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.•-. AmericanCoatings
ASSO CIATIO N

January 10,2011

The Honorable Darrell Issa

Chairman
Committee on Oversight & Government Reform
U.S. House of Representatives
Washington, DC 20515

Dear Chairman Issa:

On behalf of the American Coatings Association (ACA), thank you for the opportunity to identify
proposed pr existing regulatioJ")s that are negatively impacting our industry and our continued
ability ~o innovate in a globally competitive economy.

As you pursue the larger reform agenda, we believe that some concrete oversight action is
needed on the following areas of health, safety and environmental policy being actively pursued
by the current administration. While ACA will continue to pursue all available redress for our
concerns, we welcome your consideration and support, in particular as the nation seeks to
expand what appears to be an emerging but still fragile economic recovery.

DOT Special Permits

In order to obtain a Special Permit, applicants must submit an application containing specific
information regarding transporting the hazardous material at issue. US DOT is required to
make a finding that the applicant is "fit" prior to granting a Special Permit. During 2009, the
Pipeline and Hazardous Materials Safety Administration issued guidance which substantially
changed the criteria upon which a "fitness determination" is made. The guidance, however,
articulates criteria that appears to be beyond PHMSA's authority and, in addition, does not
articulate what constitutes fitness or a finding of "unfit."

ACA is signatory to a coalition effort designed to convince PHMSA to initiate a rulemaking to

articulate the fitness criteria more clearly. This petition for rulemaking was filed in mid­
December.

In addition, the coalition has also sought a legislative amendment to the Hazardous Material
Transportation Act (it is up for reauthorization) to require PHMSA to establish fitness criteria for
a Special Permit by rulemaking. Representative Graves (R-MO), Chair of Small Business
Committee, has indicated his support for such an amendment and has drafted such legislation.
It has not been introduced. The desired solution is a rulemaking to establish these criteria. This
can be accomplished by PHMSA responding positively to the petition for rulemaking. It could
also be accomplished by the Graves Amendment. At this point in time, PHMSA has indicated
that a rulemaking is appropriate yet there is no evidence that a rulemaking has been initiated.

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The final rule issued earlier this week (HM-233B) did not address the fitness criteria. It did
address information that is required to be included in the application. The final rule requires
significantly more information on the application and makes the process more complex. There
is a significant backlog of applications and renewal applications (over 2500) at PHMSA and this
final rule will only add to that backlog .

National Aerosol Coatings Rule

The national rule for aerosol coatings contains a very short list of compounds (169) that can be
used in aerosol coatings formulas. This is in contrast to the California rule where the Table of
MIR Values contains over 800 (and soon will be expanded to include over 1200). If a company
wants to use a compound that is not on the EPA list, the unlisted compound must be assigned a
default value of 22.04, regardless of the actual MIR value on the ARB Table. A default value of
22.04 makes it impossible for any formulator to use an "unlisted EPA compound."

We have petitioned EPA to add compounds to this list and at least one of these petitions was
filed over a year ago. EPA has not responded; even to acknowledge the filing of the petition.

The aerosol coatings regulation should be amended to include a mechanism to add compounds
to this 'list more efficiently. As it currently stands, in order to add compounds to the list, it must
be done in a fuB-blown rulemaking wah a NPRM , notice and comment, etc. As you know, this
takes EPA years to complete. In the meantime, formulators are prevented from using these
compounds that have been tested and assigned reactivity values in the California rule .

EPA Boiler MACT

The Environmental Protection Agency (EPA) has proposed a rule that would establish
stringent emissions standards on industrial and commercial boilers and process heaters (i.e.
Boiler MACT). This broad-reaching proposal will directly impact paint manufacturers with new
boiler operating and compliance costs with resultant imp~cts on economic recovery and jobs in
the industry. Recognizing the significant impacts of its initial proposal, EPA has asked the
federal District Court for the District of Columbia for an extension to re-propose the rule . While
this may be taken as a hopeful sign, any new EPA proposal must ensure that the standards are
economically feasible and achievable in practice for all manufacturers that operate boilers.

EPA NAAQS for Ozone

The EPA in January 2010 issued a proposal to tighten the National Ambient Air Quality
Standards (NMQS) for ground-level ozone standard from tihe existing 75 parts per billion (ppb)
to a range between 70 ppb and 60 ppb. ACA's longstanding concern with such a move is the
impact on many of our industry's products which necessarily contain some volatile organic
compounds (VOC's), precursors to ozone formation, which are used to protect the substrates
upon which they are applied. Often in the debate on tightening air quality standards the EPA
has not fully considered the life-cycle impacts of their proposals including the potential impact
on the efficacy of the reformulated products and their ability to forestall deterioration of our
nation's infrastructure. While our industry continues to innovate and find ways to reduce VOC
emissions and maintain product quality, these far-reaching proposalls by the agency may prove
impossible to meet. We believe it is important that any action by EPA to reduce the ozone
standard weigh the health and environmental benefits as well as the economic and
infrastructure impacts.

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OSHA On-Site Consultation

The Occupational Safety and Health Administration (OSHA) has recently moved to a more
adversarial approach toward business, issuing enforcement notices as a result of employers, in
particularly small businesses, seeking to consult with OSHA to better understand and comply
with existing workplace safety standards. As a result, businesses will likely cease reaching out
to OSHA for help and be less likely to cooperate with OSHA programs seeking to foster
improved compliance .

OSHA Noise Proposal

OSHA recently indicated that it plans to enforce noise level standards by redefining what is
deemed "feasible" for employers to do in their workplace using engineering controls, unless an
employer can show the effort is not feasible (i.e. will "put them out of business" .) OSHA's
proposal would alter a long-running and effective policy that allows employers to use
administrative controls (limit exposure times) and provide "personal protective equipment," such
as ear plugs and ear muffs, if they are more cost-effective than engineering controls. Such
changes would need to be made by employers of all sizes, regardless of their costs. OSHA is
pursuing this change outside the formal rulemaking process and, as such, and has not provided
opportunity for input from the regulated community.

OSHA Injury and Illness Protection Program

OSHA is also developing a new regulation that would mandate a standard for employers'
Injury and Illness Prevention Programs (12P2) . The regulation is expected to be proposed in the
spring of 2011 and would have sweeping ramifications on all aspects of both workplace safety
enforcement and the promulgation of new regulations. ACA believes the efforts made by
employers operating effective safety and health programs should not be disrupted by this new
mandate.

Cleaning Product Claims Policy under FIFRA at EPA, .

ACA continues to explore its options and coordinate activities with other industry trade
associations with an interest in amending the EPA new guidance on cleaning product labels.
The new agency guidance changes longstanding practice that allowed cleaning products to
make label claims regarding cleaning of mold and mildew stains, instead requiring that
cleaning products making such claims be registered as pesticides under the Federal Insecticide
Fungicide and Rodenticide Act (FIFRA). This has the potential to affect companies that
manufacture or distribute cleaning products required for surface preparation prior to the
application of new finishes. FIFRA registration of a pesticide product is a detailed and costly
regulatory requirement that requires specialized knowledge and expertise, and failure to
conform properly carries significant penalties. This change in "agency guidance" can result in
significant adverse impacts to industries relying on longstanding practices.

TSCA Inventory Update Rule

On August 16, 2010 EPA issued a Notice of Proposed Rulemaking (NPR) to amend the current
Inventory Update Rule (IUR) which serves to direct the collection of information on chemical
manufacturing, import, and processing activities in the US. The proposed rule is a dramatic
departure from current practice as it expands the scope of the rule, requiring additional
information on an increasingly broad array of chemical manufacturing activities, but also will

compel more affirmative efforts on the part of raw material (chemical) suppliers to secure
information from their customers on their use chemicals . This latter activity would move forward
without the opportunity, as the current regulation provides, for claims of confidential business
information (CBI). ACA has commented on the proposal , seeking to re-establish longstanding
practice in this area.

Once again, we thank you for the opportunity to provide our input and we look forward to a
continued dialogue with you and your committee about these important regulatory policy
matters.

Sincerely,

J. Andrew Doyle
President and CEO