[Congressional Record Volume 147, Number 63 (Wednesday, May 9, 2001)]
[Senate]
[Pages S4597-S4603]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BOND:
  S. 849. A bill to amend provisions of law enacted by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-
121 to ensure full analysis of potential impacts on small entities of 
rules proposed by certain agencies, and for other purposes: to the 
Committee on Small Business.
  Mr. BOND. Mr. President, we are awaiting the imminent arrival of the 
budget from the House. We have had many important things going on in 
this Chamber. The debate on education is tremendously important. Yet I 
think it is necessary that we take a moment and recognize something 
that colleagues on both sides of the aisle will find very important, 
and I know support; and that is, the fact that this is Small Business 
Week.
  All of us know, particularly those of us who serve on the Small 
Business Committee, that small businesses are the dynamic engine which 
keeps the economy of America growing and provides most of the new jobs 
that are created. It provides opportunities, for the entrepreneurs and 
their families, for people to gain the kind of life they wish. In many 
areas, it also provides tremendous innovations that make our economy 
more advanced and enhances the livelihoods of not only the workers but 
the customers of those small businesses.
  This week I have been working with my colleagues on Small Business. 
My ranking member, Senator Kerry, and I, and members of the committee 
have participated in recognition ceremonies for Outstanding Small 
Businesspersons of the Year. There was White House recognition 
yesterday.
  I say to all my colleagues, there is a Small Businessperson of the 
Year from your State. I hope you have had the opportunity to 
congratulate them, to thank them for their work, and also to listen to 
them on what is important for small business.
  Since I took over and had the honor of becoming chairman of the 
Committee on Small Business in 1995, we have made it a point for the 
committee to be the eyes and ears of small business. We have listened 
to what small businesses have had to say, small businesses in Missouri 
and Massachusetts and Minnesota and Georgia and all across the Nation. 
If you ask them, they will tell you.
  We found out a number of things that are of concern to them. They are 
concerned about excessive regulation. They are concerned about 
taxation. They are concerned about the complexity of taxation. They are 
concerned about getting access to the Government contracting business 
that is available, unfortunately, too often only to larger businesses.
  Last year I hosted a national women's small business summit in Kansas 
City, MO, and getting access to defense contracts and other Federal 
Government contracts was high on their list. Working together with 
members of the Small Business Committee, we pushed to get rid of 
bundling and make sure that the small businesses get their fair share 
of contracts.
  I will be introducing a measure, a mentoring and protege bill, to do 
with other agencies of the Federal Government what the Defense 
Department has done, and that is to assign an experienced government 
contractor to work with small businesses to help them get in line for 
the contracts so they can participate in and fulfill those contracts.
  I have, with Senator Kerry, introduced a resolution commending Small 
Business Week. Somebody has put a hold on it. I really hope to reason 
with them and see if we can't get that passed. Almost anything we have 
done in small business in this body has been on a bipartisan basis. We 
hope to overcome that problem.

  There are a number of tax measures that are pending before the Senate 
now. I introduced the Small Business Works Act as a tax measure right 
after this session of Congress convened. It was based upon the tax 
priorities that women business owners had. No. 1 was getting rid of the 
alternative minimum tax. You have to figure out two guides of taxes, 
and then most small businesses are taxed as individuals. Some 21.2 
million of them pay taxes on their personal income tax form. And when 
you have an AMT, you find out you lose many of the business deductions, 
and the small business person winds up paying a higher tax--certainly a 
higher tax, in many instances, than a regular C corporation pays.
  In addition, we would move up and make effective now 100-percent 
deductibility for health insurance paid for by small businesses. A 
proprietor running a small business should have the same opportunities 
to get health insurance for herself and her family as a large 
corporation does for its employees. That is in there.
  On Monday I introduced the Independent Contractor Determination Act. 
One of the things women business owners told us was, it is particularly 
troubling and has been a longstanding headache for small businesses to 
figure out who is an independent contractor and who is not. There is a 
20-factor formula. Nobody understands the 20 factors, but the one thing 
you do understand is, if an IRS agent comes in 3 or 4 years later and 
applies the test, the IRS agent is going to win because nobody knows 
how to figure it out. The result is many small businesses have faced 
very heavy burdens. Some have been put out of business because somebody 
rejiggered them from independent contractor to employee, and this has 
been a tremendous problem. The laws ought to be simple enough to 
understand. There is a lot of complexity in the law.

[[Page S4598]]

  One of the things we must do, as we reform the Tax Code, is make it 
simpler. There is no more complex, uninterpretable, undefinable, 
unreasonable provision in the law than the current independent 
contractor provision. We must change that.
  The average small business spends 5 percent of its revenues figuring 
out the tax. That is not paying the taxes, that is just figuring out 
how much they owe. A nickel out of every dollar goes to calculating 
taxes because we have made it too complex. We need to make it simpler.
  Today I introduced a measure to build upon the Red Tape Reduction 
Act, also known as the Small Business Regulatory Enforcement Fairness 
Act. I was very pleased in 1996 to work with my then ranking member, 
Senator Bumpers, and we presented a bill unanimously out of the Small 
Business Committee to provide some relief for small businesses from 
excessive redtape and regulation. We thought we would have all kinds of 
problems getting on the floor, but we worked on a bipartisan basis. We 
had worked with the agencies of government to make sure their concerns 
were expressed.
  The only people who came to the floor were people who wished to be 
added as cosponsors. It passed unanimously, and it has been having an 
impact.
  The purpose of the Red Tape Reduction Act was to ensure that small 
businesses would be given a voice in the regulatory process at the time 
when it could make the difference before the regulation was published. 
The act has proven to be a regulatory process more attentive to the 
impact on small business and, consequently, is more fair and more 
efficient.
  I cite my good friend and constituent Dr. Murray Weidenbaum at the 
Center for the Study of American Business at Washington University who 
told me a couple of years ago that the Red Tape Reduction Act was 
perhaps the only--certainly the most--significant regulatory reform 
measure passed by Congress in recent history, in the last 20 years or 
so.

  We have seen the impact of this provision. The Red Tape Reduction 
Act, among other things, requires that OSHA and EPA convene panels to 
involve small businesses in formulating regulations before the 
regulations are proposed. It gives the agencies the unique opportunity 
to learn upfront what problems their regulation may cause and to 
correct the problems with the least difficulty.
  In one case, EPA totally abandoned a regulation when they recognized 
that the industry could deal with it much more effectively on its own.
  Experience with the panel process has proven to be an unequivocal 
success. The former chief counsel for advocacy of the Small Business 
Administration, Jere Glover, who worked hard to make sure the act 
worked, stated:

       Unquestionably, the SBREFA panel process has had a very 
     salutary impact on the regulatory deliberations of OSHA and 
     EPA, resulting in major changes to draft regulations. What is 
     important to note is that these changes were accomplished 
     without sacrificing the agencies' public policy objectives.

  That is what we had in mind. Many times small businesses get run over 
if they are left out of the process. We had a hearing just a couple 
weeks ago in the Small Business Committee and found out the fisheries 
regulations had worked tremendous hardship on small fishermen along the 
North Carolina coast when they decided to change the bag limit, the 
catch limit, in the fall and wiped out many small businesses. They 
forgot to ask how best to implement the fisheries regulation.
  Another business in my State was working on a process to replace a 
particular chemical that the EPA said it was going to phase out. They 
had invested a great deal of time, money, and interest in the process 
of getting it developed. EPA changed the rule and the regulation and 
the time limit in midprocess and left them completely out in the dark.
  These are the kinds of things that Government ought not to be doing. 
Government ought not to be running roughshod over people who are trying 
to contribute to the economy, provide good employment opportunities, 
provide a solid tax base for the community, and provide good wages for 
the proprietor and employees and their families.
  We think the Red Tape Reduction Act can be expanded and can be of 
even greater value. It has demonstrated the value of small business 
input in the regulatory process, but still too many agencies are trying 
to evade the requirements to conduct regulatory flexibility analyses--
that is the technical term for seeing how it will impact the small 
business; ``regulatory flexibility'' analysis is the technical term--to 
figure out how it is going to hurt small business.
  We now realize that the Internal Revenue Service should also be 
required to conduct small business review panels so that their 
regulations will impose the least possible burden on a small business 
while still achieving the mission of the agency.
  I think there is no question we have worked with the new Commissioner 
of the IRS, Commissioner Rossotti. We have seen many steps taken by the 
IRS to relieve the burdens. I don't know anybody who really likes to 
pay taxes. We realize that it is an important part of supporting our 
Government and our system. But at least we ought to do so in a way that 
is the least confusing and burdensome.
  So I think it is important that we provide a mechanism so that 
parties will be able to reserve the benefits of their rights to 
participate at the earliest stages and have the most impact. We believe 
the litigation that is available at the end of the process if an agency 
fails to take into account the burden on small business is important 
because prior to the Redtape Reduction Act, the law had been on the 
books since 1980 that agencies ought to consider the impact on small 
business, and it was absolutely, totally ignored by the agencies; 
without judicial enforcement, they didn't get anywhere. So we added 
judicial enforcement and they started paying attention.
  The Agency Accountability Act, which I introduce today, cures a 
number of additional problems that we have identified. Let me run 
through quickly what it does. No. 1, it requires agencies to publish 
the decision to certify a regulation as not having a significant 
economic impact on a substantial number of small entities separately in 
the Federal Register. That means, in certain circumstances, the agency 
doesn't have to consider the impact on small business. That is how most 
of the bad regulations get through. EPA was infamous for doing that and 
saying it didn't have any impact. The regulation comes down to small 
business, which says we are getting killed. Then they have to fight the 
battle. Then they go to court and prove that they are impacted and the 
EPA didn't pay any attention to them.
  This says if you are going to use that escape clause to say the 
regulation doesn't have any impact on a small business, you have to set 
that out--set out in the Federal Register what you are doing and the 
fact that it does not have an impact. So you can perhaps correct the 
problems if there are small businesses that can show they are impacted 
before the regulation is issued.
  Second, the Triple A Act requires the agency to publish a summary of 
its economic analysis supporting the certification decision; i.e., if 
you say it doesn't have any economic impact, don't just grab it out of 
your hip pocket, or hat. You have to have an analysis to show why it 
would not. You have to make that available to the public so that 
interested parties will be able to see whether, in fact, it was pulled 
out of your hat, or whether it is based on sound economic reasoning.
  The third thing the Triple A does is it allows small entities to seek 
judicial review of this certification decision. They can go to the 
agency and say: Agency, you are trying to get out of the regulatory 
flexibility requirements--you are trying to get out of the requirement 
to see how the impact on small business can be lessened. If they say 
they disagree with them, the small entity can go to court and get it 
enforced.
  When I say ``small entity,'' this is not only available to small 
businesses, it is available to local governments, to not-for-profit 
organizations, eleemosynary institutions, available for the small 
entities in this country that do not have lobbyists or a presence in 
Washington. Small entities are entitled to use this Redtape Reduction 
Act.
  Fourth, the measure directs the Chief Counsel for Advocacy of the 
Small

[[Page S4599]]

Business Administration to put out a regulation defining the terms that 
the agency has to use in determining whether they can escape an 
analysis of how small business will be impacted. These terms are 
``significant economic impact,'' and ``substantial number of small 
entities.'' We found that a number of agencies like to jack around with 
those terms and skew the facts so that they can sneak out the back door 
without having to do what the bill requires. This gives the advocacy 
counsel the ability to say this is what we mean and this is how you 
have to abide by it. If they don't follow that, then they are ducking 
their responsibilities under SBREFA and the Regulatory Flexibility Act.

  The other thing is, Triple A adds the IRS, U.S. Forest Service, 
National Marine Fisheries Service, and the Fish and Wildlife Service to 
the list of agencies that must conduct small business review panels 
before they can issue proposed regulations.
  All Federal agencies are covered by the provisions of the Regulatory 
Flexibility Act. If you ignore it, you can get hauled into court and 
have your regulation overturned if it has a significant economic impact 
on a substantial number of small entities. But this is to say that 
based on their track record and problems in the past, we are going to 
have you do what OSHA and EPA have been required to do, and that is set 
up panels involving small businesses prior to formulating the 
regulation. If you ask small business how is this regulation going to 
affect you and people like you, you may find out that there are a lot 
better ways of doing it. That is what EPA found out in one of the 
regulations it considered.
  Certainly, an agency is not going to be able to say: Gee, I had no 
idea that it would cause such a hardship on you. It is as important as 
any part of Government service, and it is too bad we have to write it 
into law. We cannot be good Government servants, either as legislators 
or bureaucrats, or members of the executive branch if we don't listen 
to the voices, the hopes, concerns, and problems of average citizens. 
We are just saying under this new measure that there are a couple of 
agencies that have to be told by law to listen to the people they are 
going to regulate. Pay attention to them. They don't have to like all 
the regulations but at least listen to their concerns about how the 
regulations affect them and how you may be able to accomplish the 
purpose of the law you are seeking to administer, without putting 
burdens on small agencies.
  Well, Mr. President, this bill grows out of extensive review of how 
the Redtape Reduction Act has functioned in the last 5 years. We still 
see a lot of frustration by small businesses about how agencies 
continue to find ways to avoid including small business input in 
rulemakings, and some of the actions that our agencies take confirm the 
worst image of agency bureaucrats who are thought to know what is best 
for small business throughout the country, and when the small 
businesses are actually providing jobs, developing technology and 
keeping the economy growing. But somebody here in Washington has a lot 
better idea how they ought to be running their business.
  We need to have an interaction so that the people out there who are 
creating jobs, developing the technology, earning a living for their 
families and themselves can have an input into the agency that is going 
to regulate.
  The General Accounting Office found recently that the EPA missed 
1,098 small companies in the 32 SIC codes of industries that will be 
affected by their rule lowering the threshold for companies to report 
their use of lead. EPA thus concluded that their rule would not have a 
significant economic impact on a substantial number of small entities 
despite reducing the threshold of lead emissions from 25,000 pounds to 
10 pounds--a reduction of 99.96 percent. EPA, instead, relied on an 
average revenue compiled from all companies in the manufacturing 
industries to determine what threshold would be set to trigger the 
small business review panel required by the Redtape Production Act. The 
average included companies such as General Motors, General Electric, 
3M, and others that skewed the average so that it looked as though the 
rule would have no impact on small business.

  But I can tell you that a small business with 11 pounds of lead is 
absolutely clobbered by this rule.
  Although EPA claimed to conduct outreach to find firms that would be 
affected, they only contacted nine sources, although some of these 
sources allegedly contacted have no record of EPA contacting them. I 
think there is no excuse for that type of arrogance and abject 
avoidance of their requirements with respect to small business. This 
shoddy economic analysis exposes a loophole through which EPA should no 
longer be able to drive their trucks, and it will be closed by the 
Agency Accountability Act.
  I submitted previously, when I introduced the measure this morning, 
the GAO testimony presented at the hearing. Now I know there will be 
moans and groans by those who claim that this bill will make the 
regulatory profess more difficult and force agencies to jump through 
hoops and will make it harder to issue new regulations.
  Let me respond as follows: Had the agencies agreed to comply with the 
intent and spirit of SBREFA, rather than defy SBREFA, the Redtape 
Reduction Act, the Agency Accountability Act would not be needed.
  Frankly, if it were clear that agencies were doing what Congress 
intended for them to do, then this bill would be unnecessary. If they 
are doing adequate analysis in reaching out to small business now, then 
this act will have no impact on how they promulgate their regulation.
  I have very simple views on this subject. I want an agency that 
intends to regulate how a business conducts its affairs, to do so 
carefully and only after it has listened to the small businesses that 
will be affected to see if there are ways in which to lessen the burden 
and still achieve the objective.
  Unfortunately, as I said, there is overwhelming evidence that 
agencies are not treating this obligation seriously, and we must tell 
them in forceful terms that we really meant it when we said 5 years 
ago: You have to pay attention to small business.
  I was very pleased we did so in a tremendous bipartisan, unanimous 
vote. I am hoping we can do the same with this agency accountability 
bill. Let all agencies know firsthand: If you do your job right, then 
this should be no problem. If you are not doing your job this way, you 
ought to be because it will cause less headache, less lawsuits, and 
less problems in the end.
  Had EPA done what it should have done in the lead TRI rulemaking, 
there would not be the litigation we are seeing now, and it would have 
saved businesses and the Government untold sums of taxpayers' dollars.
  This body has said they want to treat small businesses fairly. The 
Agency Accountability Act is the next step in doing so.
  As I said earlier, I have introduced with bipartisan support a number 
of measures that I think are going to be very helpful for small 
business. I hope during the course of Small Business Week my colleagues 
will look at these and particularly take the time to listen to the men 
and women of small business who have come to Washington and continue 
the work in their home States to find out what their concerns are.
  I will be cosponsoring a measure that my colleague, Senator Kerry, 
will be introducing to reauthorize and extend a very important STTR 
bill which is a very important act in terms of transferring technology. 
It is a small business technology transfer program. I will have a 
statement that I will add after Senator Kerry introduces the bill. I 
hope this will merit the attention of our colleagues.
  I ask unanimous consent that the testimony of Hubert Potter, Tim 
Kalinowski, and Victor Rezendes of the General Accounting Office before 
the Committee on Small Business and a Summary of Provisions be printed 
in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

 Testimony of Hubert Potter, a Commercial Fisherman From Hobucken, NC, 
       Before the Senate Small Business Committee, April 24, 2001

       Thank you Mr. Chairman and Members of the Committee.
       My name is Hubert Potter. I am a 4th generation commercial 
     fisherman from Hobucken, North Carolina, a fishing community 
     in Pamlico County. I'll be 67 years old this August, and I've 
     been commercial fishing for a living since I was 15.

[[Page S4600]]

       I am a member of the North Carolina Fisheries Association, 
     and have been a Board member of that group for several years, 
     including a stint as Vice-Chairman. As such, I've tried to 
     stay on top of the political and bureaucratic issues 
     affecting us.
       Just about all of my experience has been aboard a type of 
     fishing vessel called a trawler. My wife and I have owned 5 
     trawlers over our lifetime, ranging in size from 32 to 75 ft 
     in length. We sold our last one this past September.
       Like just about everything else, there have been a lot of 
     things that stay the same in our way of life. Things like the 
     weather, fish prices, and fish cycles. Just like any red-
     blooded American, us fishermen like it when prices are high, 
     fish are plentiful, and the good Lord provides us with fair 
     weather. We might like all these things, but we also know 
     that it just doesn't work that way all the time, or even most 
     of the time.
       Although we can accept whatever bad weather the Lord gives 
     us, or the natural peaks and valleys of fish cycles put on us 
     by mother nature, it is hard to accept or even understand the 
     lack of sensitivity and sometimes the callousness of our own 
     government. At first it seems funny when we read about that 
     some of the bureaucrats say about the effects of proposed 
     regulations. But, Mr. Chairman, after you've had a chance to 
     sit down and think about what they've said, it can really 
     hurt your feelings. When you get over that, it just plain 
     makes you angry that your own government would say that these 
     regulations will not affect your small business.
       Commercial fishing is very dependent upon the weather, 
     water temperature, currents, and natural fish cycles. Some 
     years there will be lots of fish in a certain area, and in 
     other years there will be few or none. The difference may be 
     due to weather changes, or just because the cycles are 
     different. That's why diversity is so important to us. For 
     example, it it's possible to fish for summer flounder, that's 
     what I would do. Flounder are not available off our coast 
     year round, so we have to do others things. If I wasn't 
     fishing for summer flounder, I would be shrimping.
       One of the most regulated fisheries on the East Coast is 
     the summer flounder fishery. Although us fishermen try to 
     stay on top of all of the regulations, most of us had no idea 
     what the Regulatory Flexibility Act was until we got involved 
     with the North Carolina Fisheries Association in a lawsuit 
     against the National Marine Fisheries Service. That's when we 
     found out that NMFS didn't think that summer flounder 
     regulations had any impact on us as small business people.
       During one of the hearings held in Norfolk, Virginia, over 
     100 fishermen from our state attended at the request of the 
     court. We were all sworn in and I personally took the stand. 
     Allow me to read from the court order: `The federal 
     government did consider three possible quotas for the 1997 
     fishery, but the government failed to do any significant 
     analysis to support its conclusion that there would be no 
     significant impact. It is evident to this Court from the some 
     100 North Carolina fishermen who appeared to testify that 
     their businesses were significantly affected and that there 
     was a significant economic impact. . . .''
       The Judge also said, ``. . . this Court will not stand by 
     and allow the Secretary to attempt to achieve a desirable end 
     by using illegal means. Granted, administrative agencies have 
     a substantial amount of discretion in determining how they 
     will follow Congressional mandates. That discretion, 
     however, does not include rewriting or ignoring 
     statutes.''
       And this quote by Judge Doumar says it all: ``. . . the 
     Secretary has produced a so-called economic report that 
     obviously is designed to justify a prior determination''.
       Mr. Chairman, although our life has been like a roller 
     coaster ride over the years, Renona and I have done ok. But 
     we really fear for the future of our younger fishing families 
     because of all the regulations and the lack of feeling for 
     hard working people. There was one year when our summer 
     flounder fishery was closed in December due to regulations, 
     when families just didn't have the money for Christmas. 
     That's because shrimping, crabbing, and other fisheries have 
     naturally slacked out in December and many of us depended on 
     the summer flounder fishing for Christmas money. Yet, we find 
     out that our own government says that the regulations have no 
     significant impact.
       Maybe they think a slack Christmas is not having an impact. 
     In my wildest dreams, it's hard for me to figure how they 
     think.
       Mr. Chairman, speaking on behalf of commercial fishing 
     families, I want to thank you for scheduling this hearing. 
     Our small businesses are so small that we don't have the time 
     to stay on top of a lot of these kinds of issues. We do know 
     that we are expected to abide by the laws of our land, and we 
     expect that our own government should do that also.
       It's been discouraging to see our incomes drop as 
     regulations increase, and read reports by the government that 
     the regulations will have no significant impact on us. 
     Although it's hard work, we love what we do, and we would 
     like to be able to continue providing our country with a 
     healthy and tasty source of protein.
       We really hope that our government wants us to continue 
     doing that too.
       Thank you, and I would be glad to answer any questions from 
     the Committee.
                                  ____


                      Testimony of Tim Kalinowski

       Good Morning and thank you for the opportunity to address 
     this distinguished committee. My name is Tim Kalinowski and I 
     am the Vice-President of Operations for Foam Supplies, Inc. 
     (FSI) located in Earth City, Missouri.
       FSI is a typical, small, mid western family owned business. 
     It is still run by Dave and Karen Keske who founded the 
     business in 1972. They bought the first facility with the 
     help of two small business loans and built their current 
     facility by offering shares in the building and land to their 
     62 employees, who receive monthly rental income for their 
     investment.
       FSI has always operated in an environmentally responsible 
     manner and we are proud of our reputation. FSI manufacturers 
     rigid non-CFC urethane foams and solvent less urethane 
     dispensing equipment. These products have uses ranging from 
     flotation foam used in boat building to insulation foam used 
     in building construction. Our company has always been a 
     leader in the field. In the 1980's, aware of EPA's plans to 
     phase out CFCs due to its negative effect on the earth's 
     ozone layer, FSI worked aggressively to find suitable 
     substitutes. FSI was the first company to patent an HCFC-22 
     blown urethane foam, years before the EPA mandated phase-out.
       Technology development does not occur overnight and it does 
     not come cheap. FSI spends a lot of money to develop new 
     products and is wiling to do so because it is how we compete 
     against the large companies. FSI is a small company with 
     tight margins and we can only be innovative if we are able to 
     spread the costs over time. FSI had the ability to do this in 
     the CFC rulemaking, because the EPA notified us well in 
     advance of the phase out and we had the time to properly test 
     and prepare new formulations.
       I am here today to take exception to EPA's actions in the 
     July 11, 2000 Notice of Proposed Rulemaking regarding the 
     Significant New Alternatives Policy or SNAP program. The EPA 
     SNAP program was not designed to accelerate the phase out of 
     ozone depleting substances. For example, under the plan 
     developed by EPA and industry in the early 1990's, HCFC-22 
     may be produced and imported until 2010. Use may continue 
     after that date until stocks are depleted. In this recent 
     SNAP proposal EPA has ignored the current production and 
     manufacturing deadline and has proposed to accelerate the 
     deadline for not only the manufacture, but also the use of 
     these substitutes to 2005. This new deadline would hit 
     small businesses extremely hard because it changes the 
     rules midstream and gives us less time to develop new 
     products and also absorb the costs of research and 
     development. In addition to finding this new deadline 
     unacceptable, it is our position that this action is not 
     within the scope of the SNAP program.
       While this particular issue is extremely important to my 
     small business, the concern that I bring before this 
     committee has more to do with how the EPA approached this 
     proposed rulemaking. I think everyone would agree that 
     regulation works best when all concerned parties work 
     together to consider all the issues. When the regulatory 
     process is by-passed and rules are broken the resulting 
     regulation can be both harmful and ineffective. Sadly, EPA 
     did not follow the rules when it proposed the SNAP program 
     last year.
       In late June, 2000 during an unrelated call to EPA, I was 
     informed that EPA was about to publish this proposed rule in 
     the Federal Register. When questioning why the EPA had not 
     contacted manufacturers or end users that this proposal was 
     being considered, I was told that they considered it a 
     success that they were able to keep this proposal quiet, 
     prior to publication.
       This would have been less of a concern if EPA understood 
     our industry.
       In the NPRM the EPA stated that: (1) ``EPA believes that 
     today's proposal will not result in a significant cost to 
     appliance manufacturers or consumers''; (2) ``This rule would 
     not have a significant impact on a substantial number of 
     small entities because we expect the cost of the SNAP 
     requirements to be minor''; and (3) ``EPA has determined that 
     it is not necessary to prepare a regulatory flexibility 
     analysis in connection with this proposal.''
       We take great exception to these remarks.
       I am here to tell you that this rule will have an affect on 
     thousands of small manufacturers across the country. The only 
     economic study that EPA seems to have done was based on data 
     from a multi-billion dollar appliance manufacturer. If EPA 
     was truly interested in knowing what companies would be 
     impacted by this rule, they only had to make a few phone 
     calls or pull up a few web sites to identify boatbuilders, 
     truck body manufacturers, refrigerator equipment 
     manufacturers, and many other small entities. But they 
     never did. In fact they overlooked our industry. They did 
     not know how much this rule would cost my small business 
     and they did not know how many small businesses would face 
     similar costs.
       The only phone call that I am aware of to an end-user was 
     made after the rule was proposed. An EPA staff person 
     contacted the National Marine Manufacturers Association and 
     informed them that boat builders never had an extension and 
     were currently violating the law. When the NMMA called me for 
     a clarification, there was panic in the voice on the other 
     end of the phone. They believed that by commenting they had 
     struck

[[Page S4601]]

     a hornet's nest. I faxed them a copy of the initial rule, 
     which clearly stated that boat builders did have an extension 
     and were not in violation of the law. EPA was eventually 
     forced to recognize that indeed boat builders did have an 
     extension and were overlooked in this rulemaking process.
       Instead of accusing boat builders of operating illegally, 
     EPA should have learned from them and tried to find out how 
     the proposed rule affected them. EPA would have learned that 
     the Coast Guard requires boats under 20 feet to have 
     flotation foam injected or poured into the hull of the boat. 
     EPA would have learned that over 1500 small business boat 
     builders use these products and would be impacted by this 
     rule. EPA would have known that it made a big mistake in 
     overlooking these types of small businesses and that it 
     needed to go back and look, listen, and learn about these 
     impacts.
       The EPA also stated that ``non-ozone depleting substitutes 
     are now available for all end-users.'' As evidence they cite 
     a 1998 United Nations Technical Options Committee Report. 
     However, one of the authors of that report took exception to 
     EPA's interpretation of the report and commented that, ``the 
     proposed rule incorrectly interprets the UNTOC 1998 report. 
     (Copies of the author's comments are in your handouts)
       The bottom line is that this rule will affect many small 
     businesses that EPA never considered when the proposal was 
     developed. In addition, it is obvious that the EPA staff did 
     not do their homework, because the proposed alternatives are 
     more expensive, unavailable at this time, less effective or 
     present other VOC or flammability hazards.
       This rule will severely jeopardize FSI and it's customers 
     who cannot possibly pass on the increased chemical and 
     testing costs to their customers and still hope to be able to 
     compete with the larger corporations.
       Another very important overlooked casualty of this rule 
     would be the environment itself. Breakthroughs in any 
     industry are commonly a result of the efforts of the little 
     guy who has to stay one step ahead of the big corporations 
     just to stay in business. Our industry is constantly 
     trying to develop new products, which benefit our 
     customers and improve the environment. There are products 
     being tested and developed by FSI and others like us that 
     would have to be abandoned due to this new deadline. These 
     products would not only be better for the environment, but 
     also more cost effective for the small businessman.
       Dave and Karen Keske's of FSI and other small business 
     entrepreneurs want to be able to continue to dedicate their 
     limited resources to test and develop new products. These are 
     products that they are confident will be better for their 
     customers and for the environment. This will only happen if 
     the issues and concerns of companies directly impacted by the 
     rules are made aware of these rules before they are proposed. 
     This was supposed to happen in this rulemaking. The SBREFA 
     law requires it and in this case the law was ignored. Because 
     this has happened, EPA has put FSI and many other small 
     businesses in serious economic jeopardy.
       In closing, I would like to make one point very clear, FSI 
     is not looking for special treatment. We only want to be 
     treated in accordance with the law. It is our belief that 
     when the playing field is kept level, FSI and other small 
     businesses prosper.
       Thank you for your attention.
                                  ____


                      Testimony of Victor Rezendes

       I am pleased to be here today to discuss the implementation 
     of the Regulatory Flexibility Act of 1980 (RFA), as amended, 
     and the Small Business Regulatory Enforcement Fairness Act of 
     1996 (SBREFA). As you requested, I will discuss our work on 
     the implementation of these two statutes in recent years, 
     with particular emphasis on a report that we prepared for 
     this committee last year on the implementation of the acts by 
     the Environmental Protection Agency (EPA).
       The RFA requires federal agencies to examine the impact of 
     their proposed and final rules on ``small entities'' (small 
     businesses, small governmental jurisdictions, and small 
     organizations) and to solicit the ideas and comments of such 
     entities for this purpose. Specifically, whenever agencies 
     are required to publish a notice of proposed rulemaking, the 
     RFA requires agencies to prepare an initial and a final 
     regulatory flexibility analysis. However, the RFA also states 
     that those analytical requirements do not apply if the head 
     of the agency certifies that the rule will not have a 
     ``significant economic impact on a substantial number of 
     small entities,'' or what I will--for the sake of brevity--
     term a ``significant impact.'' SBREFA was enacted to 
     strengthen the RFA's protections for small entities, and some 
     of the act's requirements are built on this ``significant 
     impact'' determination. For example, one provision of SBREFA 
     requires that before publishing a proposed rule that may have 
     a significant impact, EPA and the Occupational Safety and 
     Health Administration must convene a small business advocacy 
     review panel for the draft rule, and collect the advice and 
     recommendations of representatives of affected small entities 
     about the potential impact of the draft rule.
       We have reviewed the implementation of the RFA and SBREFA 
     several times during recent years, with topics ranging from 
     specific provisions in each statute to the overall 
     implementation of the RFA. Although both of these reform 
     initiatives have clearly affected how federal agencies 
     regulate, we believe that their full promise has not been 
     realized. To achieve that promise, Congress may need to 
     clarify what it expects the agencies to do with regard to the 
     statutes' requirements. In particular, Congress may need to 
     clearly delineate--or have some other organization 
     delineate--what is meant by the terms ``significant economic 
     impact'' and ``substantial number of small entities.'' The 
     RFA does not define what Congress meant by these terms and 
     does not give any entity the authority or responsibility 
     to define them governmentwide. As a result, agencies have 
     had to construct their own definitions, and those 
     definitions vary. Over the past decade, we have 
     recommended several times that Congress provide greater 
     clarity with regard to these terms, but to date Congress 
     has not acted on our recommendations.
       The questions that remain unanswered are numerous and 
     varied. For example, does Congress believe that the economic 
     impact of a rule should be measured in terms of compliance 
     costs as a percentage of businesses' annual revenues or the 
     percentage of work hours available to the firms? If so, is 3 
     percent (or 1 percent) of revenues or work hours the 
     appropriate definition of ``significant?'' Should agencies 
     take into account the cumulative impact of their rules on 
     small entities, even within a particular program area? Should 
     agencies count the impact of the underlying statutes when 
     determining whether their rules have a significant impact? 
     What should be considered a ``rule'' for purposes of the 
     requirement in the RFA that the agencies review rules with a 
     significant impact within 10 years of their promulgation? 
     Should agencies review rules that had a significant impact at 
     the time they were originally published, or only those that 
     currently have that effect?
       These questions are not simply matters of administrative 
     conjecture within the agencies. They lie at the heart of the 
     RFA and SBREFA, and the answers to the questions can be a 
     substantive effect on the amount of regulatory relief 
     provided through those statutes. Because Congress did not 
     answer these questions when the statutes were enacted, 
     agencies have had to developed their own answers. If Congress 
     does not like the answers that the agencies have developed, 
     it needs to either amend the underlying statutes and provide 
     what it believes are the correct answers or give some other 
     entity the authority to issue guidance on these issues.


                         proposed epa lead rule

       The implications of the current lack of clarity with regard 
     to the term ``significant impact'' and the discretion that 
     agencies have to define it were clearly illustrated in a 
     report that we prepared for this committee last year. One 
     part of our report focused on a proposed rule that EPA 
     published in August 1999 that would, upon implementation, 
     lower certain reporting thresholds for lead and lead 
     compounds under the Toxics Release Inventory program from as 
     high as 25,000 pounds to 10 pounds. EPA estimated that 
     approximately 5,600 small businesses would be affected by the 
     rule, and that the first-year costs of the rule for each of 
     these small businesses would be between $5,200 and $7,500. 
     EPA said that the total cost of the rule in the first year of 
     implementation would be about $116 million. However, EPA 
     certified that the rule would not have a significant impact, 
     and therefore did not trigger certain analytical and 
     procedural requirements of the RFA.
       Mr. Chairman, last year you asked us to review the 
     methodology that EPA used in the economic analysis for the 
     proposed lead rule and describe key aspects of that 
     methodology that may have contributed to the agency's 
     conclusion that the rule would not have a significant impact. 
     You also asked us to determine whether additional data or 
     analysis could have yielded a different conclusion about the 
     rule's impact on small entities. Finally, you also asked us 
     to describe and compare the rates at which EPA's major 
     program offices certified that their substantive proposed 
     rules would not have a significant impact. We did not examine 
     whether lead was a persistent bioaccumulative toxic or the 
     value of the Toxics Release Inventory program in general.
       EPA's current guidance on how the RFA should be implemented 
     gives the agency's program offices substantial discretion 
     with regard to certification decisions but also provides 
     numerical guidelines to help define what constitutes a 
     significant impact. For example, the guidance indicates that 
     a rule should be presumed eligible for certification as not 
     having a significant impact if it does not impose annual 
     compliance costs amounting to 1 percent of estimated annual 
     revenues on any number of small entities. However, if 
     those compliance costs amount to 3 percent or more of 
     revenues on 1,000 or more small entities, the guidance 
     indicates that the program office should presume that the 
     rule is ineligible for certification.
       These numerical guidelines establish what appears to be a 
     high threshold for what constitutes a significant impact. For 
     example, an EPA rule could theoretically impose $10,000 in 
     compliance costs on 10,000 small businesses, but the 
     guidelines indicate that the agency can presume that the rule 
     does not trigger the requirements of the RFA as long as those 
     costs do not represent at least 1 percent of the affected 
     businesses' annual revenues. The guidance does not take into 
     account the profit margins of the businesses involved. 
     Therefore, if the profit margin in

[[Page S4602]]

     the affected businesses is less than 5 percent, the costs 
     required to implement a rule could conceivably take one-fifth 
     of that profit and, under EPA's guidelines, still not be 
     considered to have a significant impact. Neither does the 
     guidance take into account the cumulative impact of the 
     agency's rules on small businesses. Therefore, if EPA issued 
     100 rules, each of which imposed compliance costs amounting 
     to one-half of 1 percent of annual sales on 10,000 
     businesses, the agency could certify each of the rules as not 
     having a significant impact even though the cumulative impact 
     amounted to 50 percent of the affected businesses' revenues. 
     Consideration of cumulative regulatory impact is not even 
     required within a particular area like the Toxics Release 
     Inventory program. Each toxic substance added to the 
     approximately 600 substances already listed in the program, 
     or each change in the reporting threshold for a listed toxin, 
     constitutes a separate regulatory action under the RFA.
       An agency's conclusions about the impact of a rule on small 
     entities can also be driven by the agency's analytical 
     approach. In its original economic analysis for the proposed 
     lead rule, EPA made a number of assumptions that clearly 
     contributed to its determination that no small entities would 
     experience significant economic effects. For example, to 
     estimate the annual revenues of companies expected to file 
     new Toxics Release Inventory reports for lead, EPA assumed 
     that (1) the new filers would have employment and economic 
     characteristics similar to current filers, (2) different 
     types of manufacturers would experience similar economic 
     effects, and (3) the revenues of the smallest manufacturers 
     covered by the proposed rule could be exemplified by the firm 
     at the 25th percentile of the agency's projected revenue 
     distribution for small manufacturers. As a result of these 
     and other assumptions, EPA estimated that the smallest 
     manufacturers affected by the proposed lead rule had annual 
     revenues of $4 million. Using that $4 million revenue 
     estimate and other information, EPA concluded that none of 
     the 5,600 small businesses would experience first-year 
     compliance costs of 1 percent or more of their annual 
     revenues. Therefore, EPA certified that the proposed lead 
     rule would not have a significant impact.
       EPA revised these and other parts of the economic analysis 
     for the proposed lead rule before submitting it to the Office 
     of Management and Budget (OMB) for final review in July 2000. 
     According to a summary of the draft revised economic analysis 
     that we reviewed, EPA changed several analytic assumptions 
     and methods, and revised its estimates of the rule's impact 
     on small businesses. Specifically, the agency said that the 
     lead rule would affect more than 8,600 small companies (up 
     from about 5,600 in the original analysis), and as many as 
     464 of them would experience first-year compliance costs of 
     at least 1 percent of their annual revenues (up from zero in 
     the original estimate). Nevertheless, EPA again concluded 
     that the rule would not have a significant impact. During our 
     review, we discovered that the agency's revised estimate of 
     the number of small companies that would experience a 1 
     percent economic impact was based on only 36 of the 69 
     industries that the agency said could be affected by the 
     rule. EPA officials said that the other 33 industries were 
     not included in the agency's estimate because of lack of 
     data.
       We attempted to provided a more complete picture of how the 
     lead rule would affect small businesses by estimating how 
     many companies in these missing 33 industries could 
     experience a first-year economic impact of at least 1 percent 
     of annual revenues. We obtained data from the Bureau of the 
     Census for 32 of these 33 industries and estimated that as 
     many as 1,098 additional small businesses could experience 
     this 1-percent effect. If EPA had used this analytic approach 
     in combination with its own studies, it would have concluded 
     that as many as 1,500 small businesses would experience 
     compliance costs amounting to at least 1 percent of annual 
     revenues. Therefore, using its own guidance, EPA could have 
     concluded that the rule should not be certified, prepared a 
     regulatory flexibility analysis, and convened an advocacy 
     review panel for the rule. However, we ultimately concluded 
     that the agency's initial and revised analyses and the 
     conclusions that it based on those studies were within the 
     broad discretion that the RFA and the EPA guidance provided 
     in determining what constituted a ``significant economic 
     impact'' on a ``substantial number of small entities.''
       In the final lead rule that EPA published in January 2001, 
     EPA set the new reporting threshold for lead at 100 pounds--
     up from 10 pounds in the proposed rule. However, just as it 
     did for the proposed rule, EPA concluded that the final rule 
     would not have a significant impact. EPA said that it reached 
     this conclusion because it did not believe the rule would 
     have a significant economic impact (defined as annual costs 
     between 1 and 3 percent of annual revenues) on more than 250 
     of the 4,100 small businesses expected to be affected by the 
     rule. EPA also illustrated what it viewed as nonsignificant 
     impact in terms of work hours. The agency said that it would 
     take a first-time filer about 110 hours to fill out the form. 
     Because the smallest firm that could be affected by the rule 
     must have at least 20,000 labor hours per year (10 employees 
     times 50 weeks per year per employee times 40 hours per 
     week), EPA said that the 110 hours required to fill out the 
     Toxics Release Inventory form in the first year represents 
     only about one-half of 1 percent of the total amount of time 
     the firm has available in that year.
       EPA' determination that the proposed lead rule would not 
     have a significant impact on small entities was not unique. 
     Its four major program offices certified about 78 percent of 
     the substantive proposed rules that they published in the 
     2\1/2\ years before SBREFA took effect in 1996 but certified 
     96 percent of the proposed rules published in the 2\1/2\ 
     years after the act's implementation. In fact, two of the 
     program offices--the Office of Prevention, Pesticides and 
     Toxic Substances and the Office of Solid Waste--certified all 
     47 of their proposed rules in this post-SBREFA period as not 
     having a significant impact. The Office of Air and Radiation 
     certified 97 percent of its proposed rules during this 
     period, and the Office of Water certified 88 percent. EPA 
     officials told us that the increased rate of certification 
     after SBREFA's implementation was caused by a change in the 
     agency's RFA guidance on what constituted a significant 
     impact. Prior to SBREFA, EPA's policy was to prepare a 
     regulatory flexibility analysis for any rule that the agency 
     expected to have any impact on any small entities. The 
     officials said that this guidance was changed because the 
     SBREFA requirement to convene an advocacy review panel for 
     any proposed rule that was not certified made the 
     continuation of the agency's more inclusive RFA policy too 
     costly and impractical.


                 Previous Reports On the RFA and SBREFA

       We have issued several other reports in recent years on the 
     implementation of the RFA and SBREFA that, in combination, 
     illustrate both the promise and the problems associated with 
     the statutes. For example, in 1991, we examined the 
     implementation of the RFA with regard to small governments 
     and concluded that each of the four federal agencies we 
     reviewed had a different interpretation of key RFA 
     provisions. We said that the act allowed agencies to 
     interpret when they believed their proposed regulations 
     affected small government, and recommended that Congress 
     consider amending the RFA to require the Small Business 
     Administration (SBA) to develop criteria regarding whether 
     and how to conduct the required analyses.
       In 1994, we noted that the RFA required the SBA Chief 
     Counsel for Advocacy to monitor agencies' compliance with the 
     act. However, we also said that one reason for agencies' lack 
     of compliance with the RFA's requirements was that the act 
     did not expressly authorize SBA to interpret key provisions 
     in the statute and did not require SBA to develop criteria 
     for agencies to follow in reviewing their rules. We said that 
     if Congress wanted to strengthen the implementation of the 
     RFA, it should consider amending the act to (1) provide SBA 
     with clearer authority and responsibility to interpret the 
     RFA's provisions, and (2) require SBA, in consultation with 
     OMB, to develop criteria as to whether and how federal 
     agencies should conduct RFA analyses.
       In our 1998 report on the implementation of the small 
     business advocacy review requirements in SBREFA, we said that 
     the lack of clarity regarding whether EPA should have 
     convened panels for two of its proposed rules was traceable 
     to the lack of agreed-upon governmentwide criteria as to 
     whether a rule has a significant impact. Nevertheless, we 
     said that the panels that had been convened were generally 
     well received by both the agencies and the small business 
     representatives. We also said that if Congress wished to 
     clarify and strengthen the implementation of the RFA and 
     SBREFA, it should consider (1) providing SBA or another 
     entity with clearer authority and responsibility to interpret 
     the RFA's provisions and (2) requiring SBA or some other 
     entity to develop criteria defining a ``significant economic 
     impact on a substantial number of small entities.'' In 1999, 
     we noted a similar lack of clarity regarding the RFA's 
     requirement that agencies review their existing rules that 
     have a significant impact within 10 years of their 
     promulgation. We said that if Congress is concerned that this 
     section of the RFA has been subject to varying 
     interpretations, it may wish to clarify those provisions. We 
     also recommended that OMB take certain actions to improve the 
     administration of these review requirements, some of which 
     have been implemented.
       Last year we convened a meeting at GAO on the rule review 
     provision of the RFA, focusing on why the required reviews 
     were not being conducted. Attending that meeting were 
     representatives from 12 agencies that appeared to issue rules 
     with an impact on small entities, representatives from 
     relevant oversight organizations (e.g., OMB and SBA's Office 
     of Advocacy), and congressional staff from the House and 
     Senate Committees on Small Business. The meeting revealed 
     significant differences of opinion regarding key terms in the 
     statute. For example, some agencies did not consider their 
     rules to have a significant impact because they believed the 
     underlying statutes, not the agency-developed regulations, 
     caused the effect on small entities. There was also confusion 
     regarding whether the agencies were supposed to review rules 
     that had a significant impact on small entities at the time 
     the rule was first published in the Fedeal Register or those 
     that currently have such an impact. It was not even clear 
     what should be considered to ``rule'' under RFA's rule review 
     requirements--the entire section of the Code of Federal 
     Regulations that was affected by the rule, or just the part 
     of the existing rule that was being amended. By the end of 
     the meeting it was clear that, as one congressional

[[Page S4603]]

     staff member said, ``determining compliance with (the RFA) is 
     less obvious that we believed before.''
       Mr. Chairman, this concludes my prepared statement. I 
     reveal would be happy to responded to any questions.
                                  ____


            Agency Accountability Act--Summary of Provisions


                         Section 1. Short Title

       This act may be cited as the ``Agency Accountability Act of 
     2001''.


                    Section 2. Findings and Purposes

    Section 3. Ensuring Full Analysis of Potential Impacts on Small 
             Entities of Rules Proposed by Certain Agencies

       This section improves the procedure for the conducting 
     Small Business Advocacy Review Panels by requiring the agency 
     to collaborate with the Chief Counsel for Advocacy of the 
     Small Business Administration in selecting the small entity 
     representatives. It requires the agency to publish the panel 
     report in the Federal Register and to distribute the report 
     to the small entity representatives.


                         Section 4. Definitions

       This section expands the list of agencies required to 
     conduct Small Business Advocacy Review Panels for regulations 
     that will have a significant economic impact on a substantial 
     number of small entities to include the Internal Revenue 
     Service of the Treasury Department, the National Marine 
     Fisheries Service of the Commerce Department, the U.S. Forest 
     Service of the Agriculture Department, and the U.S. Fish and 
     Wildlife Service of the Interior Department. The section also 
     allows organizations that primarily represent small entities 
     to serve as Small Entity Representatives. Finally, this 
     section directs the Chief Counsel for Advocacy of the Small 
     Business Administration to promulgate a rule making to 
     further define the terms ``significant economic impact'' and 
     ``substantial number of small entities'' and to consider the 
     indirect impacts regulations have on small businesses when 
     promulgating these regulations.


            Section 5. Collection of Information Requirement

       This section revises the conditions under which the 
     Internal Revenue Service must conduct an initial regulatory 
     flexibility analysis for interpretative regulations. If the 
     IRS is promulgating a temporary regulation, the IRS may avoid 
     this requirement but it must inform the Chief Counsel for 
     Advocacy at the time of the decision and include an 
     explanation of why the temporary regulation is required 
     because using a notice and comment procedure would be 
     impracticable, unnecessary, or contrary to the public 
     interest, and an explanation of the reasons that 
     circumstances warrant an exception from the panel review 
     requirement. This notice and explanation must also be 
     published in the Federal Register.


           Section 6. Initial Regulatory Flexibility Analysis

       This sections adds the requirement of conducting a cost/
     benefit analysis of the regulation to the requirements of the 
     Initial Regulatory Flexibility Analysis required under the 
     Regulatory Flexibility Act. Agencies are also directed to 
     take into account, to the extent practical, the cumulative 
     cost of their regulations on small businesses and the 
     effect of the proposed regulation on those cumulative 
     costs. Finally, agencies are directed to make an initial 
     certification that the benefits of the proposed rule 
     justify the costs of the proposed rule to small entities.


            Section 7. Final Regulatory Flexibility Analysis

       This section adds cost/benefit analyses to the requirements 
     of the Final Regulatory Flexibility Analysis called for under 
     the Regulatory Flexibility Act. It also requires agencies to 
     make a final certification that the benefits of the 
     regulation justify the costs of the regulation to the small 
     entities that will be subject to it. Finally, agencies are 
     required to describe the comments received on the Initial 
     Regulatory Flexibility Analysis and a statement of any change 
     made as a result of those comments.


          Section 8. Publication of Decision to Certify a Rule

       This section requires agencies to publish separately in the 
     Federal Register their decision to certify a regulation as 
     not having a significant economic impact on a substantial 
     number of small entities instead of the current requirement 
     of publishing that decision with the proposed rule. This also 
     requires the agency to publish a summary of the economic 
     analysis supporting that decision and indicates what must be 
     in that summary. The complete analysis is to be made 
     available on the Internet to the extent practicable.


          Section 9. Judicial review of Certification Decision

       This section makes the agency decision to certify a 
     regulation as not having a singificant economic impact on a 
     substantial number of small entities judicially reviewable 
     and specifies that the remedy shall be voiding of the 
     certification and requiring the agency to conduct the Initial 
     Regulatory Flexibility Analysis, Final Regulatory Flexibility 
     Analysis, and the small business advocacy review panel if 
     required.


   Section 10. Exclusion of Agency Outreach to Small Businesses from 
             Certain Collection of Information Requirements

       This section excludes outreach efforts to small businesses 
     to determine the impact of regulations from the requirements 
     for Office of Management and Budget clearance under the 
     Paperwork Reduction Act.


                       Section 11. Effective Date

       This act shall take effect 90 days after the date of 
     enactment.
                                 ______