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





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

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

                             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 BUSINESS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 20, 2004

                               __________

                     Committee on Government Reform

                           Serial No. 108-255

                      Committee on Small Business

                           Serial No. 108-74

                               __________

 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


                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
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_____________________________________________________________________________
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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
NATHAN DEAL, Georgia                 C.A. ``DUTCH'' RUPPERSBERGER, 
CANDICE S. MILLER, Michigan              Maryland
TIM MURPHY, Pennsylvania             ELEANOR HOLMES NORTON, District of 
MICHAEL R. TURNER, Ohio                  Columbia
JOHN R. CARTER, Texas                JIM COOPER, Tennessee
MARSHA BLACKBURN, Tennessee          BETTY McCOLLUM, Minnesota
PATRICK J. TIBERI, Ohio                          ------
KATHERINE HARRIS, Florida            BERNARD SANDERS, Vermont 
                                         (Independent)

                    Melissa Wojciak, Staff Director
       David Marin, Deputy Staff Director/Communications 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
EDWARD L. SCHROCK, Virginia          JOHN F. TIERNEY, Massachusetts
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
JOHN M. McHUGH, New York             PAUL E. KANJORSKI, Pennsylvania
CHRIS CANNON, Utah                   DENNIS J. KUCINICH, Ohio
NATHAN DEAL, Georgia                 CHRIS VAN HOLLEN, Maryland
CANDICE S. MILLER, Michigan          JIM COOPER, Tennessee
PATRICK J. TIBERI, Ohio

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                   Barbara F. Kahlow, Staff Director
                          Lauren Jacobs, 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      ENI FALEOMAVAEGA, American Samoa
JIM DeMINT, South Carolina           DONNA CHRISTENSEN, Virgin Islands
SAM GRAVES, Missouri                 DANNY DAVIS, Illinois
EDWARD SCHROCK, Virginia             GRACE NAPOLITANO, California
TODD AKIN, Missouri                  ANIBAL ACEVEDO-VILA, Puerto Rico
SHELLEY MOORE CAPITO, West Virginia  ED CASE, Hawaii
BILL SHUSTER, Pennsylvania           MADELEINE BORDALLO, Guam
MARILYN MUSGRAVE, Colorado           DENISE MAJETTE, Georgia
TRENT FRANKS, Arizona                JIM MARSHALL, Georgia
JIM GERLACH, Pennsylvania            MICHAEL MICHAUD, Maine
JEB BRADLEY, New Hampshire           LINDA SANCHEZ, California
BOB BEAUPREZ, Colorado               BRAD MILLER, North Carolina
CHRIS CHOCOLA, Indiana               [VACANCY]
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 L. SCHROCK, Virginia          [RANKING MEMBER IS VACANT]
    Chairman                         DONNA M. CHRISTENSEN, Virgin 
ROSCOE G. BARTLETT, Maryland             Islands
SUE W. 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 G. McCOTTER, Michigan       DENISE L. MAJETTE, Georgia

              Rosario Palmieri, Senior Professional Staff


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 20, 2004....................................     1
Statement of:
    Acker, Joseph, president, Synthetic Organic Chemical 
      Manufacturers Association; Anita Drummond, Director, Legal 
      and Regulatory Affairs, Associated Builders and 
      Contractors, Inc.; and John Di-Fazio, Assistant General 
      Counsel, Consumer Specialty Products Association...........    64
    Graham, John D., Administrator, Office of Information and 
      Regulatory Affairs, Office of Management and Budget; Jesus 
      H. Delgado-Jenkins, Acting Assistant Secretary for 
      Management and Budget, Department of the Treasury; and 
      Felipe Mendoza, Associate Administrator, Office of Small 
      Business Utilization, General Services Administration......    21
Letters, statements, etc., submitted for the record by:
    Acker, Joseph, president, Synthetic Organic Chemical 
      Manufacturers Association, prepared statement of...........    67
    Delgado-Jenkins, Jesus H., Acting Assistant Secretary for 
      Management and Budget, Department of the Treasury, prepared 
      statement of...............................................    43
    Di-Fazio, John, Assistant General Counsel, Consumer Specialty 
      Products Association, prepared statement of................    81
    Drummond, Anita, Director, Legal and Regulatory Affairs, 
      Associated Builders and Contractors, Inc., prepared 
      statement of...............................................    76
    Graham, John D., Administrator, Office of Information and 
      Regulatory Affairs, Office of Management and Budget, 
      prepared statement of......................................    24
    Mendoza, Felipe, Associate Administrator, Office of Small 
      Business Utilization, General Services Administration, 
      prepared statement of......................................    51
    Ose, Hon. Doug, a Representative in Congress from the State 
      of California, prepared statement of.......................     4
    Schrock, Hon. Edward L., a Representative in Congress from 
      the State of Virginia, prepared statement of...............    17

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

                              ----------                              


                         TUESDAY, JULY 20, 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 p.m., in 
room 2154, Rayburn House Office Building, Hon. Doug Ose 
(chairman of the Subcommittee on Energy Policy, Natural 
Resources and Regulatory Affairs) and Hon. Edward L. Schrock 
(chairman of the Subcommittee on Regulatory Reform and 
Oversight) co-presiding.
    Present: Representatives Ose, Schrock, Tierney, Bartlett, 
and Velazquez.
    Staff present: Barbara F. Kahlow and Rosario Palmieri, 
staff directors; Lauren Jacobs, clerk; Megan Taormino, press 
secretary; Krista Boyd, minority counsel; Russell Orban, 
minority professional staff member; and Earley Green, minority 
chief clerk.
    Mr. Ose. While we are waiting, I just want to share with 
you the good news that we have a number of items on the Floor 
that are being debated right now that will probably come to a 
vote in very short order. There are a total of three votes, so 
it's probably going to be somewhere around 55 minutes. That's 
assuming we don't have a motion to recommit. So, sometime here 
in the next hour, the bells will ring, we'll recess for that 
period of time it takes to have the votes and then come back.
    We're going to go ahead and start. I want to welcome you 
all to today's hearing of the Government Reform Subcommittee on 
Energy Policy, Natural Resources and Regulatory Affairs, being 
held jointly with the Small Business Subcommittee on Regulatory 
Reform and Oversight. Today's subject is What is the 
Administration's Record in Relieving the Burden on Small 
Business?--Part II.
    Small businesses remain a critical part of our economy. 
They represent more than 99 percent of all employers and 
provide two-thirds to three quarters of the net new jobs in 
this country. Hours and compliance dollars spent and penalties 
paid affect productivity, jobs and economic growth. Small 
businesses are especially concerned about penalties levied by 
Federal agencies for innocent first-time violations of ever-
changing Federal paperwork and regulatory requirements.
    As a former owner of small businesses, I am especially 
aware of the need to relieve paperwork, regulatory and 
enforcement burdens on small business. This is my 10th hearing 
as a Government Reform Subcommittee chairman toward that end.
    The problem is also important to this administration. Point 
No. 4 in President Bush's six point economic growth plan is 
``streamlining regulations and reporting requirements.'' Today, 
our subcommittees will focus on the progress in the 
administration's implementation of the June 2002 Small Business 
Paperwork Relief Act, which is Public Law 107-198, that has 
occurred since our last joint hearing in January. This law 
requires the Office of Management and Budget to take certain 
actions by June 28, 2003 and 2004, and each Federal agency to 
take additional actions by December 31, 2003 and 2004.
    OMB estimates the Federal paperwork burden on the public to 
be 8.3 billion hours. In its June 2003 Small Business Paperwork 
Reduction Act report, OMB estimated that the price tag for all 
paperwork imposed on the public to be $320 billion a year. This 
is obviously a huge burden, especially on small businesses.
    In 1980, Congress established an Office of Information and 
Regulatory Affairs in the Office of Management and Budget. 
OIRA's principal responsibility is paperwork reduction. In 
1995, 1998, 2000 and 2002, Congress enacted additional 
legislation with the objective of decreasing the paperwork 
burden. Nonetheless, to our great chagrin, paperwork has 
increased in each of the last 8 years. The chart on display 
shows progressive Small Business Paperwork Relief Act 
implementation compliance from June 2003 to June 2004 for each 
agency, including naming a single point of contact to act as a 
liaison between small business and the agency, identifying 
compliance assistance resources available to small businesses, 
and submitting its first enforcement report.
    Non-compliance includes incomplete or completely absent 
enforcement information for four cabinet departments, those 
being Defense, Homeland Security, Justice and Veterans Affairs 
and several key independent agencies, such as the Tennessee 
Valley Authority. Because of OMB's role in governmentwide 
management generally and the Small Business Paperwork Relief 
Act specifically, we asked OMB to discuss today the reason for 
each non-compliance by Federal agency.
    We also asked two agencies, the Department of the Treasury, 
which levies the most penalties on small businesses, and the 
General Services Administration, which has the governmentwide 
lead on civilian procurement and has not yet identified its 
compliance assistance resources, to discuss their Small 
Business Paperwork Relief Act implementation.
    The Small Business Paperwork Relief Act further required an 
OMB-led interagency task force to perform certain analyses. In 
year one the task force was to analyze how to: integrate 
paperwork requirements across Federal agencies and programs; 
consolidate paperwork requirements within an agency; and 
publish a list of paperwork requirements applicable to small 
business. In year two the task force was to recommend how to 
improve electronic dissemination and develop an interactive, 
governmentwide internet program.
    Along with other chairmen, Chairman Schrock and I submitted 
letters critical of OMB's two draft reports as being largely 
non-responsive to congressional intent. For example, OMB's 
first report did not address how to consolidate paperwork 
requirements and recommended against a list organized by NAICS 
codes, by industrial sector description, or in any other 
manner. And, the principal actions in OMB's second report have 
not yet taken place, including completion of all three phases 
of the Business Gateway Project and the two pilot burden 
reduction programs, one on trucking and the other on surface 
coal mining. We asked OMB to discuss today each specific 
accomplishment resulting from the task force's 2 years of 
effort.
    I believe that the administration can do more to fully 
comply with the Small Business Paperwork Relief Act and to 
reduce burdens significantly on small business. Congress wants, 
and America's small business deserve, results--fewer hours 
spent on Government paperwork and lower compliance costs.
    I want to welcome our witnesses today. They include Dr. 
John D. Graham, Administrator of OIRA at the Office of 
Management and Budget; Mr. Jesus Delgado-Jenkins, the Acting 
Assistant Secretary for Management and Budget, and Chief 
Financial Officer at the Department of the Treasury; Mr. Felipe 
Mendoza, Acting Administrator for the Office of Small Business 
Utilization at the General Services Administration. That is our 
first panel.
    Our second panel has as witnesses Mr. Joseph Acker, who is 
the president of the Synthetic Organic Chemical Manufacturers 
Association; Anita Drummond, director of Legal and Regulatory 
Affairs at Associated Builders and Contractors, Inc.; and, Mr. 
John DiFazio, assistant general counsel for legal and 
regulatory affairs at the Consumer Specialty Products 
Association.
    You heard the bells go off so, as I indicated earlier, we 
are going to recess. When we get back Chairman Schrock will 
offer his opening statement. Mr. Tierney will offer his. We'll 
enter any others into the record for the purpose of expediting 
the hearing. Like I said, this is likely to be about 50 
minutes. So, we stand in recess for that period of time.
    [The prepared statement of Hon. Doug Ose follows:]

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    [Recess.]
    Mr. Ose. I am pleased to recognize the gentleman from 
Virginia for the purpose of an opening statement.
    Mr. Schrock. Thank you, Mr. Chairman. It never fails, we 
don't vote all day and then we get ready to start something 
important and we vote. I guess that's just the way it is up 
here.
    The President has said in several speeches that government 
regulation of paperwork continues to be a problem. In May, he 
said, ``We need fewer mandates and fewer unnecessary 
regulations from Washington. Companies like [the one he was 
visiting] should be able to spend their time building the 
business and adding jobs, not filling out a lot of useless 
government paperwork.''
    Last week in Michigan, the President made a strong case for 
why this is so important. He said, ``Now, the best way to make 
sure this economy continues to grow is to make sure America is 
the best place for people to risk capital; to make sure the 
entrepreneurial spirit is strong; to have less regulation and 
less taxes for the small business people of America.''
    Vice President Cheney has been saying the same thing. Last 
month in New York he said, ``We also need to continue stripping 
away the needless mandates and regulations that burden small 
businesses. The Small Business Administration estimates that 
regulations cost small businesses some $7,000 per worker per 
year. This discourages hiring, stifles innovation, and often 
without any benefit to the public interest. So, we streamlined 
tax reporting tax requirement for small businesses, saving them 
more than 50 million hours of unproductive work. We must 
continue those efforts. America's entrepreneurs should spend 
their time building businesses and creating jobs, not filling 
out a lot of useless government paperwork.'' I think the 
President and the Vice President have mADE MY opening statement 
for me. It is very clear where we stand on providing relief to 
small businesses from the burden of regulation and paperwork. 
Our regulatory review office, under Dr. Graham, believes the 
same thing, and has shown us through his careful stewardship of 
new regulations.
    But, the efforts to combat the legacy of regulations and 
paperwork requirements that have existed before this 
administration that came to office are incomplete. I've said 
these numbers before, over 500 million hours spent by small 
businesses to comply with tax paperwork, over 8 billion hours 
of paperwork imposed by the Federal Government in total, and 
over $800 billion that regulation costs our economy. It is 
imperative to ensure America's continued global competitiveness 
that we get these costs under control, and in fact reduce them.
    Congress tried to help get the ball rolling in 2002, when 
we passed the Small Business Paperwork Relief Act. It asked for 
some simple things, like providing a single point of contact 
for small businesses in each agency and publishing a list of 
all compliance assistance resources.
    But, it also did a big thing. That was to get multiple 
agencies to talk to each other about regulation government-
wide, and about reducing the costs and burdens of regulation 
government-wide. The reason it was so important was that 
government agencies just don't think that way. They think about 
their individual agency's mandate. Very few of them, unless 
they are forced to, think about how a proposed regulation might 
impact businesses already regulated by several other agencies. 
OMB has traditionally served that role through interagency 
reviews, comments and return letters.
    But, we had hoped that the task force created by the law 
would bring a new outlook and a new way of thinking to 
regulation and burden reduction. Sadly, the two reports of the 
task force bear little resemblance to my hopes. We may have 
missed a golden opportunity to do something great for the small 
businesses of America.
    I hope that through our dialog today, with OMB, GSA and the 
Department of the Treasury, we can re-ignite some of that 
thinking. I hope we can leave here today with the continued 
mandate of the President, the Vice President, these committees 
and the Congress to streamline and eliminate unnecessary 
paperwork and regulatory requirements that are a needless drag 
on our economy.
    I look forward to our hearing today and to hearing from our 
witnesses. Thank you, Mr. Chairman.
    [The prepared statement of Hon. Edward L. Schrock follows:]

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    Mr. Ose. I thank the gentleman.
    I'm pleased to recognize my friend from Massachusetts, Mr. 
Tierney.
    Mr. Tierney. Thank you, Mr. Chairman, I say that with all 
sincerity, and Chairman Schrock, for holding this hearing on 
the riveting subject of the regulatory process.
    There are tens of thousands of small businesses in my 
district, and it's essential that the Federal Government make 
it easier for small businesses there and across America to 
comply with regulations. We recently hosted a conference for 
small businesses in the Sixth District of Massachusetts 
pertaining to their doing business with the Federal Government. 
The conference was held with the General Services 
Administration through the e-Strategy Web site, and small 
business owners heard directly from GSA representatives as 
well.
    Small business owners also heard from representatives from 
the Small Business Administration and the Procurement Technical 
Assistance Center. The purpose of the conference, and those 
that will be hosted in the future, is to explain and simplify 
the process of doing business with the Federal Government. Many 
of our small businesses could benefit tremendously by gaining 
access to the government procurement process. The problem is, 
they either perceive that the process is too complicated or 
they've experienced the process as costly and burdensome.
    The Small Business Paperwork Relief Act required the task 
force set up by the act to address two specific provisions in 
their second final report that was released last month. One 
provision asked for recommendations on how to make it easier 
for small businesses to get information electronically from the 
Federal Government. The other provision asked for a recommended 
plan for an interactive government-wide internet program that 
would help small businesses understand what information they 
are required to submit to the government and make it easier for 
businesses to submit that information.
    These provisions were included in the act because the 
government spends taxpayer dollars to collect information, and 
much of that information can only be beneficial if it's made 
available and accessible. The task force includes in its report 
comments from small business representatives. One comment made 
by a representative from the National Federation of Independent 
Businesses says, ``in some cases it costs a small business 
owner more money to find out if it had to comply than actually 
spent complying.''
    I'm a little disappointed with the task force report. The 
recommendation for a government-wide interactive program is the 
Business Gateway Program, but the only deadline that's been set 
is for phase one of the project that involves linking the user 
to other agency Web sites. This phase is not set for completion 
until September. Phases two and three of the program, when the 
Business Gateway will actually become a singular, separate 
program, has no deadlines or target dates for implementation.
    I look forward to hearing from all of our witnesses today. 
I particularly look forward to hearing from Dr. Graham and his 
recommendations on what Congress and the administration can do 
to make it easier for small business owners and the Federal 
agencies that serve them to make the best use of technology.
    Once again, I thank you, Chairman Ose and Chairman Schrock. 
I look forward to our witnesses' testimony.
    Mr. Ose. I thank the gentleman. I'm pleased to recognize 
the gentleman from Maryland for the purpose of an opening 
statement.
    Mr. Bartlett. Thank you very much. It was about the third 
week of May that America finished paying her taxes. But, it was 
not until just a few days ago that any wage earner in America 
earned any money that they could keep for their needs. Because 
from about the third week in May until the sixth or seventh of 
July, every American worked full time to pay for the most 
regressive tax we have, a tax that the poorest of the poor pay, 
they get no exemption from it, no deduction from that tax. This 
is unfunded Federal mandates.
    What we're talking about today is a part of that deplorable 
picture that occupied nearly 2 months of the time of all 
working Americans. The average American now works about 52 
percent of his or her time to support government. I submit 
that's too close to that 100 percent of taxation where clearly 
we'll collect no taxes. Obviously you collect no taxes if the 
tax rate is zero. You'll also collect no taxes if the tax rate 
is 100 percent, because nobody will work.
    So, somewhere between that zero and 100 percent is that 
magic number where we will not depress the economy, but where 
we will collect the most taxes. I think that taking 52 percent 
of the working time of Americans is far too much. What we're 
addressing today is a part of that. In a former life, I was a 
small business person, so I'm very interested that we reduce 
the burdens on small business.
    Thank you for coming today.
    Mr. Ose. I thank the gentleman.
    As you all may realize, our normal practice here in 
Government Reform is to swear in all of our witnesses. It is 
not judgmental, it's just our practice. So, if you would all 
please rise. The people who might help you also need to rise.
    [Witnesses sworn.]
    Mr. Ose. Let the record show that the witnesses all 
answered in the affirmative.
    Our first witness on the first panel is someone with whom 
we have met before and has appeared here regularly. That would 
be Dr. John Graham, who is the Administrator of the Office of 
Information and Regulatory Affairs in the Office of Management 
and Budget. Sir, we have received your testimony, it has been 
made part of the written record. It is a pleasure to have you 
here again, and you're recognized for 5 minutes.

    STATEMENTS OF JOHN D. GRAHAM, ADMINISTRATOR, OFFICE OF 
 INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND 
 BUDGET; JESUS H. DELGADO-JENKINS, ACTING ASSISTANT SECRETARY 
  FOR MANAGEMENT AND BUDGET, DEPARTMENT OF THE TREASURY; AND 
   FELIPE MENDOZA, ASSOCIATE ADMINISTRATOR, OFFICE OF SMALL 
     BUSINESS UTILIZATION, GENERAL SERVICES ADMINISTRATION

    Mr. Graham. Thank you very much, Mr. Chairman.
    My understanding is this may be one of our last 
opportunities to chat with you on the subject of paperwork 
reduction, though I am aware we may have additional ones. But, 
it could be the last one, so we thought at OIRA we would chat a 
little bit about your accomplishments as Chair of this 
subcommittee. In addition to some thank yous, we have to engage 
in a little bit of embarrassment, of course, and that is 
remembering you as the champion of paperwork reduction. But, 
that seemed more straightforward, so we looked for a more 
interesting analogy. We've decided that it's in the movie, The 
Last Samurai.
    Mr. Ose. Dr. Graham, you'd better be careful here. 
[Laughter.]
    Mr. Graham. If you haven't seen The Last Samurai, we urge 
you to do so. But, we want to reassure you that there are a few 
flaws in our analogy. One of them is that it is paperwork and 
not human beings that these swords are addressed to in the eyes 
of Chairman Ose. And, second of all, that you are not literally 
the last samurai. There is another one working behind you to 
carry forward the banner, and I'm happy Chairman Schrock is 
here today.
    So, thank you very much, Chairman Ose, if this proves to be 
the last opportunity I have to thank you for your leadership on 
the subject of paperwork reduction.
    You have my written testimony. I just want to make a few 
brief comments on the subject of the Business Gateway. I was 
pleased Mr. Tierney introduced that conversation in his opening 
remarks. I have a few slides I'd like to put up for people to 
get a feel for what progress we're making on the Business 
Gateway, but also quite candidly the substantial challenges we 
face and a lot of the work that we still have to do on this 
important project.
    I think it was Lauren, the clerk, who was going to help me 
with these slides, and if she could go ahead and put the first 
one up. The first one is a concept slide, what is the Business 
Gateway all about. The basic idea is, a business person would 
have one electronic place they could go to for information 
about forms, compliance, other types of information from 
government that are helpful or necessary in nurturing or 
developing a small business. That information, that idea used 
to be a concept. Starting I believe in May of this year, it has 
become a partial reality in the form of Business.gov. And, 
that's the point of the first handout or slide you have 
available to you.
    Turning to the second one, this is literally for those of 
you who haven't hopped on the computer already and done your 
Business.gov. This is actually the initial screen shot of 
Business.gov, with the eight different categories of 
information that you could access: business development, 
financial assistance, taxes, laws and regulations, 
international trade, workplace issues, buying and selling and 
forms. Of course, the buying and selling of forms focuses on 
the procurement aspects of information for businesses.
    Turning to the third of the handouts, this is the so-called 
forms catalog of Business.gov, which is the electronic 
compilation of all the various forms from Federal agencies, 
organized by form number, by agency and alphabetized from A to 
Z by the initial letter in each form title. I'm still needling 
my staff on how it is that they think the alphabetized listing 
by the title of the form is necessarily going to be helpful, 
but they have some interesting arguments in favor of that, 
which if we have time we can talk more about.
    One of the important things about this handout is that, 
notice, you can actually cross-link this information with a 
topic about forms, whether it be coal mining, surface mining, 
whatever your example is, and cross-link that with this 
information to get more specific information relevant to you as 
a particular small business.
    The fourth handout refers to form number. If you have a 
colleague in your business sector who happens to have a copy of 
the form and can refer to the form number, you can just type in 
the form number and then it will create access for you to have 
that particular form.
    On No. 5, it refers to all the various agencies. I would 
like to testify to you today that all Federal agencies are now 
operational as part of Business.gov, but I can't do that. I 
think it's only, 20 plus agencies that are now in. We're 
working to get as many as we can added to that list and we have 
the Internal Revenue Service scheduled to be in completely by 
the end of this summer.
    The final one is the forms by the alphabet. You know the 
title of the form, but you don't know the number, just the 
title of the form will get you through this to the particular 
form you're interested in.
    In conclusion, the good news is we're making progress. The 
candid news is we have a long way to go. The challenge is one, 
if businesses actually submit information in this format, how 
do we protect the privacy interests of small businesses in 
cases where some agencies are entitled to access but other 
agencies are not. We need to design the submission software to 
allow that protection to occur.
    Two, we need some automatic updating mechanism. If an 
agency updates a form, based upon an OMB approval, we need an 
automatic update on Business.gov. Problem: each of the agencies 
is using different software. We need to have some sort of 
consolidation or at least integration of software to make this 
happen.
    Third, this Business.gov currently has information about 
forms. But, how about recordkeeping requirements and equipment 
and investment requirements? There are links here to compliance 
assistance but we don't want to send a signal to the small 
businesses that all you have to do is fill out this form and 
you're done because you may also have recordkeeping 
requirements. You may have to install and maintain equipment. 
We have a lot more additional information that has to be made 
available.
    Finally, perhaps most importantly, we need to use this tool 
as a way to achieve more consolidation of forms in the pilot 
projects on coal mining and trucking. They are literally 
working on an element
by element basis to establish this. I'm sorry to be a minute 
over time, but I wanted to thank you all for joining us today 
and giving me an opportunity to say a few words about a modest 
step in the right direction called Business Gateway.
    [The prepared statement of Mr. Graham follows:]

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    Mr. Ose. Thank you, Dr. Graham.
    Our next witness is Acting Assistant Secretary for 
Management and Budget at the Department of the Treasury, Mr. 
Jesus Delgado-Jenkins. Sir, your statement has been entered 
into the record. You are recognized for 5 minutes to summarize.
    Mr. Delgado-Jenkins. Thank you, Mr. Chairman. Chairman Ose 
and Chairman Schrock, members of the subcommittees, thank you 
for the opportunity to testify on the Department of the 
Treasury's implementation of the Small Business Paperwork 
Relief Act of 2002. It is my pleasure to be here today and I am 
honored to have been asked to testify.
    As Acting Assistant Secretary, I report to the Deputy 
Secretary and I am responsible for managing the Department's 
budget, emergency preparedness, Treasury headquarters 
operations, human resources, financial management and various 
other management functions for the Department. Before beginning 
my service to the Department, I worked for a number of years in 
the private sector. Prior to my Federal service, I was a 
managing director and entrepreneur in a small business. I fully 
appreciate the challenges small businesses face every day in 
complying with the Federal, State and local regulatory 
requirements. My experience in business has demonstrated to me 
on many occasions that time is money. Doing business with the 
Federal Government should not waste precious resources of 
either the Government or small businesses. If our customers 
cannot readily find the information they need to comply with 
the laws, their government has not served them well.
    The Treasury Department works to impose the least amount of 
burden necessary for small business owners to meet their 
obligations to the government, whether they are tax obligations 
or other regulatory requirements. Secretary Snow has referred 
to small businesses as the backbone and engine of our economy. 
I could not agree more with that statement.
    From a departmental standpoint, IRS actions represent the 
vast majority of enforcement actions taken that involve small 
entities or small businesses, by the IRS as well as the 
Tobacco, Tax and Trade Bureau, referred to as TTB. These two 
account for most of the penalties assessed against small 
businesses by the Department of the Treasury and it is captured 
in the reports that we submitted to you in January and March of 
this year.
    Requirements of the act. As requested in your invitation to 
testify before the subcommittees, I would like to briefly 
address our compliance and implementation of the Small Business 
Paperwork Relief Act. First, establishment of an agency point 
of contact. The Treasury Department's single contact is posted 
as required on the OMB Web site. The Department's page on the 
OMB Web site also includes an IRS contact to facilitate small 
businesses finding the resources they need with respect to 
fulfilling their tax requirements.
    The Department believes that this additional resource helps 
taxpayers find what they need more quickly. If a taxpayer 
contacts the Treasury single point of contact, this office is 
also able to properly refer the taxpayer to the appropriate IRS 
office or other office with the Treasury Department that best 
meets his or her needs.
    Regarding compliance assistance resources, resources to 
specifically help small businesses understand their obligations 
and more easily comply with the requirements are also posted on 
the internet, including information on the Department's efforts 
to reach out to small businesses which want to do business with 
the Treasury Department.
    As reported to the committee by IRS Commissioner Everson in 
January 2004, the IRS abated over 1.7 million of the 15 million 
assessments a year, or about $1.8 billion of the total $5.5 
billion in penalties assessed against small businesses. As I 
examined these statistics in preparation for this hearing, I 
was struck by the large portion of overall penalty assessments 
attributed to small businesses. Fifteen of the 23 million total 
assessments were all for small business. For this reason, I 
asked for additional data to help me understand the story 
behind these numbers.
    In short, the numbers reflect the fact that small 
businesses account for 33 percent of all taxpayers. But, they 
make up for 66 percent of the filing transactions within the 
IRS. As a result, every time one of these transactions is 
completed there is an opportunity for the small business to 
make a mistake, increasing the potential for small businesses 
to be exposed to a penalty for not filing, for filing late, or 
for not paying on time. These facts help explain the number of 
penalties assessed against small businesses.
    The IRS Commissioner testified in April of this year 
regarding activities in the IRS Office of Taxpayer Burden 
Reduction and its aggressive implementation of the burden 
reduction initiatives to significantly reduce the hours a small 
business needs in order to comply with our tax laws. You have 
heard about the many electronic service initiatives that take 
paper out of the process, and ease both information reporting 
and the payment of taxes. While the IRS will continue to 
progress and make improvements, I believe they now have a 
number of initiatives which are reducing the burden and 
hopefully will make life easier for small business taxpayers. 
For example, the IRS waives the entire Federal tax deposit 
penalty charge on the first tax period following a change in 
deposit requirements. Taxpayers also receive notification of 
the FTT penalty waiver via an IRS notice. Along with this, the 
IRS also made an administrative decision to abate the entire 
penalty for the first quarter following a change in an 
employer's deposit requirement.
    Regarding the Tax and Trade Bureau of Alcohol and Tobacco, 
which is the newest agency in the Department of the Treasury, 
we also enforce and administer the laws governing the 
production and distribution of alcohol and tobacco products. 
TTB's revenue collection program uses analysis to target non-
compliant industry members and establishes a presence with the 
industries to encourage voluntary compliance, which is critical 
to collecting over $15 billion in tax revenues.
    TTB has compliance assistance resource centers established 
to assist small business in complying with the statutes and 
regulations that TTB enforces. It also offers guidance by 
telephone, mail and e-mail to small business taxpayers. The TTB 
National Revenue Center responds to approximately 80,000 phone 
calls a year. TTB also maintains an automated late return 
reporting system that notifies taxpayers of late filed return 
or insufficient payment, helping taxpayers to resolve problems 
early to avoid additional penalties and interest.
    As reported in the Treasury Report to Congress in March 
2004, of the 16,289 penalties assessed by TTB, all of them were 
against small businesses. According to TTB, the high percentage 
of enforcement actions involving small businesses is due to the 
fact that the vast majority of TTB taxpayers are small 
entities.
    Mr. Ose. Mr. Delgado-Jenkins, you are over your time here. 
I'm going to give you 30 seconds to wrap up.
    Mr. Delgado-Jenkins. Thank you.
    In conclusion, I believe that the Department continues to 
demonstrate progress in balancing compliance and service with 
burden reduction on small businesses. As the Department's 
largest interface with small businesses, the Internal Revenue 
Service is doing great work on a number of fronts to reach out 
with information and assistance to small businesses to help 
them navigate the complex requirements of the tax code.
    Thank you, sir.
    [The prepared statement of Mr. Delgado-Jenkins follows:]

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    Mr. Ose. I thank the gentleman.
    Our third witness on the first panel I believe joins us for 
the first time. That would be Mr. Felipe Mendoza, who is the 
Associate Administrator for the Office of Small Business 
Utilization at the U.S. General Services Administration. Sir, 
welcome. We've received your testimony, it's been made part of 
the record. You are recognized for 5 minutes to summarize.
    Mr. Mendoza. Good afternoon, Chairman Ose and Chairman 
Schrock.
    I'd like to thank you and the other members here for 
inviting me to appear before you to discuss GSA's 
implementation of the Small Business Paperwork Relief Act. As 
you stated, my name is Felipe Mendoza, I'm the Associate 
Administrator for the Office of Small Business at GSA. 
Accompanying me today are several GSA associates sitting right 
behind me.
    Before addressing the act, I would like to share some 
information with you regarding the positive impact GSA is 
having in promoting Federal Government contracting 
opportunities within the small business community. GSA's 
mission is to help Federal agencies to better serve the public 
by offering, at best value, superior workplaces, expert 
solutions, acquisition services and management policies. To 
effectively fulfill this mission, the Office of Small Business 
Utilization frequently conducts training within the agency to 
keep contract staff apprised of recent changes in procurement 
policies, procedures and regulations.
    In order to reach as many small businesses as possible, and 
provide small businesses information on how best to navigate 
the Federal procurement process, GSA conducts various outreach 
activities. During this fiscal year, we have targeted Native 
American/Alaskan Native-owned, service disabled veteran, of 
which I am a member, small businesses. We have also joined 
Members of Congress in hosting small business events around the 
country. GSA constantly seeks ways to make doing business with 
the Federal Government easier for Federal businesses. GSA 
recently launched ``eOffer,'' a tool to submit contract offers 
and contract modification requests to Federal supply schedules 
on-line. Offerors interested in getting on the information 
technology schedule now have an opportunity to submit their 
offer electronically. This significantly reduces the paperwork 
burden. Offerors are guided through each step of the 
solicitation. GSA developed the program and is currently 
adapting the program to process modifications electronically as 
well. We expect to reduce the cycle time for awarding contracts 
with the help of this new program. The program will be rolled 
out to other centers in the Office of Commercial Acquisition 
within the year.
    In regard to the Small Business Paperwork Relief Act, the 
committee's invitation to testify requested that we address 
specific topics or issues. One was the implementation of the 
act, compliance assistance resources, regulatory enforcement 
report and single point of contact. Specifically in regard to 
the submission of regulatory enforcement reports, this act 
imposes a duty upon Federal agencies to report to Congress and 
to the Small Business and Agriculture Regulatory Enforcement 
Ombudsman those regulatory enforcement actions in which a civil 
penalty is assessed. Further, Federal agencies must report the 
number of actions in which such penalties are assessed against 
small businesses. The act states that the report should include 
a definition of enforcement actions as determined by the 
reporting agency.
    GSA did not submit an initial report because we did not 
initiate enforcement actions on which civil penalties are 
assessed. There are no enforcement actions to report. For the 
December 31, 2004 reporting period, as required by the act, GSA 
will submit a report that so states. The core missions of our 
agency are procurement and property management. Under our 
enabling legislation, the Federal Property and Administrative 
Services Act of 1949, GSA supplies executive agencies with 
personal property and non-personal services and maintains and 
operates government-owned and leased buildings. Our regulatory 
expertise involves guidance to branch agencies regarding 
procurement regulations, the GSA acquisition manual and 
property and travel. Pursuant to discussions with the Office of 
Management and Budget, and the subcommittee, we have submitted 
a list of compliance assistance resources to OMB. A more 
extensive list of resources will be submitted by the end of 
September of this year. While the GSA single point of contact 
listed is currently an associate with the OSBU, the Agency's 
plan of action is to transfer this function to the staff person 
within the GSA's Chief Information Office. This should be 
accomplished by September 30, 2004. Additionally, not later 
than October 1, 2004, GSA will have a dedicated toll free 
telephone number available to the small business community for 
assistance with the act inquiries. The staff person delegated 
these responsibilities will be knowledgeable of the act and 
will respond to small business inquiries. As required by the 
statute, GSA participated in the task force that studied the 
feasibility of streamlining collection of information 
requirements to small businesses. GSA recognizes that the 
purpose of the Small Business Paperwork Relief Act is to reduce 
the challenges faced by small businesses in complying with the 
government information collection requirements. Where 
applicable, GSA intends to continue to do its part in 
addressing this issue. This concludes my testimony. Again, I 
appreciate having the opportunity to appear before you today, 
and I will be pleased to answer any questions you might have. 
Thank you.
    [The prepared statement of Mr. Mendoza follows:]

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    Mr. Ose. I thank the gentleman.
    I want to welcome the ranking member from the Small 
Business Committee. I do appreciate her willingness to attend, 
and we will enter your statement for the record at the 
appropriate spot.
    Ms. Velazquez. Thank you, Mr. Chairman. I would like to ask 
unanimous consent.
    Mr. Ose. Without objection.
    The way this works is, we'll now go to a round of 
questions. Each Member will be given 5 minutes for questions. 
If Members after the first round have determined they need 
additional time, we'll have a second round of questions. I'm 
going to go first.
    Dr. Graham, one of the things we've talked about in the 
past has been the threshold number of employees over which 
reports are required. I believe in your testimony you cited 
companies with fewer than 25 employees. I think the Treasury 
used a threshold of $10 million in assets or less. I'm trying 
to determine whether or not any consideration has been given to 
raising that fewer than 25 employees threshold for reporting 
purposes on certain items?
    Mr. Graham. I don't have any concrete proposal in that 
area, but I'm happy to look into it if you'd like me to.
    Mr. Ose. I know we've talked about it in the past, and I've 
never been able to quantify the impact of raising from, say, a 
threshold of fewer than 25 employees for certain reporting 
periods to say, fewer than 35 employees or fewer than 50. 
Obviously you don't want to go to fewer than 5,000, because 
then you'd get hardly anything. But, I would be very interested 
in the paperwork impact from your perspective of raising that 
threshold.
    Mr. Graham. I definitely think it's worth looking at.
    Mr. Ose. Mr. Delgado-Jenkins, Treasury has a standard, I 
think in your testimony it talked about $10 million in assets 
or fewer.
    Mr. Delgado-Jenkins. That's correct, yes, sir.
    Mr. Ose. Why do you have a $10 million asset threshold for 
certain reporting requirements, or more appropriately, why does 
your threshold differ from this fewer than 25 employees 
threshold? Why do we have different thresholds across the board 
here?
    Mr. Delgado-Jenkins. My belief is that's probably driven by 
the IRS' enforcement mechanisms. I would have to rely on 
Commissioner Everson to answer that. But, I cannot synch up the 
two differences. I think they're driven by the agency 
requirements to meet what their needs are.
    Mr. Ose. Do you have any information that you can provide 
us relative to the number of employee hours that would be 
affected positively by raising the threshold from, say, fewer 
than 25 to fewer than 35?
    Mr. Delgado-Jenkins. I don't have that here, but I'm sure 
we can provide those numbers.
    Mr. Ose. We'll put that to you in writing for that purpose.
    Mr. Delgado-Jenkins. Yes, sir.
    Mr. Ose. Now, I went through each of your testimonies, and, 
Dr. Graham, I find yours very informative. One of the things I 
wanted to dwell on was these task force meetings. I wasn't 
clear in your testimony whether the task force meetings that 
were required by statute, did you delegate the convening of 
that to the SBA Office of Advocacy?
    Mr. Graham. Delegate the convening?
    Mr. Ose. Yes.
    Mr. Graham. They certainly were host, I believe, to some of 
the meetings. But, I remember myself doing the kickoff meeting 
for task force report one. So, we were certainly involved 
heavily through the whole process.
    Mr. Ose. Could we get a copy of the attendance roster for 
that?
    Mr. Graham. Sure.
    Mr. Ose. I would appreciate that. As far as task force 
meeting No. 2, the second task force report number, I would 
appreciate having the same information, accordingly.
    Mr. Graham. OK.
    Mr. Ose. Now, the gateway initiative here, you have some 
things here that I find interesting. I want to applaud you for 
this. While I haven't been to the actual Web site, this looks 
very streamlined in its implementation. I'm curious, there are 
some agencies that you indicated you had not received either 
the link from or the participation of in setting this up yet?
    Mr. Graham. Yes, we don't have all their forms yet in the 
form catalog.
    Mr. Ose. Is that a function of their having not sent it to 
you, or it hasn't been scanned in and put into the Web site or 
what?
    Mr. Graham. I think it's a little bit of both. 
Quantitatively, I don't know how much is which. But, I think 
there's probably some in our court, and I think there are a lot 
of agencies that it's still in their court.
    Mr. Ose. Would it help you if the committee were to send 
you a letter asking you for the agencies or departments that 
have not given you that information?
    Mr. Graham. That would be fine, sir.
    Mr. Ose. OK. That way we can play good cop, bad cop.
    Mr. Graham. Absolutely.
    Mr. Ose. OK. Now, on page five of your testimony you talked 
about information collection requirements using the internet. 
The particular one that I found most interesting, you've got a 
bullet point here, harmonizing industry specific information 
collection requirements to collect information once and use it 
many times, thereby reducing the overall number of forms to be 
completed. So, I presume you're talking about information that 
would be useful across various agencies.
    Mr. Graham. Or within a single agency on the subject you're 
referring to.
    Mr. Ose. Give us an example of how that would work, please.
    Mr. Graham. Well, I'm not sure exactly which part you're 
referring to. But, one concrete example that we've discussed at 
previous hearings is, if you are a submitter of information, 
for example, to the Environmental Protection Agency on the 
toxic release inventory, and you have zero emissions in 1 year, 
and you come to the next year and you'd like to report that you 
have no significant difference, there should be a streamlined 
way to make that reporting. We currently have proposals out, 
we're taking comments to make that a more streamlined reporting 
exercise.
    Mr. Ose. We're talking about a box on the form that would 
say, no change from last year?
    Mr. Graham. That's one of the kinds of options we're 
talking about.
    Mr. Ose. Is one of the options, or does one of the options 
that you're considering allow for the use of that information 
by multiple agencies or departments, so that, if I turn it in 
in one place, I don't have to turn it in to 100 different 
places?
    Mr. Graham. Yes. In fact, the two pilot groups that I 
mentioned, one is working in the mining sector, and one's 
working in the trucking sector. They are literally going 
through, for selected agencies, all of the forms where they ask 
for information from mining companies and from trucking 
companies and looking at each of the data elements on each of 
the forms identifying where the common data elements are and 
trying to determine what the opportunity for consolidation is.
    The advantage of doing that through Business Gateway, as 
opposed to doing it through each of those notebooks, is you can 
have search engines that can go into the data elements and pull 
those out for you, rather than having to manually go through 
each agency's notebook of collections. So, we're hopeful that 
Business Gateway is actually going to be a big plus, and the 
effort to identify where these duplicative and common data 
elements are and how they can be consolidated.
    Mr. Ose. So you'll be able to data mine submittals to one 
agency, one agency will be able to date mine submittals to 
another agency kind of deal?
    Mr. Graham. You will have this one place where you can 
submit your forms and hopefully they will be designed in such a 
way that information serves multiple agencies' needs. You don't 
have to separately fill that out for different agencies.
    Mr. Ose. The gentleman from Massachusetts.
    Mr. Tierney. Thank you, Mr. Chairman.
    Dr. Graham, while I have you here, since you may or may not 
be visiting us again soon, I think you know I've had some 
concerns about OIRA's attempts to influence Federal agencies' 
rulemaking decisions. In the past, I have expressed that. I 
think obviously, while we can agree that Congress delegates the 
authority to issue rules to regulatory agencies, such as the 
EPA, but not necessarily to the White House, if we consider 
EPA's ongoing rulemaking that's supposed to regulate emissions 
of toxic mercury from power plants, there's extensive public 
concern in my State and I think elsewhere, even an outrage in 
some cases over the direction in which this rulemaking is 
going. My State of Massachusetts obviously has strong controls 
of mercury emissions, but we feel we need a national rule to 
stop the mercury that's blown into Massachusetts from other 
States.
    I would be interested in OIRA's role in the next big 
decision that EPA is trying to make on this mercury rule. As 
you know, EPA failed to even analyze any mercury control 
options other than the ones that the administration proposed. 
In fact, EPA refused to do the analysis recommended by its own 
public advisory group on this rule, which included 
recommendations from the States, industry and environmental 
advocates. Responding to public criticism on this, 
Administrator Leavitt promised that the EPA would conduct more 
analysis, but that was back in March. Right through today, we 
have not heard anything being done on this analysis. It seems 
that EPA is refusing to answer congressional inquiries about 
its schedule for doing additional analysis.
    EPA Assistant Administrator Jeffrey Holmstead has 
repeatedly refused to analyze the range of options recommended 
by the advisory group, but, in one statement, he indicated that 
he had consulted on this with both you and Mr. Connaughton who 
is the chairman of the Council on Environmental Quality. So, my 
question to you is, have you been involved in the EPA's 
consideration of what additional analysis to conduct to support 
a decision on the mercury rule?
    Mr. Graham. Yes, sir.
    Mr. Tierney. What has been your role?
    Mr. Graham. We reviewed the proposed rule, prior to its 
release for public comment.
    Mr. Tierney. Have you been giving EPA advice on matters of 
legal interpretation of their statutory authorities?
    Mr. Graham. We may have been. I don't recall.
    Mr. Tierney. You don't recall whether you gave----
    Mr. Graham. I don't remember. It wouldn't surprise me if 
our General Counsel's office was involved in providing advice.
    Mr. Tierney. Would you be good enough to provide the 
committee with a more direct answer on that, as to whether or 
not you were involved in doing that?
    Mr. Graham. Let me see what I can do on that.
    Mr. Tierney. Is that a yes?
    Mr. Graham. I'll see--the best I can do.
    Mr. Tierney. Well, if you have it, will you present it to 
the committee?
    Mr. Graham. Absolutely.
    Mr. Tierney. OK. Are you attempting to tell the EPA what 
types of control technology are or are not commercially 
available?
    Mr. Graham. I do recall that in the effort that's being 
made with the proposed rule there are two basic approaches to 
reducing mercury, one that would require technology based 
requirements at each coal-fired power plant, and one that would 
provide a national cap on the overall amount of mercury 
emissions. We favor this latter approach because it will reduce 
emissions by 70 percent and do so at less cost than a 
technology based approach, which is the alternative that was 
analyzed in the proposed rule.
    Mr. Tierney. So, would it be your testimony that you're 
saying you are constraining your opinions on EPA on this 
strictly to the policy and the cost-benefit analysis and not 
broader than that?
    Mr. Graham. We evaluate the technologies for cost and for 
effectiveness. We evaluate the material that EPA presents to 
us. We evaluate it, make comments and suggestions. They take 
some of them. They don't take other ones.
    Mr. Tierney. But, you constrain your recommendations to 
them strictly on a cost-benefit analysis and no other policy 
terms?
    Mr. Graham. Actually, the principles of the executive order 
that govern our activities, they include cost-benefit, but they 
include a variety of other principles as well.
    Mr. Tierney. What would be your expertise in matters 
outside of the economic analysis, the cost-benefit?
    Mr. Graham. Our staff has a broad range of expertise in 
engineering, in science, in toxicology, epidemiology, as well 
as economics, statistics and so forth.
    Mr. Tierney. You're telling us that you think it's OIRA's 
responsibility to give that kind of advice, or advice touching 
on those matters, to the EPA in this matter, instead of having 
EPA rely on its expertise in this area?
    Mr. Graham. It prepares the initial draft. The EPA 
scientists have the pen. We then make comments and suggestions, 
and, if we have a disagreement, we discuss that out and proceed 
as appropriate.
    Mr. Tierney. Does OIRA support or oppose conducting the 
analyses that were recommended by EPA's advisory group?
    Mr. Graham. I am not sure which recommendations you're 
referring to, sir.
    Mr. Tierney. Any of them.
    Mr. Graham. Pardon?
    Mr. Tierney. They made a range of recommendations. Do you 
support analyzing those recommendations or not?
    Mr. Graham. I don't know. I haven't looked at them.
    Mr. Tierney. You haven't taken a look at them in all this 
time?
    Mr. Graham. No, I haven't seen them.
    Mr. Tierney. My understanding is that your main role is in 
just encouraging them to assess the potential costs and 
benefits of the rule. I would think that you would make that 
assessment on all of the items that advisory group be reviewed.
    Mr. Graham. Yes, our role at OMB is not to review the work 
of the advisory committee. Our role is to review the work of 
EPA. It developed two proposals to us, one a technology-based 
program, one a national cap and trade program, and those are 
the two policies that we evaluated.
    Mr. Tierney. Have you checked to determine whether or not 
they have in fact analyzed all of the recommendations that were 
made to them by the advisory group?
    Mr. Graham. No, sir.
    Mr. Tierney. Well, I'd just be concerned if I find that 
OIRA is overstepping what I think is OIRA's bounds and getting 
into the EPA policy considerations on this. I think the Clean 
Air Act is pretty precise on what needs to be done. I have a 
concern that this was not a political decision the White House 
should be involved in, but one where the EPA had certain 
responsibilities under the Clean Air Act. I would like to think 
that's what EPA is following.
    I would also appreciate it if you would followup with the 
information that you said you'd provide.
    Mr. Graham. Certainly. And we're very proud of the 70 
percent reduction in mercury emissions, the first time the coal 
industry will be regulated for mercury emissions.
    Mr. Tierney. We can be prouder if States like Massachusetts 
didn't have it blowing in from other places where it wasn't 
regulated enough.
    Mr. Ose. All right, here's our situation. We have two votes 
on the Floor, one a 15 and one a 5. After conversing with Mr. 
Schrock, what we're going to do is we're going to recognize Ms. 
Velazquez for the purpose of asking one question, then we're 
going to recess, and recessing with great respect, and I 
apologize for doing this, because otherwise you're going to be 
here real late. We're going to go ahead and dismiss this panel. 
We will submit our questions to you in writing. Then, when we 
come back, we will have our second panel.
    Gentlemen, I'm sorry, you came down here, you prepared, I 
know you're all ready to give us what-for. But, circumstances 
moved against us.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Dr. Graham, I have to tell you, I'm really quite 
disappointed in the work that you have done so far since we 
passed the Small Business Paperwork Relief Act. You come here 
today, you present a report, you provide to us a report. Two 
years later after we passed this law, you say that you have a 
long way to go. Just answering questions from the chairman, you 
say that you have delegated, basically, your responsibility to 
SBA and then to the Office of Advocacy to convene meetings. 
What message are we sending to small businesses which are 
suffering so much?
    The Federal Register, that is the publication that lists 
all proposed and enacted regulations by agency, says that it 
increased to 75,000 in 2002, more than 1,000 pages above both 
the previous record set in 2000. And, it represents an annual 
regulatory burden nearly of $7,000 per employee, almost 60 
percent higher than that of firms with 500 employees or more. 
This is all you have to present to us?
    Mr. Graham. Well, I'm pleased to report that we have 
achieved in this administration a sharp reduction in the growth 
of the Federal regulatory burden on the private sector and 
especially of small businesses, quantified in my testimony on 
the order of 70 percent, compared to the previous 
administration, and compared to the Bush 41 administration. 
It's a very unusual time for me to be criticized for having too 
many regulations out there, but we are in fact making 
substantial progress.
    Ms. Velazquez. Regarding the Government Accountability 
Office study that pointed out that there were a number of good 
internet based ideas for regulatory management in using the 
Federal Government and State and local government, the report 
recommends that you meet with agencies to share information 
about best practices for putting information systems in place. 
It also said that OIRA should set up a system to discuss and 
share good ideas between agencies regularly. Did you ever do 
anything to implement those recommendations?
    Mr. Graham. In fact, the task force that was mandated by 
the law we're discussing had representation from a number of 
those agencies. They discussed alternative ways of implementing 
electronic approaches to burden reduction for small businesses 
and the Business Gateway initiative that I discussed in my oral 
testimony is the outcome of that activity.
    Ms. Velazquez. Your participation with the task force?
    Mr. Graham. Absolutely. I'm co-chair of the task force. I'm 
sure the agencies will tell you they had just a few e-mails and 
phone calls from OMB during the last 2 years on this task 
force----
    Ms. Velazquez. How many meetings?
    Mr. Graham [continuing]. Almost as many as Chairman Ose's 
staff had with these agencies?
    Ms. Velazquez. How many meetings the task force has 
conducted, sir?
    Mr. Graham. There were, I believe two meetings in person in 
each of the first and second years.
    Ms. Velazquez. In 2 years.
    Mr. Graham [continuing]. And a variety of conference calls 
and----
    Ms. Velazquez. In 2 years? Thank you, Mr. Chairman.
    Mr. Ose. The gentleman from Maryland? OK, we're going to go 
ahead and recess. Again, this will be two votes. Gentleman, 
thank you. We'll send our questions in writing. We appreciate 
your showing up. I apologize for the circumstances. We're in 
recess for 25 minutes.
    [Recess.]
    Mr. Ose. We will reconvene the hearing.
    Our second panel is composed of three witnesses. We're 
pleased to be joined today by Mr. Joseph Acker, who is the 
President of the Synthetic Organic Chemical Manufacturers 
Association; Ms. Anita Drummond, who is the Director of Legal 
and Regulatory Affairs for Associated Builders and Contractors, 
Inc.; and by Mr. John DiFazio, who is the Assistant General 
Counsel for Legal, Regulatory and Scientific Affairs, at the 
Consumer Specialty Products Association.
    As you saw in the first panel, we swear all of our 
witnesses in. So, if you would please rise.
    [Witnesses sworn.]
    Mr. Ose. Let the record show the witnesses answered in the 
affirmative.
    Our first witness in the second panel, as I introduced 
them, is Mr. Joseph Acker. He is the president of the Synthetic 
Organic Chemical Manufacturers Association. Sir, we've received 
your testimony. It's been entered into the record. You're 
recognized for 5 minutes for summary.

   STATEMENTS OF JOSEPH ACKER, PRESIDENT, SYNTHETIC ORGANIC 
 CHEMICAL MANUFACTURERS ASSOCIATION; ANITA DRUMMOND, DIRECTOR, 
     LEGAL AND REGULATORY AFFAIRS, ASSOCIATED BUILDERS AND 
    CONTRACTORS, INC.; AND JOHN DI-FAZIO, ASSISTANT GENERAL 
        COUNSEL, CONSUMER SPECIALTY PRODUCTS ASSOCIATION

    Mr. Acker. Thank you. Mr. Chairman, members of the 
committee, I appreciate the invitation to speak with you today 
regarding paperwork burdens on small businesses, and in 
particular the Small Business Paperwork Relief Act of 2002. I 
am the President of the Synthetic Organic Chemical 
Manufacturers Association, or SOCMA, a trade association that 
represents specialty chemical manufacturers. Before becoming 
the President of SOCMA, I spent over 30 years in industry, most 
recently as the President and CEO of Danchem Technologies, 
Inc., in Danville, VA.
    Many SOCMA member companies, by virtue of being small 
businesses, are at an inherent disadvantage. The Federal 
Government typically approaches regulations in a one size fits 
all manner, not recognizing the differences between small and 
large businesses. Unlike larger companies in the highly 
regulated chemical industry, small businesses usually do not 
have the internal support mechanisms dedicated to regulatory 
compliance. Employees, especially those working in environment, 
safety and health, often wear multiple hats and have fewer 
resources than their counterparts in larger companies. These 
conditions make it more expensive and more difficult to 
understand and comply with the myriad Federal, State and local 
regulations that affect the chemical industry.
    In my written testimony, I distinguish between two 
manufacturing process, batch processing and continuous 
processing. Batch processing does not utilize equipment 
dedicated to a specific product line, while continuous 
processing does. Batch processors are flexible and produce 
chemicals on customer demand. Consequently, a small batch 
company's product lines will fluctuate throughout the year and 
may include several hundred different products. Regulatory 
requirements associated with each product or process, 
therefore, add significant paperwork burdens to batch 
manufacturers, which tend to be smaller companies.
    The point that I am trying to emphasize is that the size of 
the company versus the number of regulations is not a linear 
relationship. Consider my former company as an example to 
illustrate this point. Danchem Technologies is a single 
facility specialty batch manufacturer with approximately 100 
employees, only one of whom is assigned full time to ensuring 
compliance with environment, safety and health regulations. 
This one facility is subject to more than 150 environmental 
regulatory conditions. Even more relevant to today's hearing is 
that the company is required to submit more than 38 reports 
relating to these regulations each year to Federal, State and 
local officials, and up to 100 reports if you include other 
regulatory requirements. This is an enormous and an unwieldy 
burden, and it is a significant drag on productivity.
    I am particularly interested in discussing the concept of a 
single agency point of contact. We have had some experiences 
with the single contact concept, and I'd like to share some of 
the positives and negatives that we have observed. The 
Environmental Protection Agency serves as an excellent example 
here. EPA has a small business ombudsman that serves to 
facilitate communications between the small business community 
and EPA. The EPA ombudsman does serve a valuable role. But, as 
was stated in the task force report, the single point of 
contact concept has certain limitations. Because there are so 
many small business interests with very diverse 
characteristics, the ombudsman cannot effectively address every 
industry-specific concern. In this era of specialized 
regulations designed to address very specific problems, that 
becomes quite important.
    SOCMA has also been involved with the Sector Strategies 
Division in EPA's Office of Policy, Economics and Innovation. 
Through this program, particular industries have been 
identified and assigned a staff contact who serves as the 
Agency's expert on that particular industry's sector of which 
specialty batch chemical manufacturing is one. This program has 
been very successful. Through the sector contact, we are 
connected to the agency staff who works on issues impacting our 
industry. Our contact is able to focus on detailed issues and 
attends many intra-agency meetings, ensuring that she is kept 
well informed. Consequently, there is constant communication 
between SOCMA and relevant EPA staff.
    One of the more frustrating burdens that I encountered 
during my time in industry is the numerous instances of 
overlapping jurisdiction and regulation by various agencies, 
both within the Federal Government and between the Federal, 
State and local authorities. The task force specifically 
recommended broadening and improving partnerships among 
agencies with similar or overlapping information requirements. 
These partnerships would play a valuable role in eliminating 
overlapping requirements among various agencies and between the 
Federal, State and local governments. This improved 
coordination would reduce the paperwork burden on the regulated 
community and promote increased collaboration among these 
agencies.
    It would be great if EPA's sector program could be 
replicated in other agencies, then the various agency 
representatives for a particular sector could meet regularly 
and eliminate regulatory overlap and industry would still have 
a single point of contact specifically for its sector.
    In closing, if regulators can take more time to learn about 
the industries they are regulating, and, if they reach out to 
interested parties as early as possible, then there will be 
opportunities to reduce burden and eliminate regulatory 
overlap. Thank you for your support and leadership in 
addressing a critical problem. We look forward to working with 
this committee and with any government official to try to 
reduce paperwork and other burdens. I'll be pleased to answer 
any questions.
    [The prepared statement of Mr. Acker follows:]

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    Mr. Ose. I thank the gentleman.
    Our next witness is Ms. Anita Drummond, who is the Director 
of Legal and Regulatory Affairs for the Associated Builders and 
Contractors. Welcome, your statement has been entered into the 
record. You are recognized for 5 minutes to summarize.
    Ms. Drummond. Thank you, Mr. Chairman. I would like to keep 
my comments very straightforward and simple. In this process, 
I've been working on paperwork on basically this side of the 
table for 15 years. I've seen the agencies really in many ways 
have good intentions trying to eliminate paperwork burdens.
    But, what it comes down to is there's no comprehensive, 
strategic way that the government evaluates paperwork. I think 
that this legislation was exactly on point with that intention, 
and the outcomes have not really reached the point that we 
would like. I have two main comments as a result of those 
reports and their efforts. One is that a business that's trying 
to identify all the laws that apply to them at a Federal level 
needs a mechanism to look at the government as a whole, some 
type of decision tree. I would believe that the act is an 
obvious beginning to that. What classification are they? How 
many employees do they have? What are their assets? What are 
their annual receipts--which is some legislation is the 
trigger--and, go through the series of questions, procurement. 
That would help identify what would apply to them.
    The next question is how do we answer that question? The 
burden should really be on the Federal agencies. It's 
interesting, we've turned this on its head. We've said, 
businesses, you go out and figure out which laws apply to you. 
If you look at the bottom line intent of the Regulatory 
Flexibility Act, it was to identify if there was a significant 
impact on a substantial number of small businesses. If agencies 
had complied with that act to begin with, they would have this 
type of critical information. They would know which sectors it 
applies to, how large are those industries, what if we change 
the size of business that it applies to, how much is it going 
to cost. They have not done that. They have found every way 
possible not to answer those questions in a transparent manner. 
I believe that one of the first things they should do is go 
back and identify answers to questions such as those.
    Then going forward, I think every time a regulatory 
flexibility analysis is completed, at the proposed rule stage, 
they have to put on the record in their analysis what that 
impact is based on those questions. That will drive what kind 
of policies they make. It will also drive what kind of 
compliance assistance fits.
    The other outcome of that analysis is that, if the 
government did go back and answer these questions, you as 
policymakers would have a rational answer to the question you 
had earlier: why is it 25 employees, why is that the cutoff? 
Well, many times it's driven by statute. You look at the COBRA. 
Under COBRA, if you have 25 or more employees, you must provide 
continuous insurance after their termination or other critical 
events. There's new notice provisions that just came out from 
the Department of Labor. That type of thing is driven by 
statute in part and by the agency in part. It's a new paperwork 
requirement. If the Government took this seriously and did an 
analysis on that basis, you would have better answers to your 
questions.
    The second part of the outcome of these OMB reports that's 
very disappointing is how to make the information better 
available. A very easy answer that the Federal Government has 
engaged in is, oh, it's up on our Web site. Someone's testimony 
indicated there is something like 40 million Government Web 
sites. That's astronomical to a business. I absolutely believe 
they need to seriously consider how businesses get their 
information. The most simple way to get information is to use 
the agency they always go to, which is their licensing agency. 
State governments, it depends on the State, some States you 
have to get a license, or you at least register with the State. 
I'm not calling for unfunded mandates. I'm talking about doing 
some type of partnership. If we had one central Web site, one 
single Web site, where you would have triggered a decision 
tree, that's all you would send them to. I look at the report, 
and as I said, I've been looking at this stuff for 15 years.
    I'm overwhelmed by the number of Web sites that keep 
cropping up. Well, it's really Business.gov, no, it's really e-
Regulations. No, it's really this. Which one is it? To the 
everyday business, they don't know which one to go to and which 
one to trust. So, if it was one central location that was 
driven by a decision tree, you could use one Web site, and 
Business.gov seems a logical one, where you would get 
partnerships with State governments, the agencies, and that's 
usually the Secretary of the Commonwealth in Virginia, for 
example, that licenses or registers a business and says, here's 
your registration and here's a Web site to find out what laws 
you have to comply with. The second is, they've completely 
ignored media. I don't mean just simply TV media. I mean Web 
site media. There's a whole world out there that businesses 
rely on, and they didn't even begin to crack that. That is the 
conclusion of my comments.
    [The prepared statement of Ms. Drummond follows:]

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    Mr. Ose. I thank the gentlelady for her comments. We'll 
come back with questions, I'm sure.
    Our third witness is Mr. John DiFazio, who is the assistant 
general counsel for legal, regulatory and scientific affairs at 
the Consumer Specialty Products Association. Sir, you're 
certainly welcome here. Your written statement has been entered 
into the record. You're recognized for 5 minutes to summarize.
    Mr. DiFazio. Thank you, and good afternoon. I welcome the 
opportunity to testify on behalf of the Consumer Specialty 
Products Association, now in our 90th year representing 
formulators, packagers and marketers of household and 
commercial consumer specialty products, such as cleaning 
products, disinfectants and polishes.
    About one-third of our 240 member companies are small 
businesses. I'd like to discuss briefly some of our 
interactions with EPA on the toxics release inventory after I 
present our thoughts on the report of the Small Business 
Paperwork Relief Act Task Force, issued June 28th.
    CSPA generally supports the primary recommendations 
described in the report's executive summary--specifically, 
improving the organization and classification of information, 
and providing a single Web point of access for relevant 
regulatory information on all Federal forms. Clearly, the 
20,000 separate Federal Government home pages and 40 million 
Federal Government Web pages as of 4 years ago present a 
formidable burden for any business to process and function 
efficiently or effectively. We certainly agree with the issues 
identified by the SBA's Office of Advocacy earlier this year 
and cited in the report.
    The report's vision of a Business Gateway is logical and 
feasible, building the infrastructure to provide useful 
regulatory information and compliance assistance tools in one 
place, while eliminating redundant data collection is an 
ambitious but worthwhile and ultimately achievable task. To 
allow small businesses to submit information common to multiple 
forums one time and have it re-used many times will increase 
productivity meaningfully.
    The report properly notes the greater role that trade 
associations can play in assisting with classification of 
Federal information to improve accessibility. Along those 
lines, CSPA strongly supports the cross agency approach to 
outreach discussed in the report, as well as the determination 
of ways that associations can become viable and trusted 
collection and dissemination points. Unfortunately, the report 
misses the opportunity to facilitate the growth or association 
membership and thus expedite those processes. Thus, an addendum 
to this report addressing the specific topic of promoting 
association growth certainly would be appropriate.
    Further, the report focuses on only a portion of the 
problem: how to get information efficiently from the Federal 
Government. It fails to ask the fundamental question, does each 
Federal agency really need to collect all the information it 
does? To that end, we recommend that your committees 
investigate ways of putting each Federal regulatory agency on 
notice to reduce unnecessary paperwork.
    EPA's implementation of the toxics release inventory is a 
prime example of unnecessary burden. CSPA has been working to 
alleviate unnecessary TRI reporting burdens since 1992. Though 
we achieved some success with the promulgation of the Form A in 
1994, the doubling of the list of TRI chemicals and the 
subsequent facility expansion served to nearly double the 
overall TRI reporting burden from 4.9 million hours in 1992 to 
9.5 million hours in 2000.
    Compounding the predicament are the numerous State and 
local piggyback requirements, taxes, fees, pollution prevention 
plans and the like imposed on Form R submissions, no matter how 
insubstantial the releases in all or part of 37 States, which 
neither EPA nor OMB takes into account when determining the 
financial impact of TRI reporting. CSPA has filed comments with 
both EPA and OMB on each of the five subsequent TRI information 
collection requests and watched as OMB established meaningful 
terms of clearance only to have them in large part ignored by 
EPA and unenforced by OMB.
    Despite 10 public comment periods on the five ICRs in the 
past 8 years, EPA chose to create two online dialogs over the 
past 2 years on possible burden reduction scenarios. We are not 
expecting a proposed regulation on TRI burden reduction until 
next year, and have been advised by EPA staff it will likely be 
18 months from proposal until a final rule is promulgated. 
Thus, under the present scenario the regulated community, 
including the small businesses that desperately need relief 
would see no burden reduction until reporting in 2007. In 
addition, we have no assurances that any burden reduction would 
be meaningful.
    Furthermore, EPA's current enforcement practice of finding 
a violation when a Form A was filed in good faith, although 
upon further review a Form R should have been submitted, has 
discouraged use of the Form A. Utilization of the Form A has 
decreased in each of the last 4 years for which data are 
available. Ending this enforcement practice likely would 
reverse that trend.
    CSPA commends your leadership in tackling these matters 
that too often go unrecognized by those with the authority to 
remedy them. We support your efforts to remove unnecessary 
barriers to improving productivity and growing the economy, 
while maintaining corporate accountability and data integrity.
    Thank you.
    [The prepared statement of Mr. DiFazio follows:]

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    Mr. Ose. I thank the gentleman for his testimony.
    Mr. Schrock, would you like to proceed first?
    Mr. Schrock. Thank you, Mr. Chairman, and thank you all for 
being here, Mr. Acker, Mr. DiFazio, thank you for your first 
time visits. And, we've seen Anita Drummond several times and 
are glad to have her back.
    I think two of you said it best when you said 20,000 
separate Federal Government home pages and 40 million Federal 
Government Web pages. How any business big or small could deal 
with any of that is a mystery to me. We'll be creating acts 
here one of these days to reduce those as well, because it's 
just absolutely out of control.
    If I had had an opportunity to ask Dr. Graham a question, I 
was going to ask him, and I'd like all of you to comment on it, 
if I put each of you in a position of responsibility and said, 
eliminate $50 billion in regulatory compliance costs and 1 
billion hours per year of paperwork, what would you do? That's 
a loaded question, I guess.
    Mr. DiFazio. Who are you asking? Any of us?
    Mr. Schrock. All of you.
    Mr. DiFazio. I really think each agency should take a good 
hard look at what they really need as far as data collection. I 
think they can cut reporting requirements in half quite easily. 
Too often they're unsure of the congressional direction, so 
they ask for three times as much as what they really need to 
accomplish congressional intent.
    Even in the Form A, for example, it only requires 17 
reporting data elements for the report. I looked at it said, 
you can do this in nine. So, even the short forms can be 
reduced in half in our opinion.
    Mr. Schrock. It's amazing, I think you hit the nail on the 
head. They interpret the way they want to interpret it. We 
think we're doing one thing and they go out and interpret and 
say, well, this is the way we've interpreted what you said, and 
I don't know how you come to grips with that. Maybe we don't 
speak in plain English up here. In fact, most times we don't.
    Mr. DiFazio. Perhaps the Government Accountability Office 
should be let loose maybe a little bit more often to check on 
that.
    Mr. Schrock. Yes. Mr. Acker.
    Mr. Acker. Mr. Congressman, until rules are simplified and 
redundancies eliminated, there will be no reduction. At the 
company that I ran, we had one professional, and he spent three 
to 4 hours every day keeping regulatory paperwork up to date. 
You have to go back and you have to eliminate the redundancies 
in every agency, and every agency has to work on it.
    The problem is that the industry, small businesses are so 
diverse that I really believe that the sector approach is 
essential to attacking this problem. The issues that the 
chemical industry deals with are not the same issues that the 
transportation industry deals with, they're not the same issues 
that the mining industry deals with. I think you have to, you 
have to approach this by sectors and by the individual 
agencies.
    Mr. Schrock. As you probably know, I think there's a move 
afoot to try to even regulate more the chemicals industry based 
on some of the things I've heard over the weekend. I was 
watching a TV show with one of our Congressman, and the last 
thing they need to do is that. That just makes a bad problem 
even worse.
    You came from Danville to here?
    Mr. Acker. Yes, Danville. I've been in Washington a little 
over a year.
    Mr. Schrock. You have sacrificed greatly to come from 
Danville to here. You are to be admired, believe me. Danville's 
great.
    Mr. Acker. Well, I found it amusing today when I came, this 
is my first opportunity to speak before the subcommittee, and 
it happened to be on one paperwork reduction. I had to bring 
100 copies of my testimony. [Laughter.]
    Mr. Schrock. Shot well deserved.
    Ms. Drummond.
    Ms. Drummond. I would say that, I would not single out any 
particular rules as much as the process of doing a full scale 
analysis, which is what you've asked OMB to really do. Because 
you may find the duplications, I would reiterate the comments 
about EPA and DOT's overlaps, particularly.
    But, even in Department of Labor, there's a lot of various 
elements picking up different information. The compliance 
office is also doing the same thing as the Solicitor under its 
responsibility of Davis Bacon Act and the Service Contracts 
Act. So there is a lot of room to consolidate information.
    I do want to say one thing about information collection 
that I support, and that is the business census that's done. 
The business census, a lot of businesses grumble, why do I have 
to complete this information. It's some of the best information 
we get about the size of business by receipts, payroll, 
employees, that can guide Congress and agencies about what the 
makeup of businesses really are. That's also true to some 
extent of the Bureau of Labor Statistics.
    So, that's one piece of information, which as collected, is 
a burden, but it's limited.
    There's one other thing on information collection. The way 
the system currently works, when there's a proposed rule, the 
information request comment period does not coincide with the 
proposed rule. OMB goes out separately. As a result, you get 
very limited comments. It is a bifurcated system. I've never 
understood why OMB interpreted it that way. I think it would 
make a lot more sense to do information collection analysis at 
the same time as you're doing proposed rule analysis.
    Mr. Schrock. Thank you. Thank you, Mr. Chairman.
    Mr. Ose. I want to touch on a couple of things. Have any of 
you gone to the Business Gateway that Dr. Graham was talking 
about? Mr. Acker, no. Ms. Drummond?
    Ms. Drummond. I've gone to it, but I have to say I did it 
in anticipation of the last meeting that we had with the task 
group. It was up at that time, and it was my understanding, 
that's my recollection, and we looked at the paperwork. It's 
overwhelming. At the time it was, the paperwork was 
overwhelming, on how much you had to go through and sort 
through and identify what was required of you.
    Mr. Ose. So it's really not, the bumps or curves have not 
been leveled out here in terms of making it flow easily?
    Ms. Drummond. It didn't at that time, and that would have 
been in, before the last report was issued.
    Mr. Ose. Like 3 or 4 months?
    Ms. Drummond. Right.
    Mr. Ose. Mr. DiFazio, have you been on it?
    Mr. DiFazio. I have not, no.
    Mr. Ose. OK. In your everyday dealings, either yourself or 
your membership, have you experienced any reductions in 
paperwork burden by the Bush administration? What I'm referring 
to is, I know that it's either proposed or it's already been 
done, is that the quarterly reporting for payroll deductions? 
If you're aggregated below $2,500, I think, you don't have to 
do it except for on an annual basis. Have you seen any such 
things of that nature come through to affect either yourselves 
or your members? Mr. Acker.
    Mr. Acker. Mr. Chairman, unfortunately very little. But I 
would say, in our industry, the EPA and OSHA probably issue 
more regulations than any other agency. There are numerous 
rules that should be revisited. There are rules that have been 
proposed that would reduce paperwork significantly, but they 
have yet to be finalized. That's the RCRA burden reduction 
proposal and the hazardous waste generator initiative. Those 
are two examples of rules that would significantly reduce 
paperwork for small businesses that need to be finalized.
    Mr. Ose. Those are pending now?
    Mr. Acker. They are pending now.
    Mr. Ose. All right. Ms. Drummond.
    Ms. Drummond. I can't think of any off the top of my head, 
to be honest. In fact, for OSHA, I hate beating up on OSHA, 
because they're not always comfortable with it, but right now 
they have, what is it, six, seven new proposed rules that we're 
dealing with instead of less rules. The list is long and 
they're very busy. Many of those rules will, in fact, have new 
paperwork requirements.
    Hexavalent chromium, which is driven by the courts, still 
has provisions within it for medical monitoring. Silica is 
expected to have medical monitoring. Beryllium is supposed to 
have medical monitoring. And, these are very paperwork 
intensive and not necessarily a good connection between the 
risks that are identified through the paperwork and that which 
they are trying to supposedly solve. So, OSHA, I would say is 
one that we hear a lot about. And, mostly that's driven by 
health standards versus safety standards.
    Mr. Ose. Mr. DiFazio, how about your members?
    Mr. DiFazio. Nothing as of yet. Earlier this year, Congress 
passed the Pesticide Registration Improvement Act. Some of our 
members make pesticide products. EPA has not had the 
opportunity to implement any of those provisions yet. We're 
hopeful by the end of this year perhaps we'll see some burden 
reduction in that area, but nothing as of yet.
    Mr. Ose. Mr. Acker, you suggested that, a couple places for 
improvement in terms of the rulemaking. In fact, you cited two 
pending rules that need to be finalized. Are there others, in 
addition to those, that you would cite?
    Mr. Acker. I'm sure there are, and I would like to get back 
to you.
    Mr. Ose. All right. We'll put a question to you 
accordingly.
    Ms. Drummond, other than OSHA and the six or seven that you 
say are pending, are there specific ones that come to mind?
    Ms. Drummond. No. To be honest, that's probably been the 
most active, none that are really, there has been a slowdown.
    Mr. Ose. In terms of the?
    Ms. Drummond. Increased rate.
    Mr. Ose. Rate of increase has fallen?
    Ms. Drummond. New paperwork. In our industry, you have to 
consider that we're an industry that's pretty stable in terms 
of its operating systems. There's not such a dynamic change 
that there are new paperwork requirements that they think of.
    However, the largest portion of things that change tend to 
be occupational regulations, safety regulations. So it's the 
dynamic of our industry.
    Mr. Ose. Mr. DiFazio, anything you want to add?
    Mr. DiFazio. No.
    Mr. Ose. The gentleman from Virginia.
    Mr. Schrock. Thank you, Mr. Chairman.
    Mr. Acker, you cited an interesting problem. I'm glad 
regulators are actually doing a good job in visiting facilities 
that regulations will affect. But, how do we get these same 
regulators to visit small facilities, small business facilities 
where regulations have a far more negative impact than on 
others? How do we get them to do that?
    Mr. Acker. Congressman, I believe that it has to start with 
an awareness from the agencies and then working through trade 
associations. At Danchem, we actually had the EPA, about 10 
people from the EPA, come and visit the site and learn about 
batch chemical manufacturing. That was the first time they had 
ever been in a small chemical facility. It was a real learning 
experience for them, as well as for us. There are a lot of 
hurdles to get over when you do this.
    My vice president of manufacturing said to me, Joe, I can't 
believe you actually invited the EPA to come in to visit. He 
was astonished. But, it's something that I think businesses are 
very willing to do. I think they are more open to it than they 
have been in the past. And, I think the agencies have to become 
more aware that they have small businesses that they need to 
pay attention to as well.
    Mr. Schrock. Do you think there's a reluctance on the part 
of small business to do what you did, invite people in?
    Mr. Acker. I believe in the past there was. Because----
    Mr. Schrock. Fear?
    Mr. Acker. Absolutely. Whenever you invited government, 
whenever a government agency shows up at your door, it's 
usually not good news.
    Mr. Schrock. It's not a good day.
    Mr. Acker. But, as I said, I really think that the chemical 
industry has done a lot of work to move beyond that, and a lot 
of credit I give to the EPA and other agencies in being 
proactive.
    Mr. Schrock. Good. Ms. Drummond, you mentioned the success 
of the Department of Labor's e-Laws site. Do you know how much 
time or what resources were required to produce it and whether 
it would be easy to duplicate in other agencies or government-
wide?
    Ms. Drummond. I am not naive to believe it would be easy. 
But, I do believe it's their responsibility. The Department of 
Labor spent, I would say, a good 12 months trying to find out 
the common elements, and that's not an official number, 
obviously, I'm not a representative for them. But, to find the 
common elements among all the statutes and regulations. That is 
an important thing, you need to know what questions you need to 
ask. That will make it very difficult, Federal-wide.
    But, I do believe that they should, agencies should be able 
to identify what are the triggers for their law to cover a 
business, and using different types, I was using an OSHA 
regulation that covers the manufacture, exposure of a chemical. 
But, a business that's of a certain size doesn't have to comply 
for 3 years after those of a larger size. I mean, those are the 
kinds of questions that are nuances that the agency needs to 
understand, this law doesn't apply to you today, but it will in 
3 years.
    So, that process is time consuming. But, I think, if they 
had been doing it right to begin with, they would have this 
information available.
    Mr. Schrock. Clearly, Department of Labor was the first 
agency to do this. They were the ground breakers, they were 
breaking new ground. But, couldn't other agencies or 
government-wide entities use that as a template from which to 
create their own, which would cut the time line down 
dramatically and benefit everybody?
    Ms. Drummond. Absolutely, yes.
    Mr. Schrock. I wonder why they won't do that.
    Ms. Drummond. Well, agencies tend to be silos. Or, let me 
say this, departments tend to be silos. The Department of Labor 
has cut across those silos and made all their agencies talk the 
same language, at least to an extent. It's a first step. I 
would not say that necessarily happens, say, at the Department 
of Transportation, where you have, they regulate all types of 
industries. But, that does not mean a particular agency, excuse 
me, industry, is not regulated by a number of agencies.
    So, I would say Department of Transportation would be a 
next good goal, because they do have good information on their 
programs. Both to break it down and find common elements among 
them.
    Mr. Schrock. OK, thank you, Mr. Chairman. I yield back.
    Mr. Ose. Ms. Drummond, you talked about a number of members 
you said, I think you said 240, of which one-third were 
smaller. I don't remember exactly.
    Ms. Drummond. Most construction firms, outside of ABC even, 
most construction firms are small. What do we mean by small? 
Even less than 20 employees. We're talking about 85 percent of 
the industry.
    Mr. Ose. I'm trying to figure out, you heard me ask Dr. 
Graham about the threshold of fewer than 25, what the impact 
would be if it was fewer than 35 or fewer than 50?
    Ms. Drummond. Right.
    Mr. Ose. One way to reduce paperwork is to raise the 
threshold below which you don't have to report.
    If 85 percent of your members are 20 or fewer, that's 
really not going to have a big bang in terms of the 
construction industry.
    Ms. Drummond. Right.
    Mr. Ose. Mr. Acker, I'm wondering over on your side of 
things whether or not that threshold issue would have a huge 
impact?
    Mr. Acker. That would have a very large impact. It was 
interesting to note that the threshold for GSA was $10 million, 
for OMB it was 25 employees. In the chemical industry, a 
company with revenues of $10 million would probably have 100 
employees, or I'm sorry, would probably have around 50 
employees. Danchem was a $20 million business and we had about 
100 employees. It sort of goes that way.
    So, that's just an example.
    Mr. Ose. Mr. DiFazio, how about over in your area?
    Mr. DiFazio. Yes, unfortunately with EPA, which is a large 
regulator of our members, a lot of times, statute by statute 
the thresholds are different. So, a company needs to pick and 
choose where on the continuum they are as to exactly which 
regulations they need to follow. At TRI it's 10 employees or 
more, you're subject to reporting.
    Mr. Ose. But is that statutory or regulatory?
    Mr. DiFazio. Statutory.
    Mr. Ose. It's specified in the law?
    Mr. DiFazio. Yes.
    Mr. Ose. Ten or more. OK.
    Mr. DiFazio. So, not only does each regulatory agency have 
to take a look at that, but the Congress also needs to look at 
the thresholds for each of the statutes.
    Mr. Ose. Mr. Acker, is this the linear relationship, you 
said, if I recall correctly that there wasn't necessarily a 
linear relationship between size and reporting requirements?
    Mr. Acker. That's true, particularly in environmental and 
safety regulations. You have to fill out the paperwork, you 
have to send in the reports regardless of the size of your 
business.
    Mr. Ose. Give me an example. I want to make sure I 
understand your comment about a lack of a linear relationship.
    Mr. Acker. The TSCA reporting, as an example, regardless of 
the size of your company, if you have certain chemicals that 
you're using, you have to report that to the EPA. OSHA, as an 
example, you have to fill out your form 200 reports for OSHA. 
The size of the company is not an issue.
    Mr. Ose. Because it's one or more employees is basically 
the threshold?
    Mr. Acker. Yes. That's correct.
    Mr. Ose. You also talked about a regulatory overlap. I 
presume that means that information you've submitted to one 
agency is also requested by a second agency?
    Mr. Acker. That's correct.
    Mr. Ose. Give me an example of that and how we might go 
about streamlining that.
    Mr. Acker. My experience has dealt with regulations between 
EPA and the DOT. It takes a lot of time for companies just to 
determine jurisdiction and in some areas you have to submit 
duplicate reports. I can get you specific examples. I don't 
know right off.
    Mr. Ose. All right. Mr. DiFazio, do your members have a 
similar situation?
    Mr. DiFazio. Yes, they do.
    Mr. Ose. From a regulatory standpoint, they're making 
substantially or at least significantly the same report to one 
agency as to the next?
    Mr. DiFazio. Oftentimes even within a single agency, for 
example, EPA requires a lot of the same information on TSCA 
reports and TRI reporting, for example.
    Mr. Ose. What is the impediment to making one report out of 
two? It would seem to me that if----
    Mr. DiFazio. Data entered into completely separate systems. 
They can't talk to each other, so the information is maintained 
separately by each office within an agency.
    Mr. Ose. It's a piece of paper as opposed to an electronic 
form?
    Mr. DiFazio. They're switching more and more to electronic 
reporting. But, there are still issues with sharing 
information.
    Mr. Ose. Ms. Drummond, you talked about periodic 
information collection budget requirements versus analyses of 
rules. How do rules get proposed that are not necessarily 
aligned with what's being asked for in terms of the information 
collection budget?
    Ms. Drummond. What occurs is, when an agency proposes a 
rule, they at the same time publish a regulatory flexibility 
analysis. They maybe in that rule, they explain there's going 
to be an information collection. Once that occurs, it goes to 
OMB. OMB does a second notice saying, we have an information 
collection request, meaning an agency is asking to collect this 
information or asking for a business to collect information 
from a third party.
    In that process, they separate out information collection 
and that analysis is often missed in the comment period, 
because the agency hasn't gone through in its own analysis, it 
hasn't conferred with OMB at the early stages about what the 
real costs are, how many hours it's going to take, how much of 
the cost is going to be associated with it, how many businesses 
are going to be affected by it. That information collection 
request analysis by OMB occurs after the rule is essentially 
finalized. It's a very convoluted process.
    Mr. Ose. That seems backward.
    Ms. Drummond. It is. It is backward.
    Mr. Ose. Is that continuum, is that sort of defined by 
statute?
    Ms. Drummond. When the statute was written for the 
Paperwork Reduction Act, there was a lot of debate within 
interagency about exactly what the time line would be when this 
information collection request approval would occur. The 
information collection approval is occurring after the rule is 
finalized. It goes to OMB to finalize.
    But, it seems logical that information collection approval 
process could occur at the time the rule is proposed, or at 
least information specific to that approval gets published at 
the same time. So, the public is not in the position of having 
to comment, a second time when OMB puts this notice out, 
without reference to what might have been said during the 
proposed rule stage. OMB comes later in approving the 
information.
    But, what the criteria is and what OMB puts out should be 
done. OMB should do the work sooner, so the proposed comment 
rule period, they can comment on that. It is statutory and it 
is convoluted. But, there are ways the agency could do a better 
job so that OMB's process isn't a novice process; it's already 
been discussed in the public record.
    Mr. Ose. I want to ask each of you this question in turn. 
Mr. Acker testified, in his written testimony stated, too often 
compliance assistance is longer than the rule. That's on page 
12 of your testimony. I'm a little bit curious about your 
respective views of agency compliance resources and 
performance.
    Mr. DiFazio, have those been helpful, intrusive or 
otherwise a means of backdoor enforcement?
    Mr. DiFazio. I think the intentions are good. But again, 
you start with the legislation, which is fairly narrow, fairly 
focused, it starts expanding with the regulation and the 
preamble to the regulation which contains extra legal 
information. Then, you get into guidance documents and 
compliance assistance. You really don't know where on the 
continuum you are. Again, if the agencies focus on just 
gathering what they needed when they first come out with the 
regulation implementing the legislation, I think there would be 
less need for guidance documents and less need for compliance 
assistance.
    Mr. Ose. Are you saying there's mission creep on this 
stuff?
    Mr. Acker. Well put, yes.
    Mr. Ose. Or information creep? Maybe that's better.
    Mr. Acker. Both.
    Mr. Ose. Ms. Drummond, do you agree with that?
    Ms. Drummond. My answer would be, it depends. If the 
statutes are very clear, then the regulations should be clear 
and self-evident. On the other hand, there are times when the 
agencies read ambiguities into the statute and, therefore, have 
had to expand upon it. The ambiguity in and of itself might be 
as simple as the OSH Act, it is a pretty open-ended regulation, 
to regulate safety and health.
    So, as a result, there's this tremendous leeway to try to 
explain what they want, even if the regulation says, well, you 
need to regulate beryllium. But, what if beryllium, how do you 
do that, what are some of the measures? That's one instance of 
the compliance, it can get way out of hand because it wasn't 
straightforward to begin with.
    Interestingly, OSHA has just spent a tremendous amount of 
time developing a draft guidance document on hazardous 
communications. The actual regulation in column form, I looked 
it up, it's about 20 pages long, that addresses hazard 
communication. But, the compliance document, which did include 
a lot of Power Point presentations for your employees and so 
forth, was close to 200 pages long.
    So, the compliance got out of hand. The intent was good, 
but the compliance is a little out of hand. Assistant Secretary 
Henshaw has decided to pull back and try to identify a more 
effective way to help businesses with that.
    But, another compliance assistance problem is, when an 
agency goes about regulating things that are not in the 
regulation by form of advice. OSHA has proceeded to develop 
ergonomic guidelines. Those guidelines are a measure of trying 
to say, our general duty clause, we couldn't get an ergonomics 
regulation, and our general duty clause, which is a vague 
regulation, which is open-ended, allows us to regulate this. As 
a result, we're going to give you compliance assistance. But, 
they don't call it that. They call it guidance.
    As a result, the compliance assistance is larger than the 
regulation, because the regulation is about one paragraph long.
    Mr. Ose. Your members are aware that guidance is not 
binding?
    Ms. Drummond. We are aware of that. But, the reality of it 
is that the compliance officer walks in, and I would say that 
we are probably not the industry that's targeted as those that 
have more repetitive elements, such as the poultry industry, 
the nursing industry, those industries where they have 
repetitive motions. They are the ones that are getting cited. 
You can see the citations that are ergonomics. The way the 
agency is trying to say, hey, if you don't want to get cited 
under the general duty clause, use these guidance documents.
    Mr. Ose. Mr. Acker, is that what you're referring to as the 
nightmare that Ms. Drummond has highlighted for us?
    Mr. Acker. Yes, it is. I would say that mission creep is an 
excellent example.
    I would also add another example, the MTSA, the Marine 
Transportation Safety Act that was passed I believe at the end 
of last year. The guidance documents for that, which are 
extensive, came out after you had to be in compliance with the 
regulation. So, obviously, that was not very helpful.
    The only other point I would make is that, and folks have 
said it before, the clarity of the regulations is very 
important. These agencies have to work with industry at the 
beginning so that these things can be understood and be 
simplified and clarified.
    Mr. Ose. The gentleman from Virginia.
    Mr. Schrock. I have no further questions now, Mr. Chairman.
    Mr. Ose. Mr. Schrock and I have a number of questions, but 
given the hour, we're going to submit them to you in writing. 
We would appreciate a timely response. The record of this 
hearing will be left open for 10 days. That would be to allow 
us to get you the questions so you can make timely response to 
them. There may be Members who were not in attendance today or 
who were here and had to leave who may have questions for you. 
So we'll make sure we get those organized and off to you.
    I have nothing further, and with that, we're going to go 
ahead and adjourn the hearing. Thank you for attending.
    [Whereupon, at 5 p.m., the subcommittees were adjourned.]
    [Additional information submitted for the hearing record 
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