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105th Congress Rept. 105-462
2d Session HOUSE OF REPRESENTATIVES Part 1
_______________________________________________________________________
SMALL BUSINESS PAPERWORK REDUCTION ACT AMENDMENTS OF 1998
_______
March 24, 1998.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Burton of Indiana, from the Committee on Government Reform and
Oversight, submitted the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 3310]
[Including cost estimate of the Congressional Budget Office]
The Committee on Government Reform and Oversight, to whom
was referred the bill (H.R. 3310) to amend chapter 35 of title
44, United States Code, for the purpose of facilitating
compliance by small businesses with certain Federal paperwork
requirements, and to establish a task force to examine the
feasibility of streamlining paperwork requirements applicable
to small businesses, having considered the same, report
favorably thereon with an amendment and recommend that the bill
as amended do pass.
CONTENTS
Page
I. Purpose and Summary...........................................3, 4
II. Need for the Legislation.........................................5
III. Legislative Hearings and Committee Action.......................10
IV. Explanation of the Bill--Section-by-Section Analysis............12
V. Compliance with Rule XI.........................................14
VI. Budget Analysis and Projections.................................14
VII. Cost Estimate of the Congressional Budget Office................14
VIII.Specific Constitutional Authority for This Legislation..........16
IX. Changes in Existing Law.........................................16
X. Committee Recommendation........................................20
XI. Congressional Accountability Act; Public Law 104-1..............21
XII. Unfunded Mandates Reform Act; Public Law 104-4, Section 423.....21
XIII.Appendix........................................................23
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Business Paperwork Reduction Act
Amendments of 1998''.
SEC. 2. FACILITATION OF COMPLIANCE WITH FEDERAL PAPERWORK REQUIREMENTS.
(a) Requirements Applicable to the Director of OMB.--Section 3504(c)
of chapter 35 of title 44, United States Code (commonly referred to as
the ``Paperwork Reduction Act''), is amended--
(1) in paragraph (4), by striking ``; and'' and inserting a
semicolon;
(2) in paragraph (5), by striking the period and inserting a
semicolon; and
(3) by adding at the end the following new paragraphs:
``(6) publish in the Federal Register on an annual basis a
list of the requirements applicable to small-business concerns
(within the meaning of section 3 of the Small Business Act (15
U.S.C. 631 et seq.)) with respect to collection of information
by agencies, organized by North American Industrial
Classification System code and industrial/sector description
(as published by the Office of Management and Budget), with the
first such publication occurring not later than one year after
the date of the enactment of the Small Business Paperwork
Reduction Act Amendments of 1998; and
``(7) make available on the Internet, not later than one year
after the date of the enactment of such Act, the list of
requirements described in paragraph (6).''.
(b) Establishment of Agency Point of Contact; Suspension of Fines for
First-Time Paperwork Violations.--Section 3506 of such chapter is
amended by adding at the end the following new subsection:
``(i)(1) In addition to the requirements described in subsection (c),
each agency shall, with respect to the collection of information and
the control of paperwork--
``(A) establish one point of contact in the agency to act as
a liaison between the agency and small-business concerns
(within the meaning of section 3 of the Small Business Act (15
U.S.C. 631 et seq.)); and
``(B) in any case of a first-time violation by a small-
business concern of a requirement regarding collection of
information by the agency, provide that no civil fine shall be
imposed on the small-business concern unless, based on the
particular facts and circumstances regarding the violation--
``(i) the head of the agency determines that the
violation has caused actual serious harm to the public;
``(ii) the head of the agency determines that failure
to impose a civil fine would impede or interfere with
the detection of criminal activity;
``(iii) the violation is a violation of an internal
revenue law or a law concerning the assessment or
collection of any tax, debt, revenue, or receipt;
``(iv) the violation is not corrected on or before
the date that is six months after the date of receipt
by the small-business concern of notification of the
violation in writing from the agency; or
``(v) except as provided in paragraph (2), the head
of the agency determines that the violation presents an
imminent and substantial danger to the public health or
safety.
``(2)(A) In any case in which the head of an agency determines that a
first-time violation by a small-business concern of a requirement
regarding the collection of information presents an imminent and
substantial danger to the public health or safety, the head of the
agency may, notwithstanding paragraph (1)(B)(v), determine that a civil
fine should not be imposed on the small-business concern if the
violation is corrected within 24 hours of receipt of notice in writing
by the small-business concern of the violation.
``(B) In determining whether to provide a small-business concern with
24 hours to correct a violation under subparagraph (A), the head of the
agency shall take into account all of the facts and circumstances
regarding the violation, including--
``(i) the nature and seriousness of the violation, including
whether the violation is technical or inadvertent or involves
willful or criminal conduct;
``(ii) whether the small-business concern has made a good
faith effort to comply with applicable laws, and to remedy the
violation within the shortest practicable period of time;
``(iii) the previous compliance history of the small-business
concern, including whether the small-business concern, its
owner or owners, or its principal officers have been subject to
past enforcement actions; and
``(iv) whether the small-business concern has obtained a
significant economic benefit from the violation.
``(3) In any case in which the head of the agency imposes a civil
fine on a small-business concern for a first-time violation of a
requirement regarding collection of information which the agency head
has determined presents an imminent and substantial danger to the
public health or safety, and does not provide the small-business
concern with 24 hours to correct the violation, the head of the agency
shall notify Congress regarding such determination not later than 60
days after the date that the civil fine is imposed by the agency.''.
(c) Additional Reduction of Paperwork for Certain Small Businesses.--
Section 3506(c) of title 44, United States Code, is amended--
(1) in paragraph (2)(B), by striking ``; and'' and inserting
a semicolon;
(2) in paragraph (3)(J), by striking the period and inserting
``; and''; and
(3) by adding at the end the following new paragraph:
``(4) in addition to the requirements of this Act regarding
the reduction of paperwork for small-business concerns (within
the meaning of section 3 of the Small Business Act (15 U.S.C.
631 et seq.)), make efforts to further reduce the paperwork
burden for small-business concerns with fewer than 25
employees.''.
SEC. 3. ESTABLISHMENT OF TASK FORCE TO STUDY STREAMLINING OF PAPERWORK
REQUIREMENTS FOR SMALL-BUSINESS CONCERNS.
(a) In General.--Chapter 35 of title 44, United States Code, is
further amended by adding at the end the following new section:
``Sec. 3521. Establishment of task force on feasibility of streamlining
information collection requirements
``(a) There is hereby established a task force to study the
feasibility of streamlining requirements with respect to small-business
concerns regarding collection of information (in this section referred
to as the `task force').
``(b) The members of the task force shall be appointed by the
Director, and shall include the following:
``(1) At least two representatives of the Department of
Labor, including one representative of the Bureau of Labor
Statistics and one representative of the Occupational Safety
and Health Administration.
``(2) At least one representative of the Environmental
Protection Agency.
``(3) At least one representative of the Department of
Transportation.
``(4) At least one representative of the Office of Advocacy
of the Small Business Administration.
``(5) At least one representative of each of two agencies
other than the Department of Labor, the Environmental
Protection Agency, the Department of Transportation, and the
Small Business Administration.
``(c) The task force shall examine the feasibility of requiring each
agency to consolidate requirements regarding collections of information
with respect to small-business concerns, in order that each small-
business concern may submit all information required by the agency--
``(1) to one point of contact in the agency;
``(2) in a single format, or using a single electronic
reporting system, with respect to the agency; and
``(3) on the same date.
``(d) Not later than one year after the date of the enactment of the
Small Business Paperwork Reduction Act Amendments of 1998, the task
force shall submit a report of its findings under subsection (c) to the
chairmen and ranking minority members of the Committee on Government
Reform and Oversight and the Committee on Small Business of the House
of Representatives, and the Committee on Governmental Affairs and the
Committee on Small Business of the Senate.
``(e) As used in this section, the term `small-business concern' has
the meaning given that term under section 3 of the Small Business Act
(15 U.S.C. 631 et seq.).''.
(b) Conforming Amendment.--The table of sections at the beginning of
such chapter is amended by adding at the end the following new item:
``3521. Establishment of task force on feasibility of streamlining
information collection requirements.''.
I. Purpose
The purpose of the ``Small Business Paperwork Reduction Act
Amendments of 1998'' is to reduce the burden of Federal
paperwork on small businesses by requiring the publication of a
list of all the Federal paperwork requirements on small
businesses; requiring each Federal agency to establish one
point of contact for small businesses on paperwork issues;
requiring the agencies to allow small businesses to correct
first-time paperwork violations before civil fines are
assessed, except when doing so would harm or threaten public
health and safety, impede criminal detection, or involve an
internal revenue law; requiring the agencies to address the
paperwork burden on businesses with fewer than 25 employees;
and forming a task force of agency representatives to study the
feasibility of streamlining Federal reporting requirements on
small businesses. The bill amends Chapter 35, Title 44,
otherwise known as the ``Paperwork Reduction Act of 1995''
(PRA).
Summary
In brief, the Small Business Paperwork Reduction Act
Amendments of 1998 are intended to do the following:
A. Require the Office of Information and Regulatory Affairs
(OIRA) to publish a list annually on the Internet and in the
Federal Register of all the Federal paperwork requirements for
small business.
Section 2(a) requires the Director of the Office of
Management and Budget (OMB) to authorize the Administrator of
OIRA to publish this list. The definition for ``small
business,'' in this section and throughout the bill, is the one
used in the Small Business Act (15 U.S.C. 631 et seq.). Small
business is defined as an enterprise which is ``independently
owned and operated and which is not dominant in its field of
operation.'' It is further defined by the Small Business Size
Regulations (13 CFR 121), which set the size standards
businesses must meet to qualify as a small business.
``Collection of information'' is the term used throughout the
PRA to define paperwork. It includes requirements for reporting
to the Government and disclosure to third parties, as well as
record keeping.
B. Require each agency to establish one point of contact to
act as a liaison with small businesses.
Section 2(b) requires each agency to establish one point of
contact to act as a liaison between small businesses and the
agency regarding paperwork requirements and the control of
paperwork.
C. Suspend civil fines on small businesses for first-time
paperwork violations so that the small businesses may correct
the violations.
Section 2(b) provides that civil fines may be suspended for
six months unless the agency head determines that the violation
has caused actual serious harm; that waiving the fine would
impede the detection of criminal activity; that the violation
is a violation of the internal revenue laws or any law
concerning the assessment or collection of a tax, debt, revenue
or receipt; or that the violation presents an imminent and
substantial danger to the public health and safety. If the
agency head determines that the violation presents an imminent
and substantial danger to the public health and safety, the
agency head may impose a fine or suspend the fine for 24 hours
to allow the small business to correct the violation. In making
this determination, the agency head shall take into account all
the facts and circumstances of the violation, including the
following factors: (1) the nature and seriousness of the
violation, including whether it is willful or criminal; (2)
whether the small business has made a good faith effort to
comply and correct the violation; (3) the previous compliance
history of the small business, including any past enforcement
actions against its owners or principals; and (4) whether the
small business has obtained a significant economic benefit from
the violation. Only civil fines may be suspended, not criminal.
Only fines assessed for violations of collection of information
(paperwork) requirements may be suspended, not fines for
violations of other regulatory requirements. The Committee
urges the Federal agencies to ensure that this provision
applies to the States' enforcement policies and programs when
they delegate the authority to issue civil fines for paperwork
requirements to the States.
D. Further reduce paperwork for businesses with fewer than
25 employees.
Section 2(c) requires each agency to make further efforts
to reduce paperwork for small businesses with fewer than 25
employees, in addition to meeting the current paperwork
reduction requirements of the PRA.
E. Establish a task force, convened by OIRA, to study the
feasibility of streamlining reporting requirements for small
businesses.
Section 3 establishes a task force to study the feasibility
of streamlining reporting requirements for small businesses.
The Director of OMB will authorize the Administrator of OIRA to
appoint the members of the task force. The members will include
representatives from different agencies, including the Bureau
of Labor Statistics and the Occupational Safety and Health
Administration of the Department of Labor, the Department of
Transportation, the Environmental Protection Agency (EPA), and
the Small Business Administration Office of Advocacy, in
addition to other agencies that the Director determines could
contribute to this effort. The task force will examine the
feasibility of requiring the agencies to consolidate reporting
requirements in order that each small business may submit all
information required by the agency to one point of contact at
the agency, in a single format or using a single electronic
reporting system, and on one date. After one year, the task
force will report its findings to the House Government Reform
and Oversight and Small Business Committees and the Senate
Governmental Affairs and Small Business Committees. If the task
force finds that consolidating reporting requirements so that
small businesses can make annual submissions to each agency on
one form or a single electronic reporting system will not work
or reduce the burden in a meaningful way, the task force will
make recommendations to the Committees on what will work to
streamline and reduce the burden of reporting requirements for
small businesses.
II. Need for Legislation
The burden of Federal regulations on the American public
continues to grow. Total regulatory costs in 1997 were up 1.6
percent from the previous year, 7.2 percent over the past five
years, and 25.3 percent over the past ten years. Regulation now
costs over $\1/2\ trillion per year. Total regulatory costs in
1997 were $688 billion. When these costs are passed on to the
consumer, the typical family of four pays approximately $6,875
per year in hidden regulatory costs. Families spend more on
regulation than on medical expenses, food, transportation,
recreation, clothing, and savings. In fact, U.S. regulatory
costs in 1997 ($688 billion) exceeded 1996 personal income
taxes ($631 billion) and 1995 corporate profits ($601 billion).
The number of regulations on the books continues to climb as
well--45,783 final rules have been issued in the past decade
(since 1986). And agency budgets to enforce regulations are on
the rise. Budgeted enforcement spending for social and economic
regulatory programs is expected to hit $17.2 billion in 1998.
That is a 223 percent increase since 1970 when enforcement
spending was $4.6 billion.1
---------------------------------------------------------------------------
\1\ Clyde Wayne Crews, Jr., ``Ten Thousand Commandments: A
Policymaker's Snapshot of the Federal Regulatory State,'' 1998 Edition.
---------------------------------------------------------------------------
Small businesses are particularly hurt by the regulatory
burden. The United States Small Business Administration reports
that the smallest firms carry the heaviest regulatory burdens--
small businesses bear 63 percent of the total regulatory
burden. Firms with 20-49 employees spend, on average, 19 cents
out of every revenue dollar on regulatory costs. The total
regulatory burden on small businesses is $247 billion and on
large businesses is $148 billion.2 Since President
Clinton took office in 1993, the number of EPA rules affecting
small firms has increased 92 percent. The overall number of
rules affecting small firms has increased 10 percent. The EPA
plans to issue 430 rules in 1998. More than one third, or 163,
will affect small businesses.3
---------------------------------------------------------------------------
\2\ Small Business Administration, ``The Changing Burden of
Regulation, Paperwork, and Tax Compliance on Small Business,'' 1995.
\3\ Clyde Wayne Crews, Jr., ``Ten Thousand Commandments: A
Policymaker's Snapshot of the Federal Regulatory State,'' 1998 Edition.
---------------------------------------------------------------------------
Not only are regulatory costs higher for small businesses,
but they are harder to absorb. Small businesses cannot afford
to comply with regulations in the same way that large
businesses can. The high cost of regulations often makes it
impossible for small businesses to expand, threatens their
ability to stay afloat, or prevents them from opening in the
first place. At the Subcommittee on National Economic Growth,
Natural Resources and Regulatory Affairs' hearing, ``The Impact
of Regulations on Employment,'' on May 16, 1996, a small
business owner from Sumner, Washington testified that the cost
of regulations stopped her from opening a new business. When
Judi Moody and her husband tried to open a small bookstore and
cafe, they ran into so much regulation and paperwork that they
couldn't go forward. She recalled at least 25 forms they would
have to complete, and those were from the Department of Labor
alone. It seemed that they would need to hire a lawyer before
they even opened the door. Mrs. Moody and her husband just
wanted to hire a couple of employees to sell books and coffee.
But because of Government paperwork, they were not able to
realize their dream and create more jobs.
Small businesses need a break on regulations and regulatory
paperwork, not only because they bear more of the costs, but
because they are a crucial part of the American economy. There
are 22 million small businesses in the United States. Small
businesses with fewer than 500 employees make up the vast
majority of all employer firms--99.7 percent. And small
businesses generate approximately 50 percent of U.S. jobs and
sales. One of small businesses' biggest contributions to the
economy is that they hire a greater proportion of individuals,
who might otherwise be unemployed, than large businesses. Very
small firms (fewer than 10 employees) hire part-time workers at
a rate almost twice that of very large firms (1000 or more
employees). Small firms employ a higher proportion of workers
under age 25 and age 65 and over. Small firms have a higher
ratio of employees with lower educational levels--a high school
degree or less--than large firms. Small firms employ more
individuals on public assistance than large firms.4
---------------------------------------------------------------------------
\4\ Small Business Administration, ``Characteristics of Small
Business Owners and Employees,'' 1997.
---------------------------------------------------------------------------
The single most costly type of regulation is paperwork
compliance. Regulatory paperwork costs are higher than any
other regulatory costs, particularly for small businesses. For
firms with fewer than 20 employees, paperwork regulations cost
$2,017 per employee per year. For firms with 20 to 499
employees, paperwork regulations cost $1,931 per employee per
year. For firms with 500 or more employees, paperwork
regulations cost $1,086 per employee per year.5
---------------------------------------------------------------------------
\5\ Thomas D. Hopkins, ``Regulatory Costs in Profile,'' 1996.
---------------------------------------------------------------------------
One of the main areas of concern voiced by representatives
at President Clinton's White House Conference on Small Business
in 1995 was the paperwork burden. The sheer scope of
government-mandated paperwork explains why it is such a
problem--the estimated total paperwork burden for 1996 was 6.7
billion hours. Unfortunately, past efforts to fix the problem
are not working. The PRA's legal requirement for 1996--a 10
percent reduction in paperwork--was not achieved. Paperwork was
only reduced 2.6 percent in 1996. And it is estimated to have
been reduced 1.8 percent in 1997.6 According to the
General Accounting Office (GAO), the agencies are unlikely to
meet OMB's goal of a 25 percent reduction in the cumulative
paperwork burden by the end of fiscal year 1998. EPA officials
confirmed that their agency will not meet the goal.7
The total cost of the paperwork burden in 1997 is estimated to
be $225 billion. It is projected to increase to $229 billion in
1998.8 Paperwork (process regulation) accounts for
one third of total regulatory compliance spending--a dramatic
increase from one fifth in 1977.9 Process
regulations (primarily paperwork) in 1992 accounted for some 40
percent of total business regulatory costs and the burden is
increasing.10
---------------------------------------------------------------------------
\6\ Office of Management and Budget, ``1997 Report to Congress on
the Paperwork Reduction Act.''
\7\ General Accounting Office 1997 Testimony, ``Paperwork
Reduction: Government Goals Unlikely to be Met.''
\8\ Small Business Administration, ``The Changing Burden of
Regulation, Paperwork, and Tax Compliance on Small Business,'' 1995.
\9\ Thomas D. Hopkins, ``Regulatory Costs in Profile,'' 1996.
\10\ Small Business Administration, ``The Changing Burden of
Regulation, Paperwork, and Tax Compliance on Small Business,'' 1995.
---------------------------------------------------------------------------
At 18 field hearings across the country, the Subcommittee
has heard from many different small business owners about the
particular difficulties associated with Federal paperwork
requirements. Lyle Clemenson, president of CEI, Inc., a small
manufacturing business, has calculated that his company spends
between $7,500 and $9,000 per year on regulatory paperwork.
(August 8, 1995, St. Paul, MN) Betty Devoe, executive director
of Westminster Village, a small retirement community in Muncie,
Indiana, reported that the costs of the health care center at
Westminster increased by $166,000 in one year (from 1990-91).
Approximately $100,000 of the increase was due to increased
paperwork compliance under Medicare regulations. (April 17,
1995, Muncie, IN)
Dr. Edward L. Probst, a dermatologist from Columbus,
Indiana, testified that he is unable to offer his patients the
best care due to the burden of federal regulations under the
Clinical Laboratory Improvement Act (CLIA). CLIA imposes huge
paperwork and reporting requirements on physicians without
enhancing the quality of laboratory tests for patients. For Dr.
Probst, CLIA regulations have increased the cost of testing,
decreased the quality of care he gives to patients, and limited
his ability to keep up with the latest medical issues, because
the requirements are so time consuming. Dr. Probst was fined
because the 260-page manual required in his office did not
include a detailed explanation of how to change the light bulb
in his laboratory microscope. Dr. Probst must follow a total of
24 steps and fill out paperwork for even the simplest office
laboratory test he performs. (April 17, 1995, Indianapolis, IN)
Jeff Bowe testified that his small printing company, Benham
Press, in Indianapolis, is subject to 19 different federal
environmental reporting requirements. All of the reports
require information in slightly different formats, over
different periods of time, calculated or tabulated in a
slightly different manner. Therefore, on average, Mr. Benham
spends four weeks per year learning the requirements,
collecting the information, and reporting it. To hire a
consultant to deal with the paperwork would cost him about
$30,000 per year--more than most small businesses earn. Mr.
Benham testified that a unified reporting form would reduce his
paperwork by about 90 percent and reduce the time he spends on
it by 75 percent. (April 17, 1995, Indianapolis, IN)
The Subcommittee held a hearing on the bill on March 5,
1998. At the hearing small business owners stressed the need
for this legislation. They testified that the paperwork burden
is so large and costly that, in many cases, their companies'
growth is stunted and they are unable to create more jobs. They
also emphasized that most small business owners fear unknown
regulations and paperwork more than known. Jere Glover, Chief
Counsel of the Small Business Administration's Office of
Advocacy, also testified in support of the bill. He stated that
paperwork and reporting requirements remain a major cost
problem for small businesses. He also stated that the
legislation addresses almost all the concerns reported by the
1995 White House Conference on Small Business.
The bill addresses many of the concerns which the small
business owners voiced at the hearing. The bill's requirement
that OIRA publish an annual list of all paperwork requirements
on small business would help eliminate the fear of the unknown.
For the first time, small business owners would be able to go
to one source to discover all the paperwork they must complete.
At the suggestion of William Saas, one of the witnesses at the
hearing, Subcommittee Chairman McIntosh and Representative
Kucinich amended the bill to require OIRA to make the list
available on the Internet so that small businesses can access
it easily. This comprehensive list will be particularly helpful
to an entrepreneur who wants to start a small business. By
referring to this list, any entrepreneur will be able to easily
discover all the paperwork requirements he or she will have to
meet. This list would also bring to light all the duplicative
paperwork requirements placed on small business, providing
Congress with the information it needs to eliminate these
unnecessary burdens in the future.
The bill's provision to suspend civil fines for first-time
paperwork violations, except in cases of actual serious harm or
an imminent threat to public health and safety, would relieve
small business owners of the fear that they will be fined for
an innocent mistake or oversight. Subcommittee Chairman
McIntosh wrote the bill with these concerns in mind. After
hearing from small business owners at 18 field hearings, he
particularly wanted to relieve them of fines for innocent
violations of paperwork requirements. The witnesses testified
that they would benefit from this provision in cases of
omission due to ignorance of the requirements. They emphasized
that it is practically impossible to be aware of and keep up
with all the Federal paperwork requirements, particularly
because new requirements are issued by the various Federal
agencies every year.
The bill would also make it easier for small business
owners to get answers to their paperwork questions because it
requires each Federal agency to establish one point of contact
to act as a liaison between the agency and small businesses on
paperwork collection and control.
Finally, the bill takes an important step toward
streamlining and consolidating paperwork requirements for small
businesses by establishing a task force of officials from
several of the major regulatory agencies as well as the SBA and
OIRA. The task force would study the feasibility of
streamlining and reducing the burden of reporting requirements
so that small businesses could report to one point of contact
at each agency, once a year, on one form. It would report its
recommendations to the Congress after one year.
The Subcommittee held a second hearing to give the Federal
agencies an opportunity to comment on the bill. Representatives
from the Department of Transportation (DOT), the Department of
Justice (DOJ), the Securities and Exchange Commission (SEC),
and the Department of Labor's Occupational Safety and Health
Administration (OSHA) testified at the hearing. All the agency
witnesses were concerned about the provision of the bill which
would suspend fines for first-time paperwork violations. It was
clear from the testimony that the agencies ignored the bill's
carefully-crafted exceptions for violations which would result
in actual harm or threaten public health and safety. All the
witnesses testified that the agencies should retain the
authority to issue fines for first-time paperwork violations in
every instance with absolutely no restrictions. Rep. Vince
Snowbarger questioned the agency witnesses about an amendment
which Subcommittee Ranking Minority Member John Tierney and
Rep. Kucinich were planning to offer to the bill. The amendment
would have replaced the bill's suspension of fines provision
with a requirement that the agencies develop policies for
delaying, reducing, and eliminating fines for first-time
paperwork violations under appropriate circumstances. Rep.
Snowbarger asked the agency witnesses if the amendment would
add anything new to the requirements of current law under the
Small Business Regulatory Enforcement Fairness Act (SBREFA).
Each of the witnesses agreed that the amendment would not
require anything more than current law.
III. Legislative Hearings and Committee Action
a. hearings
The ``Small Business Paperwork Reduction Act Amendments of
1998,'' (H.R. 3310) was introduced on March 3, 1998, by
National Economic Growth, Natural Resources, and Regulatory
Affairs Subcommittee Chairman David McIntosh, for himself, and
Reps. Kucinich, Frost, Woolsey, Gordon, Hamilton, Hastert,
Scarborough, Sununu, Sessions, Shays, McHugh, Davis of
Virginia, Miller of Florida, Livingston, DeLay, Armey, Boehner,
Thornberry, Barr of Georgia, Dunn, and Snowbarger.
After introduction, the bill was referred to the Committee
on Government Reform and Oversight, and in addition, to the
Committee on Small Business. On March 5, 1998, and March 17,
1998, Chairman McIntosh held hearings to consider the bill.
Witnesses at the March 5, 1998, hearing included: Gary
Roberts, President, Roberts Pipeline Sulphur Springs, Indiana;
William Saas, President, Taskem, Inc., Brooklyn Heights, Ohio;
Teresa Gearhart, Owner, Mhart Express, Inc., Hope, Indiana;
Vikki Nelson, Owner, Jarnel Iron and Forge, Hagerstown,
Maryland; Robert C. Smith, President, Spero-Smith Investment
Advisors, Inc., Cleveland, Ohio; Jere Glover, Chief Counsel for
Advocacy, U.S. Small Business Administration.
At the hearing, Gary Roberts testified, ``I am not here
today asking that you create a loophole which would allow small
businesses to ignore their safety responsibilities. As I
indicated, our employees are also often our families. They are
also our neighbors and friends. Our company has many long-time,
loyal employees. We want them to be safe on the job site,
because quite simply that means they are productive. As larger
companies leave ourcommunities, as they have in neighboring
Muncie, Indiana, small businesses need to be able to step in and fill
the void with new jobs. We cannot do this when we need to worry more
about the definition of documents than we do the concept of running a
small business that benefits, not only its owners, but also its
employees and its community. * * * I would ask for your help in
reducing the paperwork burden that is flooding small businesses.''
Teresa Gearhart testified, ``The proposed legislation to
amend the [Paperwork Reduction Act] would be a tremendous
benefit for small business. As a small business owner, I have
often spent valuable time searching for the correct answers to
filing and meeting the deadlines of the numerous government
agencies. * * * Even today, but more importantly when our
company was starting and our growth was rapid, we struggled to
keep up with the requirements. Knowing the heavy burden of
documents required by the long list of agencies, it would be
very easy to make errors in meeting those deadlines and
filings. Yet fines for small business can be detrimental. The
proposed legislation to suspend fines for first-time violations
would recognize such an important fact.''
Jere Glover, Chief Counsel for Advocacy of the Small
Business Administration, testified, ``In addition to the actual
regulatory and paperwork burden is the perception that is very
clear in the minds of small business [owners], that at some
point some investigator or some auditor is going to walk in
that door and cite them for some regulation that they know
existed, and the fine will be so great that it will impact
their business and their livelihood.''
Mr. Glover further testified, ``I was one of the officials
who worked with the Vice President and the President to
promulgate the March 1995 memorandum [to the heads of the
Federal agencies] that said, much like your bill does, that
where it is reasonable, where it is a first-time violation, do
not go in and play `gotcha' with the business. I think that
makes a lot of sense. And I think your legislation also makes a
lot of sense.''
Mr. Glover closed by saying, ``There can be significant
improvements made in the regulatory burdens on small business.
And clearly, it is a wonderful idea that you are coming forward
with.''
Witnesses at the March 17, 1998, hearing included: Emily
Sheketoff, Deputy Assistant Secretary, Occupational Safety and
Health Administration; Joseph Onek, Principle Deputy Associate
Attorney General, Department of Justice; Brian J. Lane,
Director of the Division of Corporate Finance, Securities and
Exchange Commission; Neil R. Eisner, Assistant General Counsel
for Regulation and Enforcement, Department of Transportation.
At the hearing, Emily Sheketoff testified that, ``Although
OSHA agrees that legislation like [H.R. 3310] could be
beneficial, we have serious concerns about the safety and
health impact of the penalty-related provisions in section 2 of
the bill.'' The concerns voiced in her testimony were very
similar to those expressed by the other agency witnesses.
B. committee action
After taking into account the testimony from the witnesses
at the March 5, 1998, and March 17, 1998, hearings, the
Subcommittee on National Economic Growth, Natural Resources,
and Regulatory Affairs, held a mark up of H.R. 3310 on March
17, 1998. By voice vote, the Subcommittee approved forwarding
H.R. 3310, as amended, to the full Committee on Government
Reform and Oversight for consideration.
On March 19, 1998, at the full committee, Subcommittee
Chairman McIntosh offered an amendment to address the concerns
voiced by the agencies. The amendment added two additional
exceptions to the suspension of fines section of the bill to
ensure that the bill would not inadvertently prevent the
detection of crimes, particularly drug crimes, or dismiss
violations of tax and pension requirements. The amendment
passed 19 to 15. By voice vote, the full Committee approved
reporting H.R. 3310, as amended, to the full House.
Chairman Jim Talent, on behalf of the Small Business
Committee, waived jurisdiction over H.R. 3310, after reviewing
the legislation and the legislative history.
IV. Explanation of the Bill--Section-by-Section Analysis
Section 1: Title
Section 2: Facilitation of compliance with Federal paperwork
requirements
Annual publication of Federal paperwork requirements
Section 2 (a) amends Section 3504(c) of the PRA to require
the Director of the Office of Management and Budget (OMB) to
authorize the Administrator of the Office of Information and
Regulatory Affairs (OIRA) to publish a list annually in the
Federal Register and on the Internet of all the Federal
paperwork requirements for small business. The list will be
organized or indexed into useful categories by industry type to
help small businesses identify which paperwork requirements
apply to them. This includes categorization according to the
North American Industrial Classification System and other ways
that will be helpful and readily described. The first
publication of the list will be not later than one year after
the date of enactment of the Act. ``Collection of information''
is the PRA's term for paperwork. It is defined as ``the
obtaining, causing to be obtained, soliciting, or requiring the
disclosure to third parties or the public, of facts or opinions
by or for an agency, regardless of form or format, calling for
either--(I) answers to identical questions posed to, or
identical reporting or record keeping requirements imposed on,
ten or more persons, other than agencies, instrumentalities, or
employees of the United States; or (ii) answers to questions
posed to agencies, instrumentalities, or employees of the
United States which are to be used for general statistical
purposes.'' ``Small business concern'' is the term for a small
business as it is used in the Small Business Act. It is defined
as an enterprise which is ``independently owned and operated
and which is not dominant in its field of operation.'' It is
further defined by the Small Business Size Regulations (13 CFR
121), which set the size standards businesses must meet to
qualify as a small business.
Establishment of agency point of contact for small business
Section 2(b) amends Section 3506 of the PRA to require each
agency to establish one point of contact to act as a liaison
between small businesses and the agency regarding paperwork
requirements and the control of paperwork.
Suspension of fines for first-time paperwork violations
Section 2(b) further provides that agencies shall suspend
civil fines on small businesses for first-time paperwork
violations so that the small businesses may correct the
violations. If a small business does not correct the violation
within the prescribed time period, the fine may be imposed. The
fine shall be suspended for six months unless the agency head
determines (1) that the violation has caused actual serious
harm to the public; (2) that failure to impose the fine would
impede or interfere with the detection of criminal activity;
(3) that the violation is a violation of an internal revenue
law or any law concerning the assessment or collection of any
tax, debt, revenue or receipt; or (4) that the violation
presents an imminent and substantial danger to the public
health or safety.
If the violation presents an imminent and substantial
danger to the public health and safety, the agency head may
either impose the fine or suspend it for 24 hours so that the
small business may correct the violation. In determining
whether to give the small business 24 hours to correct the
violation, the agency shall take into account all the facts and
circumstances of the violation, including: (1) the nature and
seriousness of the violation, including whether the violation
is technical or inadvertent or involves willful or criminal
conduct; (2) whether the small business has made a good-faith
effort to comply and remedy the violation in the shortest
practicable time; (3) the previous compliance history of the
small business, including whether its owners or principal
officers have been subject to past enforcement actions; and (4)
whether the small business has obtained significant economic
benefit from the violation. If the agency head opts to impose
the fine in this case, he or she must notify Congress of the
decision within two months. Only civil fines may be suspended,
not criminal. Only fines assessed for violations of collection
of information (paperwork) requirements may be suspended, not
fines for violations of other, related regulatory requirements.
The Committee urges the Federal agencies to ensure that this
provision applies to the States' enforcement policies and
programs when they delegate the authority to issue civil fines
for paperwork requirements to the States.
Paperwork reduction for businesses with fewer than 25
employees
Section 2(c) amends Section 3506(c) of the PRA to require
each agency to make further efforts to reduce paperwork for
small businesses with fewer than 25 employees, in addition to
meeting the paperwork reduction requirements of the Act.
Section 3: Establishment of a task force on the feasibility of
streamlining reporting requirements
Section 3 adds a new Section to the PRA, Sec. 3521, to
establish a task force to study the feasibility of streamlining
reporting requirements for small businesses. The Director of
OMB should authorize the Administrator of OIRA to appoint the
members of the task force. The members will include
representatives from different agencies that could contribute
to this effort, including the Bureau of Labor Statistics and
the Occupational Safety and Health Administration of the
Department of Labor, the Department of Transportation, the
Environmental Protection Agency, and the Small Business
Administration Office of Advocacy. The task force will examine
the feasibility of requiring the agencies to consolidate
reporting requirements in order that each small business may
submit all information required by the agency to one point of
contact at the agency, in a single format or using a single
electronic reporting system, and on one date. After one year,
the task force will report its findings to the House Government
Reform and Oversight and Small Business Committees and the
Senate Governmental Affairs and Small Business Committees. If
the task force finds that consolidating reporting requirements
so that small businesses may make annual submissions to each
agency on one form or a single electronic reporting system will
not work or reduce the burden in a meaningful way, the task
force will make recommendations to the Committees on what will
work to streamline and reduce the burden of reporting
requirements for small businesses.
V. Compliance With Rule XI
Pursuant to rule XI, clause 2(l)(3)(A) of the Rules of the
House of Representatives, under the authority of rule X, clause
2(b)(1), the results and findings from committee oversight
activities are incorporated in the bill and this report.
VI. Budget Analysis and Projections
H.R. 3310, as amended, provides for no new authorization,
budget authority, or tax expenditures. Consequently, the
provisions of section 308(a)(1) of the Congressional Budget Act
of 1994 are not applicable.
VII. Cost Estimate of the Congressional Budget Office
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 24, 1998.
Hon. Dan Burton,
Chairman, Committee on Government Reform and Oversight, House of
Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3310, the Small
Business Paperwork Reduction Act Amendments of 1998.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is John R.
Righter.
Sincerely,
June E. O'Neill, Director.
Enclosure.
H.R. 3310--Small Business Paperwork Reduction Act Amendments of 1998
Summary: H.R. 3310 generally would seek to provide relief
to small businesses by: (1) waiving civil fines and penalties
for first-time violations of paperwork requirements, (2)
directing the Office of Management and Budget to publish
annually a list of applicable paperwork requirements, (3)
requiring that agencies provide a single point of contact, and
(4) establishing a multi-agency task force to study the
feasibility of streamlining requirements for collecting and
reporting information to the federal government.
CBO estimates that enacting H.R. 3310 would result in a net
loss of governmental receipts of at least $4.5 million a year.
That amount includes an estimated annual loss of civil monetary
penalties (CMPs) of at least $6 million, net of increased
income and payroll taxes. Because the bill would affect
receipts, pay-as-you-go procedures would apply. Implementing
the bill also would increase annual discretionary costs by
requiring agencies to publish a list of paperwork requirements
and to participate in the multi-agency task force, but CBO does
not expect such costs to be significant.
H.R. 3310 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act of 1995
(UMRA) and would not affect the budgets of state, local, or
tribal governments.
Estimated cost to the Federal Government: By waiving civil
fines and penalties for first-time violations of paperwork
requirements by small businesses, H.R. 3310 would affect the
collection of CMPs by federal regulatory agencies.
Specifically, the bill would prohibit federal agencies from
assessing CMPs for first-time paperwork violations, except for
cases where the agency determines that the violation has caused
serious harm or presents an imminent and substantial danger to
the public healthor safety, or where the violation is not
corrected within six months of notification. The onetime relief also
would not apply to violations involving the collection of any tax,
debt, revenue, or receipt. In addition, the bill would allow an agency
to forgo assessing a firm for violations that it considers to present
an imminent and substantial danger to the public health or safety. If
the agency elects not to waive the fine or penalty, the bill would
require that it notify the Congress of the decision within 60 days.
Agencies annually collect approximately $300 million in
non-tax CMPs--excluding those collected by the Internal Revenue
Service. Such fines are recorded as governmental receipts. The
vast majority of such collections, however, are for non-
paperwork violations. Paperwork violations generally involve
the failure to record and report information required by
federal regulatory agencies to assist in enforcing health,
safety, and environmental laws. Additionally, several federal
statutes, including the Small Business Regulatory Enforcement
Fairness Act of 1996, and Administration policy already
required that agencies provide relief to small businesses from
first-time fines for paperword violations. Among other things,
agencies are required to consider a firm's size, its compliance
history, whether it benefited economically from the violation,
and its efforts to correct the violation in determining the
amount of any fine or penalty.
H.R. 3310 would broaden this relief so as to prevent
agencies from imposing any fine for the vast majority of first-
time offenses. Unfortunately, based on information from the
agencies we contacted, including the Environmental Protection
Agency (EPA), the Occupational Safety and Health Administration
(OSHA), and the Departments of Justice and Transportation,
agencies do not track the assessment or collection of CMPs by
whether a penalized firm is a small business, a first-time
offender, or in most cases, even whether the fine is for a
paperwork violation. Consequently, the amount of collections
that would be forgone under H.R. 3310 is very uncertain.
Based on limited information provided by OSHA, including
the amount of fines assessed and collected for certain
paperwork violations in 1997, CBO estimates that annual
collections by that agency would decrease by at least $2
million. OSHA and EPA each account for about one-quarter of all
non-tax CMPs. Thus, we estimate the EPA would forgo a similar
amount in collections of CMPs. For other agencies, which
account for one-half of the remaining non-tax CMPs, but which
appear to impact small businesses to a lesser degree than OSHA
and EPA, we estimate the government would forgo approximately
another $2 million annually. Thus, in total, CBO estimates that
enacting H.R. 3310 would result in an annual loss of
governmental receipts from CMPs of at least $6 million. After
adjusting for the income and payroll tax offset, CBO estimates
a reduction in net governmental receipts of at least $4.5
million, beginning in fiscal year 1999. Assuming that H.R. 3310
is enacted this summer, we estimate that the net loss in
governmental receipts for fiscal year 1998 would not be
significant.
The bill also would increase annual discretionary costs for
agencies to publish a list of paperwork requirements and to
participate in the multi-agency task force, but CBO does not
expect such increases to be significant.
Pay-as-you-go considerations: Section 252 of the Balanced
Budget and Emergency Deficit Control Act of 1985 sets up pay-
as-you-go procedures for legislation affecting direct spending
or receipts. The net changes in outlays and governmental
receipts that are subject to pay-as-you-go procedures are shown
in the following table. For the purposes of enforcing pay-as-
you-go procedures, only the effects in the current year, the
budget year, and the succeeding four years are counted.
----------------------------------------------------------------------------------------------------------------
By fiscal years, in millions of dollars--
----------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................
(10) Not applicable
Changes in receipts................ 0 -5 -5 -5 -5 -5 -5 -5 -6 -6 -6
----------------------------------------------------------------------------------------------------------------
Intergovernmental and private-sector impact: H.R. 3310
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: John R. Righter.
Estimate approved by: Robert A. Sunshine, Deputy Assistant
Director for Budget Analysis.
VIII. Specific Constitutional Authority for This Legislation
Clauses 1, 14, and 18 of Article 1, section 8 of the
Constitution grant Congress the power to enact this law.
IX. Changes in Existing Law
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the
bill, as reported, are shown as follows (existing law proposed
to be omitted is enclosed in black brackets, new matter is
printed in italic, existing law in which no change is proposed
is shown in roman):
CHAPTER 35 OF TITLE 44, UNITED STATES CODE
CHAPTER 35--COORDINATION OF FEDERAL INFORMATION POLICY
Sec.
3501. Purposes.
* * * * * * *
3521. Establishment of task force on feasibility of streamlining
information collection requirements.
* * * * * * *
Sec. 3504. Authority and functions of Director
(a) * * *
* * * * * * *
(c) With respect to the collection of information and the
control of paperwork, the Director shall--
(1) * * *
* * * * * * *
(4) maximize the practical utility of and public
benefit from information collected by or for the
Federal Government; [and]
(5) establish and oversee standards and guidelines by
which agencies are to estimate the burden to comply
with a proposed collection of information[.];
(6) publish in the Federal Register on an annual
basis a list of the requirements applicable to small-
business concerns (within the meaning of section 3 of
the Small Business Act (15 U.S.C. 631 et seq.)) with
respect to collection of information by agencies,
organized by North American Industrial Classification
System code and industrial/sector description (as
published by the Office of Management and Budget), with
the first such publication occurring not later than one
year after the date of the enactment of the Small
Business Paperwork Reduction Act Amendments of 1998;
and
(7) make available on the Internet, not later than
one year after the date of the enactment of such Act,
the list of requirements described in paragraph (6).
* * * * * * *
Sec. 3506. Federal agency responsibilities
(a) * * *
* * * * * * *
(c) With respect to the collection of information and the
control of paperwork, each agency shall--
(1) * * *
(2)(A) * * *
(B) for any proposed collection of information
contained in a proposed rule (to be reviewed by the
Director under section 3507(d)), provide notice and
comment through the notice of proposed rulemaking for
the proposed rule and such notice shall have the same
purposes specified under subparagraph (A) (i) through
(iv); [and]
(3) certify (and provide a record supporting such
certification, including public comments received by
the agency) that each collection of information
submitted to the Director for review under section
3507--
(A) * * *
* * * * * * *
(J) to the maximum extent practicable, uses
information technology to reduce burden and
improve data quality, agency efficiency and
responsiveness to the public[.]; and
(4) in addition to the requirements of this Act
regarding the reduction of paperwork for small-business
concerns (within the meaning of section 3 of the Small
Business Act (15 U.S.C. 631 et seq.)), make efforts to
further reduce the paperwork burden for small-business
concerns with fewer than 25 employees.
* * * * * * *
(i)(1) In addition to the requirements described in
subsection (c), each agency shall, with respect to the
collection of information and the control of paperwork--
(A) establish one point of contact in the agency to
act as a liaison between the agency and small-business
concerns (within the meaning of section 3 of the Small
Business Act (15 U.S.C. 631 et seq.)); and
(B) in any case of a first-time violation by a small-
business concern of a requirement regarding collection
of information by the agency, provide that no civil
fine shall be imposed on the small-business concern
unless, based on the particular facts and circumstances
regarding the violation--
(i) the head of the agency determines that
the violation has caused actual serious harm to
the public;
(ii) the head of the agency determines that
failure to impose a civil fine would impede or
interfere with the detection of criminal
activity;
(iii) the violation is a violation of an
internal revenue law or a law concerning the
assessment or collection of any tax, debt,
revenue, or receipt;
(iv) the violation is not corrected on or
before the date that is six months after the
date of receipt by the small-business concern
of notification of the violation in writing
from the agency; or
(v) except as provided in paragraph (2), the
head of the agency determines that the
violation presents an imminent and substantial
danger to the public health or safety.
(2)(A) In any case in which the head of an agency determines
that a first-time violation by a small-business concern of a
requirement regarding the collection of information presents an
imminent and substantial danger to the public health or safety,
the head of the agency may, notwithstanding paragraph
(1)(B)(v), determine that a civil fine should not be imposed on
the small-business concern if the violation is corrected within
24 hours of receipt of notice in writing by the small-business
concern of the violation.
(B) In determining whether to provide a small-business
concern with 24 hours to correct a violation under subparagraph
(A), the head of the agency shall take into account all of the
facts and circumstances regarding the violation, including--
(i) the nature and seriousness of the violation,
including whether the violation is technical or
inadvertent or involves willful or criminal conduct;
(ii) whether the small-business concern has made a
good faith effort to comply with applicable laws, and
to remedy the violation within the shortest practicable
period of time;
(iii) the previous compliance history of the small-
business concern, including whether the small-business
concern, its owner or owners, or its principal officers
have been subject to past enforcement actions; and
(iv) whether the small-business concern has obtained
a significant economic benefit from the violation.
(3) In any case in which the head of the agency imposes a
civil fine on a small-business concern for a first-time
violation of a requirement regarding collection of information
which the agency head has determined presents an imminent and
substantial danger to the public health or safety, and does not
provide the small-business concern with 24 hours to correct the
violation, the head of the agency shall notify Congress
regarding such determination not later than 60 days after the
date that the civil fine is imposed by the agency.
* * * * * * *
Sec. 3521. Establishment of task force on feasibility of streamlining
information collection requirements
(a) There is hereby established a task force to study the
feasibility of streamlining requirements with respect to small-
business concerns regarding collection of information (in this
section referred to as the ``task force'').
(b) The members of the task force shall be appointed by the
Director, and shall include the following:
(1) At least two representatives of the Department of
Labor, including one representative of the Bureau of
Labor Statistics and one representative of the
Occupational Safety and Health Administration.
(2) At least one representative of the Environmental
Protection Agency.
(3) At least one representative of the Department of
Transportation.
(4) At least one representative of the Office of
Advocacy of the Small Business Administration.
(5) At least one representative of each of two
agencies other than the Department of Labor, the
Environmental Protection Agency, the Department of
Transportation, and the Small Business Administration.
(c) The task force shall examine the feasibility of requiring
each agency to consolidate requirements regarding collections
of information with respect to small-business concerns, in
order that each small-business concern may submit all
information required by the agency--
(1) to one point of contact in the agency;
(2) in a single format, or using a single electronic
reporting system, with respect to the agency; and
(3) on the same date.
(d) Not later than one year after the date of the enactment
of the Small Business Paperwork Reduction Act Amendments of
1998, the task force shall submit a report of its findings
under subsection (c) to the chairmen and ranking minority
members of the Committee on Government Reform and Oversight and
the Committee on Small Business of the House of
Representatives, and the Committee on Governmental Affairs and
the Committee on Small Business of the Senate.
(e) As used in this section, the term ``small-business
concern'' has the meaning given that term under section 3 of
the Small Business Act (15 U.S.C. 631 et seq.).
X. Committee Recommendation
On March 19, 1998, a quorum being present, the Committee on
Government Reform and Oversight ordered the bill, as amended,
favorably reported.
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT--105TH CONGRESS ROLLCALL
Date: March 19, 1998.
Amendment No. 1.
Description: Amendment to the Amendment in the Nature of a
Substitute to H.R. 3310, Page 4, after line 8, insert the
following: (c) Additional Reduction of Paperwork for Certain
Small Business.--Section 3506 (c) of title 5, United States
Code, is amended--
Offered by: Hon. Bernard Sanders (VT).
Adopted by Voice Vote.
Date: March 19, 1998.
Amendment No. 2.
Description: Substitute Amendment to the Amendment Offered
by Mr. Kucinich, Page 3, strike line 1 and all that follows
through page 4, line 8, and insert the following:
----------------------------------------------------------------------------------------------------------------
Name Aye Nay Present Name Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Burton..................... X Mr. Waxman....... X
Mr. Gilman..................... Mr. Lantos.......
Mr. Hastert.................... X Mr. Wise.........
Mrs. Morella................... Mr. Owens........ X
Mr. Shays...................... Mr. Towns........
Mr. Schiff..................... Mr. Kanjorski.... X
Mr. Cox........................ X Mr. Condit.......
Ms. Ros-Lehtinen............... Mr. Sanders...... X
Mr. McHugh..................... X Mrs. Maloney..... X
Mr. Horn....................... X Mr. Barrett...... X
Mr. Mica....................... X Ms. Norton....... X
Mr. Davis (VA)................. X Mr. Fattah....... X
Mr. McIntosh................... X Mr. Cummings..... X
Mr. Souder..................... X Mr. Kucinich..... X
Mr. Scarborough................ X Mr. Blagojevich.. X
Mr. Shadegg.................... X Mr. Davis (IL)... X
Mr. LaTourette................. X Mr. Tierney...... X
Mr. Sanford.................... X Mr. Turner....... X
Mr. Sununu..................... Mr. Allen........ X
Mr. Sessions................... X Mr. Ford......... X
Mr. Pappas..................... X
Mr. Snowbarger................. X
Mr. Barr....................... X
Mr. Miller..................... X
----------------------------------------------------------------------------------------------------------------
Offered by: Hon. David M. McIntosh (IN).
Adopted by Recorded Vote: 19 Ayes; 15 Nays.
Date: March 19, 1998.
Amendment No. 3.
Description: Amendment to the Amendment in the Nature of a
Substitute to H.R. 3310, as amended, Page 3, strike line 1 and
all that follows through page 4, line 6, and insert the
following:
Offered by: Hon. Dennis J. Kucinich (OH).
Adopted by Agreement.
Date: March 19, 1998.
Amendment No. 4.
Description: Amendment in the Nature of a Substitute to
H.R. 3310, as amended.
Offered by: Hon. David M. McIntosh (IN).
Adopted by Agreement.
Date: March 19, 1998.
Motion to favorably report H.R. 3310, as amended.
Offered by: Hon. David M. McIntosh (IN).
Adopted by Voice Vote.
XI. Congressional Accountability Act; Public Law 104-1
H.R. 3310, as amended by the Committee, amends the
Paperwork Reduction Act to reduce the burden of Federal
paperwork on small businesses by requiring the publication of a
list of all the Federal paperwork requirements on small
businesses; requiring each Federal agency to establish one
point of contact for small businesses on paperwork issues;
requiring the agencies to allow small businesses to correct
first-time paperwork violations before civil fines are
assessed, except when doing so would harm or threaten public
health and safety, impede criminal detection, or involve an
internal revenue law; requiring the agencies to address the
paperwork burden on businesses with fewer than 25 employees;
and forming a task force of agency representatives to study the
feasibility of streamlining Federal reporting requirements on
small businesses. The original Act does not apply to the House
of Representatives or to the Senate, thus H.R. 3310 does not
apply to the Congress.
XII. Unfunded Mandates Reform Act; Public Law 104-4, Section 423
The Committee finds that the legislation does not impose
any Federal mandates within the meaning of section 423 of the
Unfunded Mandates Reform Act (P.L. 104-4).
XIII. Appendix
House of Representatives,
Committee on Small Business,
Washington, DC, March 20, 1998.
Hon. Dan Burton,
Chairman, Committee on Government Reform and Oversight, Rayburn House
Office Building, Washington, DC.
Dear Mr. Chairman: This letter responds to your request
that the Committee on Small Business waive its jurisdiction
over H.R. 3310, the Small Business Paperwork Reduction Act
Amendments of 1998, as introduced on March 3, 1998. After
reviewing this legislation and the detailed legislative history
created by your Committee, I have agreed to waive the
jurisdiction of the Committee on Small Business over this
legislation.
H.R. 3310 would provide small businesses with much-needed
relief from government paperwork. Specifically, the bill would:
(1) put on the Internet a list of all Federal paperwork
requirements for small businesses, organized by industry; (2)
offer small businesses compliance assistance instead of fines
on first-time paperwork violations, except in cases of actual
harm or an imminent threat to public health and safety; (3)
establish a Paperwork Czar at each agency who is the contact
point for small businesses on paperwork requirements; and (4)
establish a task force, including representatives from the
major regulatory agencies, to study how to streamline reporting
requirements for small businesses. These are all common sense
approaches to help small business and I applaud your
Committee's prompt action on this important measure.
As you know, House Rule X, Establishment and Jurisdiction
of Standing Committees, grants the Committee on Small Business
with jurisdiction over ``Federal paperwork reduction.'' Our
waiver of jurisdiction over H.R. 3310 is not designed to limit
our jurisdiction over any future consideration of Federal
paperwork reduction legislation.
Thank you and your staff for your dedication and hard work
on this issue. I look forward to working with you on this and
other issues throughout the 105th Congress.
Sincerely,
James M. Talent, Chairman.
DISSENTING VIEWS
The business community often complains about the burden of
government regulations and the resulting paperwork. In response
to this criticism, the Administration has streamlined
regulations by reinventing government and implementing many of
the recommendations made by the White House Conference on Small
Business. Similarly, Congress has passed paperwork reduction
legislation such as the Paperwork Reduction Act (PRA) and the
Small Business Regulatory Enforcement Fairness Act (SBREFA). We
fully support efforts to reduce paperwork on small businesses
which do not jeopardize important public protections.
There are a number of provisions in H.R. 3310 that address
streamlining paperwork requirements on small businesses. They
require agencies to annually publish paperwork requirements on
small businesses, to establish a small business liaison, and to
establish a task force to study the feasibility of streamlining
paperwork requirements. However, we oppose the provisions in
H.R. 3310 that prohibit the assessment of civil penalties for
most first-time violations of information collection that are
rectified within a given period of time.
At the March 17, 1998, hearing of the Subcommittee on
National Economic Growth, Natural Resources, and Regulatory
Affairs, agency witnesses from the Departments of Justice,
Transportation, and Labor, and the Securities and Exchange
Commission testified about the unintended yet serious negative
consequences of these provisions. They explained that section
223 of the Small Business Regulatory Enforcement Fairness Act
(SBREFA), which became law two years ago, specifically provides
relief by directing that federal agencies establish policies
for the reduction or waiver of civil penalties for small
business violations under appropriate circumstances. Under this
law, agencies may provide relief for a variety of reasons
including good-faith violations, violations that are corrected
within a reasonable period, and violations that do not pose a
substantial threat to public health, safety, or the
environment. These policies were to be put in place by March
29, 1997, and the agencies should report to Congress on the
effect of those policies by March 29, 1998. The witnesses
explained that the agencies' SBREFA policies already provide
relief for most first-time violations.
However, the civil penalty provisions in H.R. 3310 go far
beyond SBREFA because, in most instances, they remove agency
discretion from the process and require agencies to prove facts
which are extremely difficult to prove before they can take
steps to protect the public. Therefore, the bill is opposed by
the Administration and many labor, environmental, and consumer
groups.
a. concerns about civil penalty provisions in h.r. 3310
1. H.R. 3310 would have wide-ranging and substantive negative effects
H.R. 3310 prohibits the federal government from assessing
civil penalties for most first-time violations of ``information
collection'' requirements. Although the term ``information
collection'' sounds like it is referring to only technical
reporting violations, it also includes the distribution of
information to third parties and the public. For instance, it
includes warning the public about the dangers of a product or
prescription drug, warning employees about how to handle
hazardous material, and adequately disclosing facts to an
investor about a company's financial status.
At the March 17, 1998, hearing, Mr. Joseph N. Onek,
Principal Deputy Associate Attorney General for the Department
of Justice testified, ``this provision could interfere with the
war on drugs, hinder efforts to control illegal immigration,
undermine food safety protections, hamper programs to protect
children and pregnant mothers from lead poisoning, and undercut
controls on fraud against consumers and the United States.''
2. H.R. 3310 would hamper law enforcement
H.R. 3310 also weakens the incentive to comply with the
law. Mr. Onek testified that ``Civil penalties deter unlawful
behavior and stop people who break the law from gaining an
unfair competitive advantage over the majority of businesses
that work hard to do the right thing and comply with the law.
But under this bill, unscrupulous businesses would know that
they could not be penalized until caught once, and then caught
again. Such automatic probation for first time offenders would
give bad actors little reason to comply until caught. And that
would work to the economic detriment of those hardworking small
business owners who work hard to comply with the law.''
Mr. Onek further explained that H.R. 3310 would hamper the
enforcement of substantive laws, not just information
collection requirements. He testified that ``In our experience,
companies that fail to comply with record keeping and reporting
requirements are often found to be violating other legal
requirements as well. Any delay in investigating or taking
action against such companies would simply allow the company
more time to reap the benefits of unlawful conduct and a
greater opportunity to coverup and conceal evidence of
wrongdoing.''
3. Exceptions in H.R. 3310 would not adequately protect the public
In most instances, an agency is prohibited from assessing a
civil fine under H.R. 3310 unless the agency:
(1) proves the violation caused actual serious harm
to the public;
(2)(a) proves the violation poses an imminent and
substantial danger to the public health and safety and
(b) informs Congress of its decision to fine within 60
days of its imposition; or
(3) proves that the failure to fine would impede the
detection of criminal activity.
Because this burden of proof is so high, these exceptions do
not adequately protect the public.
It is difficult to prove that a failure to report a
problem--rather than the underlying dangerous condition--
actually caused or posed harm. Mr. Onek explained, ``Our
concerns are not solved by the bill's language allowing an
agency to impose civil penalties where the agency head
determines that the violation causes `actual, serious harm' to
public health or safety. * * * [Actual serious harm] may be
difficult to discover, because agencies often rely on the very
information that might not be reported under this bill to
determine the nature, severity, and even existence of harm.
Also, reporting and recordkeeping obligations often provide the
information needed to prevent harm but violations of these
requirements may not appear to cause harm directly.''
Mr. Onek added, ``The `imminent and substantial danger'
standard in this bill also would be a much higher and more
difficult standard to prove than the analogous standards that
Congress has determined are appropriate to protect the public
under many other statutes. * * * Furthermore, without reporting
requirements, the government cannot identify potential
underlying problems before they cause harm.''
The third exception provides a negligible benefit. It would
be almost impossible to prove that the failure to fine would
impede criminal enforcement. It is the information collection
violation--not the resulting fine--that impedes law
enforcement.
Mr. Onek summed it up well when he testified ``The bill
essentially shifts the burden of disclosing health, safety, or
environmental risks from those in the best postion to learn of
actual or potential defects or risks to already overburdened
regulatory agencies.''
4. H.R. 3310 would create a safe haven for willful and longstanding
violations
The safe haven for first-time violations would not be
limited to inadvertent violations. Small businesses who
willfully refuse to file can also take advantage of it.
Moreover, although the bill does not prohibit the assessment of
criminal penalties, agencies often choose to assess civil fines
for criminal activity because civil violations are easier to
prove or because they may want to be lenient with first-time
violators. However, H.R. 3310 would close off this option.
5. H.R. 3310 would create an incentive to remain ignorant of the law
Mr. Onek also noted that, ``Providing a waiver of civil
penalties for first-time violations also will reduce incentives
for small businesses to become familiar with their legal
obligations.''
6. H.R. 3310 could increase the burden on small businesses
Mr. Onek also testified that ``Simply put, the penalty
waiver provision does not reduce reporting and recordkeeping
burdens at all--except for those who violate the law. This
result would put law abiding businesses at an unfair
competitive disadvantage and could endanger the public.''
Mr. Onek also explained that it could actually increase the
burdens on small businesses. He explained that ``If businesses
did not keep and report information important to law
enforcement and public health and safety, the government would
have to either make decisions without critical information or
make much more frequent and intrusive inspections. Both
alternatives are undesirable.''
B. Kucinich-Tierney Amendment Addressed Concerns
Unfortunately, the Committee did not adopt the provisions
in an amendment offered by Rep. Kucinich and Rep. Tierney. The
Kucinich-Tierney amendment addressed the concerns described
above by (1) retaining agency discretion in the civil penalty
process and (2) removing provisions that set a high burden of
proof on the agencies. Yet it would have provided appropriate
relief for first-time violations. It specifically provided that
agencies establish policies to reduce or waive civil penalties
for first-time violations in appropriate circumstances. The
policy would have taken into account the nature and seriousness
of the violation, good faith efforts to comply and remedy
violations, previous compliance history, financial benefit from
the violation, and other factors considered relevant by the
head of the agency. When considering the nature and seriousness
of the violation, the agency would have taken into account
whether the violation was technical or inadvertent, willful or
criminal, or threatens or caused harm to health and safety;
consumer, investor, worker, or pension protections; or the
environment. This amendment would have dovetailed the penalty
relief policies required under SBREFA, yet would have gone a
step farther by expressly providing relief for first-time
violators.
C. Examples of Potential Problems Because Kucinich-Tierney Amendment
Not Adopted
1. Drug enforcement
Paper trails are an important tool for catching drug
dealers and other criminals. Financial institutions must report
cash transactions exceeding $10,000 because it helps the
government identify criminal activity. Furthermore, the Drug
Enforcement Agency (DEA) requires pharmaceutical companies to
verify the legitimacy of controlled substance sales to ensure
that inventories are not improperly diverted. These reports are
jeopardized by H.R. 3310 because, in most circumstances, it
would prohibit civil fines for first-time violations that are
corrected within 6 months of notification.
2. Market integrity/pension funds
The Securities and Exchange Commission (SEC) regulates
brokers, investment advisors, and other small entities that are
entrusted with handling huge sums of money, pension funds, etc.
Paperwork requirements create audit trails and ensure proper
calculation and verification of capital requirements, proper
segregation of funds, and accurate and full disclosure to
clients. The integrity of the market depends on accurate and
timely reporting by all participating firms. Without this
paperwork, it is difficult for the SEC to protect clients,
investors, pensioners, and others from fraudulent or otherwise
inappropriate behavior. Because of the high burden of proof,
violators likely would have six months to correct their records
which, in tern, would make it more difficult to provide serious
misconduct.
3. Illegal immigration
In order to discourage illegal immigration, the Immigration
and Naturalization Service (INS) requires employers to document
that newly hired employees are eligible for work. Under H.R.
3310 employers who failed to file these reports would not be
subject to penalties. Thus, immigration enforcement would be in
jeopardy.
4. Highway safety
The Department of Transportation (DOT) requires
transporters to file evidence of drug-testing, shipping papers
showing the transportation of hazardous materials, accident
reports, and flight data recorders. H.R. 3310 would weaken the
incentive to file these important reports.
5. Consumer protections
The Consumer Product Safety Commission (CPSC) and the Food
and Drug Administration (FDA) requires manufactures to report
adverse effects of new products. This provides the information
the need to investigate whether or not there is a family
product or drug that should be removed from the marketplace
before they cause more harm. H.R. 3310 put this information
requirement--and others like it--in jeopardy.
6. Employee protections
The Occupational Safety and Health Administration (OSHA)
requires employers to report workplace accidents within a short
period of time. If this report is delayed, OSHA may not be able
to investigate whether there is a problem in time to prevent
another similar accident. Moreover, if an employer fails to
provide the proper warnings to employees on how to handle
hazardous materials, it could be difficult for an agency to
prove ``actual serious harm'' or ``an imminent and substantial
danger.'' For instance, it is difficult to establish how much
exposure to a toxic chemical, if any, can be attributed to the
failure to instruct employees. Similarly, under the Clean Air
Act, advance notice must be given to workers and the public
prior to demolition or renovation of an asbestos-containing
building. H.R. 3310 weakens the incentive to diligently comply
with these important worker protections. As the OSHA witness
explained, employees have died, in part, because they were not
adequately warned of dangers.
8. Tenant warnings on lead hazards
A landlord must provide warnings to tenants who may have
had lead hazards in the home. Without this warning, adults
might not take the precautions necessary to prevent lead
poisoning in their children. It would be hard for an agency to
prove that the failure to distribute the lead hazard pamphlet
actually caused the resulting harm or posed the threat of harm.
Furthermore, without the threat of fines, landlords might not
take their obligation to warn as seriously. Again, H.R. 3310
jeopardizes this safety protection.
Henry A. Waxman.
Tom Lantos.
Major R. Owens.
Edolphus Towns.
Paul E. Kanjorski.
Bernard Sanders.
Carolyn Maloney.
Tom Barrett.
Eleanor H. Norton.
Elijah E. Cummings.
Dennis J. Kucinich.
Rod R. Blagojevich.
Danny K. Davis.
John F. Tierney.
Thomas Allen.
Harold E. Ford, Jr.,
