[Congressional Record Volume 145, Number 128 (Tuesday, September 28, 1999)]
[Senate]
[Pages S11578-S11580]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 SMALL BUSINESS ADVOCACY REVIEW PANEL TECHNICAL AMENDMENTS ACT OF 1999

  Mr. HAGEL. Mr. President, on behalf of the leader, I ask unanimous 
consent that the Senate now proceed to the consideration of calendar 
No. 273, S. 1156.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The legislative clerk read as follows:

       A bill (S. 1156) to amend provisions of law enacted by the 
     Small Business Regulatory Enforcement Fairness Act of 1996 
     and to ensure full analysis of potential impacts on small 
     entities of rules proposed by certain agencies, and for other 
     purposes.

  There being no objection, the Senate proceeded to consider the 
bill, which had been reported from the Committee on Small Business, 
with amendments; as follows:

  (The parts of the bill intended to be stricken are shown in boldface 
brackets and the parts of the bill to be inserted are shown in italic.)

                                S. 1156

       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 Advocacy 
     Review Panel Technical Amendments Act of 1999''.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds the following:
       (1) A vibrant and growing small business sector is critical 
     to creating jobs in a dynamic economy.
       (2) Small businesses bear a disproportionate share of 
     regulatory costs and burdens.
       (3) Federal agencies must consider the impact of their 
     regulations on small businesses early in the rulemaking 
     process.
       (4) The Small Business Advocacy Review Panel process that 
     was established by the Small Business Regulatory Enforcement 
     Fairness Act of 1996 has been effective in allowing small 
     businesses to participate in rules that are being developed 
     by the Environmental Protection Agency and the Occupational 
     Safety and Health Administration.
       (b) Purposes.--The purposes of this Act are the following:
       (1) To provide a forum for the effective participation of 
     small businesses in the Federal regulatory process.
       (2) To clarify and strengthen the Small Business Advocacy 
     Review Panel process.
       (3) To expand the number of Federal agencies that are 
     required to convene Small Business Advocacy Review Panels.

     SEC. 3. ENSURING FULL ANALYSIS OF POTENTIAL IMPACTS ON SMALL 
                   ENTITIES OF RULES PROPOSED BY CERTAIN AGENCIES.

       Section 609(b) of title 5, United States Code, is amended 
     to read as follows:
       ``(b)(1) Before the publication of an initial regulatory 
     flexibility analysis that a covered agency is required to 
     conduct under this chapter, the head of the covered agency 
     shall--
       ``(A) notify the Chief Counsel for Advocacy of the Small 
     Business Administration (in this subsection referred to as 
     the `Chief Counsel') in writing;
       ``(B) provide the Chief Counsel with information on the 
     potential impacts of the proposed rule on small entities and 
     the type of small entities that might be affected; and
       ``(C) not later than 30 days after complying with 
     subparagraphs (A) and (B)--
       ``(i) [with the concurrence of] in consultation with the 
     Chief Counsel, identify affected small entity 
     representatives; and
       ``(ii) transmit to the identified small entity 
     representatives a detailed summary of the information 
     referred to in subparagraph (B) or the information in full, 
     if so requested by the small entity representative, for the 
     purposes of obtaining advice and recommendations about the 
     potential impacts of the draft proposed rule.
       ``(2)(A) Not earlier than 30 days after the covered agency 
     transmits information pursuant to paragraph (1)(C)(ii), the 
     head of the covered agency shall convene a review panel for 
     the draft proposed rule. The panel shall consist solely of 
     full-time Federal employees of the office within the covered 
     agency that will be responsible for carrying out the proposed 
     rule, the Office of Information and Regulatory Affairs of the 
     Office of Management and Budget, and the Chief Counsel.
       ``(B) The review panel shall--
       ``(i) review any material the covered agency has prepared 
     in connection with this chapter, including any draft proposed 
     rule;
       ``(ii) collect advice and recommendations from the small 
     entity representatives identified under paragraph (1)(C)(i) 
     on issues related to paragraphs (3), (4), and (5) of section 
     603(b) and section 603(c); and
       ``(iii) allow any small entity representative identified 
     under paragraph (1)(C)(i) to make an oral presentation to the 
     panel, if requested.
       ``(C) Not later than 60 days after the date a covered 
     agency convenes a review panel pursuant to this paragraph, 
     the review panel shall report to the head of the covered 
     agency on--
       ``(i) the comments received from the small entity 
     representatives identified under paragraph (1)(C)(i); and
       ``(ii) its findings regarding issues related to paragraphs 
     (3), (4), and (5) of section 603(b) and section 603(c).
       ``(3)(A) Except as provided in subparagraph (B), the head 
     of the covered agency shall print in the Federal Register the 
     report of

[[Page S11579]]

     the review panel under paragraph (2)(C), including any 
     written comments submitted by the small entity 
     representatives and any appendices cited in the report, as 
     soon as practicable, but not later than--
       ``(i) 180 days after the date the head of the covered 
     agency receives the report; or
       ``(ii) the date of the publication of the notice of 
     proposed rulemaking for the proposed rule.
       ``(B) The report of the review panel printed in the Federal 
     Register shall not include any confidential business 
     information submitted by any small entity representative.
       ``(4) Where appropriate, the covered agency shall modify 
     the draft proposed rule, the initial regulatory flexibility 
     analysis for the draft proposed rule, or the decision on 
     whether an initial regulatory flexibility analysis is 
     required for the draft proposed rule.''.

     SEC. 4. DEFINITIONS.

       Section 609(d) of title 5, United States Code, is amended 
     to read as follows:
       ``(d) For the purposes of this section--
       ``(1) the term `covered agency' means the Environmental 
     Protection Agency, the Occupational Safety and Health 
     Administration of the Department of Labor, and the Internal 
     Revenue Service of the Department of the Treasury; and
       ``(2) the term `small entity representative' means a small 
     entity, or an individual or organization that primarily 
     represents the interests of 1 or more small entities.''.

     SEC. 5. COLLECTION OF INFORMATION REQUIREMENT.

       (a) Definition.--Section 601 of title 5, United States 
     Code, is amended--
       (1) in paragraph (5) by inserting ``and'' after the 
     semicolon;
       (2) in paragraph (6) by striking ``; and'' and inserting a 
     period; and
       (3) by striking paragraphs (7) and (8).
       (b) Initial Regulatory Flexibility Analysis.--The [fourth] 
     fifth sentence of section 603 of title 5, United States Code, 
     is amended to read as follows: ``In the case of an 
     interpretative rule involving the internal revenue laws of 
     the United States, this chapter applies to interpretative 
     rules (including proposed, temporary, and final regulations) 
     published in the Federal Register for codification in the 
     Code of Federal Regulations.''.

     SEC. 6. EFFECTIVE DATE.

       This Act shall take effect upon the expiration of the 90-
     day period beginning on the date of the enactment of this 
     Act.

  Mr. BOND. Mr. President, I rise today to speak in support of the 
Small Business Advocacy Review Panel Technical Amendments Act of 1999, 
S. 1156. This bill was approved by the Committee on Small Business 
which I chair, with unanimous bipartisan support. Senator Kerry, the 
Ranking Member of the Committee, was the lead cosponsor of this 
important small business legislation.
  Our bill is simple and straightforward. It clarifies and amends 
certain provisions of the law enacted as part of my ``Red Tape 
Reduction Act,'' the Small Business Regulatory Enforcement Fairness Act 
of 1996. In 1996, this body led the way toward enactment of this 
important law. With a unanimous vote, we took a major step to ensure 
that small businesses get an opportunity to participate in the 
rulemaking process when their input can have the greatest impact, and 
that they are treated fairly by federal agencies.
  The overall purpose of the Regulatory Flexibility Act and the Small 
Business Regulatory Enforcement Fairness Act, is to identify and 
minimize the burdens of the regulations on the small businesses 
affected by the agency's actions, and to help the agency make the rule 
as effective as possible when it is implemented.
  Under the Small Business Regulatory Enforcement Fairness Act of 1996, 
which amended the Regulatory Flexibility Act, each ``covered agency'' 
is required to convene a Small Business Advocacy Review Panel (Panel) 
to receive advice and comments from small entities that will be 
affected by the regulation being developed. Specifically, under section 
609(b), each covered agency is to convene a Panel with representatives 
from the Office of Information and Regulatory Affairs within the Office 
of Management and Budget, the Chief Counsel of Advocacy of the Small 
Business Administration, and the covered agency promulgating the 
regulation, to receive input from small entities prior to publishing an 
Initial Regulatory Flexibility Analysis for a proposed rule with a 
significant economic impact on a substantial number of small entities. 
The Panel produces a report containing comments from the small entities 
and the Panel's own recommendations. The report is provided to the head 
of the agency, who reviews it and, where appropriate, modifies the 
proposed rule, Initial Regulatory Flexibility Analysis or the decision 
on whether the rule significantly impacts small entities. The Panel 
report then becomes a part of the rulemaking record.
  Under current law, the Occupational Safety and Health Administration 
(OSHA) and the Environmental Protection Agency (EPA) are the only 
agencies covered by the Panel process. So far, the results are 
encouraging with these agencies clearly benefitting from the input of 
the small entities that have participated in the review panels. In 
addition, the bill will bring the Internal Revenue Service, the agency 
that has perhaps the most pervasive impact on small businesses, into 
the Panel process by mandating the agency to convene panels for certain 
proposed rulemakings that will impact small businesses.
  Our bill also clarifies how the Regulatory Flexibility Act generally 
applies to the IRS. In 1996, Congress expressly included the IRS within 
the coverage of the Red Tape Reduction Act which amended the Regulatory 
Flexibility Act. However, the Treasury Department has interpreted the 
language in the law in a manner that essentially writes them out of the 
law. The Small Business Advocacy Review Panel Technical Amendments Act 
of 1999 clarifies which interpretative rules involving the Internal 
Revenue Code are to be subject to compliance with the Regulatory 
Flexibility Act. As I noted previously, for those rules that will 
impose a significant economic impact on a substantial number of small 
entities, the IRS will also be required under our bill to convene a 
Small Business Advocacy Review Panel as required by SBREFA.
  If the Treasury Department and the IRS had implemented the Red Tape 
Reduction Act as Congress originally intended, the regulatory burdens 
on small businesses could have been reduced, and small businesses could 
have been saved considerable trouble in fighting unwarranted rulemaking 
actions. For instance, with input from the small business community 
early in the process for their 1997 temporary regulations on the 
uniform capitalization rules, the IRS could have taken into 
consideration the adverse effects that inventory accounting would have 
on farming businesses, and especially nursery growers. Similarly, if 
the IRS had conducted an Initial Regulatory Flexibility Analysis, it 
would have learned of the enormous problems surrounding its limited 
partner regulations prior to issuing the proposal in January 1997. 
These regulations, which became known as the ``stealth tax 
regulations,'' would have raised self-employment taxes on countless 
small businesses operated as limited partnerships or limited liability 
companies, and also would have imposed burdensome new recordkeeping and 
collection of information requirements.
  Specifically, the bill strikes the language in section 603 of title 5 
that limits inclusion of IRS interpretative rules under the Regulatory 
Flexibility Act, ``only to the extent that such interpretative rules 
impose on small entities a collection of information requirement.'' The 
Treasury Department has misconstrued this language in two ways. First, 
unless the IRS imposes a requirement on small businesses to complete a 
new OMB-approved form, the Treasury Department contends that the 
Regulatory Flexibility Act does not apply. Second, in the limited 
circumstances in which the IRS has acknowledged imposing a new 
reporting requirement, the Treasury Department has limited its analysis 
of the impact on small businesses to the burden imposed by the form, 
ignoring the more substantive and complicated burdens. As a result, the 
Treasury Department and the IRS have turned Regulatory Flexibility Act 
compliance into an unnecessary, second Paperwork Reduction Act.
  To address this problem, our bill revises the critical sentence in 
section 603 to read as follows:

       In the case of an interpretative rule involving the 
     internal revenue laws of the United States, this chapter 
     applies to interpretative rules (including proposed, 
     temporary and final regulations) published in the Federal 
     Register for codification in the Code of Federal Regulations.

  The remaining provisions of our bill address the mechanics of 
convening a Panel and the selection of the small-entity representatives 
invited to submit advice and recommendations to the Panel.
  Coverage of the IRS under the Panel process and the technical changes 
I

[[Page S11580]]

have just described are strongly supported by the Small Business 
Legislative Council, the National Association for the Self-Employed, 
and many other organizations representing small businesses. Even more 
significantly, these changes have the support of the Small Business 
Administration's Chief Counsel for Advocacy.
  Our mutual goal is to ensure that the views of small entities are 
brought forth through the Panel process and taken to heart by the 
``covered agency''--in short, to continue the success that EPA and OSHA 
have shown this process has for small businesses. I thank the Senator 
from Massachusetts for his support, and I look forward to seeing the 
Small Business Advocacy Review Panel Technical Amendments Act of 1999 
signed into law at the earliest possible date.
  Mr. HAGEL. Mr. President, I ask unanimous consent that the committee 
amendments be agreed to, the bill be read a third time and passed, as 
amended, the motion to reconsider be laid upon the table, and that any 
statements relating to the bill be printed in the Record.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The committee amendments were agreed to.
  The bill (S. 1156), as amended, was read the third time and passed.

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