EPA Faces New Legal Challenge Over Alleged SBREFA Violation

Published February 1, 1998

For the second time in less than a year, a once-obscure provision tucked into a little-noticed law has provided disgruntled members of the regulated community a welcome opportunity to drag EPA into court.

The latest legal challenge to an EPA regulatory action involves the agency’s sweeping proposal, announced last year, to require 22 states to slash annual emissions of nitrogen oxide (NOx) by about 1.6 million tons. The NOx emissions, mostly from states in the Midwest and the South, are said by the agency and officials in the Northeast to be responsible for ozone problems from New Jersey to Maine. EPA’s NOx proposal is scheduled to be promulgated in September.

But the West Virginia Chamber of Commerce, the West Virginia Manufacturers Association, and the Virginia Chamber of Commerce claim in a suit filed January 5 that EPA, in developing its proposed rule, failed to adhere to the Small Business Regulatory Enforcement Fairness Act (SBREFA). In West Virginia Chamber of Commerce v. Browner, claimants say EPA failed to carry out the SBREFA-required assessment of how the proposed rule would affect small businesses.

Passed with little fanfare in 1996 and attached as an amendment to the otherwise toothless Regulatory Flexibility Act (RFA), SBREFA requires, among other things, that federal agencies carry out several procedures aimed at determining the impact of a proposed regulation on small entities–small businesses, small local governments, or non-profits–before the new rule is promulgated.

Under EPA’s proposed NOx rule, announced on October 10, 1997, the 22 affected states, all of which lie east of the Mississippi River, are required to submit to the agency so-called state implementation plans (SIPs) outlining how they intend to reduce emissions of nitrogen oxide.

EPA argues that the proposed rule will have no direct effect on small businesses, and thus the agency is not required under SBREFA to assess the impact of its action on this segment of the regulated community. According to EPA attorneys, small businesses will not be directly affected by the rule, but rather by the SIP worked out for their particular state. In essence, EPA is saying to small businesses, “your fight is not with us; it’s with your state officials.”

The claimants counter by pointing out that the SIPs, which will affect small businesses, are a direct result of the proposed NOx rule and cannot be viewed separately from it. Without a proposed NOx rule, there would be no SIPs and no impact on small businesses, they argue.

The conflict over the NOx rule is reminiscent of the suit brought last year against EPA by opponents of the agency’s new standards for particulate matter (PM) and ground-level ozone. In that instance, EPA refused to assess the impacts of its new air quality standards on small businesses, saying such impacts, if there were any, would result from SIPs designed by the individual states to come into compliance with the agency’s new standards. Claimants in the air quality standards suit have argued that the SIPs are inseparable from the agency’s action, and thus subject to SBREFA.

A ruling on the ozone/PM suit, filed late last June, is expected in 6 to 18 months. That decision will probably determine the fate of the NOx suit, as both legal challenges focus on the same issues under SBREFA.