Date:  May 27, 1999

To: Heidi King, Office of Management and Budget (OMB)
      Sandy Zavolta, Environmental Protection Agency (EPA)

From: Kevin Bromberg, Office of Advocacy, Small Business
Administration (SBA)

Subject:  IUR  - Natural Gas/ Fuels Exemption;
        Regulatory Thresholds

A.   Fuels Exemption

Based on the meeting yesterday, I propose that EPA include
two deregulatory actions in the draft proposed IUR rule:
(1) raise the initial threshold to 25,000 pounds (or some
other higher threshold) and (2) exempt from the IUR
specifically named chemicals which are the top eight
chemicals by number of reports in the 1994 IUR database.
These are: natural gas, propane, dried natural gas, butane,
2-methyl propane, gasoline, methane and ethane.  These
represent roughly 2,000 of the 19,000 reports included in
the data diskette provided to SBA (some CBI records were
excluded).

EPA has collected production volume data for these chemicals
in five previous Chemical  Inventory updates.  These
chemicals are used almost entirely as fuels, and the agency
has acknowledged that fuel streams will be required to
report only production volume information.   However, there
is little benefit to updating volume data for these
chemicals because production volumes are not as variable as
other chemicals in the Inventory.  Furthermore, collection
of production volume data for these chemicals on five
previous occasions, to our knowledge, has not caused EPA to
initiate risk management procedures.  Flammability risks are
already addressed by national, state and local requirements
(fire code and other requirements).

If EPA agrees with this rationale, the agency should move
forward and make this proposal, as it would agree that this
data, at least for now, has no "practical utility", at this
time.  If the agency later finds a need or use for this
data, it may amend the rule at a future date.  At a cost of
$1200  per report (baseline costs of $700 from Economic
Analysis, Table III- 7 and incremental cost of  new partial
report $500 from Table III-14) and $2.5 million in total
dollars, this revision would be a welcome regulatory
reinvention measure and paperwork reduction effort.  (If
some of the fuels were reported as CBI, the total dollar
figure would rise.)

Alternatively, if EPA wishes to obtain data on these fuels,
it likely would be equally effective, and much more cost-
efficient to obtain national production data on these fuels
from the American Gas Association and the American Petroleum
Institute.  To our knowledge, there is no reason why
facility-level information would be needed by EPA to analyze
flammability risks from fuels (or global warming analyses).
We know of no other risks that these chemicals raise that
warrant facility-level information.

B.   Reporting Thresholds Analysis

Using the diskette supplied by EPA, we have found the
following number of reports that exceed the applicable
thresholds shown below.

Threshold  (pounds)           Number of Reports Exceeding
                              Threshold*
                              
100,000                       7,430
50,000                        7,963
35,000                        8,317
25,000                        8,632
*There are 19,310 records in the 1994 IUR database provided
to SBA, of which 9,776 are zero production volume
(presumably those are CBI chemicals with the volumes set to
zero). Many of these 9,776 reports would also be captured by
the above thresholds.

This implies to us that there may be very little loss in the
number of reports between 25,000 and 100,000 pounds, using
the first threshold (partial reports).  Therefore, it is
more important that EPA complete the requested analysis on
the number of reports, costs, etc. for partial thresholds in
excess of 25,000 pounds.  It is difficult to justify a given
threshold (e.g. 25,000 pounds) when this threshold is at the
highest end of the analysis, rather than being bracketed by
higher and lower figures.