May 25, 2000


Mr. Steven A. Herman
Assistant Administrator
Office of Enforcement and Compliance Assurance (2201A)
U.S. Environmental Protection Agency
Ariel Rios Federal Building
1200 Pennsylvania Avenue, N.W.
Washington, D.C.  20004


          Subject:  Nitrates Enforcement Initiative Under TRI

Dear Mr. Herman:

     The Office of the Chief Counsel for Advocacy of the Small
Business Administration was created in 1976 to represent the
views and interests of small businesses in Federal policymaking
activities.  The Chief Counsel participates in agency regulatory
actions when he deems it necessary to ensure proper
representation of small business interests.

     The National Ombudsman was created by the Small Business
Regulatory Enforcement Fairness Act of 1996 ("SBREFA") to report
to Congress annually on how Federal regulatory enforcement
activity affects small firms.  The National Ombudsman works with
small business regulatory fairness boards, in each of the Small
Business Administration's ten regions, to track and receive
comment on the regulatory enforcement activity of Federal
agencies and how it affects small businesses.

     As you know, the President's Memorandum of April 1995 and
SBREFA both encourage agencies to create a more cooperative
regulatory environment among agencies and small businesses that
is less punitive and more solution-oriented.  Agency compliance
officials have been given more flexibility in dealing with small
businesses and the authority to waive penalties and the use of
enforcement discretion to help bring entities into compliance.

     Recently, approximately 600 businesses, including many small
businesses, received letters from the Environmental Protection
Agency regarding potential noncompliance with Section 313 of the
Emergency Planning and Community Right-to-Know Act ("EPCRA"),
also known as the Toxic Release Inventory ("TRI") reporting
requirements.  The Agency alleges that these facilities may have
failed to report nitrate compounds that were "coincidentally
manufactured" in the process of using nitric acid in their
wastewater treatment process.  However, it appears that this
enforcement initiative improperly subjects hundreds of firms that
are among the most environmentally responsible TRI reporters to
penalties as large as $20,000 (4 reports at $5,000 per report).

     The Office of Advocacy sponsored an Environmental Roundtable
last Friday that prominently featured this enforcement
initiative.  It was the most widely attended roundtable in many
years.  Staff in your office participated in the Roundtable
discussions.  We applaud the courage of your staff that faced the
critical audience that day.  Firms in a wide variety of
industries, including the chemical, metal finishing, dairy,
aerospace, bakers, and food processors industries, did not report
nitrate compounds.  The small business representatives protested
that their members were improperly targeted for enforcement,
despite the considerable efforts these members have been making
to comply with all environmental regulations, including TRI
reporting of other applicable compounds.

     According to figures provided by EPA, approximately 50
percent of the 1996 and 1997 nitric acid reporters did not report
nitrate compounds, allegedly in violation of the TRI
requirements, despite several admirable attempts by EPA to
educate the TRI community.  It is most telling that the largest
group of alleged noncompliers is metal finishers, who are widely
known for their exemplary environmental commitment and their
participation in the Agency's noteworthy CSI efforts.  One can
only conclude, with this unusually large amount of noncompliance
among the current TRI reporters, that these facilities were not
deliberately evading their TRI responsibilities.  It is clear
that this relatively obscure requirement escaped a large
proportion of both large and small firms, including firms that
retained experienced environmental consultants to complete their
TRI reports.

     Under these circumstances, it is much more appropriate to
directly notify the facilities of the apparent technical error,
and provide them a penalty-free period of two months to examine
their data and submit their report(s) if warranted under the
regulations.  This situation is little different than other
recent enforcement initiatives where large numbers of facilities
were in violation, and the Agency settled for either no penalty
or a limited $2,000 penalty (involving failures to report
petroleum fugitive emissions, failures to apply for a storm water
permit, and failures to file an chemical inventory update report
for natural gas).

     Furthermore, we should note that the "small business" relief
of reducing the penalty to $1,000 per report addresses only very
few entities that are small businesses.  Such relief is
available, according to your staff, to only approximately 10
percent of the affected entities.  Many small businesses cannot
take advantage of the relief because of the very restrictive
conditions in your office's enforcement policy.  It is more
appropriate in this case, however, to allow penalty-free
reporting for all firms, large or small; therefore, the
differential small business policy is unnecessary.

     We encourage you to reconsider the proposed enforcement
action, and work with the companies in a more solution-oriented,
and less punitive manner.  In the spirit of the President's April
1995 Memorandum and of SBREFA, when EPA detects a large number of
errors, as it has here, it is generally more appropriate to
educate, and not penalize facilities who were apparently acting
in good faith.  If those facilities fail to respond after
reasonable notice, EPA may act, just as it does with other TRI
"Notices of Technical Error" (NOTE).

     Both of our offices have worked with you in the past on
enforcement issues and have been impressed with the sensitivity
and responsiveness of your office to small business issues.  We
stand ready to work with you in this instance again.  We look
forward to an extension of the Friday deadline for facility
responses, while EPA reconsiders its position.  We welcome the
opportunity to meet with your office to address this issue.
Please contact Kevin Bromberg of the Office of Advocacy at
202/205-6964 to arrange such a meeting.


Sincerely,


Jere W. Glover
Chief Counel for Advocacy

Gail McDonald
National Ombudsman

cc:  Eric Schaeffer
     Jesse Baskerville
     Richard Farrell