[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]





   WHAT IS THE ADMINISTRATION'S RECORD IN RELIEVING BURDEN ON SMALL 
                               BUSINESS?

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

                             JOINT HEARING

                               before the

                 SUBCOMMITTEE ON ENERGY POLICY, NATURAL
                    RESOURCES AND REGULATORY AFFAIRS

                                 of the

                     COMMITTEE ON GOVERNMENT REFORM

                                and the

                   SUBCOMMITTEE ON REGULATORY REFORM
                             AND OVERSIGHT

                                 of the

                      COMMITTEE ON SMALL BUSNIESS

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 28, 2004

                               __________

                           Serial No. 108-142

                               __________

 Printed for the use of the Committees on Government Reform and Small 
                                Business


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform


                                 ______

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                            WASHINGTON : 2003
____________________________________________________________________________
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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana                  HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
JOHN SULLIVAN, Oklahoma              C.A. ``DUTCH'' RUPPERSBERGER, 
NATHAN DEAL, Georgia                     Maryland
CANDICE S. MILLER, Michigan          ELEANOR HOLMES NORTON, District of 
TIM MURPHY, Pennsylvania                 Columbia
MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
JOHN R. CARTER, Texas                            ------
MARSHA BLACKBURN, Tennessee          BERNARD SANDERS, Vermont 
------ ------                            (Independent)

                       Peter Sirh, Staff Director
                 Melissa Wojciak, Deputy Staff Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs

                     DOUG OSE, California, Chairman
CHRISTOPHER SHAYS, Connecticut       JOHN F. TIERNEY, Massachusetts
JOHN M. McHUGH, New York             TOM LANTOS, California
CHRIS CANNON, Utah                   PAUL E. KANJORSKI, Pennsylvania
JOHN SULLIVAN, Oklahoma              DENNIS J. KUCINICH, Ohio
NATHAN DEAL, Georgia                 CHRIS VAN HOLLEN, Maryland
CANDICE S. MILLER, Michigan          JIM COOPER, Tennessee
------ ------

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                     Barbara Kahlow, Staff Director
                Melanie Tory, Professional Staff Member
                         Anthony Grossi, Clerk
                     Krista Boyd, Minority Counsel
                      COMMITTEE ON SMALL BUSINESS

                 DONALD A. MANZULLO, Illinois, Chairman
ROSCOE BARTLETT, Maryland, Vice      NYDIA VELAZQUEZ, New York
    Chairman                         JUANITA MILLENDER-McDONALD,
SUE KELLY, New York                  California
STEVE CHABOT, Ohio                   TOM UDALL, New Mexico
PATRICK J. TOOMEY, Pennsylvania      FRANK BALLANCE, North Carolina
JIM DeMINT, South Carolina           ENI FALEOMAVAEGA, American Samoa
SAM GRAVES, Missouri                 DONNA CHRISTENSEN, Virgin Islands
EDWARD SCHROCK, Virginia             DANNY DAVIS, Illinois
TODD AKIN, Missouri                  GRACE NAPOLITANO, California
SHELLEY MOORE CAPITO, West Virginia  ANIBAL ACEVEDO-VILA, Puerto Rico
BILL SHUSTER, Pennsylvania           ED CASE, Hawaii
MARILYN MUSGRAVE, Colorado           MADELEINE BORDALLO, Guam
TRENT FRANKS, Arizona                DENISE MAJETTE, Georgia
JIM GERLACH, Pennsylvania            JIM MARSHALL, Georgia
JEB BRADLEY, New Hampshire           MICHAEL MICHAUD, Maine
BOB BEAUPREZ, Colorado               LINDA SANCHEZ, California
CHRIS CHOCOLA, Indiana               BRAD MILLER, North Carolina
STEVE KING, Iowa                     [VACANCY]
THADDEUS McCOTTER, Michigan

                  J. Matthew Szymanski, Chief of Staff
                     Phil Eskeland, Policy Director
                  Michael Day, Minority Staff Director

            SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT

EDWARD SCHROCK, Virginia, Chairman   [RANKING MEMBER IS VACANT]
ROSCOE BARTLETT, Maryland            DONNA CHRISTENSEN, Virgin Islands
SUE KELLY, New York                  ENI F. H. FALEOMAVAEGA, American 
TRENT FRANKS, Arizona                    Samoa
JEB BRADLEY, New Hampshire           ANIBAL ACEVEDO-VILA, Puerto Rico
STEVE KING, Iowa                     ED CASE, Hawaii
THADDEUS McCOTTER, Michigan          DENISE MAJETTE, Georgia

              Rosario Palmieri, Senior Professional Staff


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on January 28, 2004.................................     1
Statement of:
    Graham, John, Administrator, Office of Information and 
      Regulatory Affairs, Office of Management and Budget........    17
    Igdaloff, Harold, president, Sungro Chemicals, Inc., 
      California; and Andrew Langer, manager, regulatory policy, 
      National Federation of Independent Business................   100
    Pizzella, Patrick, Assistant Secretary for Administration and 
      Management, Department of Labor; Jeffrey Rosen, General 
      Counsel, Department of Transportation; and Kimberly Terese 
      Nelson, Assistant Administrator for Environmental 
      Information, Environmental Protection Agency...............    47
Letters, statements, etc., submitted for the record by:
    Graham, John, Administrator, Office of Information and 
      Regulatory Affairs, Office of Management and Budget, 
      prepared statement of......................................    20
    Igdaloff, Harold, president, Sungro Chemicals, Inc., 
      California:
        Information concerning reports...........................   164
        Prepared statement of....................................   104
    Langer, Andrew, manager, regulatory policy, National 
      Federation of Independent Business, prepared statement of..   112
    Nelson, Kimberly Terese, Assistant Administrator for 
      Environmental Information, Environmental Protection Agency, 
      prepared statement of......................................    68
    Ose, Hon. Doug, a Representative in Congress from the State 
      of California, prepared statement of.......................     4
    Pizzella, Patrick, Assistant Secretary for Administration and 
      Management, Department of Labor:
        Followup questions and responses................ 81, 87, 93, 96
        Prepared statement of....................................    50
    Rosen, Jeffrey, General Counsel, Department of 
      Transportation, prepared statement of......................    56
    Schrock, Hon. Edward L., a Representative in Congress from 
      the State of Virginia, prepared statement of...............    14
    Tierney, Hon. John F., a Representative in Congress from the 
      State of Massachusetts, prepared statement of..............    32

 
   WHAT IS THE ADMINISTRATION'S RECORD IN RELIEVING BURDEN ON SMALL 
                               BUSINESS?

                              ----------                              


                      WEDNESDAY, JANUARY 28, 2004

        House of Representatives, Subcommittee on Energy 
            Policy, Natural Resources and Regulatory 
            Affairs, Committee on Government Reform, joint 
            with the Subcommittee on Regulatory Reform and 
            Oversight, Committee on Small Business,
                                                    Washington, DC.
    The subcommittees met, pursuant to notice, at 2:05 p.m., in 
room 2247, Rayburn House Office Building, Hon. Doug Ose 
(chairman of the Subcommittee on Energy Policy, Natural 
Resources and Regulatory Affairs) presiding.
    Present for the Subcommittee on Energy Policy, Natural 
Resources and Regulatory Affairs: Representatives Ose, Schrock, 
Shays, Cannon, Deal, and Tierney.
    Present for the Subcommittee on Regulatory Reform and 
Oversight: Representatives Schrock, Bartlett, Kelly, King, 
Majette, and Velazquez.
    Staff present: Barbara Kahlow, staff director; Melanie 
Tory, professional staff member; Anthony Grossi, legislative 
clerk; Megan Taormino, press secretary; Krista Boyd, minority 
counsel; and Jean Gosa, minority assistant clerk.
    Mr. Ose. Good afternoon. Welcome to the joint meeting 
between the Government Reform Subcommittee on Energy Policy, 
Natural Resources and Regulatory Affairs and the Small Business 
Subcommittee on Regulatory Reform and Oversight, chaired by the 
gentleman from Virginia, Mr. Schrock.
    Here is what we're going to do. We could have votes here in 
short order or it could be quite some time. To the extent we 
have votes, I don't know, we'll just have to accommodate it. 
The way this subcommittee works is in each occasion where my 
subcommittee gathers, it being the Subcommittee of Government 
Reform, we always swear our witnesses in. Before we do that, we 
will have opening statements from myself and Mr. Schrock and 
any other Members who wish to make them, and we'll swear the 
witnesses in, and the first panel and the second panel.
    The first panel, we'll go through the questions with them 
and the testimony. Then we'll have the second panel up. The way 
we'll alternate is we'll have someone from my subcommittee. 
Then we'll have someone from Mr. Schrock's subcommittee. Then 
we'll have someone from my subcommittee and Mr. Schrock's 
subcommittee and on and on and on.
    Today the subcommittee will examine the administration's 
record in relieving burden on small business, with particular 
attention to its further implementation of the Small Business 
Paperwork Relief Act of 2002. This law required the Office of 
Management and Budget to take certain actions by June 28th of 
last year, and Federal agencies to take additional actions by 
December 31st. Both hours spent and penalties paid by small 
business affect productivity, jobs and economic growth. A 
special concern to small business are penalties levied by 
Federal agencies for innocent first-time violations of Federal 
paperwork and regulatory requirements.
    Today, OMB will update the status, since our July 2003 
hearing of the implementation actions for the complete listing 
of each of the agencies' single point of contact that will act 
as a liaison between small business and the agency, which was 
due on June 28th. They will update us on their actions for a 
complete listing of agency compliance, assistance resources 
available to small businesses, which was also due June 28th.
    We'll get an update on the timely agency enforcement 
reports, which were due December 31st, an update on OMB's 
interagency task force report to Congress, and an update on 
further significant paperwork reduction accomplishments and 
plans to benefit small business.
    In addition to the OMB, we have three key regulatory 
agencies joining us today. That would be the Departments of 
Labor and Transportation and the Environmental Protection 
Agency, and what they are joining us here to do is to discuss 
their track record in relieving enforcement burdens on small 
business and their significant paperwork reduction 
accomplishments and plans to benefit small business.
    OMB estimates the Federal paperwork burden on the public of 
8.2 billion hours. In April of last year, OMB estimated that 
the price tag for all paperwork imposed on the public was $320 
billion per year.
    In 1980, Congress passed the Paperwork Reduction Act and 
established an Office of Information Regulatory Affairs [OIRA] 
in OMB. OIRA's principal responsibility is paperwork reduction. 
In 1995 and 1998, the year 2000 and 2002, Congress enacted 
additional legislation with the objective of decreasing 
paperwork burden. Nonetheless, paperwork has increased in each 
of the last 7 years.
    On June 27, 2003, OMB published two Small Business 
Paperwork Relief Act documents. The first was a listing of the 
agencies single point of contacts and compliance assistance 
resources. The first chart on display, that would be the one on 
my right as I'm facing them. The first chart on display that 
reveals that, as of this week, 14 agencies with OMB approved 
paperwork are still without a single point of contact, and OMB 
has still not indicated compliance assistance resources for 18 
agencies.
    OMB's second June 27th document was a notice of 
availability of its initial task force report. During our July 
2003 hearing, we encouraged OMB to submit a final task force 
report by the June 28, 2004 statutory deadline.
    In the June 2002 Small Business Paperwork Relief Act, 
Congress intentionally did not require the initial agency 
enforcement reports until December 31, 2003 in order to allow 
agencies sufficient time to adjust their data systems.
    Unfortunately, guidance was not provided to the agencies 
about the Small Business Paperwork Relief Act until late 
October 2003, and, as the first chart on display reveals, that 
would be the same one I pointed to earlier, as of this week, 42 
of 69 applicable agencies have not yet submitted their 
enforcement reports. Twenty apparently were unaware of this 
statutory obligation, and that included the Small Business 
Administration.
    The second chart on display presents an analysis of the 
regulatory enforcement reports of six Federal agencies, 
including the three with us today. That is the one on the left, 
the smaller one. The chart reveals that 46 percent of both 
Department of Labor's and Department of Transportation's 
enforcement actions were against small entities in contrast to 
only 11 percent of EPA's.
    In addition, the Department of Labor reduced or waived only 
21 percent of its enforcement fines and penalties levied on 
small business. In contrast, 44 percent were reduced or waived 
by EPA. The Internal Revenue Service and Department of Labor 
reduced or waived $1.9 billion and $16 million, respectively, 
in fines or penalties levied on small business.
    The bottom line is that we could do better in complying 
with the letter and spirit of the Small Business Paperwork 
Relief Act.
    As an owner of various small businesses, I am especially 
disappointed at our progress to date. I do not understand how 
we can pick and choose which laws to fully implement.
    Congress has asked for small business results, which are 
fewer hours spent on government paperwork, lower compliance 
costs and resulting increase in productivity and profits and 
jobs.
    [The prepared statement of Hon. Doug Ose follows:]

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    Mr. Ose. I am pleased to introduce Chairman Schrock for the 
purpose of an opening statement.
    Mr. Schrock. Thank you, Chairman Ose, and good afternoon 
everyone. In 1996, Congress passed the Small Business 
Regulatory Enforcement Fairness Act. Part of the act required 
every single agency to develop a policy whereby they would 
reduce or waive civil penalties in enforcement actions against 
small businesses when appropriate.
    One of the things we have learned from NFIB surveys is that 
a majority of small businesses learn about government 
regulations for the first time in the normal course of doing 
business or when an enforcement action has begun. Compliance 
assistance is not the same as playing ``got-you'' with small 
business. A typical small business person is worried about 
making payroll next week or renewing health insurance for her 
employees or problems with a shipment that is late. She is not 
sitting at home studying the Federal Register for possible new 
regulations that may affect her business. In fact, I hope no 
one sits at home reading the Federal Register.
    She cannot afford to hire someone to handle regulatory 
compliance. Dealing with the government, once a penalty or fine 
is imposed, can be extremely onerous and can throw a typical 
small business's life and livelihood into utter chaos.
    As part of our ongoing oversight of the Small Business 
Paperwork Relief Act, we are looking at agency enforcement 
reports, and we have with us today representatives from EPA, 
the Department of Labor and Transportation and OMB to help us 
figure out if the Federal Government is treating small business 
with the sensitivity that is required.
    A small businessman or woman that is working hard providing 
jobs and growth to our economy, paying their taxes and trying 
to comply with the regulations of the Federal Government should 
be held harmless for their innocent mistakes. I hope that the 
enforcement attitude demonstrated by some regulatory agencies 
is changing for the better.
    In addition, I have long been a crusader against the ever 
increasing regulatory and paperwork burden that is imposed upon 
our small businesses.
    Our President again repeated his call in the State of the 
Union address when he said our agenda for jobs and growth must 
help small business owners and employees with relief from 
needless Federal regulation. That doesn't sound to me like the 
President thinks that there is just the right amount of 
regulation or just the right amount of paperwork imposed by the 
Federal Government. It is a call to action, and I look forward 
to working with all of you to implement the President's agenda 
for regulatory relief. Thank you.
    [The prepared statement of Hon. Edward L. Schrock follows:]

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    Mr. Ose. If I might just interject, I do want to assure the 
gentleman that my subcommittee staff does, in fact, read, on a 
daily basis, the Federal Register.
    Mr. Schrock. If mine did, I wouldn't keep them.
    Mr. Ose. I'm pleased to welcome for the purpose of an 
opening statement Ms. Velazquez.
    Ms. Velazquez. Thank you, Mr. Chairman. Small businesses in 
the United States face many challenges that hinder their 
overall success. One of these obstacles is trying to understand 
and comply with the overwhelming array of Federal regulations. 
Many times, small business owners find themselves buried under 
a mountain of paperwork, when they could be helping their 
customer and expanding their enterprises. Evidence shows that 
paperwork requirements are on the rise. The Federal Register, 
the publication that lists all proposed and enacted regulations 
by agencies, increased to 75,606 pages in 2002, more than 1,000 
pages of what the previous record was in 2000.
    The Federal compliance price tag for small firms is high. 
It has reached nearly $7,000 per employee per year, which is 56 
percent higher than large firms with 500 or more employees.
    Today, we are holding the second hearing on OMB's 
implementation of the Small Business Paperwork Relief Act to 
address this issue. I am anxious to hear from Dr. Graham, who 
has testified before the Small Business Committee numerous 
times on the progress of Federal agencies in working to reduce 
the regulatory burden on small businesses.
    I'm also interested in hearing the agency representatives 
testify about their 2003 enforcement reports. These reports are 
a critical tool in identifying the impact that rules and 
regulations have on small businesses.
    I'm disappointed to hear that almost half of the agencies 
failed to submit their enforcement reports by the December 31st 
deadline. We cannot allow this to happen. Agencies cannot adopt 
the mind-set that it is not necessary for these reports to be 
turned in.
    Congress relies on these reports not only to identify 
problems but also to present solutions to these challenges and 
to move forward in combatting high regulatory costs. These 
agencies must be held accountable for their efforts in making 
this happen.
    The Small Business Committee has looked at the regulatory 
challenges facing small businesses on many occasions in the 
past. We can probably all agree that Federal regulations are 
necessary. They serve an important purpose, such as protecting 
our workers and the environment.
    In response to these concerns, this committee worked to 
draft the Regulatory Act and the Small Business Regulatory 
Enforcement Fairness Act, which were passed into law. This 
legislation requires agencies to examine how the rules impact 
small businesses and to consider alternatives that will reduce 
the imposed costs or increase the benefits to them.
    The more clarity we can bring to this process, the better. 
Broad visions are always a good place to start, but, if we are 
going to change the environment, we cannot be afraid to propose 
bold solutions.
    I do believe that, if undertaken in a constructive manner, 
we can make real improvements. Let's hope that, in this hearing 
today, we can better understand how to build off the OMB's work 
to improve the findings and ensure the future endeavors provide 
a more comprehensive product. And, let's hope that the 2004 
task force report can determine better practices in order to 
enable agencies to comply with reducing one of the biggest 
burdens on small business, paperwork.
    The design of the Small Business Paperwork Relief Act of 
2002 was not to help small firms skirt regulations but merely 
to reduce the burden of compliance. OMB must take an active 
role in this process to make sure that agencies are involved in 
this process in order to ensure that our small businesses are 
treated fairly in the Federal rulemaking process. As the engine 
of the American economy, I believe we owe them that. Thank you, 
Mr. Chairman.
    Mr. Ose. I thank the gentlelady.
    We are joined by the gentleman from Georgia, Mr. Deal, who 
I understand does not have a statement.
    Mr. Deal. I do not.
    Mr. Ose. You're certainly welcome to make one if you'd 
like.
    And we are also joined by the gentlelady from Georgia, Ms. 
Majette. You're recognized for the purposes of an opening 
statement if you so choose.
    Ms. Majette. I do not. Thank you.
    Mr. Ose. All right. As we discussed earlier, my 
subcommittee under Government Reform, we always swear the 
witnesses in, so we're going to do that again here today and 
keep with tradition. So Dr. Graham, if you would, please.
    [Witness sworn.]
    Mr. Ose. I thank the gentleman. Let the record show that he 
answered in the affirmative.
    We are joined today by a frequent visitor of our 
subcommittee. That would be the distinguished gentleman Dr. 
John D. Graham, who is the Administrator for the Office of 
Information Regulatory Affairs at the Office of Management and 
Budget.
    Sir, you're certainly welcome. We're glad you're here. We 
are going to await your testimony with baited breath and you're 
recognized for 5 minutes.

STATEMENT OF JOHN GRAHAM, ADMINISTRATOR, OFFICE OF INFORMATION 
    AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND BUDGET

    Mr. Graham. Thank you, Mr. Chairman and other members of 
both subcommittees. I'm delighted to be here this afternoon. 
It's a little embarrassing to be a person to have to admit how 
many hours he has spent reading the Federal Register in the 
last 3 years, and as you can imagine, I've had a few people put 
issues of the Federal Register in front of me and point to 
specific paragraphs with disconcerting statements about those 
paragraphs, but I think that is perfectly appropriate.
    One of the good things about this hearing is we come 
together with a common goal, how to reduce the unnecessary 
paperwork that is hurting the development and the growth of 
small businesses in this country. I think the tougher challenge 
is to design the most effective strategies to solve this 
problem, and in my opening remarks, I'd like to talk about four 
general strategies that have some promise in this area.
    The first is for agencies and OMB to be more vigilant in 
reviewing the information collection requests that the 
government imposes on small businesses. This is a very labor-
intensive, tedious job form by form, question by question, but, 
since small businesses have to answer them, we think agencies 
and OMB should have to review these forms.
    The remedies in this area are to reduce the number of 
questions, to simplify the questions or to reduce the number of 
respondents who are required for each of these surveys.
    Examples include the Department of Labor's reducing the 
sample size of its annual employment survey or the Department 
of Health and Human Services, while engaged in a good thing, an 
evaluation of treatment providers, finding that it could 
achieve the evaluation with a 30 percent reduction in the size 
of the evaluation form, in particular, reducing the time period 
for activity logs that needed to be recorded in order to 
perform the evaluation. This is the bread and butter work 
between agencies and OMB of reviewing forms and reducing 
burdens.
    Strategy 2, reform or rescind regulations and guidance 
documents that impose paperwork burdens. For example, the 
Environmental Protection Agency has proposed a major rewrite of 
rules under the Resource Conservation and Recovery Act, and 
those proposals are estimated to save 929,000 hours of 
paperwork burden and $120 million in overall costs. Our hope is 
that this rulemaking will be finalized in 2004.
    The Occupational Health and Safety Administration has 
proposed health standards updates that cover an estimated 18 
different information collections, with an estimated burden 
reduction of 208,000 hours.
    And, third and most interestingly, the Department of 
Transportation has recently rescinded entirely the regulation 
of the airline ticketing industry, removing CRS companies and 
travel agents from the entire network of regulation. It's hard 
to have a paperwork burden if you're not covered by the 
regulation. We should keep in mind that paperwork burden and 
regulatory reform are closely connected.
    Another example, which you can hear about more today from 
Kim Nelson, is EPA's white paper of options on burden reduction 
under the toxic release inventory program. I'll let her give 
you the specifics, but it's a very promising step forward to 
maintain the environmental objectives of the toxic release 
inventory program while reducing the burden particularly on 
small businesses.
    Strategy 3, I would be remiss if I didn't say Congress had 
a role in reducing paperwork burdens on small business. 
Ideally, we might engage in simplification of the tax code at 
some point, and that might have something to do with the lion's 
share of the IRS burden that we are all aware of in terms of 
paperwork burden. But, let me give you a very concrete example. 
The bad news was the 2002 farm bill, which contained a 
provision requiring the U.S. Department of Agriculture to 
mandate country of origin labeling of foods by September 2004. 
There were no safety advantages for this mandated rulemaking, 
no quantified benefits, and, at the proposal stage, we 
estimated $3.9 billion in first-year costs and 33 million hours 
in recurring annual recordkeeping burden.
    Mr. Chairman, I've appreciated your leadership in trying to 
get a reconsideration of this issue, and the good news is in 
the omnibus budget bill, we have a 2-year delay in this 
particular regulation, but ultimately we need a careful and 
more serious evaluation of what we're doing in that area.
    When Congress passes laws with mandated rulemakings and 
heavy paperwork burdens, that makes our job at OMB and the 
agencies more difficult.
    And, fourth, we can replace paperwork with electronic 
communication and recordkeeping. This is the E in the 
President's management agenda, particularly we're interested in 
Business Gateway, a priority for helping small businesses get 
electronic information about all their compliance assistance 
requirements.
    These, we believe, are the basic strategies of paperwork 
reduction in all four areas. We believe that the administration 
is making progress here and there. We're certainly open to 
constructive criticisms and we look forward to the suggestions 
from both of these subcommittees. Thank you very much.
    [The prepared statement of Mr. Graham follows:]

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    Mr. Ose. I thank the gentleman. We're pleased to be joined 
today by my good friend and colleague from Massachusetts, Mr. 
Tierney, who has agreed to submit his statement into the 
record.
    We're going to go to questions now, and as we said earlier, 
we will alternate between the subcommittee that I chair and the 
subcommittee that Mr. Schrock chairs, back and forth, back and 
forth between the subcommittees. And within those, we'll go 
back and forth, back and forth between this side and that side. 
So if I get this screwed up, which I probably will, I just want 
to make sure that somebody is watching and we can handle it 
from there. Each Member will be given 5 minutes. We'll have 
multiple rounds if that's what everybody desires.
    So, I'm going to go ahead. Dr. Graham, I do want to go to 
the fourth item that you mentioned in terms of the efforts. You 
have more vigilance. You have the reform and the guidance 
documents, the congressional mandates. I apologize. I didn't 
get the fourth one.
    Mr. Graham. Electronic communication.
    Mr. Ose. E-government. OK. Dr. Graham, you and I have 
discussed this on a number of times. I want to cover a couple 
of things that we've discussed in the past. I read your 
testimony in terms of the updated of the single point of 
contact issue. It's our understanding that there are 14 
agencies still without a single point of contact. I believe in 
the left-hand column of the large chart over there, they're 
listed. And, my question is we'd like to update that chart so 
we can change the noes to yeses. Do you have updates that we 
can add to that list, or do you know when we might expect the 
remaining 14 in that first column over there on single point of 
contact to be in compliance? I can't read it from here, Dr. 
Graham.
    Mr. Graham. Well, I'm pleased to see we've got more yeses 
this time than the last time we went through this exercise, and 
I think one of the good things about an oversight committee is 
they put a little heat on the executive branch to try to get a 
few things done.
    I do think in the last week or so, we've had a little bit 
more progress than you have up there, in part because of this 
hearing of course, but I will get you the specifics on whether 
there are more of those Ns that should be Ys in writing after 
the hearing.
    Mr. Ose. How frequently do you review who is or isn't--or 
who has or has not established a single point of contact?
    Mr. Graham. Well, I think that you raise an interesting 
question. As we read the statute that we're discussing here, 
that's a requirement on the agencies. It's not a requirement of 
OMB. And, as a consequence, we view that ultimately--we don't 
have the ability at OMB to review every law that's applied to 
every agency to make sure that they're covering every single 
law, and this is one of those.
    However, this committee has expressed an interest in making 
sure that this gets done, and, as a consequence, this 
individual has been engaged in activity which we would not 
normally engage in to try to get more of these agencies to take 
these steps.
    Finally, we can do more than that, but that's our reading 
and understanding of the situation.
    Mr. Ose. I'm willing to have all the agencies come in 
individually and we'll have a hearing. I'm just trying to 
figure out if we can do that just administratively, and as we 
discussed in the past, I'm looking to you, and you've been very 
effective on these other agencies in terms of encouraging them 
to establish those single points of contact. So we are going 
to----
    Mr. Graham. We'll keep working on those last 14.
    Mr. Ose. All right. You had some comments about the 
training for each agency in terms of the point of contact, and 
the question I have is, given the wide variety of--the wide 
portfolio--that might exist in any single agency, how do we go 
about establishing some training regiments so that we have a 
consistent application of the single point of contact 
interaction with the taxpayer, if you will?
    Mr. Graham. I think that's a good question. I think each of 
the agencies, you know, has a responsibility to make sure that 
the person who is designated as the single point of contact has 
at least enough knowledge of the agency's programs and 
activities that they know where to point the small 
businessperson in the agency to find more detailed information. 
We don't think we're there yet with all the single points of 
contact. The agencies have identified people in many cases.
    Take the Department of Health and Human Services, a huge, 
complicated bureaucracy. A single point of contact at that 
agency has a tremendous challenge. But, we're in the process of 
trying to encourage agencies to make sure that at least at that 
initial call, that initial contact point, that person knows 
enough to then refer people to the right people in the agency 
to answer their questions.
    Mr. Ose. Are there ongoing training programs within the 
agencies to accomplish that?
    Mr. Graham. I don't know that I would refer to them as 
training programs, but, in the context of the task force that 
is mandated under the statute where we have representatives 
from various agencies, we are encouraging the members of those 
task forces to reach out to their single points of contact and 
make sure that they have the appropriate knowledge.
    Mr. Ose. All right. The gentleman from Virginia.
    Mr. Schrock. Thank you, Mr. Chairman. Thank you, Dr. 
Graham. Let me first say I agree with you on the country of 
origin thing. It just exacerbates an already bad problem and 
adds burden and grief to businesses which are already 
experiencing it. So I absolutely agree with it. And, yes we do 
too much mandating up here. How we stop that, I don't know. I 
think over time, hopefully, that will happen.
    The IRS--is anybody from IRS here? Good--accounts for not 
only 80 percent of all the paperwork living on the public, but 
also the lion's share of the Federal enforcement fines and 
penalties levied on small businesses. Enforcement reports show 
that IRS directs 66 percent of its discretionary enforcement 
actions against small business and has only reduced or waived 
12 percent of the fines or the penalties levied on small 
business.
    Is OMB willing to meet with IRS about reducing its 
enforcement penalties on small business, and, if not, what do 
you recommend? Because they seem to be the biggest culprits in 
this.
    Mr. Graham. Well, it seems at first blush like a reasonable 
question, however, I have raised that topic of the words IRS 
enforcement and OMB in a conversation with OMB legal counsel 
and White House general counsel, and quite frankly, they don't 
have any interest in the Office of Management and Budget's 
being involved in enforcement activities of the Internal 
Revenue Service.
    And, this relates to a very longstanding relationship 
between OMB and Treasury that I believe I wrote about 3 pages 
of testimony for it at a previous hearing for Chairman Ose's 
committee.
    So it seems reasonable at first blush, but we've got a lot 
of people to persuade if we're in the business of turning OMB 
into an oversight unit on the IRS enforcement operation.
    Mr. Schrock. How do we break that logjam? How do we get 
them to do it?
    Mr. Graham. How do we get the idea of OMB as an overseer? I 
think you're talking about a discussion of the relationship 
between the Treasury Department and the Office of Management 
and Budget after a transition of 20 years of a different 
operating arrangement.
    Just to give you a sense of perspective, the people at 
Treasury who work on paperwork are larger in total size than 
all of the people at OMB who work on paperwork of every agency. 
I mean, you're talking about a very significant change in the 
nature of the priorities at OMB to move them into an aggressive 
vigilant role. And, in the enforcement area particularly, 
you're going to have a much more difficult challenge getting 
any consensus that we should be involved in enforcement 
activities.
    Mr. Schrock. Well, maybe that's a challenge Chairman Ose 
and I would take on, because this is just totally out of 
control. And, maybe we can do that this year before Chairman 
Ose escapes to California to live the good life.
    Mr. Graham. Well, he's been giving me a good earful on this 
for about 3 years now.
    Mr. Schrock. Oh, he has. All right. Well, when he leaves--
--
    Mr. Graham. One of these areas when stubborn Graham hasn't 
been able to deliver any goods.
    Mr. Ose. It's the rock and the hard spot now. He's the 
rock. I'm the hard spot.
    Mr. Schrock. OK. As we discussed at our July 18th hearing 
and in correspondence with OMB, both before and after the 
hearing, the subcommittees found that initial OMB chaired task 
force report to be largely nonresponsive to congressional 
intent.
    Your written testimony reveals that since OMB's June 27th 
publication of the report, OMB has convened only one task force 
meeting last week on January 20th, which, I think, is kind of 
coincidental, to develop the final task force report which is 
statutorily due on June 28th. Will any of the topics that we 
found not adequately covered in the initial report be 
addressed? Do you think they will be reexamined? If so, which 
ones, and, if not, why?
    Mr. Graham. Well, as I recall, the statute lays out 
specific responsibilities for the task force in the second year 
report versus the first year report. So, our priority in the 
second year will be on those second-year activities.
    I don't know whether nonresponsive is necessarily the most 
appropriate way to describe that. There were some ideas that 
staff of the committee and subcommittee had about what they 
thought the task force should conclude with regard to those 
activities. The various agency representatives looked at those, 
and they reached some different conclusions. There may be 
differences in judgment, but I don't think nonresponsive to the 
statute is a fair characterization.
    Mr. Schrock. My time is up, so I think I'll pass to 
somebody else, Mr. Chairman.
    Mr. Ose. Before I recognize the gentleman from 
Massachusetts, I want to welcome the gentleman from Maryland, 
Congressman Bartlett, the gentlelady from New York, 
Congresswoman Kelly to the hearing.
    And the Congressman from Massachusetts.
    Mr. Tierney. Thank you, Mr. Chairman. Dr. Graham, how are 
you?
    Mr. Graham. Good to see you, sir.
    Mr. Tierney. Good to see you. Thanks.
    Mr. Chairman, I wonder as a first order of business if I 
might just ask unanimous consent that the hearing record be 
held open for 10 days for individuals or groups like the 
Environmental Entrepreneurs to allow them to submit a 
statement?
    Mr. Ose. Without objection.
    Mr. Tierney. Thank you. Mr. Schrock made a comment about 
the IRS, and Dr. Graham, you just started talking about that. I 
just make a note that I had the opportunity to serve as the 
minority member for this committee on the joint congressional 
committee on oversight on the IRS on their periodic review, and 
it seems to me that one of the problems we have there is just 
how we allocate our resources and where we direct the IRS's 
attention.
    In large part, the Commission was testifying that our 
failure to audit a number of businesses, particularly those 
involved in transfer of pricing schemes for tax avoidance, was 
costing us billions and billions of dollars every year. So, 
sometimes paperwork is worthwhile, but once you have it, you 
have to have enough resources and people to point in that 
direction to try and make sure that we save this government 
some money, the taxpayers some money on that.
    Do you have any examples that you might want to share with 
us of agencies that have done particularly well in finding 
better ways to access information or use information and report 
on it?
    Mr. Graham. Well, in the electronic information area, which 
is the fourth of the strategies that I described to you for 
reducing paperwork, I think both the Department of 
Transportation and the Environmental Protection Agency are 
widely recognized within the Federal Government as pioneers of 
both electronic government generally and electronic rulemaking 
in particular, and I'm pleased that you have Kim Nelson, who 
certainly is one of the governmentwide leaders in that area, is 
on the second panel, and I'd encourage you to address that 
question to her specifically.
    Mr. Tierney. I will. Thank you.
    Mr. Chairman, I have no other questions at this time. I 
actually have another Postal Committee hearing that I have to 
go to, so I'm going to turn it back to you and I know Ranking 
Member Velazquez will carry it from here.
    [The prepared statement of Hon. John F. Tierney follows:]

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    [GRAPHIC] [TIFF OMITTED] T3639.021
    
    [GRAPHIC] [TIFF OMITTED] T3639.022
    
    Mr. Ose. You realize we all envy going to the Postal 
Committee hearing.
    Mr. Tierney. I'll bet you are.
    Mr. Ose. The gentlelady from New York.
    Ms. Velazquez. Thank you, Mr. Chairman. Dr. Graham, could 
you please describe the type of progress that the interagency 
task force has made in raising awareness of the 
disproportionate impact that rules and regulations have on 
small businesses?
    Mr. Graham. Well, the task force it has basically been 
working internally within the government to simplify the 
arrangements as we relate to agencies and small businesses, but 
the awareness of the burden of regulation and paperwork on the 
small business community, quite candidly, I would not give any 
credit necessarily to the task force on that. I would give it 
to the Advocacy Office of the Small Business Administration, 
which, for example, commissioned a major report examining the 
degree of regulatory and paperwork burden of companies of 
different sizes, and we refer to that at OMB as the Crain-
Hopkins report, the two authors. It has some very useful 
information that describes the extra burden of paperwork and 
regulation on the small business community.
    Ms. Velazquez. But, how do we know that those agencies are 
aware?
    Mr. Graham. How do we know the agencies are aware? Well, 
first of all the, I think this subcommittee--both 
subcommittees--have played a very important role in making sure 
that those agencies are aware. In fact, a task force that we're 
now engaged in was created because of the activities of these 
two subcommittees and the Congress generally, and I think that 
there are pockets of professionals within various agencies that 
know a lot about the small business impact and that care a lot 
about the small business impact.
    However, to be quite candid with you, that is not a 
universal sentiment through all of the professionals in the 
various agencies, and one of the key challenges we face is how 
do we strengthen the hand in the agencies of those 
professionals who do understand the small business impacts and 
care enough that they want to make a difference in reducing 
burden on small businesses.
    Ms. Velazquez. Can you tell us about any agencies that are 
particularly severe violators of the effort to reduce the 
paperwork burden on small businesses?
    Mr. Graham. I think that there is in the Crain-Hopkins 
report that I mentioned to you--this is the report commissioned 
by the Small Business Administration, an evaluation of 
regulation in different areas and an estimate of the burdens in 
different areas. And, it starts with the clear conclusion that 
the Treasury Department and IRS obviously account for a 
substantial fraction of the overall burden, well over a 
majority of that burden, but, if you look in the areas of labor 
and environmental regulation, there are also substantial 
paperwork and recordkeeping requirements in those areas as 
well. So, I would say it's broadly based across the government 
with an emphasis in those areas.
    Ms. Velazquez. Is it feasible, Dr. Graham, that we could 
set up--or you can set up a reward program for agencies who 
meet the goals of the Paperwork Reduction Act? Do you believe 
that agencies will be more responsive if there were incentives 
for compliance?
    Mr. Graham. I think it's possible. I think the question 
becomes the nature of those incentives that are created, do we 
have the effect of increasing the influence within the agency 
of those professional names who know about the small business 
impact and care about that, and I think that depends on the 
details of exactly how the incentive system is set up and how 
it relates to the activities of those individuals.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Mr. Ose. The gentleman from Georgia.
    Mr. Deal. I believe I'll pass, Mr. Chairman.
    Mr. Ose. The gentlelady from Georgia.
    Ms. Majette. Thank you, Mr. Chairman, and thank you, Dr. 
Graham for being here this afternoon. I'd like to find out your 
opinion regarding the recommendation to reduce the penalty for 
first-time offenders of the regulations. Do you have an opinion 
on that recommendation?
    Mr. Graham. Well, I think that there clearly needs to be 
discretion in the enforcement operations of different agencies, 
and we at OMB don't have experience or authority in that 
enforcement area.
    I would actually encourage you to ask each of the agency 
representatives today what the practices of the agencies are in 
that area, and my understanding is a lot of the agencies 
already engage in that practice to a significant extent.
    Ms. Majette. From your perspective, do you think that there 
is something that we should do on a broader scale to lessen the 
impact on those first-time offenders?
    Mr. Graham. Well, I would be reluctant to freelance a 
broad-based answer to that question, but I think I clearly 
agree with the basic sentiment of your question that there 
needs to be--it's worth looking into the question of whether 
that broad-based type of action would be appropriate.
    Ms. Majette. So do you think, though, that it should be 
left to the individual agency to make a decision----
    Mr. Graham. Based upon what I know, which is not a lot, 
because as I try to emphasize, OMB is not in the enforcement 
business, or even in the review of the enforcement business. 
I'd encourage you to ask the people from the agencies that 
question.
    Ms. Majette. All right. Thank you. I yield.
    Mr. Ose. The gentlelady yields back.
    The gentleman from Maryland.
    Mr. Bartlett. Thank you very much. In a former life, I was 
a small business person. I was 1 of maybe 35 people that came 
here as a member of NFIB, and so I noted with interest Mr. 
Schrock's observations about the enormous burden that IRS is to 
small business.
    If a homeowner finds that a large crocodile has inhabited 
his backyard fish pool, he may find it more productive to 
remove the crocodile rather than trying to domesticate him.
    I wonder, sir, what thought you have given to eliminating 
the problem of IRS by simply eliminating the IRS and going to 
something like the consumption tax or the fair tax, in which 
case small business would not be taxed?
    As a matter of fact, as you know very well, you can't tax a 
business. It simply becomes a part of the cost of doing 
business, and so it's passed on to the consumer. And, this is a 
very regressive tax. It is one of our most regressive taxes, 
because the poorest of the poor must buy the products and 
services of our businesses that simply pass on this tax.
    Sir, where are you and the organization you represent 
relative to eliminating the problem of the IRS by simply 
eliminating IRS and going to something like the fair tax, the 
tax on consumption?
    Mr. Graham. Well, let me start by saying that the OMB in 
our testimony in a variety of hearings has emphasized the point 
that, if IRS paperwork reduction is a primary objective--and 
that certainly is one of the objectives of the Paperwork 
Reduction Act itself--we do have to ask fundamental questions 
about whether our tax code has too much complexity and too many 
nuances to really have a simple, easy way for taxpayers to deal 
with it.
    So, I think simplification of the tax code is a necessary, 
critical step toward reducing IRS paperwork, but I think there 
are other people who are more authoritative on tax policy in 
the administration that really should get into the meat of your 
question, but I definitely agree with its basic sentiment.
    Mr. Bartlett. So, from your perspective, substituting 
another tax structure for the IRS would not necessarily be 
unproductive and impossible?
    Mr. Graham. From a paperwork reduction perspective, one can 
imagine either alternative income taxes or various consumption 
taxes that would have a lot less paperwork burden than what we 
have with the current tax code.
    Mr. Bartlett. Is there any movement on the part of the 
administration to encourage at least a discussion of that kind 
of a change?
    Mr. Graham. I think that's a good question to pose to our 
colleagues in Treasury. I think those are the right people to--
who think hard about those questions.
    Mr. Bartlett. OMB is not involved in this?
    Mr. Graham. One of the comments I made--I forget if you 
were in the room earlier--there was a very long and treasured 
distinction between the responsibilities of the Office of 
Management and Budget and the Treasury Department, and as you 
may know, the remnants of OMB or the origins of OMB, I should 
say, were in the Department of the Treasury at one point, and 
then we were moved out. I think really the revenue side and the 
expenditure side, there's sort of an alliance that the two 
agencies are going to be primarily responsible for those two 
separate entities, and that has led quite frankly to OMB's not 
being the primary player in the administration on the 
particular subject that you raise on tax reform.
    Mr. Bartlett. Thank you. Thank you, Mr. Chairman.
    Mr. Ose. The gentlelady from New York.
    Mrs. Kelly. Thank you, Mr. Chairman. Dr. Graham, I'm glad 
you're here today. I am very pleased of the work that you've 
been doing in the agency.
    A number of years ago, I got passed and signed into law by 
President Clinton a law that would allow a separate office in 
the GAO to examine all the rules and regulations that were 
promulgated and finalized by the agencies of the United States 
that would allow this office then to have a look at them, and 
they would look at them for three things, the cost-benefit 
analysis, a look at the redundancy of rules and regulations, 
and the overlap of rules and regulations.
    It seems to me if we're really going to cut paperwork, 
those are some things we need to look at, especially with 
regard to redundancy and overlap, and I would ask you, Dr. 
Graham, if there's any movement at OIRA today to have a look at 
redundancy and overlap? There ought to be a way in an 
electronic age we can eliminate both redundancy and overlap and 
relieve the burden on our small businesses that way. Can you?
    Mr. Graham. I think there are modest steps that we can take 
in the executive branch, even without any new legislation, to 
provide progress in this direction.
    For example, in 2002, we issued a request for public 
nominations of regulatory reforms that would reduce paperwork, 
reduce burden on businesses and consumers without compromising 
the benefits of the regulatory system, and we received from 
over 1,700 commentors more than 300 unique, distinct 
recommendations, and today the agencies are still working 
through which of those to adopt, which of those are not good 
ideas, which of them might be a good idea if they were modified 
or fashioned a little bit.
    So, in our annual report to Congress, we actually describe 
the agency's progress in each of these areas, and what you're 
going to hear today from several of the agencies is some 
information on progress that they're making on some of those 
regulatory reforms.
    Mrs. Kelly. Are you, in any way, wielding a stick in terms 
of trying to get these things done?
    Small businesses are strangling. They have been strangled 
repeatedly and for far too long, by way too much paperwork. The 
red tape for simple people who are running a small business 
that may have three or four people only as their employees. 
It's really horrible, and it's not just the IRS. It's every 
agency of government. It's an agency requiring someone like a 
building contractor to respond to the agency on who they're 
employing and very personal questions about why they're 
employing these people and what those people are doing. That 
type of thing takes time. It takes cost. There have been 
estimates that are as high as--well, $7 million a year or 
something like that. Maybe more. Maybe that's way 
underestimating what the cost is for small businesses.
    I think that there's got to be a time, and I certainly 
sense that this administration is interested in trying to stop 
this kind of thing from happening. What kind of a stick do you 
have to wave at the agencies to try to get them--to prod them 
along?
    Mr. Graham. Well, maybe it needs more than a stick. Maybe I 
need both an Air Force and a Navy and an infantry. But I think 
that the tools that we have at OMB are to stimulate proposals 
for smart regulatory reforms and to jawbone our agencies into 
taking them seriously and trying to look at them, and we, of 
course, appreciate the efforts of this committee to help us do 
oversight on their implementation of those.
    One of the promising ideas that I mentioned in my earlier 
remarks is the effort at the Environmental Protection Agency to 
modernize and improve the toxic release inventory program, and 
this is a very sensible program to provide communities 
information about how much pollution is being emitted from 
various sources.
    But it turns out that they are requiring a number of 
sources, including small businesses, that report zero or near 
zero emissions to continue to have to report each year those 
types of numbers, and I'm pleased that Kim Nelson is with us 
today and can describe some efforts that they're undertaking to 
try to bring more burden reduction into the toxic release 
inventory program.
    Mrs. Kelly. Thank you. I'm running out of time, but again, 
I would encourage you and ask us for legislation if you need 
it, to help eliminate the redundancy and overlap. Simply that 
would help. If you could do that, that would be very helpful. 
Thank you, Mr. Chairman.
    Mr. Ose. Thank you. Does the gentleman from Iowa wish to 
have an opportunity to ask questions in this round?
    Mr. King. I'll pass. Thank you, Mr. Chairman.
    Mr. Ose. OK. I do want to go back to one thing. I want to 
clarify something. I'm not quite clear on, Dr. Graham. It's my 
understanding that the Paperwork Reduction Act requires OMB 
approval for all paperwork requests, including IRS. Am I----
    Mr. Graham. That's correct.
    Mr. Ose. That is correct. So before they can use it, 
they've got to come to OMB and get your sign off on it.
    Mr. Graham. For the information collection requests, yes.
    Mr. Ose. Not the----
    Mr. Graham. Not the guidance document, not the regulation 
but the information collection request.
    Mr. Ose. OK. All right. Now, I want to go back to a subject 
we were getting to. We talked about single points of contact. 
The second column over there on the large chart is compliance. 
It has to do with compliance assistance. And, one of the 
requirements of the Small Business Paperwork Relief Act was 
that, in addition to the single point of contact, there was 
supposed to be point to which people could go for compliance 
assistance.
    Now, the act required OMB to publish on June 28, 2003 a 
listing of the agency compliance assistance resources available 
to small business. In that middle column of the large chart, 
you'll see a bunch of yeses and noes, Y's and N's. There are 18 
N's still on that chart, including the GSA and FERC. The GSA is 
the agency that contracts with so much of small business. It's 
the one on the right, Dr. Graham, and then FERC obviously is--
well, at least in California, it's a very important agency.
    I'm trying to find out when we'll be able to get those 18 
agencies to have their compliance assistance much like the 
single points of contact in the 14 agencies. Do you have any 
sense of that?
    Mr. Graham. Well, let me start. It's a reasonable question, 
and the good news is that we feel we have tackled a lot of the 
major departments and agencies, and we are left with, well, 
there are a large number of those agencies, while they do not 
account for, you know, a majority or even a substantial 
fraction of the overall issue here.
    I think GSA is particularly frustrated, and it's really 
appropriate for you to be asking this, why we can't get GSA to 
do that since they do, in fact, have a lot of interaction with 
the small business community.
    FERC, you probably have the insight there just by knowing 
that it is, in fact, an independent agency in most of its 
activities outside the purview of Executive Office of the 
President oversight. But again, there's no problems with us 
picking up the phone and reminding them of their 
responsibilities under the Paperwork Reduction Act.
    Mr. Ose. Would you like us to send you a letter so you 
can----
    Mr. Graham. I was assuming I was going to get one, Mr. 
Chairman.
    Mr. Ose. Well, I am interested. I mean, GSA procures all 
sorts of services from lots of small businesses I think you're 
correct, they have at best a very small percentage, but GSA is 
one of those that I think is on a daily basis interacting with 
small business, and I'd like to see that compliance point--see 
the compliance resources made available to small business.
    Now, the second question I have is that one of the 
questions that we found in our last meeting was that when we 
asked about the forms that people could use off the Internet, 
in other words, go to each agency's Web site and pull it down, 
for paperwork requirements and the like, you responded on 
September 11th that there were staff limitations that 
constrained your ability to collect that information or collect 
those forms.
    So, what I had done was my staff called all of the 71 
different agencies and asked them to send us a copy of their 
information collection pieces, and we have them right down 
here.
    Mr. Graham. Wow.
    Mr. Ose. We'll be happy to give them to you. In fact, we're 
going to give them to you.
    Mr. Graham. Do I have to read each----
    Mr. Ose. No. What I want you to do is post them with a link 
on your Web site so people can get to them without any major 
challenge, so to speak. I mean, we tried to take the staff 
issue off the table by----
    Mr. Ose. You've done that, sir. So, what can we expect in 
terms of getting OMB to post these forms on the Web site, 
either by link or otherwise, so that people can access them off 
the Web?
    Mr. Graham. Well, let me give you an initial reaction to 
that and not a final one, and that is supposing I am a small 
business person, whether I'm working in dry cleaning or kind of 
a service industry of some sort, and I want to get on OMB's Web 
site, and I want to find out which of these net books, which 
tab in which notebook applies to me. We need more than the 
notebooks up there. We need a software system that will allow 
that person to say, I am in a dry cleaning business, these are 
my sort of parameters of my business, and then there needs to 
be a software capability that kicks out, these are the forms 
that are relevant to you.
    Just posting all of the forms on our Web site without any 
ability for the person to access those forms that are relevant 
to them, my initial instincts tell me--though I'm always 
persuaded, Mr. Chairman--that is not going to solve the 
problem. And that's what Business Gateway is all about. 
Business Gateway says here are the parameters of my business. 
Now tell me with the engine--the software engine behind it, 
which of those notebooks and tabs in those notebooks apply to 
me.
    Mr. Ose. I remember the last time I travelled to 
Washington, I started with a step. So I'm thinking this might 
be a step in the right direction.
    Mr. Graham. Well, we're certainly willing to consider that, 
Mr. Chairman.
    Mr. Ose. Mrs. Kelly, you had a request to----
    Mrs. Kelly. Well, I just wanted--I'd like to just point out 
that year after year we've been trying to do something to help 
small businesses rid themselves of this enormous burden and 
costly burden. It's costly for all of us. It drives up the 
price of everything we do with small business.
    But, I note here that 24 agencies didn't bother to provide 
with requested copies of all of the paperwork that was 
applicable to small businesses, and I also notice here that in 
these--this line of--with noes with noncompliance, the OMB is 
noncompliance straight across the board. Now, I know you will 
give me reasons for that, but it would, I think, be helpful if 
we could have some strong explanations about why some of these 
agencies, 24 agencies that govern small businesses, haven't 
bothered to send in paperwork that they require the small 
businesses themselves to file. That is obscene. I'm not after 
you, Dr. Graham. I'm just infuriated that somehow, somewhere in 
this government we are not responsible.
    I shouldn't say ``we.'' The agencies are not responsible. I 
don't know what it's going to take, but year after year. Ms. 
Velazquez and I have held hearings before, and this has gone on 
year after year. I am so glad, Mr. Chairman, that you are 
holding this hearing now, and I think it needed to be pointed 
out that the agencies don't even bother to respond when you 
have a joint hearing up here on Capitol Hill.
    Again, if this is going to require legislation, then so be 
it. We will have to write a rule.
    Mr. Ose. Well, if I may be so bold, I believe the 
legislation already exists requiring them to report, and one of 
the things that we struggle with is finding the agency, in this 
case our opinion is that it's OMB, which can just kind of sit 
there and hover and say where is it? Where is it? Where is it?
    Mrs. Kelly. Mr. Chairman, I'm suggesting at this point that 
we consider penalties.
    Mr. Ose. Ms. Velazquez.
    Ms. Velazquez. I have no more questions.
    Mr. Ose. Mr. Bartlett. Ms. Majette.
    Ms. Majette. I just need clarification, Dr. Graham. Are you 
saying that there is a need to develop the software that would 
do what you are suggesting or that the software exists but 
somehow it's not being used effectively or at all?
    Mr. Graham. It's in the early stages of being developed 
right now. As a part of the interagency task force that this 
law created, and the project goes under the name Business 
Gateway, the gateway for a small business to learn about which 
of those requirements apply to them. But we have challenges in 
the next year or more to develop the appropriations, to develop 
the evaluation, to do the technical work, to develop Business 
Gateway, because as you can imagine, the software that is 
necessary to reliably provide the answer to the questions I 
described, given all those notebooks, it's a pretty 
sophisticated engine that's going to do that.
    Ms. Majette. With respect to the appropriation, is there in 
the upcoming budget--is there going to be a need for additional 
funding that you think will be above the levels that you're 
expecting to be authorized?
    Mr. Graham. I think for the next fiscal year we have 
funding we need, but it's going to require more than 1 year. 
This is an ongoing activity that we need to provide adequate 
priority to.
    Ms. Majette. What kinds of figures are you talking about?
    Mr. Graham. I don't have the precise ones off the top of my 
head, but if you want them, I'll get them for you.
    Ms. Majette. Yes, please. Thank you.
    Mr. Ose. If I might be so bold on that, it may be possible, 
it may be as simple as putting a link on, for instance, OMB's 
Web site to the agencies where these forms might exist. It 
wasn't--it's not--it may not be a question of requiring some 
fancy new software on. On a Web-based system, it may be as 
simple as creating a link.
    Ms. Majette. If I understand Dr. Graham's concern, if 
you're dealing with a small business owner who wants to be in 
compliance but may not know exactly where in the books to turn 
to find all of the forms that he or she may need in order to be 
in compliance, then you're talking about having a mechanism by 
which that business owner will be notified that these are the 
four--if the business owner provides the parameters of the 
business then the software would somehow kick back to the 
business owner, forms 1, 5, 7, 29, 86 and 103 so that then the 
owner can go ahead and fill those forms out, knowing that those 
are the forms that need to be completed in order to be in 
compliance.
    Mr. Graham. That's right, and it will require, 
unfortunately, more than just a link from OMB's Web site to the 
agency's Web site, because even if I'm a small business that 
works with the Department of Health and Human Services, there 
are a wide range of notebooks. There's probably a whole bunch 
of notebooks in there of Health and Human Services, and I need 
to know which of those apply to me, given that I am a small 
health maintenance organization, for example. I think the 
premise of your question is correct. It is a nontrivial task to 
generate an engine that will allow that kind of information to 
be provided, and consider how important it is that it be 
reliable, because if that information that comes back from the 
engine misleads the small business person into believing they 
only need these forms, they don't need these forms, then you 
have a very messy situation developing. So, obviously, the task 
force wants that product business gateway to be done with 
accuracy, a high degree of accuracy.
    Ms. Majette. Yes. And, I guess the analogy would be what 
happens a lot of times with the IRS if someone calls in to ask 
a question, assuming that person that they receive the answer 
from is knowledgeable enough to answer the question properly, 
they are then relying on that information. And, if they have 
not been given correct information, they may not be in 
compliance or they may not do everything they need to do. So, 
the question is on----
    Mr. Graham. Bingo. You're hitting it right on----
    Ms. Majette. Where does the burden rest? Does it rest with 
the individual business owner or does the burden rest with the 
agency that's requiring compliance to provide sufficient 
information so that----
    Mr. Graham. I don't know the legal answer to your question, 
but I do know the task force feels very strongly that the 
Federal Government should not venture some half-concocted 
software system that purports to give this information that 
isn't very adequate. We want a quality system put up from the 
start and then improve it over time, and that is why it is not 
going to happen overnight, this type of exercise.
    Ms. Majette. Is there anything we can do to facilitate that 
process?
    Mr. Graham. I think it will be very useful to continue to 
have, in fact at some point to have a hearing at this committee 
where you hear from some people from the agencies working on 
Business Gateway to learn more specifically what are the 
challenges they are facing, what are the extra steps that are 
needed. That would be a useful thing to do.
    Mr. Ose. From an identification standpoint, if people 
contacting the agencies--there is a thing called NAICS, North 
American Industrial Classification System, which Chairman 
Manzullo has been pushing very strongly, the purpose of which 
would be to allow that dry cleaner or allow that engine 
manufacturer or allow whomever to be able to identify which 
forms electronically. And, we have had a significant debate 
over time about whether or not that is the appropriate system 
of classification and the like. We haven't come to a resolution 
yet. I think that accurately characterizes our discussions.
    Mr. Graham. I think the task force thinks that is a 
constructive idea, but not necessarily the best approach. 
Business Gateway, the way they are developing it will allow the 
small business person to say modest things about the nature of 
their business without getting into the codes, and then in the 
software it will provide those answers.
    Ms. Majette. Yes. Thank you.
    Mr. Ose. OK. Mr. King from Iowa.
    Mr. King. As I sit here and try to get up to speed on this 
conversation, I might have missed this in your testimony, Mr. 
Graham, but the origin of the Business Gateway project, when 
was that conceived and how was it conceived and what is the 
thrust for driving it at this point?
    Mr. Graham. It arises out of the President's management 
agenda and the effort to promote--both to promote electronic 
commerce and electronic government. So it has emerged out of 
the entire effort in the President's management agenda.
    Mr. King. When was that?
    Mr. Graham. It started several years ago, because it was 
started in the talk phase and then in the design phase and now 
we are at the very early stages of actually trying to develop 
the kind of software we are talking about here.
    Mr. King. Is it this President?
    Mr. Graham. I believe it was. I am sure there may have been 
conversations about it previously, but its real seriousness 
began in this administration.
    Mr. King. The thought that occurs to me, try to get 
accuracy out of the IRS. It is pretty hard to find three 
answers that are all the same, or even two that are the same 
when you make that call and ask them, yet we don't have any 
hesitation about enforcing IRS regulations. We aren't insisting 
upon 100 percent accuracy before we enforce IRS laws. And, that 
has been a burden on the public. But it seems to me that if you 
could deploy a Business Gateway plan and do so fairly quickly, 
at a significant degree of accuracy, we would be able to refine 
those inaccuracies by simply the problems that arise from that 
and make corrections as you go. It seems to me that it wouldn't 
be a difficult piece of software to write. And, if someone 
calls in and asks for advice and says that I am running a 
particular type of business, what do I need for forms? Those 
data I would think are easily available. Isn't that transferred 
into the electronics?
    Mr. Graham. I agree with the basic premise of your 
question. And, please don't misunderstand me, that I am not 
suggesting that this thing should have to be 100 percent 
accurate before we would begin to field test it or pilot it in 
some way, but I think you can understand that we wouldn't want 
a system like this to be highly error prone early in its 
development because the reputation that will develop because of 
that will ultimately cause a premature casualty in the 
development of that innovation.
    But, it doesn't require 100 percent effectiveness. I don't 
think that the availability of the information you just 
described, which is what Chairman Ose has been pushing me on 
for 3 years, I don't think it is quite as straightforward. And, 
that's one of the reasons, it's very hard for small business 
people to get their arms around this, even fairly 
sophisticated, knowledgeable people to try to access the 
various systems that now exist don't get easy answers to their 
questions about which of these forms is applicable to me. It is 
not an easy thing.
    Mr. King. I would suggest that if there was a profit 
incentive here, if business were actually in control of this 
development, we would have it done.
    Mr. Graham. Or a competitive bidding process to develop 
this system.
    Mr. King. Thank you, Mr. Graham.
    Mr. Ose. I have but a couple more questions for Dr. Graham 
and if anyone has any questions, we will go on. We have heard 
about the 14 missing responses on the single point of contact, 
the 18 on compliance assistance. Ms. Kelly talked about the 24 
who didn't even respond to our request for their paperwork 
applicable to small business.
    Mr. Graham. I was unclear. Twenty-four that did not respond 
to your requests? So, we have 24 more notebooks that we haven't 
seen yet?
    Mr. Ose. I want to followup on the enforcement reports. The 
Small Business Paperwork Relief Act required each agency to 
submit its initial agency enforcement reports by December 31, 
2003, and yet we are missing 42 of them by our last count. And, 
what I am trying to find out is whether or not you will help us 
get those 42?
    Mr. Graham. Facts: One, these were statutory requirements 
of the agency. Two, this subcommittee encouraged us to make 
sure agencies were aware of it and we issued the President's 
Management Council memo because of this subcommittee's 
interest. We will take further steps at your suggestion to make 
them aware. That's where we are at the present time.
    Mr. Ose. I did pick up--one of the things we thought we 
figured out on that memo for the President's Management 
Council----
    Mr. Graham. The deputies of all the major departments and 
agencies within the purview of the President.
    Mr. Ose. There were 20--I think we found there were 20 
agencies who were unaware of it.
    Mr. Graham. It will be interesting to know how many of 
those Cabinet departments or agencies or how many are outside--
--
    Mr. Ose. None of them are. There are actually--they are 
smaller.
    Mr. Graham. A lot of them are independent agencies.
    Mr. Ose. Second bracket there on that larger poster. But 
GSA is one of them. SBA.
    Mr. Graham. I think your concerns are very well taken.
    Mr. Ose. Anyway.
    Mr. Graham. The SBA one is fascinating. That's a headline.
    Mr. Ose. I just want to get the information put together in 
a single location and have it be responsive to the 
congressional legislation. So, if you could help us with that, 
we will give you what we have accordingly.
    Ms. Velazquez. Mr. Chairman, aren't you amazed by the fact 
that SBA doesn't know that they need to have a notebook to tell 
businesses what the compliances are?
    Mr. Graham. And, they are extremely involved in the task 
force.
    Ms. Velazquez. I can see that.
    Mr. Ose. Ms. Kelly.
    Mrs. Kelly. Dr. Graham, this only points out my prior 
comments. Can you help us, help us make the agencies listen to 
what our requests are and respond? If not, I don't see any 
route for us to take except take a legislative one, which then 
would have to have some kind of punitive damage. I don't think 
one agency would decide they would not comply if we had an 
automatic self-enacting or automatic rule that would apply if 
the requests from Congress weren't meant that caused them to 
lose 10 percent of their budget straight off the top. There are 
things we can do and there are things we may have to do. This 
has gone on year after year after year and it is from one 
administration after another. The agencies have an unparalleled 
arrogance in the way they treat this committee and the way they 
treat the Small Business Committee in our requests for 
information. That has to stop and we need your help.
    Mr. Graham. As you know, I have been as helpful as I can 
be. And you are going to hear from three agencies here shortly, 
and I will be eager to hear the kind of responses you get. 
However, in the design of this hearing, you put together three 
agencies that have been pretty darn good. So I think you may 
have to schedule another one to get at the root of what your 
question is about.
    Mr. Ose. I did just want to--Ms. Kelly used the word 
``request.'' These are not requests, but statutory 
requirements. There is a very, very specific difference that 
needs to be highlighted here.
    Mrs. Kelly. All the more reason why there needs to be a 
very strong message delivered to the agencies that when the 
statutory request comes in, they are to respond. There is no 
other way we can help small businesses in this Nation. And, 
what about the small businesses? What about the guy that's 
running Alphie's Garage or Nydia's Nails or something like that 
and they request information? Well, Nydia's Nails happens to be 
in my hometown, Nydia. And, so is Alphie. He is also there.
    Ms. Velazquez. I thought you admired my nails.
    Mrs. Kelly. Well, I do. In all honesty, these people when 
they ask for requests, they are treated the same way we are. 
This has to stop. There has to be a point where the people who 
are elected to represent the small businesses of this Nation, 
we say enough; and we enact something that is going to make 
these agencies stand up and listen.
    Where are those notebooks? Why haven't these people 
responded? Nydia will tell you, we have done this repeatedly in 
the Small Business Committee by ourselves and we get the same 
thing. I am just simply the voice. I am not the only Member of 
Congress who feels this way. I really feel that it is time that 
the agencies got this message. It has never been delivered by 
me this harshly and this time it is. We have had it.
    Mr. Schrock. Ms. Kelly is absolutely right. They are going 
to ignore us until we take legislative action. Dr. Graham can 
knock on their doors all day long, but they are going to thumb 
their nose at us because they have been doing it and getting 
away with it. Unless we do it legislatively--I don't want to--
let's take 25 percent of their budget away. Try to make it hard 
on them and make severe penalties on the people who run those 
organizations. But, we can sit up here all day long and do this 
every week, every month, every year, and unless we take some 
drastic action, nothing is going to get done. I think the time 
is now. These small businesses are dying out there. And, the 
sooner we do it, the better.
    Mr. Ose. Congresswoman Majette.
    Ms. Majette. I was just admiring Nydia's nails.
    Mr. Ose. What you hear up here is a certain level of 
frustration on the part of all the Members. And, what we are 
attempting I think to convey to you is that, under the rubrick 
of Office of Management and Budget, these agencies come to you 
or your entity for various things. From where we sit, we think 
you are the gatekeeper, if you will, and we look to you for 
enforcement of these things. That may be an agenda that you 
don't wish, but that is an agenda we have and are going to put 
forward.
    Mr. Graham. It's an idealistic vision and we will keep 
working as hard as we can to deliver better responsiveness both 
from OMB and the agencies.
    Mr. Ose. I think you will find up here everyone is an 
eternal optimist. Dr. Graham, we thank you for joining us 
today. The record will be open for 10 days, per Mr. Tierney's 
comments earlier, for questions. We are going to take a recess 
so that the next panel can gather up here.
    [Recess.]
    Mr. Ose. We will reconvene here. I want to welcome to the 
committee our next three witnesses. Joining us from the 
Department of Labor is the Assistant Secretary for 
Administration and Management, Mr. Patrick Pizzella. Also 
joining us is General Counsel from the Department of 
Transportation, Mr. Jeffrey Rosen. And, our third witness is 
the Assistant Administrator for Environmental Information at 
the Environmental Protection Agency, Ms. Kimberly Nelson.
    As I indicated earlier, we swear in our witnesses as a 
matter of course here. If you please rise and raise your right 
hands.
    [Witnesses sworn.]
    Mr. Ose. Let the record show the witnesses answered in the 
affirmative. Before I recognize Mr. Pizzella and go forward 
with his statement, I do want to advise everybody we expect a 
vote shortly--actually, two votes which will require us to 
temporarily recess because of the issue of two votes. In any 
case, we will come back and finish the panels. So, our first 
witness on the second panel is the Assistant Secretary for 
Administration and Management and Chief Information Officer at 
U.S. Department of Labor.
    Mr. Patrick Pizzella, glad you could join us and you are 
recognized for 5 minutes.

    STATEMENTS OF PATRICK PIZZELLA, ASSISTANT SECRETARY FOR 
  ADMINISTRATION AND MANAGEMENT, DEPARTMENT OF LABOR; JEFFREY 
   ROSEN, GENERAL COUNSEL, DEPARTMENT OF TRANSPORTATION; AND 
      KIMBERLY TERESE NELSON, ASSISTANT ADMINISTRATOR FOR 
   ENVIRONMENTAL INFORMATION, ENVIRONMENTAL PROTECTION AGENCY

    Mr. Pizzella. Thank you, Mr. Chairman. Good afternoon 
Chairman Ose, Chairman Schrock and other members of the 
subcommittees. Thank you for inviting me here today to discuss 
DOL's implementation of the Small Business Paperwork Relief Act 
and the Fiscal Year 2003 Regulatory Enforcement Report which 
was required by the act.
    I appreciate this opportunity to discuss DOL's 
responsibilities under the act and our efforts to provide 
relief and fair treatment to small business owners.
    DOL is committed to reducing the burdens on America's small 
businesses and what they deal with as a result of Federal 
regulations and paperwork. Both the SBPRA and the Paperwork 
Reduction Act are important tools for DOL to use to reduce 
unnecessary paperwork burdens on small businesses. 
Additionally, expanding the availability of government services 
and information via the Internet not only reduces the paperwork 
burden on citizens and businesses but also offers convenience 
to small business owners. The Department strives to inform 
small businesses about the extensive compliance assistance 
resources provided by our agencies, whether they are found on 
the Internet or through our local and national offices.
    DOL takes seriously our responsibilities under the SBPRA 
and the Paperwork Reduction Act and we believe we are 
fulfilling the requirements of the acts. DOL has decreased the 
paperwork burden reported in our information collection budget 
in 7 out of the 8 years under the 1995 PRA, yielding a nearly 
40 percent decrease. This decrease includes both program 
changes and adjustments. The information collection budget 
reporting process does not provide for a separate accounting of 
paperwork burden for small businesses. However, we can state 
that, in general, small businesses will benefit as we eliminate 
or simplify paperwork requirements for businesses of all sizes.
    This year our information collection budget does detail one 
nonelectronic paperwork reduction initiative which exceeds the 
100,000-hour threshold. This was accomplished as part of OSHA's 
efforts to revise provisions of its standards.
    Now, I would like to discuss the Department's Fiscal Year 
2003 Regulatory Enforcement Report. In December 2003, DOL 
submitted our initial regulatory enforcement report as required 
by the act. This report presents data on the number of DOL-
agency enforcement actions in which a civil penalty was 
assessed, the number of these enforcement actions for which 
small entities were assessed, the number of enforcement actions 
in which the civil penalty was reduced or waived, and the total 
monetary amount of these reductions or waivers.
    Within the Department of Labor, the Employee Benefits 
Security Administration, the Employment Standards 
Administration, the Mine Safety and Health Administration, and 
the Occupational Safety and Health Administration reported 
enforcement actions in which civil monetary penalties were 
assessed. It should be noted that reductions or waivers for 
small entities are in many cases already factored into the 
formulas used to compute penalties. In addition, agencies 
reduce penalties before assessment. The Wage and Hour Division 
field managers make preassessment adjustments before assessing 
penalties against small entities.
    Reductions or waivers were granted in 99 percent of the 
5,283 EBSA actions against small entities for a total of 
approximately $3.4 million. For purposes of the report, EBSA 
defined small entities to refer to employee benefit plans with 
100 or fewer participants. ESA's Wage and Hour Division 
reported 2,117 enforcement actions including 1,018 against 
small entities. Reductions or waivers were granted in 26 
percent of the actions against small entities totaling 
$650,000. For purposes of the report, the Wage and Hour 
Division defines small entities as businesses with 50 or fewer 
employees. As noted above, Wage and Hour makes its 
preassessment adjustments to civil penalties, including 
calculating further reductions and waivers.
    The Mine Safety and Health Administration is required by 
statute to impose a civil penalty for every violation. MSHA is 
not authorized to waive penalties in any case. However, prior 
to determining proposed penalties, MSHA considers 6 statutory 
criteria, including business size. Thus, business size does not 
affect proposed penalty amounts. In addition, a mine operator 
may request a review of the business's financial situation 
after MSHA issues a proposed civil penalty as a justification 
for further reduction of the penalty.
    In 2003, MSHA proposed penalties in 104,000 enforcement 
actions, 96 percent of which for operations with fewer than 500 
persons; 45 percent of all proposed penalties were for mines 
employing fewer than 20 persons, MSHA's definition of a small 
mine. MSHA investigated 6 requests for financial review during 
fiscal year 2003, but did not reduce the penalty in any of the 
six cases. OSHA--shall I continue? My time is up.
    Mr. Ose. I do want to clarify one thing you said. You 
talked about MSHA and business size. The transcript is going to 
say, thus, per your words, ``business size does not affect 
proposed penalty amounts,'' but your testimony says, ``thus 
business size does affect proposed penalty amounts.'' I just 
want to clarify that. You said the word ``does not.''
    Mr. Pizzella. It is one of the six criteria that is taken 
into consideration. So then it does.
    Mr. Ose. So it does affect.
    [The prepared statement of Mr. Pizzella follows:]

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    Mr. Ose. Now that is the bell for our first vote. We have 
in fact three votes: 15, 5 and a 5. We will all depart as best 
we can. We are going to get through your 5 minutes and we will 
probably call a halt to it and come back for Ms. Nelson's 
opening statement. I understand this is your first time in 
front of a congressional committee, having recently been 
confirmed. Congratulations on being confirmed. And, second, my 
regrets on having to appear here.
    Mr. Rosen. Thank you and good afternoon, Chairman Ose and 
Chairman Schrock, as well as members of both committees, and 
thank you all for the opportunity to testify here today. I did 
hear your comments during the previous panel, so I do want to 
underscore that the Department of Transportation takes very 
seriously our responsibilities under both the Small Business 
Paperwork Relief Act and the earlier Small Business Regulatory 
Enforcement and Fairness Act. And because we pay close 
attention to those laws, we believe we have done a good job in 
developing rules that reduce, to the extent possible, the 
burdens that we impose on small businesses and that we are 
giving appropriate consideration to small entities in our 
enforcement actions, although there is always more to be done.
    I was gratified when in looking at the long chart, the 
second chart on the right, that we had submitted our regulatory 
enforcement report in a timely fashion. We had provided our 
single point of contact, who is actually here today, I am 
pleased to say. And, we have also provided our listing of 
compliance resources. So, on that score, we have done the three 
requirements of the Small Business Paperwork Relief Act.
    Since you have our report, I want to try to highlight just 
three things here today. First, just a few brief numbers. As 
you know, we have six operating administrations at DOT that 
assess civil penalties. During fiscal year 2003, those six 
agencies reduced or waived, as your first chart indicates, in 
excess of $6.7 million in civil penalties that were assessed 
against small entities. The two operating administrations with 
the highest civil penalty assessments against small entities 
were the FAA and our Federal Motor Carrier Safety 
Administration, the agencies that regulate aviation and 
trucking.
    If you focus on those two, which have the highest civil 
penalty assessments, the numbers are interesting. Of all the 
enforcement actions that FAA initiated in fiscal year 2003, 
only 20 percent were initiated against small entities. But 
small entities received 47 percent of the reductions or waivers 
that were provided that year. For motor carriers, where small 
businesses predominate, small businesses were only 47 percent 
of all the enforcement actions that the agency took and the 
small entities received a roughly proportionate 43 percent of 
the reductions or waivers of penalties.
    But, and this is my second highlight for today, because I 
do want to emphasize that the numbers don't tell the whole 
story and that is important as you look at our overall report. 
The reason that is so is that discretion plays a very large 
role in whether the Department even initiates an enforcement 
action against a small entity. For example, small businesses 
represent approximately 87 percent of trucking companies, but 
only 47 percent of the enforcement actions that were taken by 
the Federal Motor Carrier Safety Administration. Our operating 
administrations try to emphasize that compliance is the goal 
rather than the assessment of civil penalties. This is 
especially true when there has been a good faith effort to 
comply and the alleged violation does not involve criminal 
wrongdoing or serious threat to health, safety or environment, 
and where there is instead an indication that the violator was 
attempting to comply or is ready to take remedial actions. Once 
it has been pointed out that they did not, unfortunately--and 
this is why I say the numbers do not tell the whole story--our 
operating administrations do not keep records of this type of 
informal consideration that they give in the process of 
determining whether to commence an enforcement action at the 
outset. Thus for some of our operating administrations, their 
numbers----
    Mr. Ose. That means you have a minute, Mr. Rosen.
    Mr. Rosen. Their numbers do not tell the whole story.
    My third and last observation for today is I just wanted to 
note that, of the more than roughly 8,000 information 
collection requests authorized by OMB throughout the entire 
Federal Government, I have been told that DOT is responsible 
for only 34 that have been identified as imposing significant 
burdens on small entities.
    Perhaps, since I see my time is out, in the question 
period, I can tell you about what our efforts are to do better 
with regard to those. With my time up, let me just say I can 
assure you that as the new general counsel of the Department, I 
will continue to monitor this important initiative and our 
effective compliance.
    Mr. Ose. Thank you for your testimony.
    [The prepared statement of Mr. Rosen follows:]

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    Mr. Ose. Now we are going to take a recess here. Probably 
it will be 4 p.m. until we get back.
    [Recess.]
    Mr. Ose. Ms. Nelson, you are recognized for 5 minutes.
    Ms. Nelson. Thank you.
    Good afternoon, Mr. Chairman. I appreciate being here today 
to talk to you about the Small Business Paperwork Relief Act 
and, in particular, to talk about EPA's report to Congress 
where we were able to highlight our enforcement actions and 
penalties for the last fiscal year. I will not go into all the 
details because you already highlighted in your opening remarks 
that just about 11 percent of EPA's enforcement actions were 
taken against small businesses. We were able to reduce our 
civil penalties for about half of those actions by about $4.8 
million.
    I think it is also important to note that we were able to 
reduce or completely waive civil penalties for small businesses 
by over $457,000 in cases where small businesses made a good-
faith effort to comply by discovering violations on their own 
part as part of a voluntary compliance assistance program.
    EPA is taking a two-pronged strategy to both improve 
compliance assistance as well as reduce paperwork. On the 
compliance side, the agency announced last year our smart 
enforcement approach in which we are putting emphasis on 
providing compliance assistance to regulated entities as well 
as preventing environmental violations. Key to this strategy is 
13 sector-based compliance centers that we have created and 
published information alerts that we have sent out to over 
700,000 entities, and small businesses particularly benefit 
from these services.
    As I have mentioned, our small business compliance policy 
provides guidelines for the reduction or waiver of civil 
penalties to be paid by small businesses for environmental 
violations whenever a good-faith effort has been made to comply 
by discovering violations as part of a government-sponsored 
compliance assistance or voluntary audit. In addition, 
virtually all of EPA's penalty policies have provisions which 
respond to financial concerns of small businesses. The agency, 
for instance, does not seek penalties in settlements which, 
combined with the cost of coming into compliance and remedying 
the harm that was caused, would be beyond the financial 
capacity of the violator to pay.
    We also have a small business strategy aimed at integrating 
an awareness of small business needs and issues into all of our 
agency core functions, with special attention to the impact our 
regulatory activities may have on small businesses. The small 
business work group is in the final stages of developing an 
implementation plan for that strategy, and we hope that will be 
ready in the spring.
    In terms of paperwork reduction, we have designated our EPA 
small business ombudsman as our single point of contact under 
this law. That ombudsman, who is here with us today, is now 
leading an agency-wide work group that is going to focus 
specifically on paperwork reduction and quantifiable measures 
for reporting reductions.
    Dr. Graham mentioned two specific areas that I will go into 
and just highlight briefly.
    One is our Toxics Release Inventory program, and we do have 
proposals on the street today to seek stakeholder input in 
particularly three areas. We are looking at putting higher 
thresholds in for small businesses that would eliminate 
reporting. We are looking at modifying requirements that would 
actually allow small businesses to use what we call Form A, 
which is a certification that they are below certain 
thresholds. We are looking at expanding that use.
    And, one that I particularly like is substituting reporting 
with a new form that would allow small business to say there 
was no significant change in their processes and thereby their 
releases for the last year, and, if they can do that, they can 
just sign one page and submit that, and we use those numbers 
for the previous year.
    Clearly, as Dr. Graham said, we have to balance the burden 
associated with the program while still maintaining the 
practical utility of the data, and we think some of these 
proposals do that.
    Another really important area is our Resource Conservation 
and Recovery Act. In that program we have made significant 
improvements. That is the program that actually runs the 
hazardous waste programs for the Nation. We have estimated that 
between the States and the regulated community we are going to 
save over $120 million in compliance costs and almost $1 
million in person hours responding to those program 
requirements. What is most important about that is the way we 
reduce the burden. There is a tremendous undertaking by the 
program to only request the information that is used. So, they 
have looked at every single piece of information requested and, 
if somebody is not using it, we will no longer ask for it in 
the future.
    There is one particular provision that is specific to small 
businesses and that deals with our self-inspection frequencies 
for small generators. We are changing that from a daily self-
inspection requirement to a weekly requirement for small 
generators which tend to be small businesses. Again, we are 
looking at anywhere between 200,000 and 600,000 hours a year 
that small businesses would save.
    Through all of our activities, we recognize that small 
businesses are an important partner in our efforts to maximize 
environmental protection and to protect human health, and we 
look forward to working with you and the committee to move 
forward in our efforts to do that. Thank you.
    Mr. Ose. Thank you, Ms. Nelson.
    [The prepared statement of Ms. Nelson follows:]

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    Mr. Ose. I just want to go to one thing. I want to 
recommend that you find your counterpart in the Department of 
Agriculture where your form says ``no change from previous 
year'' and just drop him a note saying, you can do this.
    Ms. Nelson. OK.
    Mr. Ose. All right. I have a series of questions here that 
are applicable to each agency, so as we go through them we will 
just go boom, boom, boom, and the like.
    I want to focus first on the policies you have for waivers 
and reduction of penalties for first-time violations by small 
business. So, Mr. Pizzella, what is your agency's policy for 
first-time violations by small business that are judged to not 
have the potential to cause serious harm to the public?
    Mr. Pizzella. It does vary amongst some of our enforcement 
agencies. The Mine Safety and Health Administration is required 
by statute to propose a civil penalty for every type of 
violation. However, in the Wage and Hour area, they usually 
would not assess a penalty for a first-time paperwork 
violation. OSHA also is unlikely to assess a penalty for a 
first-time paperwork violation.
    There are several criteria that get taken into account in 
determining whether or not to proceed with an assessment: the 
size of the business, the history behind the business, whether 
it is a first-time infraction. It is not one-size-fits-all. We 
like to think, particularly with the Secretary's initiative on 
compliance assistance, that we have gotten out of the 
``gotcha'' game, and we are trying to help businesses comply 
with the rules and regulations that are out there and not rack 
up numbers just for the sake of racking up numbers. We believe 
we are implementing the act effectively, but we think we can 
even do better.
    I hope I have answered your question.
    Mr. Ose. You have. I appreciate your response.
    Mr. Rosen.
    Mr. Rosen. Within DOT, as I mentioned in my opening 
statement, there are six agencies that have the authority to 
effectuate civil penalties; and each of them has adopted a 
policy that would call for them to waive civil penalties for 
small businesses who are first-time offenders or allowing the 
small businesses to use the money that would otherwise pay a 
civil penalty to be used toward compliance efforts.
    Now, each of the operating administrations has somewhat 
different criteria as to how they effectuate that in terms of 
their requirements for it being a good-faith violation, that is 
a good faith that they were attempting to comply and that the 
offender is taking steps to correct the issue. But, in general, 
across the administrations the policy is to waive the penalties 
for small businesses who are first-time offenders under the 
circumstance that I was identifying.
    Mr. Ose. Thank you.
    Ms. Nelson.
    Ms. Nelson. We do have a practice that allows us to reduce 
the penalty for first-time violations. I would say in fact it 
goes broader than that. We will reduce penalties even if people 
have previous violations, particularly where they can show that 
they, in fact, discovered the violations, they promptly 
disclosed it to us, and they promptly corrected the violation. 
So, we believe there is a lot of latitude and, in fact, the 
numbers support that.
    Mr. Ose. All right. Let me go back to each of the policies 
your respective agencies have.
    Has the policy that you are now implementing, changed since 
the June 2002 enactment of the Small Business Paperwork Relief 
Act?
    Mr. Pizzella. The biggest change has to deal with 
compliance assistance. I mean, that permeates our department 
now. The single point of contact in our department is a senior 
executive in the office of our Assistant Secretary for Policy. 
She is responsible for driving the compliance assistance 
initiative throughout the department. In all of the agencies--
MSHA, OSHA, Wage and Hour--compliance assistance is a huge part 
of their program.
    So that is the big single difference, and we like to think 
it is having an impact, and we are much more friendly, as 
friendly as you can be from the government, with those that we 
regulate.
    Mr. Ose. Mr. Rosen, was the June 2nd enactment important to 
these changes?
    Mr. Rosen. I think it was important, but my understanding 
is that the 1996 act, the Regulatory Enforcement Fairness Act, 
was the initial prompt that caused each of our agencies to 
adopt policies regarding the penalties with regard to first-
time offenders. Then, with the passage of the 2002 act, there 
was additional guidance provided and some refinements and 
improvements to those policies, including guidance as to 
reporting to enable us to provide our report to you.
    And, there are ongoing refinements. For example, the recent 
FAA reauthorization bill, the Vision 100 bill, changed the 
levels of civil penalties associated with violations up to 
$25,000, and there is an explicit difference for small 
businesses where there is a ceiling of $10,000. So, we are 
going back and taking a look at what revisions we need to make, 
for example, with regard to the aviation area.
    Mr. Ose. Ms. Nelson.
    Ms. Nelson. Our policy was in place in 1996. It was 
expanded, actually, just a month before the Paperwork Reduction 
Act was passed. So our expansion occurred in May. So, we were a 
little bit ahead of the curve there. When the act was passed, 
we felt that our new revised policy was consistent with the 
intention of the act.
    Mr. Ose. OK. Thank you all.
    We are talking about paperwork in this case, though the 
charts also reflect compliance in regulatory issues. Do you 
have different policies for first-time violations by small 
business of paperwork requirements versus first-time violations 
of regulatory requirements?
    Ms. Nelson, we will start with you.
    Ms. Nelson. In EPA, we do not.
    I will say from my own State experience--I had 14 years in 
a State environmental agency before coming here. In fact, we 
did distinguish these in Pennsylvania, but I will say, although 
we don't distinguish them here, it is very hard, even when you 
do distinguish them, to make a difference between what is a 
paperwork violation and something that has an environmental 
impact. Because something like a spill, a prevention plan that 
should be onsite may seem a little bothersome to people to fill 
out but, in fact, if it is not there, could be extremely 
harmful to human safety, to public health and safety if, for 
instance, firefighters come onsite during an emergency and the 
list of chemicals that are onsite is not readily available to 
them.
    So, we do not make that distinction here. But I will say 
for those, when we are negotiating, if it appears it is purely 
paperwork and there was no impact on human health or the 
environment, it is rare, if ever, we take a real action against 
somebody for that purpose.
    Mr. Ose. Mr. Rosen.
    Mr. Rosen. Well, what I am told is that, as a formal 
matter, we do not make that distinction in terms of a policy up 
front. But as a practical matter, when the agencies have to 
take enforcement actions, it would, of course, be a greater 
concern on things that involve health and safety, for example. 
If a violation involves something that is purely paperwork, it 
is much more likely as a practical matter that there would not 
be penalties and that could happen, not just on the first 
violation but even on the second or third, if the more 
important objective there is to obtain compliance. So there may 
be in practice some differentiation, but as a matter of what is 
the policy for first-time violation, we do not as a formal 
matter separate out between paperwork violations and regulatory 
violations.
    Mr. Ose. Mr. Pizzella.
    Mr. Pizzella. Very similar. By statute, all of these 
agencies include the gravity of the infraction when assessing 
penalties. A simple paperwork violation that does not endanger 
workers' health and safety would naturally be less grave and 
may be not considered in that first case. For a first-time 
paperwork violation that did endanger worker health, a penalty 
would likely be assessed. OSHA has some internal guidelines 
where they make distinctions for their field staff. But, in 
general, again, it deals with the gravity of the infraction.
    Mr. Ose. So there is no distinction between a paperwork or 
regulatory infraction in each case?
    Mr. Pizzella. Yes.
    Mr. Ose. I mean, if you say yes, there is no distinction, 
would that accurately reflect, Mr. Pizzella, your agency? 
Gravity might have something, but there is no distinction at 
the outset kind of thing?
    Mr. Pizzella. Yes, I think that is correct.
    Mr. Ose. OK. Mr. Rosen.
    Mr. Rosen. That is right. There is no automatic distinction 
at the outset.
    Mr. Ose. Ms. Nelson.
    Ms. Nelson. That is correct.
    Mr. Ose. OK. Now do you track first-time violations by 
small business owners, Mr. Pizzella?
    Mr. Pizzella. Well, a first-time violation would be noted 
in a case file by the employee on staff doing that, but these 
notations are not accounted for centrally in the office. So in 
order to gather that specific type of information, we need to 
go through every individual case file to accumulate it right 
now. We don't have that at the moment.
    Mr. Ose. All right. Mr. Rosen, how about transportation?
    Mr. Rosen. Something similar. We track the initiation of an 
enforcement action. We would have a formal record of that. But 
in terms of tracking the earlier phase of whether there was a 
violation for which there was not an enforcement action, for 
example, we do not have a systematic tracking of that. We might 
have a record with a given inspector somewhere, but in a 
systematic way what we track is the enforcement action.
    Mr. Ose. So, until and unless there is an enforcement 
action, there is no track?
    Mr. Rosen. No systematic one, that is right. There could be 
a record of an inspector somewhere, but it would not be 
systematic.
    Mr. Ose. All right. Ms. Nelson.
    Ms. Nelson. Our answer would be similar. We do not have a 
data field that says first-time violation. We track every 
violation and we can tell when we pull up a record for a 
company if they have ever had any violation before. So, if they 
are in our data base and there is no history of any violation, 
then that may become the first violation. But I could not today 
go into the system and say how many violations were first-time 
violations, because we do not keep track of those separately.
    Mr. Ose. Are each of your records or data bases electronic?
    Ms. Nelson. Ours are, yes, in EPA.
    Mr. Ose. OK.
    Mr. Rosen. I believe ours vary among the six agencies. Some 
are and some are not.
    Mr. Pizzella. It also varies. The case file is not--as I 
mentioned earlier, sometimes a notation is made in a case file, 
but that is not electronically right now available to us.
    Mr. Ose. So it is all manual in your case?
    Mr. Pizzella. Not all manual. A lot of the data is 
collected electronically, but in the case of the first-time 
violation, it might be noted in the case file, but it would not 
be--it is not centrally accumulated at the department.
    Mr. Ose. All right. So we were talking about whether or not 
the agencies track first-time violations by either paperwork or 
regulatory requirements, and the answer is no, correct? No, no, 
no.
    Ms. Nelson. Correct.
    Mr. Rosen. Correct.
    Mr. Pizzella. Correct.
    Mr. Ose. Now, Mr. Pizzella, OSHA reduced 78 percent of all 
enforcement dollars from October 1, 2002 to September 30, 2003, 
so--the last fiscal year. So $40.5 million of the $51.6 million 
that was originally assessed was reduced or waived. Do you have 
any information about what percent of this $40.5 million or of 
the $51.6 million involved first-time violations?
    Mr. Pizzella. No, because the number was not part of the 
report; and it is not easily tracked in our department for two 
reasons.
    First, we do not have a different citation for first 
offense versus just offense. However, as I mentioned 
previously, a penalty in all cases takes into consideration 
whether there is a pattern of violations. So, naturally, a 
first offense would not exhibit a pattern.
    Second, many of these violations are never cited, so they 
never have a penalty imposed; and, subsequently, there is no 
penalty to be later reduced.
    Mr. Ose. Are the same criteria applied on small businesses 
as on nonsmall businesses within OSHA?
    Mr. Pizzella. You know, I will have to get back to you 
specifically on that.
    [The information referred to follows:]

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    Mr. Ose. All right. We will make a note of that.
    On the Mine Safety and Health Administration, there were a 
little over 47,000 enforcement actions against small entities, 
and then the testimony is that MSHA is not authorized to waive 
civil penalties. Please tell me what the thinking was behind 
the prevention of waiver within MSHA as opposed to elsewhere 
and whether or not this is something we need to look at as 
Members of Congress.
    Mr. Pizzella. I can only speculate that the safety and 
health issues that involve MSHA--the nature of the Mine Safety 
and Health Administration's work is probably what triggered 
that. I think it would be improper for me to speculate on what 
type of change or no change that Congress may want to be 
thinking about.
    Mr. Ose. All right. Mr. Rosen, the Department of 
Transportation's enforcement report shows that DOT reduces or 
waives 42 percent of the penalties and fines it imposes. I am 
trying to get a sense of why, from an overall perspective. Is 
there some reason why small businesses have their penalties and 
fines waived 34 percent of the time and nonsmall businesses 
have it waived and reduced more so?
    Mr. Rosen. Well, I think to truly get at the bottom of the 
numbers would require looking at all or most key individual 
cases one at a time. But, I think the way I could address that 
falls into two categories.
    First is, as I mentioned in my opening statement, 
discretion plays such a big part at the front end of whether 
there is an enforcement action at all, or whether penalties are 
sought at all, I think is a big part of what happens with 
regard to the small businesses which are first-time offenders, 
they are not even assessed a penalty that needs to be waived. 
So that tends to have an influence in skewing some of the 
numbers.
    I think the second thing is a little bit of what I would 
think of as a statistical anomaly of two types. One is, if you 
have a large entity, you may have started with a very large 
civil fee assessment, say $1 million, and, if you wind up 
compromising that or reducing it in some fashion to half a 
million, you get a very large reduction of a fee that might not 
have ever been assessed against a small entity and it then 
tends to create numbers that look larger for the big entities.
    The other half of that, of the statistical kind of 
question, is, as I have alluded to, we have six agencies. The 
two that had the largest penalties against small entities were 
the Motor Carrier Administration and the FAA, aviation; and in 
those two the numbers point to a different direction.
    I think if you think about motor carriers, roughly 87 
percent of those, of the regulated businesses, are small 
businesses. Whereas if you look at, for example, the RSPA is 
one of our agencies, Research and Special Programs 
Administration, one of the things it regulates is pipelines, 
natural gas pipelines, ammonia pipelines and so forth. You 
probably do not find a lot of small businesses among those 
pipelines, or at least the proportion is significantly less 
than it is in the motor carrier area. So you almost have to 
look behind subsets of the data to have a better understanding 
of both the numbers. But, even then, as I said, the discretion 
at the front end is such a big factor that I think you have to 
take that into account as well.
    Mr. Ose. All right. Ms. Nelson, the information we have 
shows that only 11 percent of EPA's enforcement actions involve 
small entities, small businesses. Frankly, I find that 
refreshing. I am trying to find out what do you guys have in 
place, if you will, that might be transferable to other 
agencies. Are there nuances to the manner in which you guys do 
this that we need to explore here?
    Ms. Nelson. Well, certainly we would be happy to share 
whatever we have in place. I mean, when you look at the 
reductions and waivers for small businesses versus all 
entities, there is a higher percentage that gets waived or 
reduced for small businesses. It is almost 50 percent versus 
only about 30 percent for all businesses. So, we would be happy 
to share policies and see if that is useful.
    I do think it is fair to point out, because I did spend 14 
years in a State environmental agency, that many environmental 
laws are delegated to States to enforce. So, if you were to 
look at these numbers, for instance, for a State environmental 
agency, you may see something a little bit different because 
some of the environmental laws do not cover some of the 
smallest businesses, like the Clean Air Act. Permits do not 
cover the smallest businesses. They are often covered by State 
environmental laws. So that may be a factor there.
    Mr. Ose. So, it may be that the number is higher at the 
State level in the instance of your portfolio, so to speak, 
compared with theirs?
    Ms. Nelson. It could very well be. We did a lot of 
compliance assistance at the State level. We had similar small 
business policies. I would have to go back and look at that 
number. But, given the delegation--and EPA is fairly unique in 
the delegations that we have to States to implement programs as 
well as the enforcement authority for the Federal laws.
    Mr. Ose. OK. I will go vote.
    Mr. Schrock [presiding]. I am in the Postal Commission 
hearings as well, so I have to get my mindset here.
    I am sorry I have not been able to hear you, Ms. Nelson, 
but the followup question is, how many hours of burden 
reduction does EPA estimate if these changes are proposed and 
then finalized, and then what is the timetable for the issuance 
of the proposed rule and then the final rule?
    Ms. Nelson. The question I think you are referring to is 
the proposals we have on the street for the Toxic Release 
Inventory program.
    Mr. Schrock. It is.
    Ms. Nelson. To be quite honest, we have not calculated the 
exact burden reduction by hours or dollars for each one of 
those options. To some degree, because some of those are 
overlapping and there are still some issues with some of 
those--for instance, the option that calls for perhaps 
certifying no change to last year, one of the things we have to 
consider is does no change mean within 5 percent or 10 percent 
of last year's processor report, and that parameter may affect 
considerably the universe which would be covered. So, we will 
start to calculate those burden reductions as we move forward 
with the rule.
    In terms of the timeframe for a proposed rulemaking, the 
comment period closes next week. From my perspective, this will 
be one of the highest priorities of my office. We will move 
aggressively in evaluating those comments. It is unlikely we 
will have a rule out--a proposed rule out for comment before 
January of next year. When you consider the regulatory process, 
OMB needs 60 to 90 days to review, and we have to go through 
our own process internally. So, when I lay out the steps we 
have to go through to write a proposed rule, we are probably 
looking at about a year from today.
    Mr. Schrock. Believe it or not, I did run through the 
testimony here, and one of the questions we have is, in your 
written testimony you also mentioned a two-part EPA burden 
reduction initiative that is going to occur. EPA estimates the 
first part would eliminate 929,000 hours. What is proposed for 
that elimination? It sounds good to me, but what is proposed?
    Ms. Nelson. That was an incredible undertaking by the 
hazardous waste program. What they did was looked back over the 
history of the program since it has been in place, and they 
looked at every single piece of information that program 
collects from States or regulated entities, every single piece 
of information. And, if there was not somebody someplace who 
used that piece of information or can document the use of that 
piece of information, then they put it on the list to be 
eliminated. As a result, there was over, I think, about 100 
pieces of information that we will no longer collect because 
there was not anyone who said I use that and this is how I use 
it. That is I think a very, very broad undertaking.
    Mr. Schrock. My guess is your agency is not the only agency 
that could say that if they would come up here and say it.
    I think the thing that interests me is they file all of 
these claims or whatever it is against these small businesses, 
and it seems like they reduce or waive most of them. What is 
that all about? It just seems to me like people are sitting 
downtown to justify existences, creating this stuff, and then 
it just gets thrown out, and these agencies just continue to 
get bigger and bigger and bigger doing that stuff. I do not 
understand that.
    I know, Mr. Rosen, you have a lot on your plate. There is 
no question about that. I would be curious about what your spin 
is on that. Because it seems to me a lot of this stuff just 
makes absolutely no sense whatsoever.
    Ms. Nelson. You know, from EPA's perspective, I think a 
very small percentage of our actions are taken against small 
businesses, only 11 percent.
    Mr. Schrock. You are right, 10.6.
    Ms. Nelson. I think we take that into consideration when we 
are developing our enforcement policies. We have a strong 
emphasis on compliance assistance. For instance, I personally 
am responsible for the Toxic Release Inventory program. In the 
2\1/2\ years I have been at EPA, we have not taken an 
enforcement action. Our emphasis has been on compliance 
assistance. We have had some new rules which I know have been a 
burden, but our entire emphasis has been developing question 
and answer documents, getting compliance assistance materials 
out, and working with facilities to come into compliance.
    I think within EPA there is a strong history of that. Last 
year, when we did an inventory of compliance assistance 
activities, I think we had about 350 different compliance 
assistance activities across the agency.
    Mr. Schrock. Well, labor and transportation certainly have 
big percentages, and obviously there is a reason for that. In 
transportation, I gather it is trucking. Am I wrong in that 
assumption, trucking violations of some kind?
    Mr. Rosen. Well, that is obviously an important one, as are 
the aviation ones. And, then, just in terms of the statistics, 
we also have some civil penalties issued by NHTSA regarding 
automotive safety and also RSPA regarding pipeline safety, and 
then hazardous materials, which is enforced both by the Federal 
Rail Administration and by the Motor Carrier Safety 
Administration.
    So, there is a series of challenges there, but I think the 
point you made is a valuable one.
    I guess one anecdote I would like to mention is the Motor 
Carrier Administration had a new hours of service rule that 
went into effect at the start of this year, and one of the 
things they did was put out publicly a policy statement on 
enforcement to indicate that, as they transition to the new 
version of the rule, that it is their intention to focus on 
education and compliance assistance and not on enforcement and 
certainly not on penalties.
    Mr. Schrock. OK. You forgot to turn the clock on, didn't 
you? That is all right.
    Let me turn to Mr. King.
    Mr. King. Thank you.
    I will see if I can catch my breath here.
    Mr. Schrock. I know. I told them I ended up in the basement 
instead of here.
    Mr. King. As I sit here and listen to the pieces of 
testimony that I have had the privilege to hear--and it has 
been a little bit patchy, so forgive me if there are some gaps 
in my knowledge of your testimony. But, as I left here for the 
vote, we were on the subject matter of first-time violations 
and how those first-time violations are tracked. As I gathered, 
the best way any of you have to identify which ones are first-
time violations would be if there is a violation. Then you can 
look at the file and see if a previous file exists, whether it 
be on paper or whether it be electronic. That would be a 
summary of the last thing as I stepped out of the room.
    I notice also that with the statistics in this report that 
is here, and I will borrow Mr. Schrock's when he is not 
looking, it shows that you have the reduced or waived 
violations, particularly with Labor, Mr. Pizzella, roughly at 
20 percent of those violations where the penalty would be 
reduced or waived, but I do not see a distinction between the 
reductions and the waivers. Do you have a number on that?
    Mr. Pizzella. To reductions and to waivers?
    Mr. King. I think there is a real distinction there between 
those two. A reduction and a fine could be an incremental 
percentage decrease; and a waiver, of course, is far more 
dramatic and far more forgiving than a minor reduction of a 
fine.
    Mr. Pizzella. Because I am responding on behalf of several 
enforcement agencies, I want to get back to you in writing on 
that one, because there are probably distinctions amongst them. 
So I would ask the committee to let me respond in followup.
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    Mr. King. I would appreciate that, if you could report to 
the committee in writing on those distinctions, particularly 
with regard to the small entities that are listed here.
    I see that about roughly half of your enforcement is--a 
little less than half of it is small entities, and then the 
reductions and waivers are about 20 percent of the whole. So I 
would just ask conceptually then a question of you, and I will 
deal with the hypothetical circumstance. I am concerned about 
the weight of regulations, the enforcement of those regulations 
on small business.
    Say a hypothetical situation where you have someone who 
operates I will say a fast food facility--and I am going to be 
guessing at some of this--that the normal investigation might 
be such that a representative of the Department of Labor might 
visit the region, stop and look up the employees and interview 
the employees as to the employment practices and the safety 
regulations and how they might be enforced or not within a 
company. I am just going to hypothetically say that we have 
someone who is under the age of 18, 17 years and 11 months and 
29 days, who had announced that they had run the french fryer 
and maybe the pizza dough maker and possibly even worked after 
7 p.m. on a school night. Now, if that company had been in 
business for a number of decades without any violations, it 
could be discerned when you looked at their file, would that be 
an appropriate candidate for a waiver?
    Mr. Pizzella. It sure sounds like it. I mean, there has to 
be a sense of reasonableness that is involved in enforcing 
these regulations.
    As I mentioned earlier, one of the Secretary's big 
initiatives is compliance assistance. Our single point of 
contact at the Department of Labor happens to also be the 
person who is spearheading the compliance assistance program at 
the department. We have been getting away from the ``gotcha'' 
game, and we do everything we can to ensure, whether it is 
through the Internet, through training sessions, or through 1-
800 numbers, that businesses are familiar with what they have 
to do to comply with this large amount of regulations. And, 
your example, I think, strikes me as a perfect example of the 
type of first-time possible violator that someone out in the 
field should try to assist, rather than play ``gotcha'' with.
    Mr. King. In your response, Mr. Pizzella, you have also 
acknowledged the responsibility to educate, and I absolutely 
agree that is a far better method, particularly with small 
business. I started a business in 1975, and I was never afraid 
of the work; I was never afraid that I could not get the 
customers or satisfy them or bill them or collect the money. 
What I was afraid of was who are all the regulators out there 
who might descend upon me that I am not aware of and how do I 
deal with that and how do I anticipate that nightmare that 
could come down upon my head. I think the specter of that is 
intimidating. We have entrepreneurs that punch a time clock 
today that might be writing paychecks to employees, but they 
fear the weight of regulation.
    Mr. Pizzella. Two of our enforcement agencies, MSHA and 
OSHA, actually have offices dedicated to small businesses 
specifically, in addition to the compliance assistance 
activities that run throughout their agencies. So, we 
understand the particular uniqueness of the small businessman 
and woman who--the entrepreneur who is taking the risk, and the 
Department of Labor does not want to be putting a thumb down on 
the next generation of businesses that are developing. I think 
and I hope that you will see from the Department of Labor a 
fresher approach to cooperate and particularly through 
compliance assistance ensure that businesses are doing what 
they should be doing and not overburdening them with trying to 
comply with all of these regulations.
    Mr. King. Well, then in the case of the hypothetical that I 
had stipulated here, if that fine is not waived and then that 
sends a message throughout all the people in that community, 
young and old alike, future entrepreneurs, failed 
entrepreneurs, and those who will not try, a message that it is 
rigid, a rigid department. So, my question to you would be 
then, how do I approach your department to rectify those 
situations with the least amount of resistance?
    Mr. Pizzella. You mean as a businessman?
    Mr. King. No, as a Congressman.
    Mr. Schrock. There are different rules now.
    Mr. Pizzella. I guess I can throw away my notes.
    Mr. Schrock. Pull out your Congressman tab.
    Mr. Pizzella. I would say, I think I brought with me 
something that we provided to every Member of Congress and to 
many of our, many businesses in the country, a compliance 
assistance program that we have. We share this with as many 
businesses as we can through training sessions, and it is on 
our Web site. We also have an Employment Law Guide that we have 
updated that we try to get into the hands of many businesses as 
possible. We do find that many congressional offices request 
these for their constituents, so you should feel free to 
request as many as you might like.
    Mr. King. At the conclusion of this hearing, I will step 
over there and personally receive that from you.
    Thank you very much, and I appreciate all of your testimony 
here today.
    Mr. Schrock. Mr. Pizzella, let's get to OSHA for a second. 
Well, let's talk about OSHA for a second. How many paperwork 
hours were reduced by DOL's June 30, 2003, final version of its 
19 January 2001, revised OSHA recordskeeping rule which imposes 
3.4 million hours of public burden? What percent of that burden 
affected small businesses?
    Mr. Pizzella. I think I was earlier discussing this, that 
we are not sure of that, because the number is not part of the 
report. It is not easily tracked for a couple of reasons, Mr. 
Congressman.
    First, we do not have a different citation for the first 
offense versus an offense. However, as we mentioned, the 
penalty in all cases takes into consideration whether there is 
a pattern of violations. So, naturally, a first offense does 
not exhibit a pattern. So that makes complying with that data a 
little difficult.
    Second, many of these violations are never cited, so they 
never have a penalty imposed and subsequently there is not a 
penalty to be later reduced. So, a field inspector finishes his 
inspection and consults his policy guidelines, and if the 
policy guidelines say no citation shall be issued for a minor 
paperwork violation, then that is what will follow.
    Mr. Schrock. You are not talking about OSHA recordkeeping?
    Mr. Pizzella. Yes. I thought I was--yes, my response was 
regarding OSHA.
    Mr. Schrock. OK. During and after Chairman Ose's 
subcommittee hearing on April 11 of last year, his paperwork 
hearing, we asked OSHA Administrator John Henshaw: In your 
testimony you mentioned that employers with 10 or fewer 
employees are not required to compile injury and illness logs. 
This could be increased to exempt more employers. How about to 
20 or 25? Some of the material I read before we started this 
process today, some agencies look at small businesses as 5, 
some 20 to 25, some 50, some 100. So there is just a whole bag 
of different figures out there, and it seems to me that if 
there was one figure that everybody was working with, it would 
make it a lot easier, agreed?
    Mr. Pizzella. You know, it makes so much logical sense to 
me. I cannot disagree with you, but I will say I will have to 
take that up with Mr. Henshaw on that. Because each of these 
enforcement agency heads, they have some particular reason as 
to why the way they count is the way they count. Some I know is 
imposed statutorily, but there is some flexibility. In most 
cases, there is flexibility.
    Mr. Schrock. So, one small business guy could have the 
Department of Labor looking at him where they consider 10 or 
fewer employees, but then the next week EPA, for instance, 
could look at them as a small business, 20 to 50. The poor 
business people are out there terribly confused because they do 
not know what a small business is. They know they are, but they 
do not know what the numbers are.
    Mr. Pizzella. I would defer to my colleague.
    Mr. Schrock. No, no, no. I just used EPA as an example. I 
don't want to put her on the spot. No answer. That is a tough 
one, isn't it?
    Mr. Pizzella. Yes. The question is very logical, and I will 
have to get back to you.
    Mr. Schrock. I would be curious to know. Because when I was 
reading the testimony late last night, I mean, some of the 
paperwork they gave, they were saying it could be a range this 
big. And I thought, huh, what is it, really?
    I yield back.
    Mr. Ose [presiding]. I want to followup on Mr. Schrock's 
comment. I do not build a lot of roads other than when I am 
building subdivisions, and I do not deal necessarily with EPA 
other than generally on delineation of wetlands and all that 
sort of stuff, but, on labor, I will just tell you for a fact 
that the entities in which I have an interest are designed to 
prevent me from going afoul of these thresholds. In other 
words, if I start bumping up against a 10-person threshold, I 
will say, you know what? Time to set up another entity.
    It sounds maddening, but it is a very economically driven 
decision, and that is it is cheaper for me to set up another 
entity with the checkbooks and the letterhead and the 
accounting and the tax returns and all of this other stuff than 
it is for me to exceed the threshold on the employee level. 
Which begs the question which I think Mr. Schrock was hammering 
at, is if the threshold is 50, then I would not have to set up 
so many entities. So, if I am over here dealing with this 
agency, maybe I am at 50, but I am over here at this one, I am 
at 10. What I am trying to figure out is whether or not the 
setting of those thresholds, just very specifically, is that 
discretionary or is it not?
    Mr. Pizzella. There is discretion on the part of the 
agencies. I cannot speak for the Assistant Secretary of OSHA in 
particular on this, because I am not familiar with the 
reasoning behind it all, but I will get you those answers.
    Again, as I mentioned to the Congressman from Virginia, the 
question is so logical it begs some appropriate answer, and I 
will get the correct answer.
    [The information referred to follows:]

    [GRAPHIC] [TIFF OMITTED] T3639.048
    
    [GRAPHIC] [TIFF OMITTED] T3639.049
    
    Mr. Schrock. There needs to be a standard somewhere.
    Mr. Ose. Mr. King.
    Mr. King. No more questions.
    Mr. Ose. I have another question. See these binders right 
down here? They have the forms that a lot of different agencies 
use for reporting purposes. I am wondering whether or not on 
your respective Web sites you guys have posted the forms that 
small businesses need, together with a system whereby a small 
business owner can sort through and get the right forms? I will 
start with the EPA today.
    Ms. Nelson. I will have to look into that in terms of--most 
of our forms are posted. I will talk with our ombudsman in 
terms of whether they are in a single location.
    We are working with the business gateway project that Dr. 
Graham mentioned, and we have already submitted to them the 60 
or so forms that are applicable to EPA for businesses. So we 
are working with them to post those in one place and have 
already submitted those.
    Mr. Ose. Mr. Rosen, how about transportation?
    Mr. Rosen. Mr. Chairman, I do not actually know the answer 
to that for each of the agencies. I suspect that we do not. I 
know that we are working with the business gateway initiative 
also to accomplish fundamentally that objective. I would have 
to look into each of the agencies to see what the correct 
answer to that is and report back to you if you would like me 
to. I suspect that the question of the electronic storage is 
one that is probably a little outside my capability.
    Mr. Ose. Mr. Pizzella.
    Mr. Pizzella. Most of our forms are posted. Whether it is 
as easy as you described for the small businessperson to access 
them, I cannot answer that right now, but I will get you an 
answer on that.
    [The information referred to follows:]

    [GRAPHIC] [TIFF OMITTED] T3639.050
    
    Mr. Ose. The reason I ask the question is twofold, No. 1, 
to indicate an interest, but, No. 2, to tell you that there 
were 24 agencies that did not provide us the requested copies 
of all paperwork applicable to small business, and the 
Department of Labor and the Department of Transportation were 2 
of those 24. I think we got the wrong thing from Labor, and I 
would like to see it corrected.
    Mr. Pizzella. You will have it from the Department of Labor 
on Monday.
    Mr. Rosen. Today was the first I heard of that, Mr. 
Chairman, and we will certainly address it.
    Mr. Ose. Will you fix it?
    Mr. Rosen. Yes.
    Mr. Ose. OK. By Monday?
    Mr. Pizzella. Sorry, Jeff.
    Mr. Ose. I am through negotiating with him.
    Mr. Rosen. Well, if I knew what the burden involved, I 
could commit more readily, but, if you do not mind, I would 
like to figure out from people more knowledgeable than I how 
burdensome that would be. I would hope it would not be, and 
then we could do it very quickly.
    Mr. Ose. Our original request was made in July, and I just 
think there might have been some confusion as to what we were 
looking for.
    Mr. Rosen. I suspect that is the case. Obviously, July was 
before I had joined the Department. It does not excuse it, but 
it means that I need to look into it.
    Mr. Ose. I have somebody on my staff who would be happy to 
facilitate that. Her name is Barbara Kahlow, and you can call 
her directly if you have any questions. But, if we could get 
that by Monday, that would be great.
    I want to go to the enforcement stuff. Ms. Nelson, in terms 
of EPA, the June 2002, Small Business Paperwork Relief Act 
required the collection of enforcement data so that it could be 
reported to us by December 31, 2003. Now I am operating on the 
presumption that EPA has adjusted its data systems in order to 
collect those enforcement data. Am I operating on the correct 
assumption?
    Ms. Nelson. You are correct. We did do that. We are in the 
process of upgrading our system and were able to accommodate 
those changes.
    Mr. Ose. So that is done at EPA?
    Ms. Nelson. Yes, correct.
    Mr. Ose. OK. At Transportation?
    Mr. Rosen. My understanding is that my staff, at the time 
that the act passed, asked each of the relevant agencies to 
make that happen and was successful for the most part, except 
it appears we have one area, the Federal Railroad 
Administration, with regard to the question of shippers that 
were small businesses where we have had a miscommunication that 
we have been working on fixing since the time we put together 
our report last December. We are correcting that. It will be in 
our next report. We will have been fixed.
    But, other than that glitch, I believe that we have 
otherwise already taken care of our systems to report 
appropriately.
    Mr. Ose. Mr. Pizzella, over at Labor?
    Mr. Pizzella. Yes. Congressman, we believe that our data 
systems are capable now to help us produce that enforcement 
data.
    Mr. Ose. So there will not be any difficulty in getting it 
then?
    Mr. Pizzella. No.
    Mr. Ose. OK. My time has expired.
    Any further questions, gentleman? Mr. King.
    Mr. King. Thank you, Mr. Chairman.
    I think I would just like to go down through a list that 
kind of sticks in my head over the years of some of the things 
that come up with regard to child labor. I know we have laws 
and then we have interpretations of laws and interpretations of 
rules, actually, seldom of laws, and issues that come up. One 
would be a material safety data sheet required for soap that is 
used to wash vehicles at a car dealership. Therefore, anyone 
under the age of 18 cannot wash the vehicles because it has an 
MSD sheet, even though the chemical composition would be 
identical to the shampoo they used in their hair that morning. 
That would be one.
    Another one would be prohibition toward anyone under 18 
going above more than 2 feet off a floor. So they can't get in 
on a low stepladder. Prohibition of teenagers, I'll say candy 
stripers, from being in the vicinity of blood-borne pathogens. 
So, it has severely constricted the flexibility of young people 
learning a dedication to the health care industry.
    And then, things such as--and these are more justifiable 
certainly--young people maybe getting on a forklift to drive it 
from one place to another, transfer it, somebody that is 17 
years and 11 months old and 29 days old can't get on the lawn 
mower and cut the grass.
    The implications of these--and I bring these up partly for 
a response of those interpretations, but also for an 
opportunity to address what happens in this country when we tie 
so many regulations in place that young people lose their 
opportunities to work, and at the very age where they need to 
learn their work ethic, we tell them it's too dangerous for you 
to use this soap or climb up on that stepladder or drive this 
lawn mower or move this forklift or run this piece of dough 
mixer or the french fryer.
    So, consequently, they need to be doing something, so they 
end up on the streets with drugs and alcohol and fast cars, 
which are readily available, and we don't seem to be too 
concerned about that.
    Do you get very much comment on that? And, is there much 
feedback? And, is there anything you'd like to take issue with 
that I've laid out here?
    Mr. Pizzella. I will take issue with nothing that you've 
laid out. The expertise in answering those questions really 
rests within the assistant secretaries that have the 
enforcement responsibility for those particular areas. 
Obviously, OSHA encompasses most of what you just discussed, 
and the Wage and Hour Division, and the Employment Standards 
Division encompasses the rest.
    And, I'll make two proposals. One is that we'll try to 
answer what you've asked in writing, but more importantly 
perhaps we can arrange a meeting with the Assistant Secretary 
of OSHA and the Administrator of the Wage and Hour Division to 
sit down and talk with you and go over some of these 
hypothetical theoretical situations and perhaps even some 
actual cases, so we can sort of eliminate a lot of the smoke 
and blue mirrors and you can hear firsthand the way these 
regulations, in some case statutes, are being enforced and 
interpreted.
    And perhaps, based certainly on the way you've presented 
them, there's room for corrective action.
    Mr. King. Would that also provide an opportunity to look at 
any statistics that might be there as to injuries that occur 
with young people who are violating the regulations that we 
have?
    Mr. Pizzella. If those statistics are available.
    Mr. King. And I wonder if we might be able to compare those 
statistics to the injuries--this gets far more subjective, and 
the question really--the blunt question is, are they safer at 
work or are they safer at play under the circumstances that we 
have? And, that's more rhetorical than not, but I look very 
much forward to a meeting to sit down and discuss these issues, 
Mr. Pizzella; and I will invite my colleague, Mr. Schrock, as 
well. Thank you very much.
    That would conclude my questions, Mr. Chairman.
    Mr. Ose. Thank you. I want to thank this panel for 
appearing today and giving us your testimony and answering our 
questions. We appreciate it.
    Mr. Rosen. I'd like to thank the committees for having us 
here, and if there are other ways that I can be helpful after 
today, I hope you'll certainly take the opportunity to let me 
know.
    Mr. Ose. Well, we're going to give you a chance because 
we're going to leave the record open for 10 days so that we can 
send questions to you that might arise within the membership. 
We would appreciate a timely response.
    Thank you all. We'll take a 2-minute recess for this next 
panel.
    [Recess.]
    Mr. Ose. If we could have the third panel join us, please. 
I see Mr. Langer is here. Is Mr. Igdaloff here?
    Mr. Langer. Yes. He'll be back in a moment.
    Mr. Ose. All right. We'll take another 2-minute recess.
    [Recess.]
    Mr. Ose. We'll reconvene. First of all, I want to welcome 
both our witnesses, Mr. Igdaloff from California, Mr. Langer 
from the National Federation of Independent Business.
    Gentlemen, if you'd both rise, please. We swear all our 
witnesses in, so you're not getting special treatment.
    [Witnesses sworn.]
    Mr. Ose. Let the record show that both witnesses answered 
in the affirmative.
    Now, Mr. Igdaloff, I understand you have a 7 o'clock flight 
out of National?
    Mr. Igdaloff. Yes.
    Mr. Ose. OK. Mr. Langer, how is your time?
    Mr. Langer. My wife is waiting for me at National.
    Mr. Schrock. He lives here. Don't let him kid you.
    Mr. Langer. She's just waiting for me to pick her up.
    Mr. Ose. Have you ever heard the phrase rock and roll?
    You all are recognized for 5 minutes for the purposes of a 
statement.

  STATEMENTS OF HAROLD IGDALOFF, PRESIDENT, SUNGRO CHEMICALS, 
   INC., CALIFORNIA; AND ANDREW LANGER, MANAGER, REGULATORY 
      POLICY, NATIONAL FEDERATION OF INDEPENDENT BUSINESS

    Mr. Igdaloff. Thank you, Chairman Ose and Chairman Schrock, 
and ranking members of the committee for the opportunity to 
speak on behalf of the National Small Business Association, the 
Nation's oldest nonpartisan small business advocacy group 
reaching more than 150,000 small businesses across the country. 
As the president of Los Angeles-based Sungro Chemicals, Inc., 
I'd like to thank your two committees for your ongoing 
commitment to America's small business.
    Sungro is a formulator of pesticide products with over 50 
products registered with the Environmental Protection Agency. 
I'd like to talk specifically about the difficulties I've 
encountered there, as well as discuss in broad context the 
concerns of NSBA members.
    The last time I testified before a congressional body was 
in 1996, right before you passed the Small Business Regulatory 
Enforcement Act. Since that time, you've passed the Small 
Business Paperwork Relief Act. Both laws have strived to 
greatly alleviate the headaches I was dealing with in 1996. 
However, as you know and have already stated, agency compliance 
with these laws, specifically the Small Business Paperwork 
Relief Act, sometimes leaves much to be desired.
    Before I launch into specifics, I'd like to remind you, 
paperwork is a symptom, not the root problem. Government's 
tendency to overregulate is the source of burdensome paperwork. 
Due to a simple directive requiring a change in wording on our 
pesticide labels from Precautionary Statements, which had been 
acceptable for over 25 years, to First Aid, we had to revise 
each of our labels, send each one to EPA for review, and 
approval, frequently getting contradictory responses to the 
warning statements on the same labels for the same products. 
And, after we got a stamp-approved label from EPA, we then had 
to send each one of these labels to each State agency that 
regulates pesticides and wait for their approval process. We 
estimate just this one change probably took 2 to 3 man-months 
to implement.
    By their very nature, unnecessary Federal regulation and 
paperwork burden discriminate against small business. We don't 
have large staffs of accountants, benefit coordinators, 
attorneys or personal administrators. Small businesses are 
often at a loss to implement or even keep up with the 
overwhelming paperwork demands of the Federal Government, and 
most Federal officials who develop regulations are largely 
unaware of the many activities and requirements of their fellow 
agencies.
    I'd like to call your attention to another example of 
voluminous paperwork, the pesticide reregistration booklets. 
The Office of Pesticide Programs within EPA issues these 
lengthy, complex booklets on each active pesticide ingredient, 
which we have to review and sort through to find out what we 
have to do to conform, and then submit the paperwork under a 
protocol that requires one sheet of paper for each item. If 
you've got page 2 instead of page 3 out of order, they send it 
back to you for further review.
    A few hours of extrapolation and condensation by a 
knowledgable staff would significantly reduce the size of the 
publications as well as the time and complexity required to 
conform.
    We also have a problem with the DOT regulations relative to 
hazardous waste shipments. You have to have an advanced college 
degree to cross-sort all of the cross-references that are in 
that particular regulation to decide what we should put on the 
shipping papers for a particular commodity.
    The regulatory and paperwork overloads are gradually 
eliminating participation. As an example, we have to report 
annually our total sales and production of each pesticide 
product. In my testimony in 1996, I pointed out the problems 
with this antiquated form that is used. This sheet contains 
three products per page, and we have to take data off of a 
spreadsheet that comes out of our computer and hand-transmit 
all of this information to the 16 pages of the report. A 
tabular spreadsheet would replace this 16-page report we have 
to submit.
    It not only takes us time to do it, but we get calls from 
the regional agency saying, well, you put a ``G'' in this 
particular square instead of an ``L''; is this supposed to be 
pounds or is this supposed to be gallons?
    We have to put over 500 pieces of data hand transcribed 
into this simple form. There seems to be little concern for 
paperwork reduction in the OPP relative to their internal 
procedures or external communication. As a result, the practice 
typified by the example above, the OPP has chosen to increase 
the maintenance fees for each product that we have approved 
from $600 per year to over $3,000 per year. This, coupled with 
additional fees imposed by each State--California has gone from 
$200 per product to $750 per product--is essentially taking the 
small business community right out of the pesticide formulating 
business.
    The new law that just came out of Congress defined a small 
business as a business doing $60 million. Now, if the mindset 
defines $60 million a year as a small business, what are they 
basing their criteria for performance on. We talked to Karen 
Brown this morning about perhaps making an amendment to that 
law to put another category below the $60 million level to take 
care of the small business people. We have to lay out $100,000 
in fees in January before we can offer a product for sale.
    In terms of EPA's compliance with the Small Business 
Paperwork Relief Act, I would like to voice a number of 
concerns. While increased flexibility for small business in 
terms of the EPA audit policy and small business compliance 
policy may reduce the penalties assessed in a formal 
investigation process, it has the potential of strong-arming 
small businesses into admitting and paying for something they 
may not agree with. I would also argue that even though EPA has 
implemented a discount penalty based on violation, there should 
be further discounts reserved only for small businesses who 
unknowingly commit one of those violations.
    We have been forced in instances and cancellations to waive 
our 6-month right for appeal to a 30-day appeal in order to 
keep our products in the business stream, and we've been 
displaced in our marketplace as a result of some of the big 
chemical companies trading off their marketplaces for the small 
business marketplace.
    I don't have resources on a par with those of large 
business to ensure compliance with what you see are notebooks 
full of paperwork requirements, and I see you've got them.
    The EPA, in their enforcement actions report to Congress 
for fiscal year 2002, stated that due to the complexity of the 
environmental enforcement process and the variety of settlement 
options, the data maintained by EPA cannot be classified this 
neatly.
    The EPA has quite eloquently proved my point here. If the 
EPA cannot even collect their own information because the 
process is too complex, how can they justify requiring small 
business owners to comply with their quagmire of rules and 
regulations?
    Mr. Schrock. Bingo.
    Mr. Igdaloff. I find it interesting that less than 30 
percent of agencies are in full compliance with SBREFA with 
only 28 percent filing their enforcement report. I suggest that 
the compliance rate for small businesses on any number of 
agency regulations is far above 20 percent.
    In addition to my concerns with EPA, I also want to make 
mention of enforcement practices of OSHA in fiscal year 2002. 
Of all enforcement actions on businesses through OSHA, a 
whopping 84 percent were penalties on businesses with fewer 
than 25 employees.
    One important discrepancy among many of the reports is the 
definition of a small business. The SBA has established certain 
size standards based upon revenues or employee size under the 
NAICS industry classification system. The overwhelming majority 
of industries under NAICS have a 500-employee cap to be a small 
business. However, the EPA defines a small business as 100 or 
fewer employees within. Within the Department of Labor there 
are varied definitions for each--20, 50 and 250, all use the 
small business employer cap.
    So, how can any agency evaluate the impact on small 
business when they don't know which small business community 
they're having their impact on, when everybody has a different 
definition?
    I would urge all agencies to use the SBA size guidelines or 
get together and agree on some rational standardization system 
of classifying small businesses of different categories, and 
then, based on the particular environment of companies that 
they're working with, apply their regulations consistent with 
the activities of those companies.
    Potential solutions: First and foremost, streamline the 
paperwork, eliminate the duplication of paperwork and 
coordinate due dates. This will save businesses countless 
hours. And, there's a lot of overlapping of information that's 
submitted both to the Federal Government and to the State 
agencies, and I think some coordination between the State 
agencies and the government would tend to help reduce that 
burden.
    Small business assistance and compliance: Small business 
owners are smart, entrepreneurial, creative and quick students. 
We are not, however, regulatory experts. Increase the 
importance of burden reduction through additional dedicated 
staff. I know what it means to be short-staffed and I 
understand that people can only do so much. Regulatory cost/
benefit analyses should be done on every piece of new 
regulation. This is common-sense business policy. Federal 
agencies should be required to submit the estimates of costs as 
well as benefits associated with rules and paperwork for each 
of their programs.
    In closing, I would like to commend Chairman Ose and 
Chairman Schrock for their efforts and dedication to the small 
business with the Paperwork and Regulatory Improvements Act of 
2003. NSBA supports this legislation, and I look forward to 
working with you.
    Congress and the administration need to take a bottom line 
look at the mountains of reporting small businesses face. 
Paperwork is paperwork, regardless of whether it's good or bad. 
When I'm completing the annual production report to EPA, 
revising labels for pesticide products and reporting the same 
basic information and data to State agencies, I'd like to let 
you know what I'm not doing. I'm not researching ways to 
provide the most competitive health insurance packages to my 
employees. I'm not creating new pesticides. I'm not looking for 
ways to make more environmentally friendly pesticides. I'm not 
selling additional product. I'm not growing my business. I'm 
not hiring new employees.
    Thank you.
    Mr. Ose. Thank you, Mr. Igdaloff.
    [The prepared statement of Mr. Igdaloff follows:]

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    Mr. Ose. Mr. Langer.
    Mr. Langer. Chairman Ose, Chairman Schrock, and staff who 
are here, I want to thank you for letting me participate today 
on behalf of the 600,000 small business owners represented by 
the NFIB. I'd like to thank you for the opportunity to appear 
before you to discuss the current status of paperwork burden 
reduction and the importance of this effort to our members and 
to small business businesses in general.
    Small businesses are being buried under mounds of 
paperwork. It costs them time and it costs them money. Not only 
do we know this, but we've measured it a number of ways. Small 
businesses have told us, they've told Congress, what the extent 
of this problem is.
    So, what do we know? We know that regulatory costs are 
higher for small firms and that for firms with under 20 
employees, it costs them an average of nearly $7,000 per 
employee per year to comply with regulations.
    NFIB's own research foundation recently surveyed small 
businesses around the country and found that the average cost 
per hour for paperwork was nearly $50. To dovetail into what 
you said earlier, Chairman Ose, if we were to take your number 
of 8.2 billion hours for paperwork, for Federal paperwork, 
that's a cost not of $320 billion a year, but close to $400 
billion a year in lost time for paperwork.
    This cost shoots up to $75 for tax preparation which 
comprises, of course, the bulk of the paperwork. That poll is 
discussed in detail in my written testimony, and the complete 
poll is attached as an appendix to it.
    We know that it's the complexity of the paperwork, combined 
with the sheer amount of it that are the primary concerns of 
small business owners, neither of which should be surprising to 
anybody. I won't recount the history of congressional efforts 
to minimize paperwork and regulatory impacts. A number of 
Members of Congress have taken ownership of the paperwork 
reduction issue and have introduced some stellar pieces of 
legislation. Unfortunately, however, those initiatives have met 
with real incalcitrance on the part of certain agency 
bureaucracies.
    When I testified here in July, it was on the subject of 
single points of contact regarding paperwork within Federal 
agencies and the efforts of the OMB to bring agencies in line 
with Federal law. But here we are 6 months after congressional 
inquiries into the first issue, and 14 agencies still aren't 
complying with the directive to have a single point of contact 
down from 33. To be fair, a jump of more than 19 agencies is a 
good thing, but still short of the ultimate goal.
    Having a single point of contact at an agency is not 
something that the Federal agencies can take lightly. From my 
own personal experience in July of dealing with the document, 
running around from office to office to track down information 
about that Superfund ability-to-pay claim form, I know that it 
can take hours. And, again, I'm a professional. I know where to 
go to find answers to questions about documents. But for the 
small business owner already spending precious hours filling 
out Federal paperwork, it is a terrible waste of time and 
money.
    What is more disheartening is the continued absence of 
identifiable compliance assistance efforts from 18 Federal 
agencies, including the GSA and FERC.
    As I stated a moment ago, complex and confusing paperwork 
is a paramount concern to the small business owner, and while a 
single point of contact is essential to answering questions, 
proactive assistance by agencies in helping businesses comply 
with the law can go a long way toward answering those questions 
before they need to be asked. Moreover, in the case of agencies 
like the EPA and OSHA, and let's say FERC, it goes a long way 
toward making sure that those regulations are complied with 
properly.
    As I note in my written testimony, we have experienced 
firsthand the problems of creating compliance-friendly guidance 
when it came to the development of the TRI rules for lead. And, 
my written testimony discusses the lead TRI issue in greater 
detail.
    Small business owners want to comply with the law, but they 
have to be told simply and succinctly what they need to do. I 
mention as one possible solution the development of a business 
gateway, which I worked on as the Business Compliance One-Stop 
System, as an aid to this end. But, that system is some time 
from being ready to use. In the interim, agencies have to take 
ownership of this problem and be held accountable for it.
    I was disappointed to learn that nearly two-thirds of the 
required agencies hadn't completed reports on their enforcement 
activities against small entities, and that 21 of those 
agencies, including GSA, have been unaware of the requirement 
to do so. The importance of this information is reinforced by 
those agencies that did submit reports. Small entities make up 
a great percentage of those against which enforcement actions 
were taken.
    For instance, in the case of the Department of Agriculture, 
out of 536 enforcement actions, 506 of them were against small 
entities.
    It is especially helpful in understanding the vastness, the 
hugeness of enforcement, especially when it comes to the most 
burdensome and complex paperwork-requiring agencies like the 
IRS. The IRS claims more than 15 million small entity 
assessments, versus just over 23 million total enforcement 
assessments. To me, that's a staggering number.
    I don't want to extrapolate, but when you consider that 
according to our poll, small businesses are spending $75 per 
hour on average in tax preparation, that 15 million enforcement 
assessments against those entities represents a huge cost. 
Think about it, 15 million assessments can all not be chalked 
up to people cheating on their taxes. I would suspect that a 
significant amount of that is simple mistakes, which means that 
people are spending large amounts of money only to find their 
preparation to be mistaken.
    That, too, reconfirms the problems with compliance 
assistance and paperwork reduction itself and the need to make 
Congress' paperwork efforts stick to the IRS. Right now, IRS 
believes itself to be largely immune from having to reduce its 
paperwork through various memoranda of understanding within 
OMB, though I do note that OMB has been directed to focus staff 
attention on reducing that paperwork.
    Tax paperwork accounts for 80 percent of the paperwork 
burden imposed on small business. It is hugely expensive and, 
as the IRS's own report shows, fraught with potential 
liabilities. The time has come for another stab at forcing the 
IRS to comply with the rules that other agencies comply with, 
or at least are supposed to. At the very least, OMB needs to 
take much greater steps to ensure that serious paperwork 
reduction is being undertaken at IRS and that MOUs that exist 
between them should be scrapped or at the very least 
reevaluated.
    I urge you to do what needs to be done to help these small 
businesses free themselves of their paper shackles.
    Thank you once again for allowing me to testify today, and 
I look forward to any questions that you might have.
    Mr. Ose. Thank you, Mr. Langer.
    [The prepared statement of Mr. Langer follows:]

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    Mr. Ose. Mr. Langer's testimony begs the question, given 
Dr. Graham's comments, we really need to think about that since 
Dr. Graham is reluctant to involve OMB in Treasury's 
activities, particularly at the IRS. Well, exactly who is the 
IRS accountable to?
    Mr. Schrock. That's exactly right.
    Mr. Ose. I mean, it just begs that question. I may have to 
get back to him on that.
    Mr. Schrock. Are we going to have them in front of us, the 
IRS, on April 20th?
    Mr. Ose. Yes.
    Mr. Schrock. OK, then we are. That ought to be an 
interesting hearing.
    Mr. Ose. Mr. Igdaloff, I'm looking at this EPA form, 
pesticide report for pesticide-producing and device-producing 
establishments, which I believe you filled out on February 17, 
2003. You've signed it, and there--I just want to make sure, 
you have a portfolio of 50 products or 500?
    Mr. Igdaloff. 50.
    Mr. Ose. 50. So you have to take--it says this is page 1 of 
16. So you've got 16 pages of this thing that you filled out. 
And, I notice on the different lines----
    Mr. Igdaloff. To go to an instruction sheet and then----
    Mr. Ose. Well, my question is amount produced, repackaged 
or relabeled last year; amount sold or distributed last year, 
U.S.; amount sold or distributed last year, foreign; and amount 
to be produced, repackaged, relabeled this year.
    I'm trying to figure out if----
    Mr. Igdaloff. They want an annual production report. So, I 
mean, we just have to put all these things in a column across 
the top, list the products and just put all that information in 
a simple sheet.
    Mr. Ose. Yet, this is the form they're using, so you have 
to transcribe it from this one sheet to 16 pages?
    Mr. Igdaloff. Yes, with errors.
    Mr. Ose. Can you do this electronically?
    Mr. Igdaloff. Not currently.
    Mr. Ose. What happens if you have a product that you have 
the same amount being produced this year as last year? Can you 
check a box that says no change from last year?
    Mr. Igdaloff. No. I just have to go and cross these off, 
re-sort them from my spreadsheet, put the numbers on. And, 
since nobody can read my writing, give it to my office girl. We 
have two women in the office that handle sales and everything 
else, and then she takes 3 or 4 hours to fill them out.
    She may miss one sheet or another. Then they call me from 
Compliance in San Francisco, and we go back over the thing, 
item by item, to make sure that we have the right ``Gs'' and 
the ``Ls'' and the ``Ps.''
    Mr. Ose. Do you pull this form down electronically off the 
Web?
    Mr. Igdaloff. No. No. We get this mailed to us, Registered 
Letter, Certified. We have to sign for it. And, if you don't 
comply, some of the other companies have been fined $4,000 to 
$5,000 for not submitting a production report.
    Mr. Ose. Well, this is something I find very interesting. I 
notice on the form that up in the upper right-hand corner, the 
mailing label is clearly generated from EPA. Sungro Chemicals, 
Inc.
    Now, it seems to me that you turned in one of these last 
year. Why can't the EPA also enter into these items here the 
chemical numbers and the amounts produced, U.S., produced, 
foreign, from last year; and, then, if there's a change, you 
just scratch it out and put the accurate number.
    Mr. Igdaloff. Yes. The only thing that changes are the 
numbers here, the other statistical information is essentially 
the same.
    Mr. Ose. I mean, the product name probably doesn't change.
    Mr. Igdaloff. No.
    Mr. Ose. And, the EPA product registration number doesn't 
change?
    Mr. Igdaloff. We submit a similar report to the State of 
California quarterly, where we pay a mill tax for everything we 
do. And, so, we get a printout from them, the name of the 
product and the column just to fill in the numbers, you know, 
on two pieces of paper.
    Mr. Ose. Do you have a copy of that with you?
    Mr. Igdaloff. Not with me, but I can send you one.
    Mr. Ose. We want to ask for that. Perhaps we could expedite 
paperwork at EPA by suggesting they take some of the wisdom 
from California and bring it here.
    [The information referred to follows:]

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    Mr. Schrock. You should know for the record, he's a 
Californian.
    Mr. Ose. Well, at least it would help one gentleman.
    Mr. Schrock. You'd better believe it. It would probably 
help thousands.
    Mr. Ose. Mr. Schrock.
    Mr. Schrock. Let me ask you a question, Mr. Igdaloff. You 
sell 50 different products?
    Mr. Igdaloff. Right.
    Mr. Schrock. That means you pay $150,000 a year for 
maintenance fees?
    Mr. Igdaloff. No. They have a cap of--it's $3,000 a 
product, but you--once you get to 50, then they have a cap of 
$50,000. We've got the new law here. So, once you get 16 
products, if you have 16 products, there's no way to reduce 
your costs. Everything from 16 to 50--registrations cost 
$50,000.
    Mr. Schrock. What is the maintenance fee? What's it for?
    Mr. Igdaloff. Well, in 1989, Congress passed a law that EPA 
was to reregister all pesticides within 10 years. I received a 
letter from the EPA then that the registration fee would never 
exceed $600 or $36,000 maximum fee per year. Each year----
    Mr. Schrock. Careful when the Congress says ``never.''
    Mr. Igdaloff. So, what happened as a result of Congress 
giving their wisdom to this, 50 percent of the registrations 
were canceled. People said, we aren't going to pay the fee. So, 
in order to raise the same $15 million, EPA said, all right, 
we've got to get twice as much money from every registrant, and 
thus the fees have been increasing. The legislation that 
Congress has just passed in this latest document have increased 
the fees. Our cap for our 50 products for last year was 
$50,000. We just paid $50,000, for 2004.
    It says, for registrants holding not more than 50 
registrations, the annual maintenance fee cap for small 
businesses, which are defined at $60 million a year, at $59,000 
for the fiscal year 2004; $61,000, each of the fiscal years 
2005 to 2006; $48,000 for 2007; $38,000 for 2008.
    Mr. Ose. You're saying that was a law passed by the 
Congress?
    Mr. Igdaloff. Just came out.
    Mr. Ose. What's the number?
    Mr. Igdaloff. The Pesticide Registration Improvement Act 
that's contained in a conference report to accompany H.R. 2673, 
the Consolidated Appropriations Act of 2004. And, then they 
have a whole schedule of service fees which is another subject. 
There are both the maintenance fee and a service fee.
    Mr. Ose. Facts are facts.
    Mr. Igdaloff. Pardon me?
    Mr. Ose. I appreciate your candor.
    Mr. Igdaloff. I mean, I've been fighting it for 15 years 
now.
    Mr. Schrock. Andrew, thank you. You were here 6 months ago 
today. I hope you're not busy July 28th. So you'll probably be 
here again. We have simply got to do something about this 
stuff.
    I'm just surprised Mr. Igdaloff even stayed in business. 
It's nonsense. By the time the Federal and the State get done 
with you, what's left?
    Mr. Igdaloff. Well, we thought it was going to sunset 2 
years ago, and, someplace in the Indian Affairs Act they put a 
couple of lines to increase----
    Mr. Schrock. In the Indian Affairs Act?
    Mr. Igdaloff. Yes.
    Mr. Schrock. I'm not even going to ask. I have no idea.
    Mr. Ose. Mr. Igdaloff, in your testimony on page 4 you talk 
about ways to eliminate duplication of paperwork and coordinate 
the due dates and then, you cite the paperwork for filing 
mandatory emergency plans as an excellent example of the 
opportunity that exists there.
    Would you elaborate on that a little bit? Why is 
coordinating due dates--why would that reduce your paperwork, 
for instance?
    Mr. Igdaloff. All right. For example, the report that you 
have there is due March 1st. We have to submit our maintenance 
fee schedule to EPA by January 15th with a fee. Now, if those 
were coordinated, since we don't have on January 15th our 
production analysis from the prior year, we could use the data 
from the production report to know which products to include on 
the maintenance fee report for the following year.
    These two reports could be combined into one report that 
lists all the products--all that is required is the addition of 
a couple more columns on the maintenance report to include the 
production and sales data. A duplicate copy could be sent to 
the regional offices to satisfy their needs. By combining the 
two reports, we could do the job one time and send the whole 
thing in.
    Mr. Ose. One is a Federal report and one is a State report?
    Mr. Igdaloff. No. One goes to the EPA in Washington, and 
the production reports go to the regional, the EPA regional 
office.
    Mr. Ose. In San Francisco or in Los Angeles?
    Mr. Igdaloff. Right.
    Mr. Ose. Mr. Langer, do you have any suggestions along 
those lines?
    Mr. Schrock. We need to get Mr. Igdaloff to the airport.
    Mr. Ose. You're right. Mr. Igdaloff, we're going to do 
something out of the ordinary here, because you've got a 7 
o'clock plane.
    Mr. Langer, if you'll just hang a minute.
    Mr. Igdaloff, I want to thank you for coming, traveling 
back here at your expense and the like, to visit with us and 
share with us the association's testimony. We are going to 
leave the record open, so if we have additional questions, we 
may send them to you.
    Mr. Igdaloff. Surely.
    Mr. Ose. To the extent we can get timely responses, that 
would be wonderful.
    Mr. Igdaloff. If you could give me a couple extra days, 
though, because I'll be gone next week.
    Mr. Ose. And, we also need that form that you're using with 
the State of California that's different from this. OK. I see 
your assistant in the back nodding her head.
    Mr. Igdaloff. We'll put that in and the maintenance form 
that EPA used.
    Mr. Schrock. We're going to find that piece of legislation 
you talked about and work that back and find out how that 
happened and why it happened. We have our guesses, but we're 
going to find out.
    Mr. Igdaloff. Well, I cannot for the record suggest that 
the large chemical companies are not interested in maintaining 
the small chemical people in business.
    Mr. Schrock. Your words, not mine, but you're probably 
right.
    Mr. Ose. We will note that was not for the record, OK? 
Thank you for coming.
    Mr. Schrock. Thank you very much.
    Mr. Igdaloff. Thank you for having me.
    Mr. Ose. All right, Mr. Langer, you have some suggestions 
as to where we might look for significant decreases in 
paperwork for small business?
    Mr. Langer. Yes.
    Mr. Ose. Could you step us through those, please?
    Mr. Langer. Well, sure. One of those that we have been 
talking about, at the very least, to step back for a second, to 
dovetail onto what Mr. Igdaloff said, eliminating duplicative 
paperwork is something that NFIB has been talking about for 
quite some time. The elimination of duplicative paperwork is 
absolutely essential.
    Mr. Ose. When you say duplicative, you mean between Feds 
and State?
    Mr. Langer. No, between Federal agencies. If you're filing 
Federal paperwork for, say, EPA, Department of Transportation, 
or EPA and OSHA, finding some way to streamline that paperwork 
would be excellent; then, moving onto sort of electronic 
reporting, we have been supporting the efforts to develop this 
business gateway, which I helped--was a part of, when it was 
part of--when it was called the business compliance one-stop.
    That's down the road, but something needs to happen in 
which a small business owner can log onto his computer, type in 
his NAICS code or enter into some sort of North American 
Industrial Classification Code; or, more to the point, if there 
is some sort of a system where you can enter in what kind of 
business he has, and it will be able to interpret that, and 
then it will spit out every regulation that this person has to 
comply with, that would be incredibly helpful. The problem is 
that it is down the road, and right now, according to our own 
polling, only 90 percent of small businesses are using 
computers.
    Mr. Ose. Only 90 percent?
    Mr. Langer. Only 90 percent.
    For the last few years we have been using the statistic of 
80 to 85 percent, so it's improving as the cost of computers 
come down and more things are being done on line, but, the fact 
is there will always be a small amount of small businesses that 
are not on line, in which case, compliance assistance is going 
to be essential to help those businesses, active outreach on 
the part of the agencies to help these businesses figure out 
what they need to do.
    As Chairman Schrock said, it is incredibly unfortunate the 
first time a small business owner finds out about our 
regulations is when they're being enforced against, and, 
unfortunately, as you can see the number of binders here and 
the number of laws on the books, Paul Rosenzweig of the 
Heritage Foundation is trying to find out a number that carry 
criminal penalties. He can't get an answer to that question. 
So, the fact is it's a constant minefield for the small 
business owner in terms of trying to find out exactly what they 
need to do to be in compliance with the law, and they want to 
comply.
    Mr. Ose. So, why is it when I go on the Internet and get to 
Google or MSN.com and hit search, I can get 250,000 references 
to some keyword, but we cannot figure out how some person who 
can survive the winds of fate in the economy--I mean, why is it 
we cannot have that person go on the Internet and figure out 
which of these forms they need?
    Mr. Langer. Well, because it gets confusing; I mean, when 
you are talking about 225,000, the agencies don't make it easy.
    When you are an expert in these sorts of things, you know 
which keywords to use.
    The fact is a small businessman can't go on line. He may 
not know that MSDS stands for material safety data sheet, or he 
may not know that he ought to look under boric acid under 
pesticides, I don't know, but there are all sorts of new 
answers that are out there that your average person does not--
your average person does not speak bureaucratese. That is part 
of the problem, and the career civil servants, unfortunately, 
do not think in the same way that small business owners do. 
And, there are ways to get around that and sort of get them to 
start thinking like small business owners, but there is a lot 
of training involved, and I can offer up suggestions to that, 
but----
    Mr. Ose. Well, let me ask you a question: How is the case 
proven that small business owners who can run their own 
enterprises aren't able to use the NAICS code or something else 
to sort through to get their forms?
    Mr. Langer. Well, largely because they are not all in the 
same place. It really comes down to time and effort and really 
just wanting--being so consumed with getting their businesses 
up and running and moving forward that, in order to take the 
time and effort to sort of learn the new answers of the 
bureaucratic language and to learn where to go in each 
different place, that is a lot to ask of someone who is working 
7 hours a day, you know, running their small dry cleaner or 
running their auto repair shop, as Congressman Kelly raised.
    Mr. Ose. Seems to me that if you constructed--and I just 
want to explore this a little bit. Seems to me if you 
constructed a Web site to which I could click through, starting 
at OMB, with a link that says regulatory whatever, and I can 
click on that, and that takes me to the NAICS codes, and it 
says, please select the code most applicable to your 
enterprise, I ought to be able to figure out which of these 
codes is most applicable.
    Mr. Langer. I agree with that.
    Mr. Ose. OK. So, then, we got to that point; then I click 
on that thing, and it takes me to the various agencies that 
might have--or a list of various agencies that might have a 
regulatory burden applied to that, right?
    Mr. Langer. Yes.
    Mr. Ose. Pretty simple so far. I do not think we have 
Einstein involved yet.
    Mr. Langer. Not yet.
    Mr. Ose. So, then I would click on, oh, I don't know, EPA. 
I go to EPA, and they have a form. OK. Then I click back and I 
go back to that list, and I click Transportation, and it would 
click me through to that form. What is so complicated about 
that?
    Mr. Langer. I mean, I do not want to belabor that point. 
There are two basic problems with that, because it needs to be 
simpler than that, if you can believe it.
    No. 1, starting at OMB, the average small business owner is 
not going to think about that. It would have to be business 
compliance, small business compliance, or small business 
regulations, or small business rules. You know, that would have 
to be smallbusinessrules.gov.
    It is like right now what they have in sort of e-rulemaking 
side of things is regulations.gov. That's pre-KISS; keep it 
simple stupid. That's KISS, simple, right there, and you go to 
that Web site, and all you have to do is go to regulations.gov 
and click on the agencies, and it spits out everything that you 
need, all the new rules that are being proposed.
    So, the idea is to do it on the other side. Type in what 
sort of business you are, and it should spit out everything. 
There should be no sort of click through, click through, click 
through, because that takes precious time. Every minute spent 
clicking through is a small business owner's time wasted, so it 
should really be that simple. You click in your small dry 
cleaner in, say, Carmel, CA, and it should just come out and 
spit out exactly what you need to do to comply with every 
regulation.
    You know, I am an optimist. I don't see why that should be 
so difficult, though.
    Mr. Ose. Well, we can put a computer on Mars with 156--256-
bit memory. I don't know why we can't do that.
    Mr. Langer. There you go.
    Mr. Ose. Mr. Schrock.
    Trying to draw a connection to the reduction in paperwork 
that would come from that.
    I got one other question. I need to find it here.
    Mr. Langer, the agency compliance assistance resources and 
the performance from the agencies, do you have any view as to 
the degree to which those resources have been helpful or the 
performance of the agency personnel have been helpful and how 
we might improve that, if at all?
    Mr. Langer. I don't have a ready answer to that. I think 
that every effort that the agencies can make to be more helpful 
is good, but it never, ever goes far enough really. You know, 
either the agencies themselves do not specifically know what 
language to put it in to make it small-business-friendly--there 
is almost always too much small business language in compliance 
guides. Agencies are sort of reluctant to make it as simple as 
possible, largely because it covers their own--well, it covers 
themselves. If they get too specific in how to be helpful, you 
know, they think that--well, they think that they will not be 
able to assess fines or go after people, but, you know----
    Mr. Ose. Too helpful?
    Mr. Langer. You know, I have always gotten the feeling they 
do not want to make it too helpful for people. They do not want 
to make it simple enough. That way, if there is any political 
blowback, they can say, well, it was not that specific.
    I will give you an example, a case that came out of Texas 
about 10 years ago in which a large chemical company was given 
an exemption from complying with the national emission 
standards for hazardous air pollutants. This chemical company 
was given an express exemption from having to comply with 
tenets of this regulation, and several years later EPA came 
back and said, no, we were wrong. We didn't mean to tell you 
you were exempt, and we are going to assess you a fine of $40 
million, $2,000 per day, per violation.
    I have always gotten the feeling that agencies don't want 
to make it that easy for businesses to comply in just sort of 
instances like that, where they can go back--if you have a new 
administration that comes in that may have different priorities 
for how to enforce, you know, they want to be able to go back 
and revisit things and change guidance and change 
interpretation. So I would like to see agencies go further. 
They can always go further, as far as I am concerned.
    In the instance of lead TRI, to give you an example lately, 
we went through the guidance documents lately with senior EPA 
officials including, Kim Nelson, and I was met with a great 
deal of reluctance on the part of EPA to make that more clear. 
I wanted a specific table of contents which specifically asks 
questions about lead TRI: Here is where you go to get an answer 
to that question. The EPA claimed--well, I don't remember what 
they said, but they were very reluctant to provide that 
guidance, and, as we all know, many small businesses out there, 
they reported they had no releases whatsoever, and they still 
have to continue to fill out this paperwork.
    It just seems to me that EPA--there is always room for 
improvement, and the lead TRI example is a very good object 
lesson, as far as I am concerned.
    Mr. Ose. Anything?
    All right. Anything else?
    All right. We're going to leave the record open for 10 days 
in case other Members may have additional questions or we think 
there is something that we forgot to ask.
    Mr. Langer. Great.
    Mr. Ose. I want to thank you.
    Mr. Langer. Thank you very much.
    Mr. Ose. For those agencies that are still in the room, we 
appreciate your taking part today. I think we made a little bit 
of progress today, and I look forward to working with you in 
the future.
    We are adjourned.
    [Whereupon, at 6:12 p.m., the subcommittees were 
adjourned.]
    [Additional information submitted for the hearing record 
follows:]

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