[Congressional Record Volume 141, Number 163 (Friday, October 20, 1995)]
[Senate]
[Pages S15402-S15404]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FEINGOLD:
  S. 1350. A bill to promote increased understanding of Federal 
regulations and increased voluntary compliance with such regulations by 
small entities, and for other purposes; to the Committee on 
Governmental Affairs.


             THE SMALL BUSINESS FAIR TREATMENT ACT OF 1995

 Mr. FEINGOLD. Mr. President, I am pleased to introduce the 
Small Business Fair Treatment Act of 1995, a measure designed not only 
to afford regularly relief to our Nation's small businesses, but also 
to begin to change the attitude of Government regulators who are often 
viewed by small business as adversaries rather than as sources of help 
and guidance.
  Mr. President, the regulatory structure that has developed over the 
years performs important safety, health, and consumer protection 
functions.
  Just 2 years ago, a cryptosporidium outbreak in the city of 
Milwaukee's water supply left 104 people dead and over 400,000 people 
seriously ill.
  That was a tragic reminder of how just one small crack in the 
regulatory process can have devastating consequences for a community 
that until then had never experienced any such problems.
  The need for strong, effective regulations is undeniable.
  At the same time, few would dispute that the current regulatory 
system needs meaningful reform.
  Mr. President, I have held over 175 listening sessions in my home 
State of Wisconsin during the 2\1/2\ years that I have been a Member of 
this body.
  Countless times I have had constituents stand up at these meetings 
and express their tremendous frustration and anger with a regulatory 
process that too often is impractical, impersonal, and needlessly 
burdensome.
  This body debated a regulatory reform proposal earlier this summer 
that sought to respond to this widespread frustration and anger.
  But many of the proposals that were offered on the floor of the 
Senate during that regulatory relief debate earlier this summer focused 
more on changes in the actual rulemaking process and featured solutions 
that if not entirely Washington-based at least took a Washington 
perspective in addressing the issue.
  The central devices that evolved in that debate as the tools by which 
the regulatory process would be improved, such as judicial review and 
the petition process, were approaches to regulatory relief that 
reflected a large corporation, Washington lobbyist, Washington law firm 
based approach to solutions.
  Mr. President, there certainly is a role for our Nation's larger 
corporate citizens to play in the regulatory climate of this country, 
but those interests do not always represent the interests of all 
businesses, and the solutions to the regulatory problems of large 
businesses are not always appropriate or effective for smaller 
businesses.
  While a multinational corporation with substantial resources might 
find it reasonable to devote funds to an enhanced petition process, 
that kind of solution might mean little for a small, family owned 
business with a fraction of the resources of a large firm, and little 
working knowledge of the rulemaking process.
  As well, Mr. President, solutions proposed during the regulatory 
relief debate did little to focus on the day-to-day, practical problems 
of regulation with which small businesses must contend.
  By contrast, this legislation focuses on small business, and on the 
practical problems of dealing with Government agencies and regulations.
  It contains a number of provisions that make it easier for small 
businesses to comply with Government regulations, including several 
that are similar to some excellent ideas offered as part of legislation 
sponsored by the chair of the Senate Small Business Committee, Mr. 
Bond, as well as others that have been implemented at the direction of 
President Clinton.

[[Page S15403]]

  The bill requires agencies to publish compliance guides that provide 
a straightforward, plain language description of a rule or regulation 
with which a small business must comply.
  These guides would be required to be published and disseminated by 
the agency before any enforcement action was brought.
  Beyond the obvious help these guides could be for businesses affected 
by a Government regulation, requiring an agency to think out and 
describe a new regulation in a clear and understandable way will only 
enhance the ability of that agency to administer the regulation.
  The bill also requires agencies to establish procedures for the use 
of so-called no action letters. These are letters issued by an agency 
in response to a specific request of clarification from a small 
business trying to comply with that agency's regulations.
  The bill requires agencies to make a timely determination whether or 
not to issue such a no action letter, and if such a letter is issued, 
the bill establishes that the business could rely on it in an 
enforcement action related to matters laid out in the letter.
  In addition to providing specific direction to a small business in 
dealing with subjective interpretations of agency regulations, a no 
action letter also establishes a record to which other businesses can 
turn in seeking guidance on how a particular regulation should be 
interpreted.
  A body of no action letters also ensures consistency in the 
interpretation of regulations by an agency, something that can only 
further enhance compliance.
  Mr. President, the bill also allows small businesses to request an 
audit from a regulator without the fear that the findings of such an 
audit would be used in any enforcement action.
  The findings from such an audit would not be used in any enforcement 
action, if correction of any identified problem were made within 180 
days, except if the basis of the enforcement action were a violation of 
criminal law, or if the voluntary audit was requested for the purpose 
of avoiding disclosure of information required for an investigative, 
administrative, or judicial proceeding that, at the time of the audit, 
was imminent or in progress.
  In listening to small businessmen and women in Wisconsin, one of the 
most troubling complaints that is raised with respect to Government 
regulation is the feeling that Government agencies too often take a 
confrontational or adversarial approach in dealing with the business.
  Whether or not this feeling is justified in every instance, in many 
instances, or in only a few, it is honestly felt and reveals a problem 
that needs fixing.
  When the relationship between those who oversee and enforce 
regulations and those who must observe them deteriorates in this 
manner, it only hinders compliance.
  By allowing businesses to request a review of their operations, 
without fear that the results would be used against them, we can begin 
to improve that relationship, and change the way business perceives 
regulators from adversaries to sources of help.
  Mr. President, another provision in the bill allows small business a 
6-month grace period to correct violations of Environmental Protection 
Agency regulations after they have been identified, unless there is 
imminent risk to public health or worker safety.
  This proposal has already been implemented at the direction of 
President Clinton, and in my own State of Wisconsin, small businesses 
have informed me that this extra time has allowed them to work with EPA 
to develop a plan of action to deal with an identified problem.
  We should codify this directive, and this bill does just that.
  Another Presidential directive that we should codify is allowing 
regulators to waive up to 100 percent of the punitive fines on small 
businesses for first-time violations where the firm acts quickly and 
sincerely to correct the problem.
  While as a general rule, we should ensure that rules and regulations 
are enforced uniformly, it makes sense to provide regulators some 
flexibility in addressing the first-time regulatory infractions of a 
small business.
  Small businesses trying to comply with regulations should be allowed 
to devote scarce resources to correcting problems instead of paying 
fines.
  Here again the target of this measure is not only to provide 
regulatory relief to small business, it is to improve and enhance the 
relationship between small businesses and Government agencies.
  Though these last two provisions have been implemented by executive 
order, enacting them into law will give them permanence, and will 
prevent future Presidents from simply rescinding them through 
subsequent Executive order.
  An additional directive of the President's that merits the full force 
of Federal law is a prohibition against using personnel practices that 
reward agency employees, directly or indirectly, based on the number of 
contacts made with small entities in pursuit of enforcement actions, or 
on the amount of fines levied against small entities to enforce agency 
regulations.
  The section responds to comments made to my office by small business 
people who have reported that agency personnel have felt compelled to 
find something wrong, even if it is small, in order to justify their 
visit to the firm.
  This goes to the heart of what the role of a regular is. Personnel 
practices based on these kinds of performance incentives may quite 
naturally provoke adversarial relationships. Regulators need to remain 
independent from the entities they oversee, but unnecessary antagonism 
can actually hinder efforts to ensure compliance with the rules.
  Mr. President, I want to reiterate my sincere and spirited support 
for reforming the regulatory process that is currently in place.
  The current system is not acceptable; the need for reform is clear 
and imperative.
  And though the larger regulatory reform legislation has bogged down, 
I very much hope a compromise can be worked out and a meaningful reform 
package can be enacted into law.
  But, Mr. President, even if a compromise can be hammered out, it is 
likely that it will still reflect a process-oriented approach that may 
provide large corporate interests with avenues for relief, but does 
little to address the day-to-day problems facing small business.
  Nor does such legislation address the very real feeling of small 
businesses that Government regulators too often act as adversaries 
rather than to provide guidance in helping firms to comply with the 
law.
  Mr. President, the provisions of this bill are designed to help do 
just that.
  The provisions outlined in this measure both provide some practical 
regulatory relief and can improve the relationship between businesses 
and agencies. The process reforms of other regulatory reform measures 
merit our consideration, but I urge my colleagues not to allow that 
approach to dominate a debate which should rightly be focused on that 
portion of the business world that is most severely burdened by 
Government regulation--small business.
  I ask unanimous consent that the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1350

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Small Business Fair 
     Treatment Act of 1995''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.

      TITLE I--REGULATORY SIMPLIFICATION AND VOLUNTARY COMPLIANCE

Sec. 101. Definitions.
Sec. 102. Compliance guides.
Sec. 103. No action letter.
Sec. 104. Voluntary self-audits.

                   TITLE II--MISCELLANEOUS PROVISIONS

Sec. 201. Performance measures.
Sec. 202. Grace period for correction of violations of Environmental 
              Protection Agency regulations.
Sec. 203. Waiver of punitive fines for small entities.
      TITLE I--REGULATORY SIMPLIFICATION AND VOLUNTARY COMPLIANCE

     SEC. 101. DEFINITIONS.

       For purposes of this Act, the following definitions shall 
     apply:
       (1) Compliance guide.--The term ``compliance guide'' means 
     a publication made by a covered agency under section 102(a).

[[Page S15404]]

       (2) Covered agency.--The term ``covered agency'' means any 
     agency that, on the date of enactment of this Act, 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 enactment 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;
       (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.
       (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) Procedures.--Each agency shall establish voluntary 
     self-audit procedures for small entities regulated by the 
     agency.
       (b) Inadmissibility of Evidence and Limitation on 
     Discovery.--If action to address a violation is taken not 
     later than 180 days after the date on which a voluntary self-
     audit is concluded, the evidence described in subsection 
     (c)--
       (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.
       (c) Application.--For purposes of subsection (b), 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.
       (d) Exceptions.--Subsection (b) 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.
                   TITLE II--MISCELLANEOUS PROVISIONS

     SEC. 201. PERFORMANCE MEASURES.

       No covered agency shall establish or enforce agency 
     personnel practices that reward agency employees, directly or 
     indirectly, based on the number of contacts made with small 
     entities in pursuit of enforcement actions or on the amount 
     of fines levied against small entities to enforce agency 
     regulations.

     SEC. 202. GRACE PERIOD FOR CORRECTION OF VIOLATIONS OF 
                   ENVIRONMENTAL PROTECTION AGENCY REGULATIONS.

       (a) In General.--Subject to subsection (b), for violations 
     of regulations identified on or after the date of enactment 
     of this Act, the Administrator of the Environmental 
     Protection Agency shall afford small entities 180 days after 
     the date on which the violation is identified to correct such 
     violation.
       (b) Exception.--Subsection (a) shall not apply--
       (1) if the Administrator of the Environmental Protection 
     Agency determines that there is an imminent risk to public 
     health or worker safety; or
       (2) to a violation of a regulation for which criminal 
     liability may be imposed.

     SEC. 203. WAIVER OF PUNITIVE FINES FOR SMALL ENTITIES.

       Notwithstanding any other law, policy, or practice, a 
     covered agency may waive all or part of a punitive fine that 
     would otherwise be imposed on a small entity if--
       (1) the fine is for a first time violation of a law or 
     regulation; and
       (2) the small entity acts quickly and in good faith to 
     correct the violation.
                                 ______