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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.,