STATEMENT OF
STEVEN D. AITKEN
ACTING ADMINISTRATOR,
OFFICE OF INFORMATION AND REGULATORY AFFAIRS
BEFORE THE
SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT
OF THE
COMMITTEE ON SMALL BUSINESS,
UNITED STATES HOUSE OF REPRESENTATIVES
July 13, 2006
Chairman Akin, Ranking Member Bordallo, and distinguished Members of this
Subcommittee, I am Steven D. Aitken, Acting Administrator, Office of Information
and Regulatory Affairs (OIRA), U.S. Office of Management and Budget (OMB). I
have worked at OMB for 17 years, most recently serving as Deputy General Counsel. This
is my first appearance before this Committee. Thank you for inviting
me to this hearing and for giving me the opportunity to testify today on the
reform of regulations that impact the United States manufacturing sector.
As you know, two keys roles of OIRA are to review new rulemakings and stimulate
modernization of existing rules. In my testimony today, I will discuss
the process OIRA has used to receive public input on reforming existing rules
and how OIRA ensures that agencies consider the impact of new rules on small
businesses.
The 2004 Manufacturing Initiative
A major tool that OIRA uses to improve existing rules is our call for public
reform nominations pursuant to the Regulatory Right to Know Act.1 Pursuant
to this Act, OIRA has initiated three public nomination processes to undertake
reform of existing regulations. In 2001, OMB requested public nominations
of rules that should be rescinded or modified. We received 71 nominations
from 33 commenters. In 2002, OMB again requested public nominations of
reforms of rules and also sought nominations for reform of guidance documents
and paperwork requirements. We received 316 distinct reform nominations
from more than 1,700 commenters.
Our most recent request for public nominations was in February of 2004 - in
our draft Report to Congress on the Costs and Benefits of Federal Regulations.2 In
that request, OIRA focused on the manufacturing sector because it continues
to be one of the most heavily regulated sectors of our economy. We asked nominators
to suggest specific reforms to regulations, guidance documents or paperwork
requirements that would improve manufacturing regulation by reducing unnecessary
costs, increasing effectiveness, enhancing competitiveness, reducing uncertainty
and increasing flexibility. We also mentioned that OIRA is particularly interested
in reforms that address burdens on small and medium-sized manufacturers, where
burdens tend to be relatively large. Finally, since any proposed reforms
would need to be evaluated as any other regulatory action under Executive Order
12866, we suggested that commenters consider the extent to which a benefit-cost
case (quantitative and/or qualitative) can be made for the reform.
In response to the solicitation, OMB received 189 distinct reform nominations
from 41 commenters. The materials submitted by the 41 commenters are
available on OMB's web site, and the 189 reform nominations are summarized
in OMB's Final 2004 Report to Congress on the Costs and Benefits of Federal
Regulations, which was issued on December 17, 2004.3 OMB
evaluated the reform nominations and collaborated with federal agencies in
the development of response plans. OMB also sought evaluations of the recommendations
by the Office of Advocacy of the US Small Business Administration and the US
Department of Commerce's Office of the Assistant Secretary for Manufacturing
and Services. As a result of this process, on March 4, 2005, OMB issued
the Regulatory Reform of the U.S. Manufacturing Sector Report. In this
report, Federal agencies and OMB determined that 76 of the 189 nominations
have potential merit and justify further action.4 For
all future actions on these reforms, the report also identified milestones
and deadlines, which range from performing a priority investigation and reporting
to OMB in order to determine appropriate next steps, to issuing modernized
regulations.
Status of the 2004 Manufacturing Reform Initiative
The U.S. Manufacturing Sector Report identified 46 milestones that agencies
were due to complete (i.e., by publishing a proposed rule or submitting a report
to OMB) by the end of FY 2005. Agencies reached 33 of these 46 reform
milestones. We report on each of the reform nominations in the final
2005 Report to Congress on the Costs and Benefits of Federal Regulations.5
According to the most recent information provided to OMB, the agencies have
now completed 36 of the 76 priority reforms. Please note that these numbers
are preliminary; we will continue to work with the agencies to verify and update
the status of the priority reforms in preparation for our 2006 final report
to Congress. Several of these reforms successfully improved existing
regulations, in that the reforms increase the net benefits of regulation while
maintaining important environmental, health, and safety protections. The
first two reforms listed below were also identified as high priorities by SBA’s
Office of Advocacy.
- In December 2005, EPA issued a final rule permanently exempting certain
categories of “non-major” industrial sources that are subject
to national emission standards for hazardous air pollutants (NESHAP) from
the requirement to obtain an operating permit under title V of the Clean
Air Act. The five exempted source categories are dry cleaners, halogenated
solvent degreasers, chromium electroplaters, ethylene oxide sterilizers and
secondary aluminum smelters. The sources affected by this rule are
primarily smaller businesses and EPA estimates that this final rule will
provide regulatory relief for over 38,000 sources, many of which are small
entities. This reform was in response to nomination number 1086,
which requested that EPA develop a rule that permanently exempts metal finishing
facilities from federal permitting requirements. EPA studied this issue
and found that it had merit.
- In October 2005, EPA published the final rule, which included about a dozen
targeted revisions to EPA's industrial pretreatment program, which streamlined
the monitoring and oversight requirements for industrial facilities discharging
into wastewater treatment plans. One provision allowed treatment plant
operators to waive sampling for regulated ("categorical") pollutants
upon a showing by the discharger that the pollutant is not expected to be
present in its wastewater. Another allowed treatment plant operators
to reduce oversight of facilities with small volume discharges in order to
allow greater focus on dischargers with the greatest potential for adverse
environmental impact. The rule was estimated to reduce burden on dischargers
and treatment plant operators by about 240,000 hours. This reform
was in response to nomination number 47, which asked the EPA to finalize
a rule they had already proposed that streamlined the general Pretreatment
Regulations for Existing and New Sources of Pollution.
- On April 2006, EPA published a final rule streamlining requirements under
the Resource Conservation and Recovery Act (RCRA). This rule was a
result of a multi-year effort that was designed to systematically reduce
burden while ensuring protection of human health and the environment. Numerous
changes were made to provide greater flexibility (e.g., allow in-house professional
engineers to make required certifications) and reduce paperwork requirements
(e.g., lessen the frequency of required self-inspections for facilities with
exemplary environmental performance, eliminate duplicative recordkeeping
and reporting requirements). Overall, this final rule is expected to
reduce compliance costs by $2 million to $3 million annually, without lessening
environmental protections. The annual burden hour savings range from
22,000 hours to 37,500 hours per year. This reform was in response
to nomination number 92, which requested that EPA should reduce the frequency
of inspections of large quantity generator accumulation areas regulated under
RCRA. EPA had already begun a rulemaking to streamline these
requirements before this round of reform nominations.
OMB remains dedicated to these reform initiatives; we will continue to oversee
the reform process to make sure that agencies make adequate progress so that
these nominations can be closed out by the end of 2008.
OIRA undertakes many other activities, in addition to the manufacturing regulatory
reform process, to ensure that agencies consider the impact of their regulatory
actions on small business. We work closely with the Office of Advocacy
of the Small Business Administration to ensure that agencies meet their obligations
to analyze the impact of regulations and to consider less burdensome regulatory
alternatives for small businesses. For example, OIRA, along with Advocacy,
sits on Small Business Advocacy Review Panels, pursuant to Small Business Regulatory
Enforcement Fairness Act (SBREFA). These panels ensure meaningful small
business input in the early stages of rule development for all EPA and OSHA
rules that may have significant small business impacts. To date, OIRA
has participated in 30 EPA and 7 OSHA SBREFA panels. While not legally
binding, the recommendations of these panels are taken seriously by the agencies
and have frequently resulted in significant improvements to the proposed regulations.
In addition, Executive Order 13272, issued in August 2002, strengthens agency
compliance with the Regulatory Flexibility Act (RFA) and Advocacy's role in
ensuring that agencies make minimization of small business impacts a central
consideration in the rule development process. The Executive Order states that
agencies must thoroughly review draft rules to assess and take appropriate
account of the potential impact on small businesses, small governmental jurisdictions,
and small organizations, as provided by the RFA.
Thank you very much for the opportunity to participate today in this important
hearing. I would be happy to answer any questions you may have.
1 Section 624 of
the Treasury and General Government Appropriations Act of 2001 (31 U.S.C. § 1105
note, Pub. L. 106-554)
2 Available at
/omb/inforeg/draft_2004_cbreport.pdf
3 Available at
/omb/inforeg/2004_cb_final.pdf
4 A detailed explanation
of each priority reform, along with milestones, can be found in OMB’s
report on Regulatory Reform of the U.S. Manufacturing Sector, available
at /omb/inforeg/reports/manufacturing_initiative.pdf
5 Available at
/omb/inforeg/2005_cb/final_2005_cb_report.pdf
6 The reforms
were numbered for tracking purposes in OMB’s final 2004 Report to
Congress on the Costs and Benefits of Federal Regulations.