'Burden of Over-Regulation' Examined by House Committee

March 7, 2002
Witness says regulators are not adhering to the Small Business Regulatory Enforcement Fairness Act, placing costly burdens on small businesses.

Regulators are not adhering sufficiently to the Small Business Regulatory Enforcement Fairness Act, and costly burdens on small businesses are not being eased as the act intended, says a representative of one company that has been impacted by a proposed Environmental Protection Agency (EPA) regulation.

"During the past three years, we have spent an inordinate amount of time and an extraordinary amount of money to oppose a proposed rule to establish an allocation system for controlling hydrochlorofluorocarbons (HCFC) production, import and export in the United States," Jeff Gibson, director of Support Operations for the Halotron Division of American Pacific Corp., told the House Small Business Committee at a hearing yesterday.

American Pacific Corp. employs 220 people in Utah and Nevada who manufacture specialty chemicals used in the space shuttle and Department of Defense solid rocket motor programs. Recently, the company diversified into the air bag and fire protection chemical market.

Gibson bemoaned efforts by EPA to adhere to the Montreal Protocol on Substances that Deplete the Ozone Layer, which established a limit on the combined production and import of hydrochlorofluorocarbons (HCFCs) for industrialized countries. The protocol went into effect in 1996, and a phaseout schedule was created. The phaseout schedule includes: a 35 percent reduction from the limit in 2004; a 65 percent reduction in 2010; a 90 percent reduction in 2015; a 99.5 percent reduction in 2020; and a total phaseout in 2030. The parties to the protocol decided in 1999 to establish a separate limit on production to take effect in 2004 and continue at that allocated level.

To ensure that the United States achieves the required reductions in production and import of HCFCs in the protocol, EPA developed a marketable allowance system. According to the agency, the system was the most "economically efficient system of all the methods considered, being market-based and relatively simple to administer. The allowance system will retain the flexibility for industry to continue to operate efficiently, while ensuring the United States does not violate the parameters agreed to as a party to the protocol."

Under the proposed regulation, when a company produces or imports each type of HCFC, they would expend an allowance for each kilogram of the HCFC produced or imported. If a producer expends allowances to make HCFCs, then exports those HCFCs, the producer receives allowances for the amount exported. The system is based on the need to ultimately balance the global output of HCFCs.

"This rule proposes an allocation system for a key ingredient in our fire protection chemical, which is also used in a wide variety of other products, from foam insulation to commercial chillers," Gibson continued. "We believe that the EPA has not performed the required due diligence in weighing the rule''s negative impact to small businesses against the potentially minimal environmental gain."

Gibson claims the allocation system will create a commodity market for HCFCs that would hurt many small businesses through increased costs due to contrived shortages.

Worrying about the "survivability" of his employer, Gibson added, "As a small business, we are reminded daily of the onerous and unintended effects regulations can have on our and other small businesses."

by Sandy Smith ([email protected])

About the Author

EHS Today Staff

EHS Today's editorial staff includes:

Dave Blanchard, Editor-in-Chief: During his career Dave has led the editorial management of many of Endeavor Business Media's best-known brands, including IndustryWeekEHS Today, Material Handling & LogisticsLogistics Today, Supply Chain Technology News, and Business Finance. In addition, he serves as senior content director of the annual Safety Leadership Conference. With over 30 years of B2B media experience, Dave literally wrote the book on supply chain management, Supply Chain Management Best Practices (John Wiley & Sons, 2021), which has been translated into several languages and is currently in its third edition. He is a frequent speaker and moderator at major trade shows and conferences, and has won numerous awards for writing and editing. He is a voting member of the jury of the Logistics Hall of Fame, and is a graduate of Northern Illinois University.

Adrienne Selko, Senior Editor: In addition to her roles with EHS Today and the Safety Leadership Conference, Adrienne is also a senior editor at IndustryWeek and has written about many topics, with her current focus on workforce development strategies. She is also a senior editor at Material Handling & Logistics. Previously she was in corporate communications at a medical manufacturing company as well as a large regional bank. She is the author of Do I Have to Wear Garlic Around My Neck?, which made the Cleveland Plain Dealer's best sellers list.

Nicole Stempak, Managing Editor:  Nicole Stempak is managing editor of EHS Today and conference content manager of the Safety Leadership Conference.

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