ments. In fact, I have told many people that if I had written the law myself, I do not think I could have done a better job, in terms of putting forward what the problems facing small town America are today.

The Act establishes as a principle of regulatory issuance that agencies should "endeavor to fit regulatory requirement to the scale of the governmental jurisdiction." Let me just summarize some of those things that already are in Reg Flex that are not being activated by the Federal agencies at this time.

Unless specifically directed otherwise by the Congress, Federal agencies are encouraged, in fact required to look at signficant alternatives to the rules which would minimize economic impact on small entities, to require different or varying compliance and reporting requirements, to allow for the tiering of regulations so that communities with shelter resources would have a different standard of performance, to require simplification of compliance and reporting requirements across the board, and if none of those things were available, to exempt sectors of the local government regulated community from parts or all of the regulations.

In fact, it is interesting from our perspective that the actual publication of the regulatory flexibility analyses, which are required by the Congress, would probably be less important than the process by which that statement would be developed. It would be more important to have a routine situation where the Federal agencies are going through the drill of looking at their proposed rules from the perspective of small governments than actually what they come up with as the bottom line.

The process is what is vital. It requires the rule-maker to think through what they are trying to accomplish from the point of view of a small government: would this approach work; would something be better; could small entities afford to do what the Federal agency is proposing to require; could some other approach or technique or technology work and accomplish the same environmental or other policy goal?

Let us take a couple of examples of what happens when Reg Flex is not followed completely. I would like to point just briefly to the proposed regulations regarding underground storage tank specifically the financial responsibility regulations.

The bottom line is that EPA has taken a congressional mandate which said that it should regulate petroleum marketers and on its own determined that these regulations should apply to everybody who owns a petroleum tank, and if you owned one or more of these tanks you should find somehow $1 million of environmental hazard insurance.

Well, Mr. Chairman, thousands of local governments, more than 28,000 of them with under 3,000 people, store gasoline for their fire engines and police cars and ambulances in underground storage tanks, are providing vital basic services, survival services for their community. Those small communities, under these proposed rules, somehow have to come up with at least a million dollars of liability insurance or close those tanks down.

Many of our small communities, Mr. Chairman, simply could not raise that amount of money if they sold the entire community. Liability insurance for small governments is difficult to get under

any circumstances, but these days insurance against environmental hazards is practically non-existent.

Obviously, we are not here this morning to argue the particular issue of the underground storage tank rules, but rather to point out that if a full regulatory flexibility analysis had been undertaken in this case, EPA would most surely have realized what an impossible situation it was creating for America's small communities. The same could be said of many other offices within EPA and surely of other Federal agencies as well.

Just briefly looking at two other recent regulations from EPA; the first one, a proposed rule to remove some of the volatile organic chemicals in drinking water. The cost estimated by EPA, in this case indeed they have done cost estimates, which many times Federal agencies do not perform, indicate that the cost of complying with that particular portion of the proposed rule, would be approximately $3 per household per year in a large system, that is a water system serving more than 50,000 people-$3 per household per year. For a small system defined as 3,300 people or fewer, $41 per household per year, and for a very small system, one serving fewer than 500 persons, $91 per household per year. that range again is quite large, going from $3 per household in the largest communities to $91 per household per year in smaller ones.

In a similar proposal, one to reduce the lead in drinking water, the commensurate cost estimates run from $10 per family for a year in the largest communities to $96 per family per year in a small one, under 3,300 persons, to $367 per year in the smallest communities. Again, that ranges from $10 per family to $367.

These two proposals alone would require our Nation's smallest governments, in fact the people who live in them, to raise their costs of living by $450 per family per year in a small community, and that is only one office within one Federal agency. EPA alone issues proposed rules, of course, almost every day.

I think the point needs to be eemphasized, that I am not here, asking that small governments not be involved with environmental protection, that they should be exempt from environmental rules.

What we are saying is that there most probably are techniques, technologies, different processes, in fact all the things that the Regulatory Flexibility Act already requires, which, if looked at from the small community perspective, would have led the EPA to propose regulations that would not cause such a dramatic impact on small communities compared to their brethren in larger places.

We have, if I may, several major recommendations for improvement in Reg Flex that I would like to share with you this morning. The first, Mr. Chairman, is in section 605(b) of the law, the socalled loophole in the law, which says that if an agency head would determine on his or her own that there would be no substantial impact on a significant number of small entities by a rule which is being proposed, then they, on their own initiative, may cancel the regulatory flexibility process. This is the most popular course of action by Federal agency heads today. This option is exercised almost as a matter of course if the agency even knows that Reg Flex exists. Often, they do not even consider regulatory flexibility in the context of small towns. If they do, then they certify almost as a matter of course that there is "no substantial impact."

It is our belief at the National Association of Towns and Townships, that, given the number of small communities that I mentioned earlier in my testimony, that there is always a significant number of governments being impacted by Federal regulations, and that the impact, given the resource limitations of these communities, almost always has to be substantial.

So, we find that their is no good justification, there should not be certainly a pro forma justification for activating the loophole in section 605(b).

We secondly believe that, although it was very contentious during the development of the law in 1980, that the Congress should revisit the discussion of whether the Reg Flex Act should include a provision for judicial review.

Right now, local governments affected by these regulations have no recourse whatsoever, and our conversations with regulating community indicates that, when confronted with arguments about why they did not do this or that with regard to more flexible regulations, the reaction of the regulators is: "Well, what are you going to do if we do not comply with reg flex?"

We believe that, in the absence of judicial review, or perhaps even in addition to it, the Committee might consider very beneficially the requirement that the Office of Management and Budget be itself required to develop a procedure whereby Federal agencys would be allowed to adopt a certification under section 605(b). That is, that there be a standard government-wide process which would insure regulatory flexibility compliance by establishing criteria which must be met before OMB would clear regulatory proposals, or would allow a Federal agency to adopt the substantial impact loophole.

We think that such an approach would insure that the resources of the Federal Government would be brought to bear on behalf of America's small communities. It would stimulate creative thinking about new, appropriate technologies, about alternative regulatory processes, about innovative techniques to accomplish existing statutory requirements. And that, Mr. Chairman and Members of the Committee, is what we believe the Reg Flex Act was initially meant to do.

A couple of other recommendations that we would like to place before you: We beleive that it would be very beneficial to the Federal agencies, as a matter of course, develop cumulative cost estimates to determine the total regulatory burden of current and proposed regulations which are being placed on local government.

We believe that a recent self-initiated study at EPA, at the direction of Administrator Thomas, called the Sector Study, would be a very interesting and valuable model to be looked at, to see whether these kinds of cost estimates can be developed. We think that Mr. Thomas took a giant step on his own initiative that will help small governments ultimately, and we commend him for that initiative. We would recommend that if these cost estimates were available, that they be published each year by the agency in their twiceyearly regulatory calendar, and certainly be provided to committees of jurisdiction in the Congress. And Congress itself, Mr. Chairman, should be using those kinds of estimates as it develops proposed legislation, so that it would be able to see up-front what kind

of burdens these regulations might be placing on small govern

ments.

Before closing, Mr. Chairman, I would like to mention, because we are very pleased, that a NATaT proposal recently presented to the Administrator of the Environmental Protection Agency makes suggestions for improving small government regulatory policy apart from and in addition to Reg Flex compliance within the EPA, and the main points of that proposal are attached to my statement. I would hope that the elements of this proposal could serve as a model for other Federal agencies, and that those suggestions would find the same level of acceptance and support that we have received from EPA. In fact, last week, at our annual conference of small town officials, which we call America's Town Meeting, Administrator Thomas addressed our group and agreed to implement virtually all of the provisions of our proposals to EPA.

Mr. Chairman and members of the Committee, we hope that you agree that the situation we are discussing here today merits further_investigation by the Congress, that legislation to strengthen the Reg Flex Act would be a very important step to help local governments.

We urge you to make realistic_regulations for local government a high priority as you lead this Committee now and into the 101st Congress. We, as an organization, certainly look forward to working with you.

I would be happy to answer any questions you may have at the appropriate time. Thank you very much.

Chairman GLENN. Thank you very much, Mr. Schiff. We will go on with the testimony before we ask questions.

Our next witness is Ms. Joan L. Beardmore, Clerk, Warren Township, Ohio. She is also on the Board of Directors of the Ohio Township Association, and is a member of NATaT, the National Association of Towns and Townships.

Ms. Beardmore, we welcome you this morning and we look forward to your testimony.

TESTIMONY OF JOAN L. BEARDMORE, CLERK, WARREN

TOWNSHIP, WASHINGTON COUNTY, OH 1

Ms. BEARDMORE. Thank you, Mr. Chairman.

Good morning, Mr. Chairman and members of the Committee. I am serving my ninth year as Clerk of Warren Township, in Washington County, and I speak to you this morning on behalf of the thousands of small governments in the United States. My testimony was provided to you earlier, and just this morning I would like to highlight a few of my concerns about the Federal reg agencies ignoring my concerns about the Federal agencies ignoring the Regulatory Flexibility Act. Two of the Federal mandates that I am concerned with this morning are underground storage tanks and a portion of SARA title III regulations.

At this point, the Federal EPA does require $1 million of insurance coverage for environmental pollution for entities that own or operate one to twelve underground storage tanks. At this point,

1 See p. 274 for Ms. Beardmore's prepared statement.

Warren Township does operate five underground storage tanks, and we are currently insured with the Ohio Township Association Risk Management Authority, which is our insurance pooling in the State of Ohio.

In checking with our local agent, we have $50,000 coverage for this protection now. But I checked with him and asked him to see if we could find us the additional coverage and, after several days of checking, he could not offer us that kind of protection. And when I asked him is there another way, he said, well, there is an old statement in the insurance business that any time the fragrance of the premium is greater than the stench of the risk, you can be insured.

Mr. Chairman, the stench of our risk is much greater than our budget can afford. Keeping that in mind, if we cannot come up with that kind of insurance at this time, we would have to remove our five underground storage tanks.

This morning, just for a few minutes, I would like to take you on an imaginary trip around our township. As you are familiar with rural townships in Ohio, we have 3,600 residents, we have 53 miles of township roads. As we go on this trip, you would find that we would have five 1,000-gallon underground storage tanks which house diesel and gasoline for our road and fire equipment.

On any given day, you will find our employees patching and sealing blacktop roads or in the winter months we would be removing the snow. At this point, when they are on their work and they needed fuel, they would just simply take the few miles back to the garage and refuel and go back to work. If our underground storage tanks have to be removed, they would have to make the round-trip to Marietta, which is a 20-mile round-trip trip, not only taking extra traveling time, but we would be buying the gas at a retail price and it would add added costs and time to our road department.

On our imaginary trip, we would also find we have two fire departments in the north and south part of the township, and I would just like for you to imagine that this particular day our fire department had been called to a house fire. The volunteers have responded and, after several hours of work, they are leaving the fire only to receive another call to one of our local plants, which we have several, and they have had a hazardous material fire.

Before we could respond to that fire, we again would have to take all the equipment the 20-mile round-trip to Marietta to refuel, and we would have to say we will be there as soon as we can.

There would also be a problem with that volunteer fire department, because of SARA title III. There is a tremendous amount of paperwork required by each volunteer fire department. The material data sheets that are required, we get those several times a week. The paperwork of keeping the training hours also is becoming much burdensome for the fire department.

The biggest concern that we have with the fire department at this particular point is the amount of training that is required. The bill does require that we have 24 hours of hazardous material training alone, to be a first-responder.

Now, Mr. Chairman, that does not sound like a lot of time, I am sure, but that is not the only training that is required. The State of