[Congressional Record Volume 141, Number 99 (Friday, June 16, 1995)]
[Senate]
[Pages S8560-S8564]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BOND (for himself, Mr. Domenici, Mr. Warner, Mrs. 
        Hutchison, Mr. Burns, Mr. Frist, and Mr. Coverdell):
  S. 942. A bill to promote increased understanding of Federal 
regulations and increased voluntary compliance with such regulations by 
small entities, to provide for the designation of regional ombudsmen 
and oversight boards to monitor the enforcement practices of certain 
Federal agencies with respect to small business concerns, to provide 
relief from excessive and arbitary regulatory enforcement actions 
against small entities, and for other purposes; to the Committee on 
Small Business.


           The small business regulatory fairness act of 1995

 Mr. BOND. Mr. President, today I am announcing the opening of 
a new front in our fight against oppressive, onerous, and overly 
meddlesome Government regulations. I believe this new front will, for 
the time, take the fight outside the beltway and attack regulations and 
agencies where they impact people in their day-to-day lives.
  Since the election, there has been tremendous activity in reforming 
the way Federal agencies develop and issue regulations, and I have been 
deeply involved in this effort as cochair, along with Senator Kay 
Bailey Hutchison, of the Senate Republican Regulatory Relief Task 
Force. As we speak, we are working with Senator Dole and others on his 
Comprehensive Regulatory Reform Act, S. 343. These efforts are vitally 
important if we are to slow run-away regulation and better control 
Federal agencies. Equally important for small business is to add some 
meaningful judicial enforcement provisions to the Regulatory 
Flexibility Act, and I have introduced legislation to accomplish this.

  All of these efforts focus on changing the way agencies enact 
regulations. Today, I announce an effort to reform the way Government 
officials enforce Federal regulations. After all, most people, most 
small business people, do not have the time to concern themselves with 
the process of reviewing and commenting on proposed and final rules in 
the Federal Register. Small businesses have to deal with regulations 
when the regulator shows up on the doorstep to inspect their facility 
or to enforce a new Federal mandate. As chairman of the Senate 
Committee on Small Business, I have heard numerous horror stories about 
burdensome regulations. But as I have listened and learned from 
businessmen and women with real life problems, I have become 
increasingly convinced that the enforcement of regulations is a problem 
as troublesome as the regulations themselves.
  Today I am introducing legislation to make fundamental changes in the 
way regulatory agencies think about small 

[[Page S8561]]
business. It should be every regulatory agency's mission to encourage 
compliance by making rules easier to understand and by not enforcing 
their regulations in a way that unnecessarily frustrates law abiding 
small businesses. To this end, my bill includes a three part attack on 
unfair enforcement of Government regulations.
  First, small businesses should be able to understand what is expected 
of them. I want small businesses to know that if they are playing by 
the rules of the game as expressed in plain English compliance guides 
the agencies will be required to print, then they have nothing to fear 
from inspectors. Sound like common sense? It should be, but for too 
long agencies like EPA and OSHA have refused to tell businesses how 
they can avoid the threat of regulatory action. Like the merchant who 
responds to questions about his product with the phrase caveat emptor, 
some regulators have taken the attitude that it is not their 
responsibility to make complying with the law easy, preferring instead 
to punish small business owners who deviate in the smallest way from 
the most complicated regulation.
  The second part of my bill is designed to give small businesses a 
place to voice complaints about excessive, unfair or incompetent 
enforcement of regulations, with the knowledge that their voices will 
be heard. My bill sets up regional Small Business and Agriculture 
Ombudsmen through the Small Business Administration's offices around 
the country to give small businesses assurance that their confidential 
complaints and comments will be recorded and heard. These Ombudsmen 
also will coordinate the activities of volunteer Small Business 
Regulatory Fairness Boards, made up of small business people from each 
region. These boards will be able to investigate and make 
recommendations about troublesome patterns of enforcement activities. 
Any small business that is subject to an inspection or enforcement 
action will have the chance to rate and critique the inspectors or 
lawyers they deal with. In dealing with small businesses today, 
agencies sometimes seem to assume that every one is a violator of their 
rules, trying to get away with something. Some agencies do a good job 
of fulfilling their legal mandate while assisting small business, but 
many agencies seem stuck in an enforcement mentality where everyone is 
presumed guilty until proven innocent. I think we should let small 
businesses compare their dealings with one agency to dealings with 
another so that the abusive agencies or agents can be weeded out and 
exposed. Agencies should be vying to see which can fulfill their 
statutory mandate in a way that helps and empowers small business. We 
need direct feedback from small businessmen and women around the 
country on how well the regulators are doing their jobs.

  The third part of the legislation will create some financial 
accountability at Federal agencies and level the playing field for 
small businesses when they disagree with a fine or penalty imposed on 
them this bill will make the Government inspectors and lawyers 
responsible for their actions in assessing fines, penalties, and 
citations because it will allow small businesses to recover their legal 
costs from the Government when the enforcers and the lawyers have been 
unreasonable. If Federal agencies make excessive demands that they can 
not sustain in court, then the Federal agency will have to pay the 
legal fees of the small business. Small businessmen and women in 
American are more than willing to comply with regulations and pay 
appropriate penalties when they are in the wrong. But it is time we put 
a stop to powerful Federal agencies swooping down on small businesses 
and insisting on unreasonable fines just because they agency enjoys an 
enormous financial and resource advantage and can afford an expensive 
and time consuming court challenge. If the small business can reduce or 
eliminate the penalty, this bill will require the legal costs to be 
paid directly out of the agency's budget.
  On Monday of this week, the President told the White House conference 
that he wants Government regulators to stop treating small business men 
and women as criminals and start treating them as partners or 
customers. I believe this legislation will make that goal a reality and 
bring much needed relief to small businesses across the country. I hope 
the President will follow through on his speech to small business and 
join with the National Federation of Independent Businesses in 
supporting this bill. I urge all of my colleagues to join with me in 
supporting small business by supporting this legislation.
  Mr. President, I ask unanimous consent that the bill and additional 
material be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 942

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Small 
     Business Regulatory Fairness Act of 1995''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purposes.

      TITLE I--REGULATORY SIMPLIFICATION AND VOLUNTARY COMPLIANCE

Sec. 101. Definitions.
Sec. 102. Compliance guides.
Sec. 103. No action letter.
Sec. 104. Voluntary self-audits.
Sec. 105. Defense to enforcement actions.

      TITLE II--SMALL BUSINESS RESPONSIVENESS OF COVERED AGENCIES

Sec. 201. Small business and agriculture ombudsman.
Sec. 202. Small business regulatory fairness boards.
Sec. 203. Services provided by small business development centers.

  TITLE III--FINANCIAL ACCOUNTABILITY OF COVERED AGENCIES RELATING TO 
                           FEES AND EXPENSES

Sec. 301. Administrative proceedings.
Sec. 302. Judicial proceedings.

     SEC. 2. PURPOSES.

       The purposes of this Act are--
       (1) to change the relationship between regulators and small 
     entities;
       (2) to ameliorate the concern of small entities regarding 
     the effects of arbitrary Federal regulatory enforcement 
     actions on small entities;
       (3) to increase the comprehensibility of Federal 
     regulations affecting small entities;
       (4) to make Federal regulators accountable for their 
     actions; and
       (5) to provide small entities with a meaningful opportunity 
     for the redress of arbitrary enforcement actions by Federal 
     regulators.
      TITLE I--REGULATORY SIMPLIFICATION AND VOLUNTARY COMPLIANCE

     SEC. 101. DEFINITIONS.

       For purposes of this title, the following definitions shall 
     apply:
       (1) Compliance guide.--The term ``compliance guide'' means 
     a publication made by a covered agency under section 102(a).
       (2) Covered agency.--The term ``covered agency'' has the 
     same meaning as in section 30(a) of the Small Business Act 
     (as added by section 201 of this Act).
       (3) No action letter.--The term ``no action letter'' means 
     a written determination from a covered agency stating that, 
     based on a no action request submitted to the agency by a 
     small entity, the agency will not take enforcement action 
     against the small entity under the rules of the covered 
     agency.
       (4) No action request.--The term ``no action request'' 
     means a written correspondence submitted by a small entity to 
     a covered agency--
       (A) stating a set of facts; and
       (B) requesting a determination by the agency of whether the 
     agency would take an enforcement action against the small 
     entity based on such facts and the application of any rule of 
     the agency.
       (5) Rule.--The term ``rule'' has the same meaning as in 
     section 601(2) of title 5, United States Code.
       (6) Small entity.--The term ``small entity'' has the same 
     meaning as in section 601(6) of title 5, United States Code.
       (7) Small business concern.--The term ``small business 
     concern'' has the same meaning as in section 3 of the Small 
     Business Act.
       (8) Voluntary self-audit.--The term ``voluntary self-
     audit'' means an audit, assessment, or review of any 
     operation, practice, or condition of a small entity that--
       (A) is initiated by an officer, employee, or agent of the 
     small entity; and
       (B) is not required by law.

     SEC. 102. COMPLIANCE GUIDES.

       (a) Compliance Guide.--
       (1) Publication.--If a covered agency is required to 
     prepare a regulatory flexibility analysis for a rule or group 
     of related rules under section 603 of title 5, United States 
     Code, the agency shall publish a compliance guide for such 
     rule or group of related rules.
       (2) Requirements.--Each compliance guide published under 
     paragraph (1) shall--
       (A) contain a summary description of the rule or group of 
     related rules;
       (B) contain a citation to the location of the complete rule 
     or group of related rules in the Federal Register;
     
[[Page S8562]]

       (C) provide notice to small entities of the requirements 
     under the rule or group of related rules and explain the 
     actions that a small entity is required to take to comply 
     with the rule or group of related rules;
       (D) be written in a manner to be understood by the average 
     owner or manager of a small entity; and
       (E) be updated as required to reflect changes in the rule.
       (b) Dissemination.--
       (1) In general.--Each covered agency shall establish a 
     system to ensure that compliance guides required under this 
     section are published, disseminated, and made easily 
     available to small entities.
       (2) Small business development centers.--In carrying out 
     this subsection, each covered agency shall provide sufficient 
     numbers of compliance guides to small business development 
     centers for distribution to small businesses concerns under 
     section 21(c)(3)(R) of the Small Business Act (as added by 
     section 202 of this Act).
       (c) Limitation on Enforcement.--
       (1) In general.--No covered agency may bring an enforcement 
     action in any Federal court or in any Federal administrative 
     proceeding against a small entity to enforce a rule for which 
     a compliance guide is not published and disseminated by the 
     covered agency as required under this section.
       (2) Effective dates.--This subsection shall take effect--
       (A) 1 year after the date of the enactment of this Act with 
     regard to a final regulation in effect on the date of the 
     enactment of this Act; and
       (B) on the date of the enactment of this Act with regard to 
     a regulation that takes effect as a final regulation after 
     such date of enactment.

     SEC. 103. NO ACTION LETTER.

       (a) Application.--This section applies to all covered 
     agencies, except--
       (1) the Federal Trade Commission;
       (2) the Equal Employment Opportunity Commission; and
       (3) the Consumer Product Safety Commission.
       (b) Issuance of No Action Letter.--Not later than 90 days 
     after the date on which a covered agency receives a no action 
     request, the agency shall--
       (1) make a determination regarding whether to grant the no 
     action request, deny the no action request, or seek further 
     information regarding the no action request; and
       (2) if the agency makes a determination under paragraph (1) 
     to grant the no action request, issue a no action letter and 
     transmit the letter to the requesting small entity.
       (c) Reliance on No Action Letter or Compliance Guide.--In 
     any enforcement action brought by a covered agency in any 
     Federal court, or Federal administrative proceeding against a 
     small entity, the small entity shall have a complete defense 
     to any allegation of noncompliance or violation of a rule if 
     the small entity affirmatively pleads and proves by a 
     preponderance of the evidence that the act or omission 
     constituting the alleged noncompliance or violation was taken 
     in good faith with and in reliance on--
       (1) a no action letter from that agency; or
       (2) a compliance guide of the applicable rule published by 
     the agency under section 102(a).

     SEC. 104. VOLUNTARY SELF-AUDITS.

       (a) Inadmissibility of Evidence and Limitation on 
     Discovery.--The evidence described in subsection (b)--
       (1) shall not be admissible, unless agreed to by the small 
     entity, in any enforcement action brought against a small 
     entity by a Federal agency in any Federal--
       (A) court; or
       (B) administrative proceeding; and
       (2) may not be the subject of discovery in any enforcement 
     action brought against a small entity by a Federal agency in 
     any Federal--
       (A) court; or
       (B) administrative proceeding.
       (b) Application.--For purposes of subsection (a), the 
     evidence described in this subsection is--
       (1) a voluntary self-audit made in good faith; and
       (2) any report, finding, opinion, or any other oral or 
     written communication made in good faith relating to such 
     voluntary self-audit.
       (c) Exceptions.--Subsection (a) shall not apply if--
       (1) the act or omission that forms the basis of the 
     enforcement action is a violation of criminal law; or
       (2) the voluntary self-audit or the report, finding, 
     opinion, or other oral or written communication was prepared 
     for the purpose of avoiding disclosure of information 
     required for an investigative, administrative, or judicial 
     proceeding that, at the time of preparation, was imminent or 
     in progress.

     SEC. 105. DEFENSE TO ENFORCEMENT ACTIONS.

       (a) In General.--No covered agency may impose a fine or 
     penalty on a small entity if the small entity proves by a 
     preponderance of the evidence that--
       (1) the covered agency rule is vague or ambiguous; and
       (2) the interpretation by the small entity of the rule is 
     reasonable considering the rule and any applicable compliance 
     guide.
       (b) Interpretation of Rule.--In determining whether the 
     interpretation of a rule by a small entity is reasonable, no 
     deference shall be given to any interpretation of the rule by 
     the agency that is not included in a compliance guide.
      TITLE II--SMALL BUSINESS RESPONSIVENESS OF COVERED AGENCIES

     SEC. 201. SMALL BUSINESS AND AGRICULTURE OMBUDSMAN.

       The Small Business Act (15 U.S.C. 631 et seq.) is amended--
       (1) by redesignating section 30 as section 31; and
       (2) by inserting after section 29 the following new 
     section:

     ``SEC. 30. OVERSIGHT OF REGULATORY ENFORCEMENT.

       ``(a) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       ``(1) Board.--The term `Board' means a Small Business 
     Regulatory Fairness Board established under subsection (c).
       ``(2) Covered agency.--The term `covered agency' means any 
     agency that, as of the date of enactment of the Small 
     Business Regulatory Fairness Act of 1995, has promulgated any 
     rule for which a regulatory flexibility analysis was required 
     under section 605 of title 5, United States Code, and any 
     other agency that promulgates any such rule, as of the date 
     of such promulgation.
       ``(3) Ombudsman.--The term `ombudsman' means a Regional 
     Small Business and Agriculture Ombudsman designated under 
     subsection (b).
       ``(4) Region.--The term `region' means any area for which 
     the Administrator has established a regional office of the 
     Administration pursuant to section 4(a).
       ``(5) Rule.--The term `rule' has the same meaning as in 
     section 601(2) of title 5, United States Code.
       ``(b) Ombudsman.--
       ``(1) In general.--Not later than 180 days after the date 
     of enactment of the Small Business Regulatory Fairness Act of 
     1995, the Administrator shall designate in each region a 
     senior employee of the Administration to serve as the 
     Regional Small Business and Agriculture Ombudsman in 
     accordance with this subsection.
       ``(2) Duties.--Each ombudsman designated under paragraph 
     (1) shall--
       ``(A) on a confidential basis, solicit and receive comments 
     from small business concerns regarding the enforcement 
     activities of covered agencies;
       ``(B) based on comments received under subparagraph (A), 
     annually assign and publish a small business responsiveness 
     rating to each covered agency;
       ``(C) publish periodic reports compiling the comments 
     received under subparagraph (A);
       ``(D) coordinate the activities of the Small Business 
     Regulatory Fairness Board established under subsection (c); 
     and
       ``(E) establish a toll-free telephone number to receive 
     comments from small business concerns under subparagraph 
     (A).''.

     SEC. 202. SMALL BUSINESS REGULATORY FAIRNESS BOARDS.

       Section 30 of the Small Business Act (as added by section 
     201 of this Act) is amended by adding at the end the 
     following new subsection:
       ``(c) Small Business Regulatory Fairness Boards.--
       ``(1) In general.--Not later than 180 days after the date 
     of enactment of the Small Business Regulatory Fairness Act of 
     1995, the Administrator shall establish in each region a 
     Small Business Regulatory Fairness Board in accordance with 
     this subsection.
       ``(2) Duties.--Each Board established under paragraph (1) 
     shall--
       ``(A) advise the ombudsman on matters of concern to small 
     business concerns relating to the enforcement activities of 
     covered agencies;
       ``(B) conduct investigations into enforcement activities by 
     covered agencies with respect to small business concerns;
       ``(C) issue advisory findings and recommendations regarding 
     the enforcement activities of covered agencies with respect 
     to small business concerns;
       ``(D) review and approve, prior to publication--
       ``(i) each small business responsiveness rating assigned 
     under subsection (b)(2)(B); and
       ``(ii) each periodic report prepared under subsection 
     (b)(2)(C); and
       ``(E) prepare written opinions regarding the reasonableness 
     and understandability of rules issued by covered agencies.
       ``(3) Membership.--Each Board shall consist of--
       ``(A) 1 member appointed by the President;
       ``(B) 1 member appointed by the Speaker of the House of 
     Representatives;
       ``(C) 1 member appointed by the Minority Leader of the 
     House of Representatives;
       ``(D) 1 member appointed by the Majority Leader of the 
     Senate; and
       ``(E) 1 member appointed by the Minority Leader of the 
     Senate.
       ``(4) Period of appointment; vacancies.--
       ``(A) Period of appointment.--
       ``(i) Presidential appointees.--Each member of the Board 
     appointed under subparagraph (A) of paragraph (2) shall be 
     appointed for a term of 3 years, except that the initial 
     member appointed under such subparagraph shall be appointed 
     for a term of 1 year.
       ``(ii) House of representatives appointees.--Each member of 
     the Board appointed under subparagraph (B) or (C) of 
     paragraph (2) shall be appointed for a term of 3 years, 
     except that the initial members appointed under such 
     subparagraphs shall each be appointed for a term of 2 years.
       ``(iii) Senate appointees.--Each member of the Board 
     appointed under subparagraph (D) or (E) of paragraph (2) 
     shall be appointed for a term of 3 years. 
     
[[Page S8563]]

       ``(B) Vacancies.--Any vacancy on the Board--
       ``(i) shall not affect the powers of the Board; and
       ``(ii) shall be filled in the same manner and under the 
     same terms and conditions as the original appointment.
       ``(5) Chairperson.--The Board shall select a Chairperson 
     from among the members of the Board.
       ``(6) Meetings.--
       ``(A) In general.--The Board shall meet at the call of the 
     Chairperson.
       ``(B) Initial meeting.--Not later than 90 days after the 
     date on which all members of the Board have been appointed, 
     the Board shall hold its first meeting.
       ``(7) Quorum.--A majority of the members of the Board shall 
     constitute a quorum for the conduct of business, but a lesser 
     number may hold hearings.
       ``(8) Powers of the board.--
       ``(A) Hearings.--The Board or, at its direction, any 
     subcommittee or member of the Board, may, for the purpose of 
     carrying out the provisions of this section--
       ``(i) hold such hearings, sit and act at such times and 
     places, take such testimony, receive such evidence, 
     administer such oaths; and
       ``(ii) require, by subpoena or otherwise, the attendance 
     and testimony of such witnesses and the production of such 
     books, records, correspondence, memoranda, papers, documents, 
     tapes, and materials as the Board or such subcommittee or 
     member considers advisable.
       ``(B) Issuance and enforcement of subpoenas.--
       ``(i) Issuance.--Each subpoena issued pursuant to 
     subparagraph (A) shall bear the signature of the Chairperson 
     and shall be served by any person or class of persons 
     designated by the Chairperson for that purpose.
       ``(ii) Enforcement.--

       ``(I) In general.--In the case of contumacy or failure to 
     obey a subpoena issued under subparagraph (A), the United 
     States district court for the judicial district in which the 
     subpoenaed person resides, is served, or may be found may 
     issue an order requiring such person to appear at any 
     designated place to testify or to produce documentary or 
     other evidence.
       ``(II) Contempt of court.--Any failure to obey the order of 
     the court issued under subclause (I) may be punished by the 
     court as a contempt of that court.

       ``(C) Witness allowances and fees.--Section 1821 of title 
     28, United States Code, shall apply to witnesses requested or 
     subpoenaed to appear at any hearing of the Board. The per 
     diem and mileage allowances for any witness shall be paid 
     from funds available to pay the expenses of the Board.
       ``(D) Information from federal agencies.--Upon the request 
     of the Chairperson, the Board may secure directly from the 
     head any Federal department or agency such information as the 
     Board considers necessary to carry out the provisions of this 
     section.
       ``(E)  Postal services.--The Board may use the United 
     States mails in the same manner and under the same conditions 
     as other departments and agencies of the Federal Government.
       ``(F) Donations.--The Board may accept, use, and dispose of 
     donations of services or property.
       ``(9) Board personnel matters.--
       ``(A) Compensation.--Members of the Board shall serve 
     without compensation.
       ``(B) Travel expenses.--Members of the Board shall be 
     allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of services for the Board.''.

     SEC. 203. SERVICES PROVIDED BY SMALL BUSINESS DEVELOPMENT 
                   CENTERS.

       Section 21(c)(3) of the Small Business Act (15 U.S.C. 
     648(c)(3)) is amended--
       (1) in subparagraph (O), by striking ``and'' at the end;
       (2) in subparagraph (P), by striking the period at the end 
     and inserting a semicolon; and
       (3) by inserting immediately after subparagraph (P) the 
     following new subparagraphs:
       ``(Q) providing assistance to small business concerns 
     regarding regulatory requirements, including providing 
     training with respect to cost-effective regulatory 
     compliance;
       ``(R) developing informational publications, establishing 
     resource centers of reference materials, and distributing 
     compliance guides published under section 102(a) of the Small 
     Business Regulatory Fairness Act of 1995 to small business 
     concerns; and
       ``(S) developing a program to provide confidential onsite 
     assessments and recommendations regarding regulatory 
     compliance to small business concerns and assisting small 
     business concerns in analyzing the business development 
     issues associated with regulatory implementation and 
     compliance measures.''.
  TITLE III--FINANCIAL ACCOUNTABILITY OF COVERED AGENCIES RELATING TO 
                           FEES AND EXPENSES

     SEC. 301. ADMINISTRATIVE PROCEEDINGS.

       Section 504 of title 5, United States Code, is amended--
       (1) in subsection (b)(1)(B)--
       (A) by striking ``, or (ii)'' and inserting ``, (ii)''; and
       (B) by striking the semicolon at the end of the 
     subparagraph and inserting the following: ``, or (iii) a 
     small entity as such term is defined in subsection 
     (g)(1)(D);'' and
       (2) by adding at the end the following new subsection:
       ``(g)(1) For purposes of this subsection, the term--
       ``(A) `covered agency' has the same meaning as in section 
     30(a) of the Small Business Act;
       ``(B) `fees and other expenses' has the same meaning as in 
     subsection (b)(1)(A), except that--
       ``(i) clause (ii) of such subparagraph (A) shall not apply; 
     and
       ``(ii) attorney's fees shall not be awarded at a rate of 
     pay in excess of $150 per hour unless the adjudicative party 
     determines that regional costs or other special factors 
     justify a higher fee;
       ``(C) `prevailing small entity'--
       ``(i) means a small entity that raised a successful defense 
     to an agency enforcement action by a covered agency in an 
     adversary adjudication; and
       ``(ii) includes a small entity that is a party in an 
     adversary adjudication in which the adjudicative officer 
     orders a corrective action or penalty against the small 
     entity that is less burdensome than the corrective action or 
     penalty initially sought or demanded by the covered agency; 
     and
       ``(D) `small entity' has the same meaning as in section 
     601(6).
       ``(2) For the purpose of making a finding of whether an 
     award under subsection (a)(1) is unjust, in any case in which 
     fees and other expenses would be awarded to a prevailing 
     small entity as a prevailing party--
       ``(A) the adjudicative officer of the agency shall not 
     consider whether the position of the agency was substantially 
     justified; and
       ``(B) special circumstances shall be limited to 
     circumstances in which--
       ``(i) the matters in the adversary adjudication are matters 
     for which there is little or no legal precedent; or
       ``(ii) findings of fact or conclusions of law are based on 
     inconsistent interpretations of applicable law by different 
     courts.
       ``(3) If a prevailing small entity is awarded fees and 
     other expenses as a prevailing party under subsection (a)(1), 
     such fees and other expenses shall include all fees and 
     expenses incurred by the small entity in appearing in any 
     proceeding the purpose of which is to determine the amount of 
     fees and other expenses.
       ``(4) Fees and other expenses awarded to a prevailing small 
     entity as a prevailing party under this section shall be paid 
     by the covered agency from funds made available to the agency 
     by appropriation or from fees or other amounts charged to the 
     public if authorized by law. A covered agency may not 
     increase any such fee or amount charged for the purpose of 
     paying fees and other expenses awarded to a prevailing small 
     entity as a prevailing party under this section.''.

     SEC. 302. JUDICIAL PROCEEDINGS.

       Section 2412 of title 28, United States Code, is amended--
       (1) in subsection (d)(2)(B)--
       (A) by striking ``, or (ii)'' and inserting ``, (ii)''; and
       (B) by striking the semicolon at the end of the 
     subparagraph and inserting the following: ``, or (iii) a 
     small entity as defined under subsection (g)(1)(D);'' and
       (2) by adding at the end the following new subsection:
       ``(g)(1) For purposes of this subsection, the term--
       ``(A) `covered agency' has the same meaning as in section 
     30(a) of the Small Business Act;
       ``(B) `fees and other expenses' has the same meaning as in 
     subsection (d)(2)(A), except that--
       ``(i) clause (ii) of such subparagraph (A) shall not apply; 
     and
       ``(ii) attorney's fees shall not be awarded at a rate of 
     pay in excess of $150 per hour unless the court determines 
     that regional costs or other special factors justify a higher 
     fee;
       ``(C) `prevailing small entity'--
       ``(i) means a small entity that raised a successful defense 
     to an agency enforcement action by a covered agency in a 
     civil action; and
       ``(ii) includes a small entity that is a party in a civil 
     action in which the court orders a corrective action or 
     penalty against the small entity that is less burdensome than 
     the corrective action or penalty initially sought or demanded 
     by the covered agency; and
       ``(D) `small entity' has the same meaning as the term 
     `small entity' in section 601(6) of title 5.
       ``(2) For the purpose of making a finding of whether an 
     award under subsection (d)(1)(A) is unjust, in any case in 
     which fees and other expenses would be awarded to a 
     prevailing small entity as a prevailing party--
       ``(A) the court shall not consider whether the position of 
     the United States was substantially justified; and
       ``(B) special circumstances shall be limited to 
     circumstances in which--
       ``(i) the matters in the civil action are matters for which 
     there is little or no legal precedent; or
       ``(ii) findings of fact or conclusions of law are based on 
     inconsistent interpretations of applicable law by different 
     courts.
       ``(3) If a prevailing small entity is awarded fees and 
     other expenses as a prevailing party under subsection 
     (d)(1)(A), such fees and expenses shall include all fees and 
     expenses incurred by the small entity in appearing in any 
     proceeding the purpose of which is to determine the amount of 
     fees and other expenses.
     
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       ``(4) Fees and other expenses awarded to a prevailing small 
     entity as a prevailing party under this section shall be paid 
     by the covered agency from funds made available to the agency 
     by appropriation or from fees or other amounts charged to the 
     public if authorized by law. A covered agency may not 
     increase any such fee or amount charged for the purpose of 
     paying fees and other expenses awarded to a prevailing small 
     entity as a prevailing party under this section.''.
                                                                    ____


The Small Business Regulatory Fairness Act--Section-by-Section Analysis

       Sec. 1. Short Title. ``The Small Business Regulatory 
     Fairness Act of 1995.''
       Sec. 2. Purposes. The purposes of the act are to change the 
     relationship between agencies and small business, to increase 
     the understandability of regulations, to increase the 
     accountability of regulatory agencies, and to provide 
     meaningful opportunities for redress of arbitrary enforcement 
     actions.
       Sec. 101. Definitions. Defines covered agency (those that 
     have regs requiring a Regulatory Flexibility Act analysis), 
     compliance guide, no-action letter, small business concern 
     (as defined in sec. 3 of the Small Business Act) and 
     voluntary self-audit.
       Sec. 102. Compliance Guides. Directs regulatory agencies to 
     publish small business compliance guides for regulations with 
     significant economic impact on small entities, to disseminate 
     the guides through Small Business Development Centers and 
     prohibits enforcement actions of these regs against small 
     entities until such time as the compliance guide is 
     published.
       Sec. 103. No Action Letter. Directs regulatory agencies to 
     establish a system for issuing ``no-action letters'' similar 
     to those used by the IRS and SEC, and allows small entities 
     to rely on those no-action letters.
       Sec. 104. Voluntary self-audits. Provides that information 
     developed during a voluntary self-audit by a small entity is 
     not admissible or discoverable by a Federal Agency.
       Sec. 105. Defense to Enforcement Actions. Provides small 
     entities with an affirmative defense where the agency rule is 
     vague or ambiguous and the interpretation of the small entity 
     is reasonable, and limits the court from giving deference to 
     agencies' interpretations of their own rules.
       Sec. 201. Small Business and Agriculture Ombudsman. 
     Establishes Small Business and Agriculture Ombudsmen in each 
     of the Small Business Administration's regional offices who 
     will receive complaints about the enforcement activities of 
     other federal agencies, develop a small business 
     responsiveness rating to each regulatory agency, publish 
     reports on those activities, and establish a toll-free 
     telephone number to receive comments from small business.
       Sec. 202. Small Business Regulatory Fairness Boards. 
     Establishes volunteer Small Business Regulatory Fairness 
     Boards in Small Business Administration offices around the 
     country, appointed by the President and the Congressional 
     leadership to advise the Ombudsmen, conduct investigations 
     into agency enforcement activities, prepare independent 
     reports and review the reports of the Ombudsmen.
       Sec. 203. Services Provided by Small Business Development 
     Centers. Expands the role of Small Business Development 
     Centers to include providing regulatory compliance 
     assistance, serving as a resource for compliance information 
     including the distribution of compliance guides, and 
     developing a program to provide regulatory compliance audits.
       Sec. 301. Administrative Proceedings. Amends the 
     Administrative Procedures Act to allow small entities to 
     recover their attorneys fees in litigation against the 
     government where the government has made unreasonable demands 
     of settlement that are not sustained by a court, and without 
     having to prove that the government position was not 
     ``substantially justified.''
       Sec. 302. Judicial Proceedings. Makes conforming changes to 
     Title 28 U.S.C. Section 2412.

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