[Senate Hearing 106-347]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 106-347


 
   H.R. 391 AND S. 1378--THE SMALL BUSINESS PAPERWORK REDUCTION ACT 
                           AMENDMENTS OF 1999

=======================================================================


                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 19, 1999

                               __________


                          H.R. 391 and S. 1378

TO AMEND CHAPTER 35 OF TITLE 44, UNITED STATES CODE, FOR THE PURPOSE OF 
   FACILITATING COMPLIANCE BY SMALL BUSINESSES WITH CERTAIN FEDERAL 
   PAPERWORK REQUIREMENTS, TO ESTABLISH A TASK FORCE TO EXAMINE THE 
FEASIBILITY OF STREAMLINING PAPERWORK REQUIREMENTS APPLICABLE TO SMALL 
                   BUSINESSES, AND FOR OTHER PURPOSES

      Printed for the use of the Committee on Governmental Affairs


                                


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 61-664 cc                   WASHINGTON : 2000
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                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware       JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio            RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico         ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi            MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania          JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire
             Hannah S. Sistare, Staff Director and Counsel
                      Paul R. Noe, Senior Counsel
                         David E. Gray, Counsel
     Kathleen G. Braun, Professional Staff Member, Subcommittee on
Oversight of Government Management, Restructuring, and the District of 
                                Columbia
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                  Lawrence B. Novey, Minority Counsel
           Darla M. Silva, Minority Counsel, Subcommittee on
Oversight of Government Management, Restructuring, and the District of 
                                Columbia
                 Darla D. Cassell, Administrative Clerk



                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Voinovich............................................     1

                               WITNESSES
                       Tuesday, October 19, 1999

Hon. Blanche Lincoln, a U.S. Senator from the State of Arkansas..     4
Jere W. Glover, Chief Counsel for Advocacy, U.S. Small Business 
  Administration.................................................     8
John T. Spotila, Administrator, Office of Information and 
  Regulatory Affairs, Office of Management and Budget............    10
Eleanor D. Acheson, Assistant Attorney General, Office of Policy 
  Development, Department of Justice.............................    13
Robert Smith, President, Spero-Smith Investment Advisers, Inc., 
  on behalf of National Small Business United....................    19
Jack Gold, President, Center Industrial, on behalf of the 
  National Federation of Independent Business....................    22
Gary E. Warren, Deputy Chief, Baltimore County Fire Department, 
  on behalf of the International Association of Fire Chiefs......    24

                     Alphabetical List of Witnesses

Acheson, Eleanor D.:
    Testimony....................................................    13
    Prepared statement...........................................    68
Glover, Jere W.:
    Testimony....................................................     8
    Prepared statement with an attachment........................    49
Gold, Jack:
    Testimony....................................................    22
    Prepared statement...........................................    94
Lincoln, Hon. Blanche:
    Testimony....................................................     4
Smith, Robert:
    Testimony....................................................    19
    Prepared statement...........................................    86
Spotila, John T.:
    Testimony....................................................    10
    Prepared statement...........................................    61
Warren, Gary E.:
    Testimony....................................................    24
    Prepared statement...........................................    99

                                Appendix

Copies of H.R. 391 and S. 1378...................................    31
Responses to Questions from Senator Voinovich for Jere W. Glover.   102
Responses to Questions from Senator Voinovich for John T. Spotila   104
Responses to Questions from Senator Voinovich for Eleanor D. 
  Acheson with attachments.......................................   109
American Farm Bureau Federation, prepared statement..............   150
Associated Builders and Constractors, prepared statement.........   152
U.S. Department of Labor, prepared statement.....................   153
U.S. Environmental Protection Agency, prepared statement.........   157
American Federation of State, County and Municipal Employees, 
  AFL-CIO, prepared statement....................................   160
OMB Watch, prepared statement....................................   162
Citizens for Sensible Safeguards, prepared statement.............   164
U.S. Department of Transportation, prepared statement............   165
State of New York, Office of the Attorney General, prepared 
  statement......................................................   167



   H.R. 391 AND S. 1378--THE SMALL BUSINESS PAPERWORK REDUCTION ACT 
                           AMENDMENTS OF 1999

                              ----------                              


                       TUESDAY, OCTOBER 19, 1999

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:38 a.m., in 
room SD-628, Dirksen Senate Office Building, Hon. George V. 
Voinovich presiding.
    Present: Senator Voinovich.

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich. The Committee will please come to order.
    First of all, I would like to welcome today's witnesses, 
including my friend and colleague, Senator Blanche Lincoln, and 
my fellow Ohioan, Robert Smith of Beachwood, Ohio, who is 
President of Spero-Smith Investment Advisers in Beachwood and 
who is also associated with National Small Business United.
    Today, we will be hearing from witnesses regarding H.R. 391 
and S. 1378, which are companion bills to one another and are 
both entitled the Small Business Paperwork Reduction Act 
Amendments, importantly, amendments. S. 1378 is a bill that 
Senator Lincoln and I introduced this past July, while H.R. 391 
is legislation that has passed the House already by a vote of 
274 to 151.
    The main thrust of these bills is to give small business 
the ability to correct first-time paperwork violations that do 
not cause physical harm, affect internal revenue laws, and I 
want to underscore, or threaten public health or safety if the 
violation is corrected in a reasonable time.
    In addition, the legislation would establish a multi-agency 
task force appointed by OMB to study how to streamline 
reporting requirements for small business, establish a point of 
contact at each Federal agency that small business could 
contact regarding paperwork requirements, require an annual 
comprehensive list of all paperwork requirements for small 
business to be placed in the Federal Register and on the 
Internet, and last, require additional paperwork reductions for 
small businesses with fewer than 25 employees.
    Today, there are 23 million small businesses in the United 
States employing 53 percent of our Nation's private workforce. 
Small businesses are the mainstay of American society, and 
their payroll contributions and their tax base constitute the 
economic heart and the backbone of our competitiveness in the 
global marketplace. People forget that it is the little 
businesses that grow into the big businesses and we need to 
continue to have more of them and to see them succeed.
    Despite the contributions small businesses make, the 
Federal Government too often unfairly burdens them by burying 
them in paper, and I would like to say that it may not 
necessarily be just the ``Federal Government,'' including 
Congress. Small business owners spend $229 billion per year on 
compliance costs and some 6.7 billion hours are used annually 
to fill out all Federal paperwork requirements in order to 
comply with numerous government programs, guidelines, and 
policies. They just keep stacking up.
    I will never forget when I started practicing law and I had 
some people and they wanted to go into business, and I started 
explaining all of the things they would need to do, and this 
was back a long time ago, 35, 40 years, and they said, well, I 
am going to have to hire you, and I said, yes, you are. You are 
also going to have to hire an accountant and you are also going 
to have to have a bookkeeper, and a lot of them just shook 
their heads, got up, and walked out. That was enough of that.
    According to the National Federation of Independent 
Business, small business owners are subjected to 63 percent of 
the Nation's regulatory burden, and the paperwork regulations 
they are subjected to cost more than $2,000 per employee, which 
I think is just incredible.
    I am convinced that relieving the paperwork burden on the 
small business owners in our Nation is going to help increase 
productivity, save money, create more jobs, and make them more 
competitive in that global marketplace.
    That is another thing we forget about, all these rules, 
regulations, and so forth, and a lot of them are absolutely 
necessary and some of them are questionable, but all of that 
adds to the cost of doing business. In the old days when we 
were just doing business in this country, that is one thing. 
But today, we are now in that international marketplace and I 
think every time we do anything, we ought to evaluate what 
impact will this decision have on the competitiveness of 
America's businesses in that global marketplace.
    In 1996, the Paperwork Reduction Act was supposed to reduce 
the amount of paper by 10 percent. Instead, it was only a 2.6 
percent reduction. In 1997, the act was supposed to provide 
another 10 percent reduction in the amount of paper. Instead, 
there was a 2.3 percent increase in paperwork. In 1998, the act 
was supposed to provide another 5 percent reduction in the 
amount of paper. Instead, there was another 1 percent increase. 
I know that is not easy. I know when I was governor, I said we 
were going to reduce unnecessary regulations, and it is easy to 
say, but it is a lot more difficult to implement.
    In most instances, it is the business owner himself who, 
along with running the day-to-day operation of the business, is 
also responsible for filling out the paperwork and keeping 
track of the government's constantly changing requirements. 
Small business owners want to comply.
    It was very interesting. We had a hearing last week with 
the Internal Revenue Service where we were talking about 
quality management. Congress passes changes in the IRS code and 
we make them effective immediately. What we forget about is 
that it takes a while for the agency to even understand what 
they are and then train people to respond to customers' 
questions that are coming in. Somehow, we just forget about the 
fact that the people in those agencies are the ones that have 
to do the work, become familiar with things, and are able to 
handle it.
    It is the same thing in business today. If you are a small 
business owner and these things come in and you are trying to 
keep track of everything that is going on, it takes a while for 
you to get a handle on what it is that you are being required 
to do.
    To show how onerous first-time paperwork violations can be, 
the National Federation of Independent Businesses reports that 
an agriculture supply store owner from Oklahoma had decided to 
switch over the storage of chemicals for the fertilize he sold 
from 2.5-gallon containers to bulk containers. In other words, 
before that, he had them in 2.5-gallon containers. No, I am 
going to go to bulk.
    His bulk storage approach also brought additional 
regulations, which he acknowledged and complied with. But in 
his second year of using the bulk containers, he did not know 
he had to submit the Pesticide Production Report required by 
the EPA. He was fined the maximum of $5,500, which the EPA 
insisted on even after he submitted the paperwork. A settlement 
agreement was eventually reached that called for a fine of 
$3,300 and legal fees of $1,600, nearly the entire original 
amount.
    That is the other thing that people forget about. It is 
easy enough to say, well, I have got to deal with the agency, 
but most of the time, when you start dealing with a Federal 
agency, you end up hiring a lawyer, and quite frankly, 
sometimes the lawyers' fees are as expensive as the fine that 
you might ultimately have to pay with the Federal agency.
    William Saas, President of Taskem, Inc., in Brooklyn 
Heights, Ohio, mentioned in a House hearing last year that the 
metal finishing industry studied a particular finishing 
operation--now, this is not the whole industry, this is a 
particular finishing operation--and discovered that there were 
over 160 environmental reports alone that had to be filed on 
one particular operation. Mr. Saas made a good point, saying, 
``Honestly, with 160 potential regulations, no one can really 
be sure that they have touched every base.''
    To sum it up, a friend of mine who owns a nursery recently 
said to me when I was out there, ``George, every morning when I 
open that door, I am afraid that I am violating some Federal 
regulation or paperwork requirement.'' That is a heck of a 
thing. Every day, he is going in there thinking, somebody is 
going to maybe do something wrong and I am going to be in the 
soup.
    The Small Business Paperwork Reduction Act, I think, will 
help a bit. It will give small business owners a 6-month grace 
period to correct first-time paperwork violations, again, that 
do not cause harm, affect internal revenue laws, or involve 
criminal activity. If a violation threatens public health or 
safety, each affected agency or jurisdiction would have the 
discretion to levy a fine as usual or provide a 24-hour window 
to correct the infraction. But I will say this so that 
everybody understands this. There are certain things that are 
going to be exempt, period, from this law, and that involves 
the IRS and those things that would cause harm or involve 
criminal activity.
    This legislation is also about giving decent, hard-working 
entrepreneurs as much assistance as possible in gaining access 
to information about what is required of them, decrease the 
amount of paper they are required to submit to the government, 
and more importantly, keep from having to pay penalties for 
simple, honest paperwork mistakes.
    In addition, I want to stress that this does not limit the 
ability of Federal agencies from going after business owners 
who are bad apples, owners whose negligence or recklessness are 
a threat to their employees, their customers, or the public.
    I will never forget, my first year as Governor of Ohio, we 
had a business in Lancaster, Ohio, that did not label--and 
Chief, you would be interested in this--the chemicals in that 
place, and he had just one violation after another. As a result 
of their failure to do their labeling, a fire fighter was 
killed and it was just a terrible situation. We nailed him. We 
went after him. I just want you to know that that kind of 
thing, that is not exempt under this legislation. It is not 
exempt under this legislation. If it is not specific enough for 
some of you, then we will work on it with you to make sure that 
we calm any fears that you may have.
    I look forward to the testimony of today's witnesses, but 
before I do that, we have a custom in this Committee of asking 
all the witnesses to stand, raise their hand, and to swear to 
the truthfulness of their testimony. So if you will do that, I 
will swear you in.
    Do you swear that the testimony that you are about to give 
is the truth, the whole truth, and nothing but the truth?
    Senator Lincoln. I do.
    Mr. Glover. I do.
    Mr. Spotila. I do.
    Ms. Acheson. I do.
    Mr. Smith. I do.
    Mr. Gold. I do.
    Mr. Warren. I do.
    Senator Voinovich. Let the record show that everyone 
answered in the affirmative.
    Our first witness this morning is Senator Blanche Lincoln. 
The two of us are freshmen. However, Senator Lincoln served 
with distinction in the House of Representatives before being 
elected to the Senate, although I think you took a couple years 
off to start a family. She has been just a breath of fresh air 
in the Senate and I have really enjoyed working with her and 
with her staff. Senator, we are so glad that you are here this 
morning and I appreciate the fact that you are cosponsoring 
this legislation, which I think is important to businesses in 
my State and your State and in this country.
    Senator Lincoln.

TESTIMONY OF THE HON. BLANCHE LINCOLN, A U.S. SENATOR FROM THE 
                       STATE OF ARKANSAS

    Senator Lincoln. Thank you, Mr. Chairman. I appreciate all 
of your leadership on this issue and have certainly enjoyed 
working with you and your staff on the Small Business Paperwork 
Reduction Act of 1999. I would like to compliment your staff. 
They have worked wonderfully with us and we appreciate that.
    Without a doubt, your experience as Governor of Ohio and 
certainly in the other levels of government that you have 
served previous to this, working with small businesses that are 
the lifeblood of most communities, has been enormously helpful 
in moving forward on the Paperwork Reduction Act. I think it is 
so essential for legislators and public servants here in 
Washington to have some of that first-hand experience, and I 
think you bring a really good perspective that is much needed. 
So I am delighted to be here with you as a cosponsor and to be 
working with you.
    Regulatory reform has been a priority of mine since I began 
my public service in the U.S. House of Representatives in 1993. 
When I served in the House, we figured out that it was 
important for the Federal Government to comply with the same 
regulations that we were applying to all of American 
businesses.
    A great example is here in the Dirksen building, where we 
are undergoing renovations to comply with safety standards. If 
you walk around, you realize that now in trying to comply with 
the regulations that we placed on businesses out in the 
countryside, we are having much difficulty within the Federal 
walls of government being able to comply. So we are beginning 
to, hopefully, recognize that when we impose rules and 
regulations on industry, it is important to walk in their shoes 
a time or two to realize exactly what we are doing.
    As many know, I come from a seventh generation farming 
family in Phillips County, Arkansas. My brother grows rice, 
cotton, soybeans, and wheat on the same land that our family 
has farmed for more than 60 years. So my interest in regulatory 
reform originated with the personal experience of me and my 
family with too much government intrusion. My father was always 
proud to both study and take the test for his compliance with 
pesticide application, but it was not usually the studying that 
troubled him. After having used pesticide application for 
almost 40 years, he knew the issues backwards and forwards. It 
was really the application with government, going through the 
paperwork to comply with being able to take those tests that 
annoyed him.
    Another example of intrusive government regulation is 
wetlands regulation, when you have only a quarter of an acre 
that needs to be leveled and yet you have four different 
agencies to work through who all go by different laws. It does 
not make a lot of sense.
    The farmers in my State are frustrated by having to file 
too many forms for too many government agencies. They cannot 
imagine why they need to provide the same information to 
several different offices within the Department of Agriculture. 
Since all of the agencies are part of the Federal Government, 
it seems they should share information rather than taking up 
folks' time filling out forms.
    So when I came to Congress 6 years ago, I joined other 
like-minded members who tried to relieve the regulatory burden 
on small businesses and local government by passing Reg Flex 
Act and the unfunded mandates legislation. The bill that we are 
discussing today is an important extension to the Paperwork 
Reduction Act that I supported in 1995, and I know that you can 
well understand what the unfunded mandates legislation meant to 
State and county and local governments. It was an important 
issue that we brought up when I was in the House and something 
we need to continue to focus on.
    I would like to highlight a few components of the Small 
Business Paperwork Reduction Act of 1999 that are particularly 
appealing to my constituents. First, it just makes sense to 
permit agencies to waive fines for the first time violations of 
paperwork requirements. You have mentioned that in your 
remarks.
    One small business owner who employs 85 people in 
Paragould, Arkansas, has complained that many Federal laws are 
difficult to understand. His quote was, ``You do not know that 
you are doing it wrong until they come after you.''
    Especially in rural areas, small business owners are the 
engines that fuel the local economy. The Federal Government 
should not dispassionately levy fines on people who are making 
a good-faith effort to obey the law. Rather than harassing 
small business owners, we should be eliminating burdensome 
regulations and making sure the laws that are necessary are 
easy to understand.
    That is why I support another provision in this bill that 
requires all Federal departments to have a single point of 
contact for small businesses. Until we can streamline our laws 
to make them crystal clear, we ought to at least provide a 
person at the other end of the telephone line to answer 
questions, and you have mentioned some of that, as well, making 
sure that there is someone there to converse with, communicate 
with, and at least give our constituents the common courtesy of 
giving them an idea of what they can expect.
    The gentleman I mentioned earlier also said, ``With all the 
regulations, I am not even sure why I am in business.'' He 
said, ``Small business owners have been fined for violating 
information gathering requirements that they did not even know 
existed.''
    That is why another provision in the bill, to require the 
OMB to publish annually all information gathering requirements 
for small business, makes sense. Think of how difficult it 
would be to start a new business. In addition to trying to 
lease space, hire new employees, purchase equipment, and secure 
financing, a potential small business owner must attempt to 
follow local, State, and Federal laws. That would be a lot 
easier if all the Federal paperwork requirements were listed in 
one place, would it not? We do not want to tie the hands of 
enterprising young business men and women in government red 
tape.
    Mr. Chairman, I could go on and on, sharing stories from 
constituents who complain about the information gathering 
requirements associated with well-meaning laws that I have 
supported. The owner of a small business that employs 75 people 
in Little Rock said that she has had to pay an outside firm $75 
per employee covered by COBRA just to comply with paperwork 
requirements. As she said, ``the best part is we just have a 
mere 14 days to facilitate all of this or face penalties, 
regardless of how busy we might be in trying to make a living. 
My business is highly seasonal and we get really busy in the 
spring trying to fulfill our State contract obligations, and 
you know, it really does become a hassle at trying to get all 
of this done within the 14-day requirement.''
    The bill we are discussing today will not solve all the 
frustrations of small business men and women, but it is an 
important first step. I thank you for your leadership on this 
issue and I encourage you to continue to look for ways that we 
might alleviate the paperwork requirements for small business 
owners.
    On a final note, I understand that the International 
Association of Fire Chiefs will testify today regarding some of 
the concerns about this legislation, and I noticed you 
mentioned that to the Chief. Senator Voinovich, you and I 
thought we had addressed the fire fighters' concerns which were 
raised when the House considered similar legislation and I 
would refer my colleagues to page S8640 of the July 15, 1999, 
Congressional Record, where Senator Voinovich and I engaged in 
a colloquy to clarify the legislative intent of this bill. As 
the Chairman has stated first-time violations of paperwork 
reduction would not qualify for a civil penalty waiver if human 
health and safety were endangered. We in no way want to make 
that an issue in this bill.
    I look forward to working with the fire fighters and any 
other groups that may have concerns about parts of this bill. I 
view all legislation, until it is signed into law, as a work in 
progress rather than a work of art. Collaborating with the fire 
fighters, nursing home groups, and the small business men and 
women from across the country, I am confident that we can forge 
this legislation into good law.
    Thank you, Mr. Chairman, for your leadership and for 
allowing me the time to be a part of this hearing.
    Senator Voinovich. Thank you, Senator Lincoln. I would 
underscore what you have to say in terms of working with the 
various organizations that are concerned about this legislation 
to make sure that it is something that everybody feels 
comfortable with. I have learned here in the Senate, very 
quickly, that the more you are able to do that, the better off 
you are. So I am hoping that we are going to be able to respond 
to some of the concerns that individuals have about this 
legislation, at the same time making sure that we move forward 
with it.
    I do really think, as you do, how important it is, and I am 
glad that you brought up some personal experiences in your 
family and also other examples, because so often when we talk 
about some of this, it is just paperwork and we do not think of 
human beings that have to go through the process of complying 
with it. I think that most people want to do the right thing 
and are conscientious. What we are trying to do is to work with 
those individuals so that they comply with the law and at the 
same time not put them in a position where they are 
jeopardizing their business because of some innocent first-time 
failure to file a piece of paper.
    So thanks very much for being here today.
    Senator Lincoln. Thank you, Mr. Chairman, and I think if 
there is anything we want to accomplish, it is to interject 
common sense into government. I think you and I have really 
worked hard at doing that in this bill and we look forward to 
working with others that will be testifying here today.
    Senator Voinovich. Thank you.
    Senator Lincoln. Thank you.
    Senator Voinovich. On our second panel this morning, we 
have Jere Glover, who is the Chief Counsel for Advocacy at the 
Small Business Administration; the Hon. John Spotila, 
Administrator of the Office of Information and Regulatory 
Affairs at OMB, who came on, in July, was it?
    Mr. Spotila. Yes.
    Senator Voinovich. And we have Eleanor Acheson, who is the 
Assistant Attorney General for the Office of Policy Development 
at the Department of Justice.
    We thank you very much for being here today and we look 
forward to your testimony. I will first call on Mr. Glover for 
his testimony this morning. I would like to remind the 
witnesses that we would appreciate your keeping your remarks as 
close to 5 minutes as possible, that the written testimony that 
you submitted will become a part of the record, that we in this 
Committee leave open the record for at least a week, so if 
there is some other information that you would like to add, we 
would welcome it, and also give you an opportunity to respond 
to questions that may arise during this hearing so that you can 
let us know your point of view.
    Mr. Glover.

  TESTIMONY OF JERE W. GLOVER,\1\ CHIEF COUNSEL FOR ADVOCACY, 
               U.S. SMALL BUSINESS ADMINISTRATION

    Mr. Glover. Mr. Chairman, it is a privilege to be here. 
Paperwork reduction is sort of like the old saying about the 
weather. Everybody talks about it, but nobody ever really does 
anything about it. I am very pleased that the Committee has 
focused on this and I think that the legislation you have 
introduced goes in the right direction to making sure that we 
do, in fact, actually do something about it.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Glover with an attachment appears 
in the Appendix on page 49.
---------------------------------------------------------------------------
    You mentioned one of your constituents who said that every 
morning he goes to work with fear that some government official 
is going to point out some rule or regulation. That is an all 
too common occurrence in the small business community. The 
amount of government regulations and paperwork is so much that 
most small businesses recognize that there is probably 
something they are not in compliance with. This bill goes a 
long way to addressing that fear, and it really does draw 
heavily on small business people because they are worried that 
their businesses and their life savings may be lost because of 
something they have done that they did not know that was even a 
violation.
    The White House Conference on Small Business recommendation 
on paperwork, I think, was very interesting when the delegates 
came together in 1995, and I will just summarize that quickly. 
It is to simplify langauge and forms, sunset and reevaluate all 
reporting every 5 years, with a goal of reducing paperwork by 
at least 5 percent in each of the next 5 years, and eliminate 
duplicative regulations and reporting, and assemble information 
through a single source. It is kind of like you had their 
recommendation in mind when you drafted your legislation.
    The Office of Advocacy did a study in 1994 and 1995 which 
pointed out that there were $700 billion. It has been widely 
reported, and you mentioned it in your opening statement. Over 
$2 billion of this, almost $2.4 billion, actually, comes from 
the process regulations or paperwork regulations. That is a 
tremendous amount of information.
    Small business is very heavily impacted, because numerous 
studies that we have conducted indicate that the burden on 
small business is 50 percent more than it is on larger firms in 
filling out the same kind of regulatory compliance. So small 
business is often much more heavily burdened by the regulations 
than others.
    Let me give you an example of a regulation that we have 
dealt with within the government process. The Office of 
Advocacy is charged with representing the views of small 
business before Congress and before the Federal agencies, so we 
often appear, and often when small businesses tell us about a 
concern.
    We got a call from a small business person who I had met 
during the White House Conference process and he said, ``Jere, 
I have to fill out paperwork on every one of my locations every 
year and it drives me up the wall because it is the worst 
possible kind of regulation, that has no purpose and no 
function.'' He was a service station dealer, and every year he 
has to file with the Environmental Protection Agency forms that 
indicate he has gasoline on his premises. Now, he assured me 
that everybody in his community knew that and that on those 
rare days when he did not have gasoline, he put a sign out 
front that said, ``no gas today.''
    I said, boy, the Paperwork Reduction Act has just passed. 
This is a great opportunity. I am going to contact EPA and say, 
hey, this is a slam-dunk. There is no reason you need to have 
these forms filed. Well, we met with the folks at EPA in charge 
of this and they said, ``Well, Jere, the fire departments, the 
fire chiefs rely on this information. This is critical 
information that they have to know.'' And I said, ``I will tell 
you what. You call five and I will call five, because I do not 
believe that is how they find out that service stations have 
gasoline on their premises.''
    Well, I called five fire chiefs and they did not even know 
that EPA had that information, but they assured me that under 
no circumstances, if they got a call to go to a service 
station, would they go look at EPA's information. They fully 
were aware that there was gasoline there.
    EPA then agreed to remove that regulation, and they went a 
step further. They said, ``You know, not only that, Jere, there 
are some other regulations that we are requiring people to 
report. There is rock salt. There is sand. There is gravel. 
These are things that are sort of fungible commodities. They 
are not real problems. We are going to eliminate those at the 
same time.''
    Well, after 2\1/2\ years, the gasoline reports are no 
longer required, but it took 2\1/2\ years of personal 
involvement of us to get those eliminated. Unfortunately, the 
rock salt, sand, and gravel regulations are still hung up, and 
one of the reasons is that the State Governments get revenues 
for every form that is filed and they have objected to removing 
that because it will reduce the amount of paperwork.
    I use this example to show how hard it is to change the 
regulatory and paperwork burdens on businesses, and without 
some serious legislation directly focused, as yours is. There 
are a number of things in this particular legislation that I 
think make a lot of sense--the compilation of small business 
paperwork burden, a single point of contact, a single filing. 
In this day and age with the Internet technology that is out 
there, there is no reason small businesses cannot file one form 
and all the rest of the government look at that and you would 
not ask any of the same information a second time. I have had 
conversations with John Spotila and we are working on a project 
to make that sort of thing happen.
    So there is promise. There is hope. But that does not mean 
we do not need legislation to make sure we do not backslide and 
that we move forward as quickly as possible.
    The paperwork burden on small business has not gone down, 
despite the Paperwork Reduction Act. There are lots of 
explanations. In my mind, there is no justification for it. So 
I commend you for the legislation and, hopefully, we can move 
forward on this. Thank you, sir.
    Senator Voinovich. Thank you. Mr. Spotila.

   TESTIMONY OF JOHN T. SPOTILA,\1\ ADMINISTRATOR, OFFICE OF 
 INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND 
                             BUDGET

    Mr. Spotila. Thank you, Mr. Chairman, for inviting me here 
today. While the administration strongly supports easing the 
paperwork burden on small businesses, we are concerned that, as 
now drafted, S. 1378 could produce unintended negative 
consequences. We acknowledge the need to increase our efforts 
to reduce the paperwork burden and would welcome the 
opportunity to work with you to achieve real progress in this 
area, but we feel strongly that S. 1378 has flaws and needs to 
be modified.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Spotila appears in the Appendix 
on page 61.
---------------------------------------------------------------------------
    Reducing the paperwork burden on small business has been a 
continuing theme for the President. As he said to the White 
House Conference on Small Business, ``We know that small 
business is the engine that will drive us into the 21st 
Century. You employ most of the people, create more than half 
of what we produce and sell, and create more of the new jobs 
and we need to respond to that.''
    We have some examples of burden reduction. The Federal 
Highway Adminstration reduced the burden of its controlled 
substances and alcohol use and testing program by allowing 
motor carriers to conduct 15 percent less alcohol testing, 
reducing burden by 300,000 hours. The Patent and Trademark 
Office has introduced electronic filing of trademark forms. The 
Department of Defense is reducing the burden of its acquisition 
management system and data requirements control list by over 20 
million hours by eliminating duplicative data requirements on 
DoD contractors.
    But there is still much more to be done. Since my 
confirmation in July, I have made this a priority at OIRA. Last 
month, we issued new guidance to agencies on preparing their 
fiscal year 2000 information collection submissions to OMB. 
Agencies are to describe in detail their initiatives to reduce 
the information collection burden on small business. This will 
give us a better picture and enable us to help agencies learn 
from each other and adopt strategies that have worked 
elsewhere.
    But reducing burden will require a comprehensive effort 
with full participation by the agency. OIRA plans to work 
closely with the Small Business Administration to develop new 
approaches that will reduce paperwork burden. To help spearhead 
our joint efforts with the agencies, SBA Administrator Aida 
Alvarez has detailed to us Ronald Matzner, who is here today, 
to my left, one of SBA's leaders in streamlining and regulatory 
reform.
    My good friend, Jere Glover, and I have talked at length on 
what needs to be done and how to do it. We envision setting up 
an interagency working group to examine what must be done and 
to develop recommendations, and we are going to do that now, 
even before the statute is resolved. We very much look forward 
to working closely with you and other members of Congress in 
this endeavor.
    These initiatives provide background for the discussion 
today. We know we need to take a fresh look at this problem and 
work together to address it. Our concern is that a number of 
the provisions of the bill may create unintended new problems 
that complicate our task and cause other harm. We need to be 
careful, despite good intentions, not to adopt legislation that 
would create adverse consequences.
    We are most concerned that the one-time waiver provision in 
Section 2(b) would shield small entities that do not act in 
good faith, such as those that do not make a good faith effort 
to comply or who intentionally or knowingly violate regulations 
at the expense of the public good. We note that a number of 
agencies argue that the waiver provision would seriously hamper 
their ability to ensure safety, protect the environment, detect 
criminal activity, and carry out their statutory 
responsibilities. We certainly believe that the supporters of 
S. 1378 do not intend for it to have these consequences, but we 
fear that it will have this effect. Here are some examples:
    Transportation operators must now report certain accidents 
to the Department of Transportation. This serves important 
purposes. If a company fails to notify DOT promptly after an 
accident, information important to the investigation may be 
lost or destroyed. This would make it harder to protect public 
safety. Companies who delay the reports until being notified of 
a violation may compromise public safety, even though it may 
not be possible to show that they cause serious harm to the 
public interest or a danger to the public health or safety, the 
standards proposed in S. 1378. We must be careful not to create 
a situation in which negligent operators can delay their 
notification just to cover up their mistakes.
    DOT's effort to implement legislation requiring passenger 
manifests for virtually all airline flights into and out of the 
United States could be undermined here. These manifests make it 
possible to notify the families of victims if an accident 
occurs. If a small carrier decided to save money by 
deliberately ignoring the information collection and record 
keeping requirements, it could use the waiver to undermine the 
intent of legislation designed to help those families.
    Under the Clean Water Act, regulated entities must monitor 
and report pollution discharges. This can be important in 
assessing environmental threats. In a recent case in 
California, EPA and a regional water quality control board were 
concerned that a company withheld and misrepresented data 
relating to the amount of sealife killed by a cooling water 
intake system. This made it hard to assess the extent of any 
damage to water quality and sealife.
    Nor is Section 2(b) needed. We already have protection for 
small business owners who act in good faith under the Small 
Business Regulatory Enforcement Fairness Act, SBREFA, which 
directed agencies to provide civil penalty waivers to small 
entities for violations of statutory and regulatory 
requirements when the small entity corrects the violation 
within a reasonable time, is not subject to multiple 
enforcement actions, and has not acted willfully or in a way 
posing serious health, safety, and environmental threats. This 
is a sensible approach that we support fully. It applies 
directly to the concern about first-time paperwork violators, 
since reporting and record keeping requirements are almost 
always based on regulations.
    Most small business owners make a good faith effort to 
comply with governmental requirements for record keeping and 
reporting. They believe that if they act in good faith, they 
should not be punished, but they do not believe that those who 
act in bad faith or who try to abuse the system should get away 
with it. Indeed, they do not want some competitor to get a cost 
advantage over them by enjoying immunity for deliberately 
ignoring known requirements.
    If the protection in SBREFA is not sufficient to reach 
small business owners who act in good faith without harming the 
public, it is reasonable to talk about adjusting it. There is 
no good reason, however, to extend this protection to entities 
that do not act in good faith. As it is now drafted, the 
administration strongly opposed Section 2(b).
    We are also concerned about the provision in Section 2(a) 
requiring OMB to publish annually a list of all Federal 
collection requirements applicable to small business concerns, 
organized by North American Industrial Classification System 
Code. We are very interested in communicating information on 
this better, but we are concerned that this may not be the 
right solution. It would be hard to implement, resource 
intensive, and difficult to keep current and complete, and if 
not kept current and complete, it will not be of much use to 
small business owners. It also will be difficult for agencies 
to predict what collections they might require in the future 
since they cannot anticipate all the problems and situations 
that may arise. We want to help small business owners, but we 
are not sure this is the right way to use our resources.
    Finally, you have asked us for our views specifically on 
Section 2(c) dealing with efforts to further reduce the burden 
for small business concerns with fewer than 25 employees. As we 
understand it, this is designed to ensure that agency efforts 
to reduce burden aim specifically at businesses with relatively 
few employees. We appreciate the unique circumstances these 
businesses face and do not object to this provision.
    In summarizing, we sympathize with the goal of easing the 
paperwork burden on small business and would be willing to work 
with you to improve the language of S. 1378 to the point where 
we could support its passage. More generally, we would welcome 
the opportunity to work with the Committee to develop new 
approaches for alleviating paperwork burdens. We understand and 
share your concerns and those of small business owners all 
across the land. This is a difficult problem to solve and we 
need to work together if we are going to make any real 
progress. Thank you.
    Senator Voinovich. Thank you. Ms. Acheson.

TESTIMONY OF ELEANOR D. ACHESON,\1\ ASSISTANT ATTORNEY GENERAL, 
      OFFICE OF POLICY DEVELOPMENT, DEPARTMENT OF JUSTICE

    Ms. Acheson. Thank you, Mr. Chairman. I am pleased to 
provide the views of the Department of Justice on S. 1378. The 
Department strongly supports common sense efforts to streamline 
information collection requirements and help small businesses 
comply with reporting and record keeping obligations. However, 
we have serious concerns with the provision of S. 1378 that 
would waive civil penalties for certain first-time violations 
of those obligations because such a waiver would undermine 
basic principles of accountability, enforcement, and deterrence 
that are the underpinnings of important regulatory programs 
that protect Americans' well-being.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Acheson appears in the Appendix 
on page 68.
---------------------------------------------------------------------------
    Earlier this session, the Department recommended that the 
President veto a bill, H.R. 391, with a similar provision. By 
allowing one free pass for violations of information collection 
requirements, the bill appears to suggest that these violations 
are not significant. We disagree. Reporting and record keeping 
requirements form the backbone of most Federal regulatory 
programs designed to protect human health, safety, environment, 
welfare, and other public interests, allowing agencies to 
monitor compliance with applicable standards and to detect and 
deter illegal conduct. The public also relies on such 
information to make educated choices.
    We ask businesses to provide information because they are 
the best sources of that information. Encouraging self-
reporting by businesses is a sound means to ensure that the 
government receives the necessary information important to law 
enforcement and public health and safety without having to make 
much more frequent and intrusive inspections.
    The penalty waiver provision undermines these safeguards by 
removing consequences for failure to comply with the law. This 
makes it easier for small businesses to be casual about or even 
to decide not to comply with information collection or 
reporting requirements. The results of such noncompliance can 
be that real risks and harms to the public occur because 
agencies or the public do not have the information when it is 
needed. For example, if a company that stores hazardous waste 
on its property fails to notify local fire fighters about these 
wastes, in the case of an emergency, those fire fighters will 
not know how to respond in the safest way.
    As my prepared statement explains in detail, this provision 
could undermine law enforcement and regulatory safeguards that 
protect the public from a whole range of safety, health, or 
environmental hazards and implement other important public 
policies.
    Failure to report information may mean serious harms go 
undetected and unremedied. We recognize that the vast majority 
of small businesses are law abiding and both the Federal 
statutes, as Mr. Spotila has alluded, and administration 
policies already understand and respond to the special 
challenges that small businesses face and accommodate the needs 
of small business in assessing penalties, among other ways.
    For example, under both SBREFA and other Federal statutes, 
agencies have adopted policies in assessing civil penalties to 
consider good faith efforts to comply with the law, the impact 
of civil penalties on small businesses and other appropriate 
factors. The policies compliment ongoing agency efforts 
specifically designed to help small businesses understand and 
comply with the law.
    By contrast, the penalty waiver provision in S. 1378 goes 
far beyond helping companies that have made a good faith effort 
to comply with the law. It does not streamline record keeping 
or reporting requirements. Instead, it would reduce those 
burdens only for those who violated the law, even for 
unscrupulous businesses who have made a calculated decision to 
save on the cost of complying with reporting or record keeping 
requirements. This result would put law abiding businesses at a 
competitive disadvantage and could endanger the public.
    We appreciate the changes that have been made to the bill 
to allow agencies to impose penalties under certain 
circumstances. My written statement explains why those limited 
exceptions do not address our fundamental concern that the bill 
undermines the reporting and record keeping system as a whole, 
eroding the primary purpose for it, impairing the underlying 
goal of obtaining information to prevent and avert harm.
    By creating a broad presumption in general against the 
imposition of civil penalties for violations of information 
collection requirements, even though we fully understand this 
is for a first-time waiver, the bill undermines the deterrent 
effect of penalties in general and makes it easier for small 
businesses not to comply with the law. This is the exact 
opposite of existing law and policy, which keeps intact the 
integrity of regulatory programs but allows agencies to focus 
on whether there are mitigating circumstances, that is, 
equities in the businesses' favor with regard to a violation. 
The practical result of this bill is that agencies will be able 
to impose penalties and enforce the law, but only when it is 
too late and after the harms have already occurred.
    The bill also includes many ambiguous terms that will lead 
to litigation and may be a trap for the unwary small business. 
There is a real danger that small businesses will be lulled 
into believing they are immune from civil penalties for certain 
conduct when, in fact, they are not.
    Finally, we also have questions about the provision 
prohibiting States from imposing civil penalties for certain 
first-time violations, particularly if that were interpreted to 
impact upon the States' abilities to enforce their own laws.
    In conclusion, the Department remains committed to 
promoting small businesses and working effectively with OIRA 
and other agencies of the Federal Government and with Congress 
to reduce any unnecessary burdens on small businesses without 
jeopardizing essential reporting functions designed to protect 
the American public. However, we cannot support this bill 
because of the first-time waiver provision. Thank you very 
much.
    Senator Voinovich. Thank you very much.
    One of the things that has come out today is that there is 
a lot of effort by the government to really try to create a 
better environment for businesses to be successful in terms of 
government regulation and paperwork. In your testimony, Mr. 
Spotila, you talked about the June 12, 1995, White House 
Conference on Small Business. But then you go on to say that 
since your confirmation, you have made it a priority at OIRA to 
move forward with some things, but this is 1999.
    Last month, you issued a bulletin giving new guidance to 
agencies on preparing their fiscal year 2000 information 
collection submissions to OMB. The bulletin calls on agencies 
to describe in detail their initiatives to reduce the 
information collection burden on small businesses through 
changes in regulation. We hope that the agencies will take a 
hard look at existing burdens and try to identify steps to 
relieve the burden on small businesses. OMB will then publish a 
description of these agencies and fiscal year 2000 information 
collection.
    Jere Glover--he talked about one issue that it took him 
2\1/2\ years to get something done. In spite of all of the 
rhetoric, the fact of the matter is that there is some real 
resistance, I think, in some agencies to do what it is that 
Congress has wanted. One of the things that has hit me since 
becoming a member of the U.S. Senate is the fact that the 
Administrative Branch of government, in many instances, frankly 
just ignores the Legislative Branch and goes on and does their 
own thing. As a result of that, the frustration continues to 
build up, and Mr. Spotila, I congratulate you on the fact that 
you are moving forward with this.
    The other observation I have is that I can understand, Ms. 
Acheson, the Justice Department's attitude towards this. There 
are some specific things that you think need to be corrected in 
this legislation and we would be glad to hear from you, in the 
same way with you, John, but from what I hear, it is like 
everybody is out to try--and I can understand from the Justice 
Department that is the kind of people you are dealing with--but 
this legislation is aimed at trying to relieve some first-time 
errors that individuals make that do not involve criminal 
activity, violate the Internal Revenue Code, or involve the 
health and safety of individuals. If we can make it more 
specific so it is clear that that is the case, we will be more 
than happy to do that.
    At the same time, I think that it is a worthy endeavor to 
try to create an environment where, as I say, simple mistakes 
that are made by businesses can be taken care of. The fact that 
that exists, I do not think, and I would be interested in 
hearing some of the other witnesses on it, is going to increase 
the number of people that are out trying to take advantage of 
their customers or the Federal Government.
    Mr. Spotila, you said that you have SBREFA. You have been 
around. Do you think SBREFA is working?
    Mr. Spotila. I think that SBREFA has actually done a 
considerable amount of good. It is working imperfectly. 
Actually, I would defer to Mr. Glover, who tracks it much more 
closely than I do.
    I think it is working in several areas. It is working in 
the development of regulations, particularly the use of the 
panels that OIRA, SBA, EPA, and OSHA all participate on. I 
think that has helped the process, by getting small business 
owners involved at an earlier stage in the development of 
regulations.
    I think that the creation of the ombudsman was 
constructive, to look at enforcement issues all around the 
country with representation from the 10 regions and the holding 
of public hearings. I think that has been constructive. Peter 
Barca was the first enforcement ombudsman and has done a good 
job.
    I think that the waiver provision that I referred to in my 
testimony is, in fact, good policy. I did notice there were 
some--I think a reference that you may have made, Senator, that 
you feel that agencies have not done as much as they should to 
implement that provision. We are not directly involved at OMB 
in enforcing that, but I would be more than happy to work with 
you and your staff and the Committee to try to be of assistance 
there, because the President supports this and we certainly 
want the agencies to proceed in good faith here.
    So it has been constructive. It has done a number of 
positive things, and in that regard, even in the area of the 
Reg Flex Act, that it has been a step in the right direction. 
So there are a lot of positive things about it.
    Senator Voinovich. Mr. Glover, would you like to comment on 
that?
    Mr. Glover. I believe that SBREFA is one of the best pieces 
of legislation Congress has passed in recent history. It has 
done a whole bunch of things to help the government change the 
way it views small business people.
    As to the specific provision on enforcement and penalties, 
I would say that there, it is certainly not proven that it has 
been effective yet. I think that it goes part of the way, but 
it certainly--your legislation goes further.
    The problem we are not talking about in many instances 
where small businesses are being fined under current 
situations, but we are talking about a perception of every 
small business. The reason that I support the legislation is it 
goes directly to that perception.
    There are certainly some fine points and examples, but I 
will tell you, when we passed Equal Access to Justice in 1980, 
which provided that the government sued a small business person 
and was not substantially justified, the small business could 
recover those attorneys' fees. When that legislation was 
passed, I heard the same kind of cries that, oh, the sky is 
falling. This will cost us $50 million in attorneys' fees to 
small businesses. During that whole process, the average has 
been less than $1 million, and they expanded it beyond small 
businesses to include individuals, consumers, and nonprofit 
organizations. So in their total, it has been less than $1 
million.
    I do not think that the sky will fall. I think that perhaps 
we can tune and tweak the language a little bit, but I think 
that the overall need is to change the perception in the 
businessman's mind that there is somebody out to play 
``gotcha'' with them. I know that a lot has been done to change 
that within the government, and certainly more should be done, 
but the perception out there is just as real today as it was 3 
years ago when SBREFA was passed.
    Senator Voinovich. You have had an opportunity to hear from 
Mr. Spotila and Ms. Acheson, and if I listen to their testimony 
carefully, the impression is that, somehow, if this passes, 
that there is going to be an increase in individuals who are 
going to deliberately take advantage of this waiver provision 
because they know that they will not be nailed on that first-
time offense. I just would like your comment on that.
    Mr. Glover. First of all, I do not believe any small 
business is going to be that careful planning their paperwork. 
If I were advising small businesses, as I did in the private 
sector as an attorney, you would never want them to waste that 
one waiver, because once they have lost it, they have lost it 
forever and you want to save it for something you really did 
not know about that was going to cause you great harm, first.
    Second, the law that you are supposed to comply with, the 
underlying regulation that says you must do something, you are 
still obligated to do it, and if you do not do that, this 
waiver provision would not kick in. So most of the complaints 
that I have heard or the examples that I have heard, the small 
businesses involved who did not do the paperwork also violated 
the law, and especially where there are examples involving 
health and safety, and I think those, clearly, we all agree 
were situations where we would not want to waive the paperwork 
requirements and the fines and pay health and safety issues.
    So I think that you do not see the examples that are there. 
So I think for those two different reasons, I am not concerned 
about it as they are.
    Senator Voinovich. I would like Ms. Acheson or Mr. Spotila 
to comment on the issue of giving an unfair competitive 
advantage over a competitor in terms of filing these papers. Do 
either one of you want to give me an example of what you are 
talking about?
    Mr. Spotila. Senator, the examples that I used in my 
testimony show areas of concern. In fairness here, we are all 
very much in agreement conceptually on the idea that small 
business owners who proceed in good faith should not be 
inadvertently fined. I think where we may have some difference 
of opinion, and maybe a common understanding of the need to 
work together to look at this language with some care and 
precision, is in the implementation of how we proceed from that 
conceptual agreement.
    Our sense is that if you do have a situation where, for 
example, a small airline carrier does not need to keep 
manifests because they figure they will not be caught, we not 
only undermine a statute but they are not bearing a cost that 
everyone else has to bear, so their competitors----
    Senator Voinovich. But the point is that the assumption in 
your testimony and what you are saying now is that the one-time 
waiver is going to be something that allows them continually to 
do that. We are talking about a first-time failure of an 
individual to report something that is required by the Federal 
Government.
    Mr. Spotila. I understand that, Senator. Let me explain and 
clarify further. In the case of the air carrier, we do not have 
very many accidents a year. It is at least possible that a 
small carrier would conclude that it is unlikely there would 
ever be an airplane accident, and therefore unlikely that 
anyone would ever catch them. No one actually comes by and 
looks at this in the absence of an accident.
    So you would find out the first time a plane crashed and 
you did not have a manifest of the passengers who were aboard. 
At that point, the carrier would not be fined, very possibly, 
because it was a first-time violation. But we would lose our 
ability to carry out a different statute that the Congress just 
recently passed, for very good reason, to protect the families 
of victims, because someone made a calculation that they could 
get away with it and that it was unlikely there would be a 
crash. That is the kind of thing we are talking about.
    In different areas, there could be similar, unintended 
consequences.
    Senator Voinovich. In other words, you think because they 
would not get fined the first time that they might do that 
because they knew they would not get nailed?
    Mr. Spotila. It is hard to predict what anyone specifically 
would do. I think that the concern that has been expressed to 
us, in this case by the Department of Transportation, is that 
that could be a result. It is certainly not what anyone 
intends, but we need to be careful that in starting with good 
intentions, we do not impose something that would lead to 
unintended consequences, and that is the point we are trying to 
make.
    Senator Voinovich. OK. Any other comments?
    Ms. Acheson. Senator, I would just say that in the written 
testimony we submitted, there are several examples of failure 
to come forward with required information. There is an example 
of a crib manufacturer, another of a painting business where 
complaints had been submitted to the crib manufacturer and they 
never turned them over to the Consumer Product Safety 
Commission, although they were well aware they needed to do 
that. The spray painting business was putting VOCs out into the 
environment and they knew full well that if they reported that, 
as they were required to do, they probably would be shut down 
until their operation was changed. Both of those situations had 
pretty grim results.
    Now, whether a motivation was competitive advantage, I do 
not know, but I think there are--and they are certainly on the 
margins. None of us is suggesting that this would be a common 
occurrence. But it is always the bad actor that ruins the day 
for everybody.
    I would just underscore, I have had the pleasure of working 
with OIRA before John was the head of it, but when he was over 
being the counsel for the Small Business Administration, he and 
I together worked with the people who were then in charge of 
OIRA.
    When SBREFA was coming into being, and even before that 
under the administration's initiatives, and I would agree that 
perhaps imperfectly is the adverb to be used, but on the other 
hand, the amount of effort, and I can see it in the very few 
areas that the Department of Justice is responsible for 
operational sort of proactive regulatory activity, the DEA and 
pharmaceutical and other kind of drug activity, the Civil 
Rights Division and the Americans with Disabilities Act, we 
were headed in the right direction.
    But SBREFA and the administration policies, I think it is 
fair to say, kicked us forward in the appropriate part of the 
anatomy and we have been aggressively working with the 
constituencies in small business, many of them, to have them 
understand what the requirements of these acts are, to work 
with them proactively. We have architects in the Civil Rights 
Division to help people figure out what this means, not just 
conceptually, but with respect to their particular problem, 
their particular structure, their particular operation. The 
same in the DEA. We get together with the industry regularly. 
We have been very proactive to try and get them to comply and 
understand, work toward a situation where we eliminate this 
issue of violations.
    I think that is the direction all of us here, at least John 
and I, would support coming at this from, not so much in the 
waiver. We can do more on the other end of this to eliminate 
situations of violations, first-time or otherwise. We will work 
as hard as we can on that front. Thank you.
    Senator Voinovich. Thank you very much.
    Our next panel is Robert Smith, President of Spero-Smith 
Investment Advisers, Inc., who represents Small Business 
United; Jack Gold, the President of Center Industrial, on 
behalf of the National Federation of Independent Business; and 
Deputy Chief Gary Warren, who is with the Baltimore County Fire 
Department, International Association of Fire Chiefs, 
representing them this morning.
    I would like to welcome our third panel. Mr. Smith, we 
would like to hear from you first.

TESTIMONY OF ROBERT SMITH,\1\ PRESIDENT, SPERO-SMITH INVESTMENT 
  ADVISERS, INC., ON BEHALF OF NATIONAL SMALL BUSINESS UNITED

    Mr. Smith. Mr. Chairman, thank you for allowing me to 
appear before you. I am the President of Spero-Smith Investment 
Advisers in Beachwood and a small business owner. I am a member 
of the Board of Trustees and currently Vice Chair of Advocacy 
for National Small Business United, the Nation's oldest small 
business advocacy organization. Additionally, I am a board 
member and incoming Chairman of COSE, the Council of Smaller 
Enterprises. COSE, as you know, is a division of the Greater 
Cleveland Growth Association, of which I am also a trustee and 
a member of its Government Affairs Council. I reside in the 
10th District of the great State of Ohio and am one of your 
constituents, the chief sponsor of this legislation.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Smith appears in the Appendix on 
page 86.
---------------------------------------------------------------------------
    I want to thank you and Senator Lincoln for your leadership 
and understanding of the serious dilemma that paperwork 
presents for America's 24 million-plus small businesses. On 
behalf of NSBU's 65,000 members in all 50 States, I applaud you 
and support this legislative effort to bring sanity to the 
paperwork requirements that we face. NSBU has been a long 
supporter of a strong and viable Paperwork Reduction Act, which 
was passed originally in 1980. Despite the best intentions of 
the Paperwork Reduction Act, however, small business has been 
fighting for years to fill the holes that Federal regulatory 
agencies have punched into the law.
    If you ask any small business owner their opinion of the 
required paperwork, their responses overwhelmingly will 
indicate there is redundancy and excessiveness in the filing 
process. Let us take, for example, the pool and spa industry. 
If a dealer services a pool, they must comply with OSHA's 
hazard communications standard. If they have more than 100 
pounds of chlorine on site, which all pool and spa dealers do, 
they must also comply with SARA Title III. Added to this, there 
is the Department of Transportation shipping papers and the 
Department of Agriculture specialized documentation 
requirements.
    In sum, the government requires similar and duplicate 
information from the same company in a different format to 
several regulatory agencies, which results in wasted time and 
money for small business owners. Nevertheless, the fine for 
noncompliance with any of the above could exceed the company's 
income for the year. Plus, the IRS, the EEOC, and various State 
and local governing bodies add to above requirements and create 
a paperwork nightmare.
    Agencies must seek ways to eliminate duplication of 
paperwork. The paperwork requirements for filing mandatory 
emergency plans are an excellent example. As you know, many 
agencies require emergency plans, such as a plan for hazardous 
waste, a fire report, a leak report, or a stormwater plan.
    As one small business owner recently informed me, he must 
maintain nine separate notebooks, each containing a different 
emergency plan. From these notebooks, he has to scramble to 
find the booklet that covers the particular area when agencies 
regulating that area come to inspect the paperwork that is due. 
Inevitably, the paperwork due dates are all different and 
require him to keep a separate calendar simply dedicated to 
these dates. This is not uncommon, and it would be useful if 
the various agencies came together with small businesses and 
agreed to file less paperwork and work hard to eliminate 
duplication or contradictory requirements.
    Another serious problem with these complicated and 
duplicative layers of paperwork is that it is easy for a well-
meaning small business to overlook a requirement or a deadline 
because they did not have dedicated compliance staff to 
research the vast Federal and State regulatory paperwork 
quagmire.
    Dealing with pensions and health care plans, as you might 
expect, presents a very significant paperwork burden for the 
average small business owner. Atop any list of unnecessary and 
burdensome paperwork is an aspect from the group health 
insurance requirements. We know that many employer group plans 
are contributory to some degree. In small business, the vast 
majority of plans require some degree of employee contributions 
toward premiums.
    The current tax law allows employers to establish so-called 
flexible benefit plans, or Section 125 plans, so employees can 
make their contributions on a pre-tax basis. This tax savings 
feature reduces the net cost to the employee and enables the 
employer to increase employee enrollment as a result, an 
obvious plus for both sides.
    The IRS requires that employees have a plan document and 
summary plan description and that they file Form 5500 at year's 
end in order for such premium payments to qualify for the tax-
preferred status. Failure to file a 5500 Form can result in a 
penalty of up to $1,000 a day, without limit. The Form 5500 was 
designed for pension tax reporting. It is over 6 pages long, 10 
with schedules, and according to the IRS, it takes over 11 
hours to complete. Yet, the form is not intended for this 
purpose and the IRS does virtually nothing with the form when 
they receive it.
    As a result of this, this may be the single greatest abuse 
by business-paying taxpayers in America. Very few of the 
employers who are required to actually file this actually do 
file it, leaving them with a significant exposure.
    A final example is the very complicated IRS Notice 9852. 
This requires 401(k) plans and other plans with employee 
contributions to provide employees with an annual notice of 
their rights under the plan. This notice duplicates virtually 
every point in the summary plan description that the DOL 
requires that plan trustees provide to eligible plan 
participants. Employers who fail to provide this annual 
notification stand the risk of being fined and possibly having 
their plan disqualified. If the summary plan description is a 
vital summary of employee rights, then why is another notice 
required to repeat that which they have already been given?
    Every year, National Small Business United conducts a 
survey with Arthur Andersen's Enterprise Group, a survey of the 
small business community to assess attitudes, concerns, and 
needs. Repeatedly, small business owners have been asked to 
identify the most significant challenges to their business 
growth and survival. Some issues come and go from the top 
ranks, but regulatory burdens and paperwork requirements are 
consistently in the top three challenges.
    There is a serious message here which we must continue to 
address. These issues go hand in hand and small business owners 
and the groups that represent them need to continue to work 
with Congress to ensure that small businesses do not see an 
unfair number of regulations and paperwork requirements come 
out of this town and bury them in our hometown.
    To have a once-yearly list of all paperwork requirements 
for small business is invaluable. The bill calls for the 
paperwork requirements to be published on the Internet. It 
would be my suggestion, on top of this requirement, if Federal 
agencies provided a plain English explanation and listing of 
their paperwork requirements to small business owners, many 
through associations like NSBU and COSE and the others before 
you, simply because if the information does not get to the 
small business owner, it is not valuable. The establishment of 
an agency point of contact for small business is another 
excellent idea.
    Finally, there are certain times when all businesses, even 
small businesses, are not in compliance with every law, 
regulation, and form that this town and their State and local 
governments provide. On the first occasion of a Federal 
paperwork mistake, the Voinovich-Lincoln bill calls for 
suspension of the fine. This is the critical aspect of this 
bill and something that NSBU has been lobbying in favor for for 
many years.
    On behalf of NSBU and our 65,000 members, I believe the 
Small Business Paperwork Reduction Act Amendments of 1999 lead 
us in the proper direction and it is legislation that should 
pass this Congress.
    Mr. Chairman, I commend you for addressing this 
longstanding problem. Thank you for allowing me to be a witness 
here before you today.
    Senator Voinovich. Thank you. Our next witness is Jack 
Gold.

  TESTIMONY OF JACK GOLD,\1\ PRESIDENT, CENTER INDUSTRIAL, ON 
   BEHALF OF THE NATIONAL FEDERATION OF INDEPENDENT BUSINESS

    Mr. Gold. Mr. Chairman and Members of the Committee, I wish 
to thank you for allowing me to testify in support of S. 1378, 
the Small Business Paperwork Reduction Act. My name is Jack 
Gold. I am the founder, owner, and operator of Center 
Industrial, located in Edison, New Jersey. I am proud to be a 
member of the National Federation of Independent Business and I 
am honored to be presenting this statement on behalf of NFIB's 
600,000 small business members nationwide.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Gold appears in the Appendix on 
page 94.
---------------------------------------------------------------------------
    Center Industrial is a family-owned and operated business. 
Four of my eight employees are family members, and after 36 
years, I am in the process of passing it on to the next 
generation. We supply major industry contractors and other 
small businesses like ourselves with products that keep their 
businesses operating on a day-to-day basis. Some examples of 
our products are hand tools, power tools, safety products, and 
general hardware.
    I am here to testify on the need for the legislative 
waivers for first-time paperwork violations, as contained in 
the SBPRA of 1999. I believe small business owners deserve a 
break when they make an honest mistake, no one was hurt, and 
the mistake is corrected.
    My support for this legislation is based on my experience 
with a Department of Transportation inspection. I sincerely 
believe that my experience mirrors the stories of many small 
business owners. We feel that regardless of how hard we try to 
comply with all the rules and regulations, a government 
inspector can fine us regardless of our spotless record or 
whether we immediately correct any unintentional mistakes.
    On August 13, 1998, we were inspected by the DOT. This was 
our first contact with the DOT. We were originally told that it 
was a routine inspection, but later discovered the inspection 
was prompted by an anonymous complaint given by two disgruntled 
employees that were dismissed for company theft. The inspectors 
were given full access to our facility and files because, as 
far as we were concerned, we had nothing to hide. They were 
provided with any and all information that they asked for.
    After the inspection, we were told that certain products 
were hazardous and that we lacked shipping documents and 
training for the sale and handling of these products. They were 
muriatic acid, which is a pool cleaner, fire extinguishers, and 
pine power, which is a cleaner. It never occurred to us that 
any of these items required special papers or triggered 
training requirements because anyone can walk into a Home 
Depot, Lowe's, or Wal-Mart and purchase these same or 
comparable items, throw them in his or her trunk, and drive 
away without giving it a second thought. We did not think these 
products posed any danger. I would never intentionally place 
anyone, especially my family, in harm's way.
    Once the inspectors explained that some of our products 
were deemed hazardous and that other products required shipping 
papers, we took the necessary steps to comply. We purchased the 
DOT's training CD-ROM and went from there. Training manuals 
were created and reference guides were purchased. We are 
currently training all of our employees, even though we are 
only required to train the two or three employees involved with 
shipping. We identified which products required special 
shipping papers and drafted a fill-in-the-blank shipping paper 
and shipping checklist. Copies of the master product list, 
shipping paper, and checklist are now posted in our shipping 
and receiving area.
    My daughter, Mary Ritchie, helps me run Center Industrial. 
When we went through the process of researching what steps we 
needed to take to come into compliance, she spoke with Colleen 
Abbenhaus of the DOT on a regular basis. We were thankful for 
Ms. Abbenhaus' assistance, but we were under the impression 
that if we did everything by the book, the original citation 
would be considered a warning. This assumption was based on Ms. 
Abbenhaus' repeated use of the expression, ``if there is a 
fine,'' when explaining our situation.
    Well, there was a fine. In January 1999, we were presented 
with a penalty of $1,575. We were particularly offended by the 
wording of the ticket that read, ``If within 45 days' receipt 
of this ticket you pay the penalty, the matter will be closed. 
If you submit an informal response or request a formal hearing, 
you may be subject to the full guideline penalty of $4,500.'' 
This, to us, was perceived as a Federal agency's attempt to 
intimidate a small business so that they would not question the 
agency's actions.
    We are not asking to be excused from any obligations of the 
regulations, but what does this experience tell me and other 
small business owners? It says no matter how hard you try to 
make your business safe for your employees, customers, 
neighbors, and family members, in the end, if a government 
inspector wants you, they can get you. The government cannot 
tell me that they care more about my family's safety and my 
company's reputation than I do. It seems to me that DOT 
inspectors have more of an incentive to simply issue tickets 
that say, pay us or we will run you out of business, than they 
do to help us understand how to comply with all these rules and 
regulations.
    It only makes sense in cases where there is paperwork 
violation and no one is put in harm's way, business owners may 
be given a reasonable amount of time to comply before fines are 
issued. We have been left with the feeling that DOT misled us. 
We feel that DOT wanted to impose a fine from the moment they 
entered our building, no matter what we did.
    I thank you for this opportunity to tell you my story in 
hopes it will make a positive difference in the way agencies 
treat small business owners in the future. I am now happy to 
answer any questions. Thank you.
    Senator Voinovich. Thank you. Deputy Chief.

TESTIMONY OF GARY E. WARREN,\1\ DEPUTY CHIEF, BALTIMORE COUNTY 
FIRE DEPARTMENT, ON BEHALF OF THE INTERNATIONAL ASSOCIATION OF 
                          FIRE CHIEFS

    Mr. Warren. Good morning. I am Deputy Chief Gary Warren of 
the Baltimore County Fire Department. I am responsible for the 
hazardous material and special operations in Baltimore County, 
Maryland, and serve on the Hazardous Material Committee of the 
International Association of Fire Chiefs, the IAFC. It is on 
behalf of the IAFC that I appear here today. I would like to 
thank the Committee for allowing me to address the concerns 
shared by my fire service colleagues to the Small Business 
Paperwork Reduction Act.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Warren appears in the Appendix on 
page 99.
---------------------------------------------------------------------------
    Local fire departments are the primary providers of fire 
suppression and local hazardous material response service 
throughout the United States. I need not remind the Committee 
that, like politics, all instances involving dangerous 
chemicals are local. The Small Business Paperwork Reduction Act 
seeks to provide relief to small business from Federal 
paperwork requirements.
    America's fire departments have no quarrel with the intent 
of the bill. However, we are concerned that relaxing the threat 
of fines against the businesses that will not comply with 
existing safety regulations will have the effect of relaxing 
compliance. Relaxing compliance leads to delayed compliance and 
even non-compliance, which is at the heart of our concern.
    There are approximately 60,000 incidents in the United 
States each year that involve dangerous chemicals. Many of 
these involve transportation accidents, as well as chemical 
inventories by businesses both large and small. The issue of 
concern is chemical inventory reporting required under Title 
III of the Superfund Amendments and Reauthorization Act, SARA, 
of 1986.
    In an emergency, fire fighters are expected to enter 
structures to protect life, property, health, and the 
environment. Advance knowledge of the presence of dangerous 
chemicals is crucial to our ability to protect ourselves. We 
must be aware of their presence to avoid serious injury or 
worse. An injured fire fighter cannot render aid to civilians 
or protect property and the environment. He also diverts 
attention from these priorities as his fellow fire fighters 
come to his aid.
    The SARA Title III reporting requirements apply to several 
hundred chemicals that are considered extremely dangerous. 
Exceptions are already in place for many of these for up to 
quantities of 10,000 pounds. There are small reporting 
thresholds for chemicals that are particularly lethal, such as 
sodium cyanide, used in limited industrial production. It is 
also better known for use in our State penitentiaries in the 
gas chamber. If that chemical is present in a facility to which 
we must respond in an emergency, we need to know before we 
respond to the alarm.
    We understand that legislation provides exemptions that 
authorize fines where the ``agency head determines that the 
violation had the potential to cause serious harm to the public 
interest, or that the head of the agency determines it is a 
violation presenting danger to the public health or safety.'' 
This is closing the door after the fact. In our view, this 
language is broad. Who is the agency head, how does he 
determine danger, and by what definition?
    We understand that the exemptions are well intentioned. 
However, they will not strengthen and will probably weaken the 
fire department's ability to collect information necessary to 
ensure public safety.
    The existing requirements under SARA Title III is not 
onerous. In fact, I have personally assisted small business 
owners in completing the required paperwork for submission. It 
takes about an hour the first time for its completion. The 
original document can be resubmitted each year with minor 
changes, such as quantities on hand and the date on the form.
    When my grandfather started out in the fire service in 
1921, my dad in 1937 at the age of 14, and myself in 1968 at 
age 16, we had very little knowledge of what we were going to 
be subjected to as it relates to chemicals. Years later, I feel 
confident that America's fire service can handle any event that 
may confront our responders. Our elected officials receive 
credit for that by passing legislation that protects the 
citizens and the responders.
    My daughter, a fire fighter EMT since age 18, who is now 
21, and my son, now 14, look forward to carrying on the 
tradition of being a fire fighter. I am concerned that their 
health, like so many fire fighters before them, will be in 
jeopardy by not knowing what chemicals are present prior to the 
emergency. We need to protect the future fire fighters, like my 
daughter and son, by ensuring compliance.
    Mr. Chairman, I would like at this time to comment on Mr. 
Glover's comment regarding gasoline, if permissible.
    Senator Voinovich. Why not?
    Mr. Warren. Thank you, sir. As Mr. Glover stated in his 
testimony, all the fire chiefs he contacted knew about gas 
stations and they knew that they had flammable liquids. I would 
certainly hope that everyone in the fire service would know 
that, so I am very proud of that fact. However, I would assure 
you that every fire chief--every fire chief--would want to know 
where and what chemicals are stored in their jurisdiction. 
Their fire fighters' health and safety depend on that 
information.
    To restate, existing dangerous chemical reporting 
requirements authorized under SARA Title III are a crucial life 
safety tool available to local fire departments. Any unintended 
relaxation of the requirement is unacceptable. The requirement 
itself is not onerous. I urge you not to fix a system that is 
not broken.
    Mr. Chairman, I would again thank you for allowing me, a 
fire chief, to testify before your Committee. This is the 
highest honor that I could be afforded as a citizen of this 
country, and I thank you, sir.
    Senator Voinovich. Thank you for being here, Deputy Chief.
    It is kind of an interesting thing. We have the Chief and 
we have you, Mr. Gold, and I could not help but think, I do not 
know whether any of the products that they came in and said 
that were not labeled were the kind of products that were 
hazardous, that if you had a fire, that the Chief would come in 
and take care of it.
    The issue that hits me is, is the situation any better or 
worse if, in your case, after you were made knowledgeable of 
the fact, that you were penalized as a result of it. It seems 
to me the problem you had is, you did not know about the 
requirements, is that right, Mr. Gold?
    Mr. Gold. Absolutely.
    Senator Voinovich. Were any of these hazardous chemicals 
that, in effect, would be a threat to a fire fighter if you had 
had a fire at your place?
    Mr. Gold. In my opinion, no. I have been in business for a 
long time and never had an accident, always looked out for--
when there were not these rules, going back in the 1960's and 
the 1970's, you always had to watch out for yourself and your 
people. In small business, the people that work for you are as 
much family as your family and you certainly are not going to 
be responsible in any way to harm them, so you are not going to 
do anything silly. It is just a matter of daily routine.
    Senator Voinovich. I guess the point I am making is that 
you said you were not aware of them. So whether you were fined 
or not fined really made no difference whatsoever because you 
were not aware of it. The issue is that if this legislation had 
passed, would it have made any difference in terms of your 
initial situation?
    Mr. Gold. No, absolutely not. We are watching out for 
ourselves without any kind of legislation. The fine in no way 
would change the situation. We were made aware by the DOT. We 
took the steps for the proper corrections on items that we did 
not know about. We complied with whatever they told us. We did 
not know what the rules and regulations were up to that point. 
We just ran a business as safely and as honestly as possible.
    Senator Voinovich. One of the things that is of concern to 
me is that it would be the--for instance, Chief, in your city, 
what do you do to inform businesses about the labeling 
requirements? How do they find out about it?
    Mr. Warren. Mr. Chairman, in Baltimore County, the fire 
service is responsible for the LEPC, the Local Emergency 
Planning Committee. Under the Local Emergency Planning 
Committee, we host an annual seminar. For example, our recent 
one was on terrorism. Ones prior to that were on SARA 
reporting.
    Senator Voinovich. What is SARA reporting? I am sorry.
    Mr. Warren. The SARA reporting is under the Superfund 
Amendments and Reauthorization Act. What you are required is, 
depending on quantities of chemicals, which is where 
substantial fines usually occur against business, what happens 
is the individual company, depending on quantities, they have 
to determine what product they have on their premise up to the 
10,000 pounds or if it is on the extremely hazardous substance 
list, that ranges anywhere from 1 to 500 pounds. So 1 pound, a 
company would have to report under the extremely hazardous----
    Senator Voinovich. So that is a Federal law that they are 
required----
    Mr. Warren. That is a Federal law that we at the local 
level, and I think throughout the country, what you will find, 
utilizes to ask industry or have industry proceed with keeping 
us informed as to what they have. On an annual basis, they 
provide that information to us. The fire service in our 
jurisdiction is the depository for that. When an incident 
occurs at a SARA reporting facility in our jurisdiction, when 
the alarm goes out, the last thing that the dispatcher says, 
whether it be an issue for an alarm bell sounding or an actual 
fire, the last thing the dispatcher advises the company is that 
it is a SARA reporting facility, which automatically notifies 
those companies----
    Senator Voinovich. It tips you off.
    Mr. Warren [continuing]. That says they have chemicals at 
that property, whether it be extremely hazardous or whether it 
just be in bulk quantity.
    Senator Voinovich. How do the businesses in your area know 
about those regulations?
    Mr. Warren. The businesses, through different mailings that 
the fire department goes ahead and sends out----
    Senator Voinovich. So, in effect, you are the local 
enforcer of the Federal regulations----
    Mr. Warren. Yes, sir.
    Senator Voinovich [continuing]. And you have a provision in 
your community where you send out notices about these various 
items and indicate that reports need to be filed if they are 
present.
    Mr. Warren. Every jurisdiction in the country, under the 
LEPCs, are required, as far as under the EPA, should be seeing 
that information gets out to each jurisdiction or each entity 
as far as business to see that they comply. We, as a fire 
service, are proactive in seeing that we get into all of our 
mercantile buildings to do inspections. When we do the 
inspections, if we come across larger quantities of hazardous 
materials, then the fire department sends our hazardous 
material team to those events.
    The one thing, if I can, sir, when you talk about fines and 
them being levied, and hearing some of the fines that were 
levied as far as with $1,500, for a small business, that is 
substantial. However, I can tell you of two different instances 
in my county, one involving a brewery which resulted in 33,000 
pounds of ammonia being released, which was actually the 
largest ammonia leak in the country's history. Only after we 
got into the issue of levying the fine of $25,000, of 
threatening to use that, did they go ahead and follow through 
with the proper reporting of the release, not of what the 
product was but of the release, which is another part of the 
Federal mandate.
    We also entered into problems with this particular event 
where we usually recoup the cost of the protective gear, which 
is pretty substantial to the fire service. Only through 
additional fines did the company decide that they were going to 
go ahead and settle the case.
    Another incident involved a plating company that had 10 
pretty substantial-sized tanks of chemicals that they dipped 
the plating in. We had no knowledge of it. Our fire fighters 
responded for a structure fire. They were in plastic tanks 
because of being acid. The tanks had melted away, and before we 
realized what had occurred, our fire fighters were in jeopardy 
in 6 inches of chemical goop. As we went back----
    Senator Voinovich. In that instance, were you notified? Was 
that a case where you did not have that notice of----
    Mr. Warren. We had no information, and one of the things 
that you sometimes find is that the company comes in, they set 
up, there is no information, and as we are going through our 
inspection throughout the year, the following year is when we 
find them--not fine, as far as monetary-wise, but find them in 
the area.
    Senator Voinovich. In that instance, do you think they 
deliberately did not do what they were supposed to have done?
    Mr. Warren. No, I do not think they deliberately did it. 
But I think that one of the things that we have to be concerned 
about is you have the companies that started out as Ace 
Plumbing and the following year, because they did have a 
problem, they are now Ace Plumbing, Inc., which changes them. 
They have now gotten their one chance and they are now back 
again----
    Senator Voinovich. Trying to do another. Well, I am 
interested in your testimony and perhaps what we need to do is 
just--I mean, the legislation, quite frankly, is not meant to 
deal with the problem that you have been referencing today, 
that that would be excluded from the legislation. It would not 
be included, period. You would be out of this. I mean, the same 
law that is in effect now would be in effect tomorrow if this 
passed. We do not intend to include anything of the sort that 
you have described here today in this legislation, and if you 
think that it still does that, we will be glad to sit down and 
talk to you about it. How is that?
    Mr. Warren. Fair, sir. Thank you very much.
    Senator Voinovich. OK. I would just like to again ask the 
question, do you think that because this legislation would 
pass, that there would be, Mr. Gold, in your case, or Bob 
Smith, in your case, or among your membership, a tendency on 
the part of your members to be less conscientious about doing 
what it is that they are supposed to be doing, that some would 
deliberately, as alluded to by Mr. Spotila and Ms. Acheson, 
would deliberately kind of try to ease out of something because 
they knew they would not get nailed on the first occasion? I 
would like your comment about that.
    Mr. Gold. I do not believe so. I believe that a small 
businessmen just takes the proper precaution, and once he is 
informed that he might be not in compliance or whatever it 
might be, the education, the awareness at that point, he is 
going to take the proper steps. He is not going to look to get 
out of anything or he is not going to look to escape anything. 
He is going to do what is right, and I believe that. I believe 
he is going to do what is right.
    Senator Voinovich. Do you still have a lot of anxiety every 
day that you may be violating some rule or regulation?
    Mr. Gold. Well, we went through the whole thing. I have a 
daughter who is an extremely intelligent girl, if I say so 
myself. I buy her very cheaply these days because she is 
raising my three grandchildren and she works for small pay, as 
many small businesses in this country do.
    She belongs here because she took this thing to the 
ultimate. She went out and bought manuals, she bought the CD-
ROM, she sat people down, and, in fact, she annoyed me because 
she sat in my office and proceeded to tell me, you have to know 
what is going on. This is your company.
    We took it quite seriously, and that is why we were 
offended by the fact that we were led differently and all of a 
sudden we were hit with this fine. If they had come back and if 
they had seen what we had done, in my opinion, there would be 
no reason for a fine. We had taken all the proper precautions, 
again, thanks to Mary. I think we reacted in the proper manner 
and we are offended by it. To be honest with you, we are 
offended by it because we feel like if we had done nothing, we 
would have been treated the same way, and that is just not a 
fair thing to happen.
    Senator Voinovich. So the issue is that you did 
conscientiously try to do what you were supposed to have done 
and you would have liked to have had the person who was in 
charge to be in a position where they could have waived that 
first penalty in the event that they felt that you had complied 
and done your best about complying with the rules and 
regulations.
    Mr. Gold. Sure, Senator. There are checks and balances, 
hopefully, in every system. If they had taken the time to come 
back, I am sure there are businesses that would try to 
circumvent the law, but this was not in this case, and if she 
had come back or they had come back and they had seen what we 
had done, my opinion is that the only answer was to give us the 
proper warning and I would say they would say that we had 
done--maybe even use us as the example, that we had done it the 
right way, and that is what is offensive about it. Thank you.
    Mr. Smith. Senator, I would add that the idea that the 
waiver would encourage business owners to develop an attitude 
of noncompliance just is not reasonable. The safety issues are 
too important to us and our employees and our families, and to 
get away from complying with Federal laws, it would just be 
overwhelming if we ever developed that kind of attitude. So I 
do not think that is going to be a major incentive to be non-
compliant.
    Senator Voinovich. I think that we need to sit down with 
some of the folks that have got problems and see if we can work 
out some of the differences. I just wonder if some of the same 
testimony, and your representatives from your organizations 
could probably share that with me, were in attendance over in 
the House, they seemed to have some major problems with this 
legislation and it got to the floor and was passed. I guess the 
question I have is, where were they then?
    We have obviously got some more work to do and I apologize 
that there are not more members here. It is my first year in 
the Senate. One of my frustrations is we bring in some 
wonderful people who travel in many instances long distances at 
great inconvenience to come here to testify before the U.S. 
Senate and everybody is so busy that they do not get an 
opportunity to hear first-hand from the witnesses themselves. I 
wish I could tell all of you that we all read all of the 
testimony. We do not. We rely on staff to do it, and I guess 
the only comfort that I would have is if we look around this 
room we have staff here. Obviously, Chief, if we had had a fire 
last night or something and the media had been interested, 
maybe we would have had a packed house because you were here to 
testify.
    But the work of government goes on. We try to deal with 
things that are significant. We are concerned about the health 
and safety of our citizens and we are also concerned, as I said 
earlier in my remarks, that I think we need to understand that 
particularly your small businesses are very important to our 
country and to our well-being and to our competitiveness, and 
so we have got to try and balance these things and make sure 
that we protect the public and at the same time do the best we 
can so that you folks can hire people and pay taxes and 
contribute to society.
    So thank you very, very much for coming here today. The 
meeting is adjourned.
    [Whereupon, at 12:13 p.m., the Committee was adjourned.]


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