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98–121 PDF 2005

WHAT IS THE ADMINISTRATION’S RECORD IN

RELIEVING BURDEN ON SMALL BUSINESS?—

PART II

JOINT HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY POLICY,

NATURAL RESOURCES AND REGULATORY

AFFAIRS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

AND THE

SUBCOMMITTEE ON REGULATORY

REFORM AND OVERSIGHT

OF THE

COMMITTEE ON SMALL BUSINESS

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

JULY 20, 2004

Committee on Government Reform

Serial No. 108–255

Committee on Small Business

Serial No. 108–74

Printed for the use of the Committees on Government Reform and Small

Business

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

DOUG OSE, California

RON LEWIS, Kentucky

JO ANN DAVIS, Virginia

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

EDWARD L. SCHROCK, Virginia

JOHN J. DUNCAN, JR., Tennessee

NATHAN DEAL, Georgia

CANDICE S. MILLER, Michigan

TIM MURPHY, Pennsylvania

MICHAEL R. TURNER, Ohio

JOHN R. CARTER, Texas

MARSHA BLACKBURN, Tennessee

PATRICK J. TIBERI, Ohio

KATHERINE HARRIS, Florida

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. ‘‘DUTCH’’ RUPPERSBERGER, Maryland

ELEANOR HOLMES NORTON, District of

Columbia

JIM COOPER, Tennessee

BETTY MCCOLLUM, Minnesota

———

BERNARD SANDERS, Vermont

(Independent)

MELISSA WOJCIAK, Staff Director

DAVID MARIN, Deputy Staff Director/Communications Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON ENERGY POLICY, NATURAL RESOURCES AND REGULATORY

AFFAIRS

DOUG OSE, California, Chairman

EDWARD L. SCHROCK, Virginia

CHRISTOPHER SHAYS, Connecticut

JOHN M. MCHUGH, New York

CHRIS CANNON, Utah

NATHAN DEAL, Georgia

CANDICE S. MILLER, Michigan

PATRICK J. TIBERI, Ohio

JOHN F. TIERNEY, Massachusetts

TOM LANTOS, California

PAUL E. KANJORSKI, Pennsylvania

DENNIS J. KUCINICH, Ohio

CHRIS VAN HOLLEN, Maryland

JIM COOPER, Tennessee

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

BARBARA F. KAHLOW, Staff Director

LAUREN JACOBS, Clerk

KRISTA BOYD, Minority Counsel

(III)

COMMITTEE ON SMALL BUSINESS

DONALD A. MANZULLO, Illinois, Chairman

ROSCOE BARTLETT, Maryland, Vice

Chairman

SUE KELLY, New York

STEVE CHABOT, Ohio

PATRICK J. TOOMEY, Pennsylvania

JIM DEMINT, South Carolina

SAM GRAVES, Missouri

EDWARD SCHROCK, Virginia

TODD AKIN, Missouri

SHELLEY MOORE CAPITO, West Virginia

BILL SHUSTER, Pennsylvania

MARILYN MUSGRAVE, Colorado

TRENT FRANKS, Arizona

JIM GERLACH, Pennsylvania

JEB BRADLEY, New Hampshire

BOB BEAUPREZ, Colorado

CHRIS CHOCOLA, Indiana

STEVE KING, Iowa

THADDEUS MCCOTTER, Michigan

NYDIA VELA ́ ZQUEZ, New York

JUANITA MILLENDER-MCDONALD,

California

TOM UDALL, New Mexico

ENI FALEOMAVAEGA, American Samoa

DONNA CHRISTENSEN, Virgin Islands

DANNY DAVIS, Illinois

GRACE NAPOLITANO, California

ANI ́BAL ACEVEDO-VILA ́ , Puerto Rico

ED CASE, Hawaii

MADELEINE BORDALLO, Guam

DENISE MAJETTE, Georgia

JIM MARSHALL, Georgia

MICHAEL MICHAUD, Maine

LINDA SA ́ NCHEZ, California

BRAD MILLER, North Carolina

[VACANCY]

[VACANCY]

J. MATTHEW SZYMANSKI, Chief of Staff

PHIL ESKELAND, Policy Director

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT

EDWARD L. SCHROCK, Virginia Chairman

ROSCOE G. BARTLETT, Maryland

SUE W. KELLY, New York

TRENT FRANKS, Arizona

JEB BRADLEY, New Hampshire

STEVE KING, Iowa

THADDEUS G. MCCOTTER, MICHIGAN

[RANKING MEMBER IS VACANT]

DONNA M. CHRISTENSEN, Virgin Islands

ENI F. H. FALEOMAVAEGA, American

Samoa

ANI ́BAL ACEVEDO-VILA ́ , Puerto Rico

ED CASE, Hawaii

DENISE L. MAJETTE, Georgia

ROSARIO PALMIERI, Senior Professional Staff

(V)

C O N T E N T S

Page

Hearing held on July 20, 2004 ............................................................................... 1

Statement of:

Acker, Joseph, president, Synthetic Organic Chemical Manufacturers Association; Anita Drummond, Director, Legal and Regulatory Affairs,

Associated Builders and Contractors, Inc.; and John Di-Fazio, Assistant

General Counsel, Consumer Specialty Products Association .................... 64

Graham, John D., Administrator, Office of Information and Regulatory

Affairs, Office of Management and Budget; Jesus H. Delgado-Jenkins,

Acting Assistant Secretary for Management and Budget, Department

of the Treasury; and Felipe Mendoza, Associate Administrator, Office

of Small Business Utilization, General Services Administration ............. 21

Letters, statements, etc., submitted for the record by:

Acker, Joseph, president, Synthetic Organic Chemical Manufacturers Association, prepared statement of .................................................................. 67

Delgado-Jenkins, Jesus H., Acting Assistant Secretary for Management

and Budget, Department of the Treasury, prepared statement of ........... 43

Di-Fazio, John, Assistant General Counsel, Consumer Specialty Products

Association, prepared statement of ............................................................. 81

Drummond, Anita, Director, Legal and Regulatory Affairs, Associated

Builders and Contractors, Inc., prepared statement of ............................. 76

Graham, John D., Administrator, Office of Information and Regulatory

Affairs, Office of Management and Budget, prepared statement of ......... 24

Mendoza, Felipe, Associate Administrator, Office of Small Business Utilization, General Services Administration, prepared statement of ............. 51

Ose, Hon. Doug, a Representative in Congress from the State of California, prepared statement of ........................................................................... 4

Schrock, Hon. Edward L., a Representative in Congress from the State

of Virginia, prepared statement of .............................................................. 17

(1)

WHAT IS THE ADMINISTRATION’S RECORD IN

RELIEVING BURDEN ON SMALL BUSINESS?—PART II

TUESDAY, JULY 20, 2004

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENERGY

POLICY, NATURAL RESOURCES AND REGULATORY AFFAIRS, COMMITTEE ON GOVERNMENT REFORM, JOINT

WITH THE SUBCOMMITTEE ON REGULATORY REFORM

AND OVERSIGHT, COMMITTEE ON SMALL BUSINESS,

Washington, DC.

The subcommittees met, pursuant to notice, at 2 p.m., in room

2154, Rayburn House Office Building, Hon. Doug Ose (chairman of

the Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs) and Hon. Edward L. Schrock (chairman of the Subcommittee on Regulatory Reform and Oversight) co-presiding.

Present: Representatives Ose, Schrock, Tierney, Bartlett, and

Velazquez.

Staff present: Barbara F. Kahlow and Rosario Palmieri, staff directors; Lauren Jacobs, clerk; Megan Taormino, press secretary;

Krista Boyd, minority counsel; Russell Orban, minority professional

staff member; and Earley Green, minority chief clerk.

Mr. OSE. While we are waiting, I just want to share with you the

good news that we have a number of items on the Floor that are

being debated right now that will probably come to a vote in very

short order. There are a total of three votes, so it’s probably going

to be somewhere around 55 minutes. That’s assuming we don’t

have a motion to recommit. So, sometime here in the next hour, the

bells will ring, we’ll recess for that period of time it takes to have

the votes and then come back.

We’re going to go ahead and start. I want to welcome you all to

today’s hearing of the Government Reform Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs, being held

jointly with the Small Business Subcommittee on Regulatory Reform and Oversight. Today’s subject is What is the Administration’s Record in Relieving the Burden on Small Business?—Part II.

Small businesses remain a critical part of our economy. They

represent more than 99 percent of all employers and provide twothirds to three quarters of the net new jobs in this country. Hours

and compliance dollars spent and penalties paid affect productivity,

jobs and economic growth. Small businesses are especially concerned about penalties levied by Federal agencies for innocent firsttime violations of ever-changing Federal paperwork and regulatory

requirements.

2

As a former owner of small businesses, I am especially aware of

the need to relieve paperwork, regulatory and enforcement burdens

on small business. This is my 10th hearing as a Government Reform Subcommittee chairman toward that end.

The problem is also important to this administration. Point No.

4 in President Bush’s six point economic growth plan is ‘‘streamlining regulations and reporting requirements.’’ Today, our subcommittees will focus on the progress in the administration’s implementation of the June 2002 Small Business Paperwork Relief Act,

which is Public Law 107–198, that has occurred since our last joint

hearing in January. This law requires the Office of Management

and Budget to take certain actions by June 28, 2003 and 2004, and

each Federal agency to take additional actions by December 31,

2003 and 2004.

OMB estimates the Federal paperwork burden on the public to

be 8.3 billion hours. In its June 2003 Small Business Paperwork

Reduction Act report, OMB estimated that the price tag for all paperwork imposed on the public to be $320 billion a year. This is obviously a huge burden, especially on small businesses.

In 1980, Congress established an Office of Information and Regulatory Affairs in the Office of Management and Budget. OIRA’s

principal responsibility is paperwork reduction. In 1995, 1998, 2000

and 2002, Congress enacted additional legislation with the objective of decreasing the paperwork burden. Nonetheless, to our great

chagrin, paperwork has increased in each of the last 8 years. The

chart on display shows progressive Small Business Paperwork Relief Act implementation compliance from June 2003 to June 2004

for each agency, including naming a single point of contact to act

as a liaison between small business and the agency, identifying

compliance assistance resources available to small businesses, and

submitting its first enforcement report.

Non-compliance includes incomplete or completely absent enforcement information for four cabinet departments, those being

Defense, Homeland Security, Justice and Veterans Affairs and several key independent agencies, such as the Tennessee Valley Authority. Because of OMB’s role in governmentwide management

generally and the Small Business Paperwork Relief Act specifically,

we asked OMB to discuss today the reason for each non-compliance

by Federal agency.

We also asked two agencies, the Department of the Treasury,

which levies the most penalties on small businesses, and the General Services Administration, which has the governmentwide lead

on civilian procurement and has not yet identified its compliance

assistance resources, to discuss their Small Business Paperwork

Relief Act implementation.

The Small Business Paperwork Relief Act further required an

OMB-led interagency task force to perform certain analyses. In

year one the task force was to analyze how to: integrate paperwork

requirements across Federal agencies and programs; consolidate

paperwork requirements within an agency; and publish a list of paperwork requirements applicable to small business. In year two the

task force was to recommend how to improve electronic dissemination and develop an interactive, governmentwide internet program.

3

Along with other chairmen, Chairman Schrock and I submitted

letters critical of OMB’s two draft reports as being largely non-responsive to congressional intent. For example, OMB’s first report

did not address how to consolidate paperwork requirements and

recommended against a list organized by NAICS codes, by industrial sector description, or in any other manner. And, the principal

actions in OMB’s second report have not yet taken place, including

completion of all three phases of the Business Gateway Project and

the two pilot burden reduction programs, one on trucking and the

other on surface coal mining. We asked OMB to discuss today each

specific accomplishment resulting from the task force’s 2 years of

effort.

I believe that the administration can do more to fully comply

with the Small Business Paperwork Relief Act and to reduce burdens significantly on small business. Congress wants, and America’s small business deserve, results—fewer hours spent on Government paperwork and lower compliance costs.

I want to welcome our witnesses today. They include Dr. John

D. Graham, Administrator of OIRA at the Office of Management

and Budget; Mr. Jesus Delgado-Jenkins, the Acting Assistant Secretary for Management and Budget, and Chief Financial Officer at

the Department of the Treasury; Mr. Felipe Mendoza, Acting Administrator for the Office of Small Business Utilization at the General Services Administration. That is our first panel.

Our second panel has as witnesses Mr. Joseph Acker, who is the

president of the Synthetic Organic Chemical Manufacturers Association; Anita Drummond, director of Legal and Regulatory Affairs

at Associated Builders and Contractors, Inc.; and, Mr. John

DiFazio, assistant general counsel for legal and regulatory affairs

at the Consumer Specialty Products Association.

You heard the bells go off so, as I indicated earlier, we are going

to recess. When we get back Chairman Schrock will offer his opening statement. Mr. Tierney will offer his. We’ll enter any others

into the record for the purpose of expediting the hearing. Like I

said, this is likely to be about 50 minutes. So, we stand in recess

for that period of time.

[The prepared statement of Hon. Doug Ose follows:]

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[Recess.]

Mr. OSE. I am pleased to recognize the gentleman from Virginia

for the purpose of an opening statement.

Mr. SCHROCK. Thank you, Mr. Chairman. It never fails, we don’t

vote all day and then we get ready to start something important

and we vote. I guess that’s just the way it is up here.

The President has said in several speeches that government regulation of paperwork continues to be a problem. In May, he said,

‘‘We need fewer mandates and fewer unnecessary regulations from

Washington. Companies like [the one he was visiting] should be

able to spend their time building the business and adding jobs, not

filling out a lot of useless government paperwork.’’

Last week in Michigan, the President made a strong case for why

this is so important. He said, ‘‘Now, the best way to make sure this

economy continues to grow is to make sure America is the best

place for people to risk capital; to make sure the entrepreneurial

spirit is strong; to have less regulation and less taxes for the small

business people of America.’’

Vice President Cheney has been saying the same thing. Last

month in New York he said, ‘‘We also need to continue stripping

away the needless mandates and regulations that burden small

businesses. The Small Business Administration estimates that regulations cost small businesses some $7,000 per worker per year.

This discourages hiring, stifles innovation, and often without any

benefit to the public interest. So, we streamlined tax reporting tax

requirement for small businesses, saving them more than 50 million hours of unproductive work. We must continue those efforts.

America’s entrepreneurs should spend their time building businesses and creating jobs, not filling out a lot of useless government

paperwork.’’ I think the President and the Vice President have

mADE MY opening statement for me. It is very clear where we

stand on providing relief to small businesses from the burden of

regulation and paperwork. Our regulatory review office, under Dr.

Graham, believes the same thing, and has shown us through his

careful stewardship of new regulations.

But, the efforts to combat the legacy of regulations and paperwork requirements that have existed before this administration

that came to office are incomplete. I’ve said these numbers before,

over 500 million hours spent by small businesses to comply with

tax paperwork, over 8 billion hours of paperwork imposed by the

Federal Government in total, and over $800 billion that regulation

costs our economy. It is imperative to ensure America’s continued

global competitiveness that we get these costs under control, and

in fact reduce them.

Congress tried to help get the ball rolling in 2002, when we

passed the Small Business Paperwork Relief Act. It asked for some

simple things, like providing a single point of contact for small

businesses in each agency and publishing a list of all compliance

assistance resources.

But, it also did a big thing. That was to get multiple agencies to

talk to each other about regulation government-wide, and about reducing the costs and burdens of regulation government-wide. The

reason it was so important was that government agencies just don’t

think that way. They think about their individual agency’s manVerDate 11-MAY-2000 11:19 Apr 04, 2005 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 D:\DOCS\98121.TXT HGOVREF1 PsN: HGOVREF1
16

date. Very few of them, unless they are forced to, think about how

a proposed regulation might impact businesses already regulated

by several other agencies. OMB has traditionally served that role

through interagency reviews, comments and return letters.

But, we had hoped that the task force created by the law would

bring a new outlook and a new way of thinking to regulation and

burden reduction. Sadly, the two reports of the task force bear little

resemblance to my hopes. We may have missed a golden opportunity to do something great for the small businesses of America.

I hope that through our dialog today, with OMB, GSA and the

Department of the Treasury, we can re-ignite some of that thinking. I hope we can leave here today with the continued mandate

of the President, the Vice President, these committees and the Congress to streamline and eliminate unnecessary paperwork and regulatory requirements that are a needless drag on our economy.

I look forward to our hearing today and to hearing from our witnesses. Thank you, Mr. Chairman.

[The prepared statement of Hon. Edward L. Schrock follows:]

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Mr. OSE. I thank the gentleman.

I’m pleased to recognize my friend from Massachusetts, Mr.

Tierney.

Mr. TIERNEY. Thank you, Mr. Chairman, I say that with all sincerity, and Chairman Schrock, for holding this hearing on the riveting subject of the regulatory process.

There are tens of thousands of small businesses in my district,

and it’s essential that the Federal Government make it easier for

small businesses there and across America to comply with regulations. We recently hosted a conference for small businesses in the

Sixth District of Massachusetts pertaining to their doing business

with the Federal Government. The conference was held with the

General Services Administration through the e-Strategy Web site,

and small business owners heard directly from GSA representatives as well.

Small business owners also heard from representatives from the

Small Business Administration and the Procurement Technical Assistance Center. The purpose of the conference, and those that will

be hosted in the future, is to explain and simplify the process of

doing business with the Federal Government. Many of our small

businesses could benefit tremendously by gaining access to the government procurement process. The problem is, they either perceive

that the process is too complicated or they’ve experienced the process as costly and burdensome.

The Small Business Paperwork Relief Act required the task force

set up by the act to address two specific provisions in their second

final report that was released last month. One provision asked for

recommendations on how to make it easier for small businesses to

get information electronically from the Federal Government. The

other provision asked for a recommended plan for an interactive

government-wide internet program that would help small businesses understand what information they are required to submit to

the government and make it easier for businesses to submit that

information.

These provisions were included in the act because the government spends taxpayer dollars to collect information, and much of

that information can only be beneficial if it’s made available and

accessible. The task force includes in its report comments from

small business representatives. One comment made by a representative from the National Federation of Independent Businesses

says, ‘‘in some cases it costs a small business owner more money

to find out if it had to comply than actually spent complying.’’

I’m a little disappointed with the task force report. The recommendation for a government-wide interactive program is the

Business Gateway Program, but the only deadline that’s been set

is for phase one of the project that involves linking the user to

other agency Web sites. This phase is not set for completion until

September. Phases two and three of the program, when the Business Gateway will actually become a singular, separate program,

has no deadlines or target dates for implementation.

I look forward to hearing from all of our witnesses today. I particularly look forward to hearing from Dr. Graham and his recommendations on what Congress and the administration can do to

20

make it easier for small business owners and the Federal agencies

that serve them to make the best use of technology.

Once again, I thank you, Chairman Ose and Chairman Schrock.

I look forward to our witnesses’ testimony.

Mr. OSE. I thank the gentleman. I’m pleased to recognize the

gentleman from Maryland for the purpose of an opening statement.

Mr. BARTLETT. Thank you very much. It was about the third

week of May that America finished paying her taxes. But, it was

not until just a few days ago that any wage earner in America

earned any money that they could keep for their needs. Because

from about the third week in May until the sixth or seventh of

July, every American worked full time to pay for the most regressive tax we have, a tax that the poorest of the poor pay, they get

no exemption from it, no deduction from that tax. This is unfunded

Federal mandates.

What we’re talking about today is a part of that deplorable picture that occupied nearly 2 months of the time of all working

Americans. The average American now works about 52 percent of

his or her time to support government. I submit that’s too close to

that 100 percent of taxation where clearly we’ll collect no taxes.

Obviously you collect no taxes if the tax rate is zero. You’ll also collect no taxes if the tax rate is 100 percent, because nobody will

work.

So, somewhere between that zero and 100 percent is that magic

number where we will not depress the economy, but where we will

collect the most taxes. I think that taking 52 percent of the working time of Americans is far too much. What we’re addressing

today is a part of that. In a former life, I was a small business person, so I’m very interested that we reduce the burdens on small

business.

Thank you for coming today.

Mr. OSE. I thank the gentleman.

As you all may realize, our normal practice here in Government

Reform is to swear in all of our witnesses. It is not judgmental, it’s

just our practice. So, if you would all please rise. The people who

might help you also need to rise.

[Witnesses sworn.]

Mr. OSE. Let the record show that the witnesses all answered in

the affirmative.

Our first witness on the first panel is someone with whom we

have met before and has appeared here regularly. That would be

Dr. John Graham, who is the Administrator of the Office of Information and Regulatory Affairs in the Office of Management and

Budget. Sir, we have received your testimony, it has been made

part of the written record. It is a pleasure to have you here again,

and you’re recognized for 5 minutes.

21

STATEMENTS OF JOHN D. GRAHAM, ADMINISTRATOR, OFFICE

OF INFORMATION AND REGULATORY AFFAIRS, OFFICE OF

MANAGEMENT AND BUDGET; JESUS H. DELGADO-JENKINS,

ACTING ASSISTANT SECRETARY FOR MANAGEMENT AND

BUDGET, DEPARTMENT OF THE TREASURY; AND FELIPE

MENDOZA, ASSOCIATE ADMINISTRATOR, OFFICE OF SMALL

BUSINESS UTILIZATION, GENERAL SERVICES ADMINISTRATION

Mr. GRAHAM. Thank you very much, Mr. Chairman.

My understanding is this may be one of our last opportunities to

chat with you on the subject of paperwork reduction, though I am

aware we may have additional ones. But, it could be the last one,

so we thought at OIRA we would chat a little bit about your accomplishments as Chair of this subcommittee. In addition to some

thank yous, we have to engage in a little bit of embarrassment, of

course, and that is remembering you as the champion of paperwork

reduction. But, that seemed more straightforward, so we looked for

a more interesting analogy. We’ve decided that it’s in the movie,

The Last Samurai.

Mr. OSE. Dr. Graham, you’d better be careful here. [Laughter.]

Mr. GRAHAM. If you haven’t seen The Last Samurai, we urge you

to do so. But, we want to reassure you that there are a few flaws

in our analogy. One of them is that it is paperwork and not human

beings that these swords are addressed to in the eyes of Chairman

Ose. And, second of all, that you are not literally the last samurai.

There is another one working behind you to carry forward the banner, and I’m happy Chairman Schrock is here today.

So, thank you very much, Chairman Ose, if this proves to be the

last opportunity I have to thank you for your leadership on the

subject of paperwork reduction.

You have my written testimony. I just want to make a few brief

comments on the subject of the Business Gateway. I was pleased

Mr. Tierney introduced that conversation in his opening remarks.

I have a few slides I’d like to put up for people to get a feel for

what progress we’re making on the Business Gateway, but also

quite candidly the substantial challenges we face and a lot of the

work that we still have to do on this important project.

I think it was Lauren, the clerk, who was going to help me with

these slides, and if she could go ahead and put the first one up.

The first one is a concept slide, what is the Business Gateway all

about. The basic idea is, a business person would have one electronic place they could go to for information about forms, compliance, other types of information from government that are helpful

or necessary in nurturing or developing a small business. That information, that idea used to be a concept. Starting I believe in May

of this year, it has become a partial reality in the form of Business.gov. And, that’s the point of the first handout or slide you

have available to you.

Turning to the second one, this is literally for those of you who

haven’t hopped on the computer already and done your Business.gov. This is actually the initial screen shot of Business.gov,

with the eight different categories of information that you could access: business development, financial assistance, taxes, laws and

regulations, international trade, workplace issues, buying and sellVerDate 11-MAY-2000 11:19 Apr 04, 2005 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 D:\DOCS\98121.TXT HGOVREF1 PsN: HGOVREF1
22

ing and forms. Of course, the buying and selling of forms focuses

on the procurement aspects of information for businesses.

Turning to the third of the handouts, this is the so-called forms

catalog of Business.gov, which is the electronic compilation of all

the various forms from Federal agencies, organized by form number, by agency and alphabetized from A to Z by the initial letter

in each form title. I’m still needling my staff on how it is that they

think the alphabetized listing by the title of the form is necessarily

going to be helpful, but they have some interesting arguments in

favor of that, which if we have time we can talk more about.

One of the important things about this handout is that, notice,

you can actually cross-link this information with a topic about

forms, whether it be coal mining, surface mining, whatever your

example is, and cross-link that with this information to get more

specific information relevant to you as a particular small business.

The fourth handout refers to form number. If you have a colleague in your business sector who happens to have a copy of the

form and can refer to the form number, you can just type in the

form number and then it will create access for you to have that

particular form.

On No. 5, it refers to all the various agencies. I would like to testify to you today that all Federal agencies are now operational as

part of Business.gov, but I can’t do that. I think it’s only, 20 plus

agencies that are now in. We’re working to get as many as we can

added to that list and we have the Internal Revenue Service scheduled to be in completely by the end of this summer.

The final one is the forms by the alphabet. You know the title

of the form, but you don’t know the number, just the title of the

form will get you through this to the particular form you’re interested in.

In conclusion, the good news is we’re making progress. The candid news is we have a long way to go. The challenge is one, if businesses actually submit information in this format, how do we protect the privacy interests of small businesses in cases where some

agencies are entitled to access but other agencies are not. We need

to design the submission software to allow that protection to occur.

Two, we need some automatic updating mechanism. If an agency

updates a form, based upon an OMB approval, we need an automatic update on Business.gov. Problem: each of the agencies is

using different software. We need to have some sort of consolidation or at least integration of software to make this happen.

Third, this Business.gov currently has information about forms.

But, how about recordkeeping requirements and equipment and investment requirements? There are links here to compliance assistance but we don’t want to send a signal to the small businesses

that all you have to do is fill out this form and you’re done because

you may also have recordkeeping requirements. You may have to

install and maintain equipment. We have a lot more additional information that has to be made available.

Finally, perhaps most importantly, we need to use this tool as a

way to achieve more consolidation of forms in the pilot projects on

coal mining and trucking. They are literally working on an element

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by element basis to establish this. I’m sorry to be a minute over

time, but I wanted to thank you all for joining us today and giving

me an opportunity to say a few words about a modest step in the

right direction called Business Gateway.

[The prepared statement of Mr. Graham follows:]

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Mr. OSE. Thank you, Dr. Graham.

Our next witness is Acting Assistant Secretary for Management

and Budget at the Department of the Treasury, Mr. Jesus DelgadoJenkins. Sir, your statement has been entered into the record. You

are recognized for 5 minutes to summarize.

Mr. DELGADO-JENKINS. Thank you, Mr. Chairman. Chairman

Ose and Chairman Schrock, members of the subcommittees, thank

you for the opportunity to testify on the Department of the Treasury’s implementation of the Small Business Paperwork Relief Act

of 2002. It is my pleasure to be here today and I am honored to

have been asked to testify.

As Acting Assistant Secretary, I report to the Deputy Secretary

and I am responsible for managing the Department’s budget, emergency preparedness, Treasury headquarters operations, human resources, financial management and various other management

functions for the Department. Before beginning my service to the

Department, I worked for a number of years in the private sector.

Prior to my Federal service, I was a managing director and entrepreneur in a small business. I fully appreciate the challenges small

businesses face every day in complying with the Federal, State and

local regulatory requirements. My experience in business has demonstrated to me on many occasions that time is money. Doing business with the Federal Government should not waste precious resources of either the Government or small businesses. If our customers cannot readily find the information they need to comply

with the laws, their government has not served them well.

The Treasury Department works to impose the least amount of

burden necessary for small business owners to meet their obligations to the government, whether they are tax obligations or other

regulatory requirements. Secretary Snow has referred to small

businesses as the backbone and engine of our economy. I could not

agree more with that statement.

From a departmental standpoint, IRS actions represent the vast

majority of enforcement actions taken that involve small entities or

small businesses, by the IRS as well as the Tobacco, Tax and Trade

Bureau, referred to as TTB. These two account for most of the penalties assessed against small businesses by the Department of the

Treasury and it is captured in the reports that we submitted to you

in January and March of this year.

Requirements of the act. As requested in your invitation to testify before the subcommittees, I would like to briefly address our

compliance and implementation of the Small Business Paperwork

Relief Act. First, establishment of an agency point of contact. The

Treasury Department’s single contact is posted as required on the

OMB Web site. The Department’s page on the OMB Web site also

includes an IRS contact to facilitate small businesses finding the

resources they need with respect to fulfilling their tax requirements.

The Department believes that this additional resource helps taxpayers find what they need more quickly. If a taxpayer contacts the

Treasury single point of contact, this office is also able to properly

refer the taxpayer to the appropriate IRS office or other office with

the Treasury Department that best meets his or her needs.

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Regarding compliance assistance resources, resources to specifically help small businesses understand their obligations and more

easily comply with the requirements are also posted on the internet, including information on the Department’s efforts to reach out

to small businesses which want to do business with the Treasury

Department.

As reported to the committee by IRS Commissioner Everson in

January 2004, the IRS abated over 1.7 million of the 15 million assessments a year, or about $1.8 billion of the total $5.5 billion in

penalties assessed against small businesses. As I examined these

statistics in preparation for this hearing, I was struck by the large

portion of overall penalty assessments attributed to small businesses. Fifteen of the 23 million total assessments were all for

small business. For this reason, I asked for additional data to help

me understand the story behind these numbers.

In short, the numbers reflect the fact that small businesses account for 33 percent of all taxpayers. But, they make up for 66 percent of the filing transactions within the IRS. As a result, every

time one of these transactions is completed there is an opportunity

for the small business to make a mistake, increasing the potential

for small businesses to be exposed to a penalty for not filing, for

filing late, or for not paying on time. These facts help explain the

number of penalties assessed against small businesses.

The IRS Commissioner testified in April of this year regarding

activities in the IRS Office of Taxpayer Burden Reduction and its

aggressive implementation of the burden reduction initiatives to

significantly reduce the hours a small business needs in order to

comply with our tax laws. You have heard about the many electronic service initiatives that take paper out of the process, and

ease both information reporting and the payment of taxes. While

the IRS will continue to progress and make improvements, I believe they now have a number of initiatives which are reducing the

burden and hopefully will make life easier for small business taxpayers. For example, the IRS waives the entire Federal tax deposit

penalty charge on the first tax period following a change in deposit

requirements. Taxpayers also receive notification of the FTT penalty waiver via an IRS notice. Along with this, the IRS also made

an administrative decision to abate the entire penalty for the first

quarter following a change in an employer’s deposit requirement.

Regarding the Tax and Trade Bureau of Alcohol and Tobacco,

which is the newest agency in the Department of the Treasury, we

also enforce and administer the laws governing the production and

distribution of alcohol and tobacco products. TTB’s revenue collection program uses analysis to target non-compliant industry members and establishes a presence with the industries to encourage

voluntary compliance, which is critical to collecting over $15 billion

in tax revenues.

TTB has compliance assistance resource centers established to

assist small business in complying with the statutes and regulations that TTB enforces. It also offers guidance by telephone, mail

and e-mail to small business taxpayers. The TTB National Revenue

Center responds to approximately 80,000 phone calls a year. TTB

also maintains an automated late return reporting system that notifies taxpayers of late filed return or insufficient payment, helping

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taxpayers to resolve problems early to avoid additional penalties

and interest.

As reported in the Treasury Report to Congress in March 2004,

of the 16,289 penalties assessed by TTB, all of them were against

small businesses. According to TTB, the high percentage of enforcement actions involving small businesses is due to the fact that the

vast majority of TTB taxpayers are small entities.

Mr. OSE. Mr. Delgado-Jenkins, you are over your time here. I’m

going to give you 30 seconds to wrap up.

Mr. DELGADO-JENKINS. Thank you.

In conclusion, I believe that the Department continues to demonstrate progress in balancing compliance and service with burden

reduction on small businesses. As the Department’s largest interface with small businesses, the Internal Revenue Service is doing

great work on a number of fronts to reach out with information and

assistance to small businesses to help them navigate the complex

requirements of the tax code.

Thank you, sir.

[The prepared statement of Mr. Delgado-Jenkins follows:]

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Mr. OSE. I thank the gentleman.

Our third witness on the first panel I believe joins us for the first

time. That would be Mr. Felipe Mendoza, who is the Associate Administrator for the Office of Small Business Utilization at the U.S.

General Services Administration. Sir, welcome. We’ve received your

testimony, it’s been made part of the record. You are recognized for

5 minutes to summarize.

Mr. MENDOZA. Good afternoon, Chairman Ose and Chairman

Schrock.

I’d like to thank you and the other members here for inviting me

to appear before you to discuss GSA’s implementation of the Small

Business Paperwork Relief Act. As you stated, my name is Felipe

Mendoza, I’m the Associate Administrator for the Office of Small

Business at GSA. Accompanying me today are several GSA associates sitting right behind me.

Before addressing the act, I would like to share some information

with you regarding the positive impact GSA is having in promoting

Federal Government contracting opportunities within the small

business community. GSA’s mission is to help Federal agencies to

better serve the public by offering, at best value, superior workplaces, expert solutions, acquisition services and management policies. To effectively fulfill this mission, the Office of Small Business

Utilization frequently conducts training within the agency to keep

contract staff apprised of recent changes in procurement policies,

procedures and regulations.

In order to reach as many small businesses as possible, and provide small businesses information on how best to navigate the Federal procurement process, GSA conducts various outreach activities. During this fiscal year, we have targeted Native American/

Alaskan Native-owned, service disabled veteran, of which I am a

member, small businesses. We have also joined Members of Congress in hosting small business events around the country. GSA

constantly seeks ways to make doing business with the Federal

Government easier for Federal businesses. GSA recently launched

‘‘eOffer,’’ a tool to submit contract offers and contract modification

requests to Federal supply schedules on-line. Offerors interested in

getting on the information technology schedule now have an opportunity to submit their offer electronically. This significantly reduces

the paperwork burden. Offerors are guided through each step of

the solicitation. GSA developed the program and is currently

adapting the program to process modifications electronically as

well. We expect to reduce the cycle time for awarding contracts

with the help of this new program. The program will be rolled out

to other centers in the Office of Commercial Acquisition within the

year.

In regard to the Small Business Paperwork Relief Act, the committee’s invitation to testify requested that we address specific topics or issues. One was the implementation of the act, compliance

assistance resources, regulatory enforcement report and single

point of contact. Specifically in regard to the submission of regulatory enforcement reports, this act imposes a duty upon Federal

agencies to report to Congress and to the Small Business and Agriculture Regulatory Enforcement Ombudsman those regulatory enforcement actions in which a civil penalty is assessed. Further,

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Federal agencies must report the number of actions in which such

penalties are assessed against small businesses. The act states that

the report should include a definition of enforcement actions as determined by the reporting agency.

GSA did not submit an initial report because we did not initiate

enforcement actions on which civil penalties are assessed. There

are no enforcement actions to report. For the December 31, 2004

reporting period, as required by the act, GSA will submit a report

that so states. The core missions of our agency are procurement

and property management. Under our enabling legislation, the

Federal Property and Administrative Services Act of 1949, GSA

supplies executive agencies with personal property and non-personal services and maintains and operates government-owned and

leased buildings. Our regulatory expertise involves guidance to

branch agencies regarding procurement regulations, the GSA acquisition manual and property and travel. Pursuant to discussions

with the Office of Management and Budget, and the subcommittee,

we have submitted a list of compliance assistance resources to

OMB. A more extensive list of resources will be submitted by the

end of September of this year. While the GSA single point of contact listed is currently an associate with the OSBU, the Agency’s

plan of action is to transfer this function to the staff person within

the GSA’s Chief Information Office. This should be accomplished by

September 30, 2004. Additionally, not later than October 1, 2004,

GSA will have a dedicated toll free telephone number available to

the small business community for assistance with the act inquiries.

The staff person delegated these responsibilities will be knowledgeable of the act and will respond to small business inquiries. As required by the statute, GSA participated in the task force that studied the feasibility of streamlining collection of information requirements to small businesses. GSA recognizes that the purpose of the

Small Business Paperwork Relief Act is to reduce the challenges

faced by small businesses in complying with the government information collection requirements. Where applicable, GSA intends to

continue to do its part in addressing this issue. This concludes my

testimony. Again, I appreciate having the opportunity to appear before you today, and I will be pleased to answer any questions you

might have. Thank you.

[The prepared statement of Mr. Mendoza follows:]

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Mr. OSE. I thank the gentleman.

I want to welcome the ranking member from the Small Business

Committee. I do appreciate her willingness to attend, and we will

enter your statement for the record at the appropriate spot.

Ms. VELAZQUEZ. Thank you, Mr. Chairman. I would like to ask

unanimous consent.

Mr. OSE. Without objection.

The way this works is, we’ll now go to a round of questions. Each

Member will be given 5 minutes for questions. If Members after the

first round have determined they need additional time, we’ll have

a second round of questions. I’m going to go first.

Dr. Graham, one of the things we’ve talked about in the past has

been the threshold number of employees over which reports are required. I believe in your testimony you cited companies with fewer

than 25 employees. I think the Treasury used a threshold of $10

million in assets or less. I’m trying to determine whether or not

any consideration has been given to raising that fewer than 25 employees threshold for reporting purposes on certain items?

Mr. GRAHAM. I don’t have any concrete proposal in that area, but

I’m happy to look into it if you’d like me to.

Mr. OSE. I know we’ve talked about it in the past, and I’ve never

been able to quantify the impact of raising from, say, a threshold

of fewer than 25 employees for certain reporting periods to say,

fewer than 35 employees or fewer than 50. Obviously you don’t

want to go to fewer than 5,000, because then you’d get hardly anything. But, I would be very interested in the paperwork impact

from your perspective of raising that threshold.

Mr. GRAHAM. I definitely think it’s worth looking at.

Mr. OSE. Mr. Delgado-Jenkins, Treasury has a standard, I think

in your testimony it talked about $10 million in assets or fewer.

Mr. DELGADO-JENKINS. That’s correct, yes, sir.

Mr. OSE. Why do you have a $10 million asset threshold for certain reporting requirements, or more appropriately, why does your

threshold differ from this fewer than 25 employees threshold? Why

do we have different thresholds across the board here?

Mr. DELGADO-JENKINS. My belief is that’s probably driven by the

IRS’ enforcement mechanisms. I would have to rely on Commissioner Everson to answer that. But, I cannot synch up the two differences. I think they’re driven by the agency requirements to meet

what their needs are.

Mr. OSE. Do you have any information that you can provide us

relative to the number of employee hours that would be affected

positively by raising the threshold from, say, fewer than 25 to

fewer than 35?

Mr. DELGADO-JENKINS. I don’t have that here, but I’m sure we

can provide those numbers.

Mr. OSE. We’ll put that to you in writing for that purpose.

Mr. DELGADO-JENKINS. Yes, sir.

Mr. OSE. Now, I went through each of your testimonies, and, Dr.

Graham, I find yours very informative. One of the things I wanted

to dwell on was these task force meetings. I wasn’t clear in your

testimony whether the task force meetings that were required by

statute, did you delegate the convening of that to the SBA Office

of Advocacy?

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Mr. GRAHAM. Delegate the convening?

Mr. OSE. Yes.

Mr. GRAHAM. They certainly were host, I believe, to some of the

meetings. But, I remember myself doing the kickoff meeting for

task force report one. So, we were certainly involved heavily

through the whole process.

Mr. OSE. Could we get a copy of the attendance roster for that?

Mr. GRAHAM. Sure.

Mr. OSE. I would appreciate that. As far as task force meeting

No. 2, the second task force report number, I would appreciate having the same information, accordingly.

Mr. GRAHAM. OK.

Mr. OSE. Now, the gateway initiative here, you have some things

here that I find interesting. I want to applaud you for this. While

I haven’t been to the actual Web site, this looks very streamlined

in its implementation. I’m curious, there are some agencies that

you indicated you had not received either the link from or the participation of in setting this up yet?

Mr. GRAHAM. Yes, we don’t have all their forms yet in the form

catalog.

Mr. OSE. Is that a function of their having not sent it to you, or

it hasn’t been scanned in and put into the Web site or what?

Mr. GRAHAM. I think it’s a little bit of both. Quantitatively, I

don’t know how much is which. But, I think there’s probably some

in our court, and I think there are a lot of agencies that it’s still

in their court.

Mr. OSE. Would it help you if the committee were to send you

a letter asking you for the agencies or departments that have not

given you that information?

Mr. GRAHAM. That would be fine, sir.

Mr. OSE. OK. That way we can play good cop, bad cop.

Mr. GRAHAM. Absolutely.

Mr. OSE. OK. Now, on page five of your testimony you talked

about information collection requirements using the internet. The

particular one that I found most interesting, you’ve got a bullet

point here, harmonizing industry specific information collection requirements to collect information once and use it many times,

thereby reducing the overall number of forms to be completed. So,

I presume you’re talking about information that would be useful

across various agencies.

Mr. GRAHAM. Or within a single agency on the subject you’re referring to.

Mr. OSE. Give us an example of how that would work, please.

Mr. GRAHAM. Well, I’m not sure exactly which part you’re referring to. But, one concrete example that we’ve discussed at previous

hearings is, if you are a submitter of information, for example, to

the Environmental Protection Agency on the toxic release inventory, and you have zero emissions in 1 year, and you come to the

next year and you’d like to report that you have no significant difference, there should be a streamlined way to make that reporting.

We currently have proposals out, we’re taking comments to make

that a more streamlined reporting exercise.

Mr. OSE. We’re talking about a box on the form that would say,

no change from last year?

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Mr. GRAHAM. That’s one of the kinds of options we’re talking

about.

Mr. OSE. Is one of the options, or does one of the options that

you’re considering allow for the use of that information by multiple

agencies or departments, so that, if I turn it in in one place, I don’t

have to turn it in to 100 different places?

Mr. GRAHAM. Yes. In fact, the two pilot groups that I mentioned,

one is working in the mining sector, and one’s working in the

trucking sector. They are literally going through, for selected agencies, all of the forms where they ask for information from mining

companies and from trucking companies and looking at each of the

data elements on each of the forms identifying where the common

data elements are and trying to determine what the opportunity for

consolidation is.

The advantage of doing that through Business Gateway, as opposed to doing it through each of those notebooks, is you can have

search engines that can go into the data elements and pull those

out for you, rather than having to manually go through each agency’s notebook of collections. So, we’re hopeful that Business Gateway is actually going to be a big plus, and the effort to identify

where these duplicative and common data elements are and how

they can be consolidated.

Mr. OSE. So you’ll be able to data mine submittals to one agency,

one agency will be able to date mine submittals to another agency

kind of deal?

Mr. GRAHAM. You will have this one place where you can submit

your forms and hopefully they will be designed in such a way that

information serves multiple agencies’ needs. You don’t have to separately fill that out for different agencies.

Mr. OSE. The gentleman from Massachusetts.

Mr. TIERNEY. Thank you, Mr. Chairman.

Dr. Graham, while I have you here, since you may or may not

be visiting us again soon, I think you know I’ve had some concerns

about OIRA’s attempts to influence Federal agencies’ rulemaking

decisions. In the past, I have expressed that. I think obviously,

while we can agree that Congress delegates the authority to issue

rules to regulatory agencies, such as the EPA, but not necessarily

to the White House, if we consider EPA’s ongoing rulemaking

that’s supposed to regulate emissions of toxic mercury from power

plants, there’s extensive public concern in my State and I think

elsewhere, even an outrage in some cases over the direction in

which this rulemaking is going. My State of Massachusetts obviously has strong controls of mercury emissions, but we feel we need

a national rule to stop the mercury that’s blown into Massachusetts

from other States.

I would be interested in OIRA’s role in the next big decision that

EPA is trying to make on this mercury rule. As you know, EPA

failed to even analyze any mercury control options other than the

ones that the administration proposed. In fact, EPA refused to do

the analysis recommended by its own public advisory group on this

rule, which included recommendations from the States, industry

and environmental advocates. Responding to public criticism on

this, Administrator Leavitt promised that the EPA would conduct

more analysis, but that was back in March. Right through today,

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we have not heard anything being done on this analysis. It seems

that EPA is refusing to answer congressional inquiries about its

schedule for doing additional analysis.

EPA Assistant Administrator Jeffrey Holmstead has repeatedly

refused to analyze the range of options recommended by the advisory group, but, in one statement, he indicated that he had consulted on this with both you and Mr. Connaughton who is the

chairman of the Council on Environmental Quality. So, my question to you is, have you been involved in the EPA’s consideration

of what additional analysis to conduct to support a decision on the

mercury rule?

Mr. GRAHAM. Yes, sir.

Mr. TIERNEY. What has been your role?

Mr. GRAHAM. We reviewed the proposed rule, prior to its release

for public comment.

Mr. TIERNEY. Have you been giving EPA advice on matters of

legal interpretation of their statutory authorities?

Mr. GRAHAM. We may have been. I don’t recall.

Mr. TIERNEY. You don’t recall whether you gave——

Mr. GRAHAM. I don’t remember. It wouldn’t surprise me if our

General Counsel’s office was involved in providing advice.

Mr. TIERNEY. Would you be good enough to provide the committee with a more direct answer on that, as to whether or not you

were involved in doing that?

Mr. GRAHAM. Let me see what I can do on that.

Mr. TIERNEY. Is that a yes?

Mr. GRAHAM. I’ll see—the best I can do.

Mr. TIERNEY. Well, if you have it, will you present it to the committee?

Mr. GRAHAM. Absolutely.

Mr. TIERNEY. OK. Are you attempting to tell the EPA what types

of control technology are or are not commercially available?

Mr. GRAHAM. I do recall that in the effort that’s being made with

the proposed rule there are two basic approaches to reducing mercury, one that would require technology based requirements at

each coal-fired power plant, and one that would provide a national

cap on the overall amount of mercury emissions. We favor this latter approach because it will reduce emissions by 70 percent and do

so at less cost than a technology based approach, which is the alternative that was analyzed in the proposed rule.

Mr. TIERNEY. So, would it be your testimony that you’re saying

you are constraining your opinions on EPA on this strictly to the

policy and the cost-benefit analysis and not broader than that?

Mr. GRAHAM. We evaluate the technologies for cost and for effectiveness. We evaluate the material that EPA presents to us. We

evaluate it, make comments and suggestions. They take some of

them. They don’t take other ones.

Mr. TIERNEY. But, you constrain your recommendations to them

strictly on a cost-benefit analysis and no other policy terms?

Mr. GRAHAM. Actually, the principles of the executive order that

govern our activities, they include cost-benefit, but they include a

variety of other principles as well.

Mr. TIERNEY. What would be your expertise in matters outside

of the economic analysis, the cost-benefit?

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Mr. GRAHAM. Our staff has a broad range of expertise in engineering, in science, in toxicology, epidemiology, as well as economics, statistics and so forth.

Mr. TIERNEY. You’re telling us that you think it’s OIRA’s responsibility to give that kind of advice, or advice touching on those matters, to the EPA in this matter, instead of having EPA rely on its

expertise in this area?

Mr. GRAHAM. It prepares the initial draft. The EPA scientists

have the pen. We then make comments and suggestions, and, if we

have a disagreement, we discuss that out and proceed as appropriate.

Mr. TIERNEY. Does OIRA support or oppose conducting the analyses that were recommended by EPA’s advisory group?

Mr. GRAHAM. I am not sure which recommendations you’re referring to, sir.

Mr. TIERNEY. Any of them.

Mr. GRAHAM. Pardon?

Mr. TIERNEY. They made a range of recommendations. Do you

support analyzing those recommendations or not?

Mr. GRAHAM. I don’t know. I haven’t looked at them.

Mr. TIERNEY. You haven’t taken a look at them in all this time?

Mr. GRAHAM. No, I haven’t seen them.

Mr. TIERNEY. My understanding is that your main role is in just

encouraging them to assess the potential costs and benefits of the

rule. I would think that you would make that assessment on all of

the items that advisory group be reviewed.

Mr. GRAHAM. Yes, our role at OMB is not to review the work of

the advisory committee. Our role is to review the work of EPA. It

developed two proposals to us, one a technology-based program, one

a national cap and trade program, and those are the two policies

that we evaluated.

Mr. TIERNEY. Have you checked to determine whether or not

they have in fact analyzed all of the recommendations that were

made to them by the advisory group?

Mr. GRAHAM. No, sir.

Mr. TIERNEY. Well, I’d just be concerned if I find that OIRA is

overstepping what I think is OIRA’s bounds and getting into the

EPA policy considerations on this. I think the Clean Air Act is pretty precise on what needs to be done. I have a concern that this was

not a political decision the White House should be involved in, but

one where the EPA had certain responsibilities under the Clean

Air Act. I would like to think that’s what EPA is following.

I would also appreciate it if you would followup with the information that you said you’d provide.

Mr. GRAHAM. Certainly. And we’re very proud of the 70 percent

reduction in mercury emissions, the first time the coal industry will

be regulated for mercury emissions.

Mr. TIERNEY. We can be prouder if States like Massachusetts

didn’t have it blowing in from other places where it wasn’t regulated enough.

Mr. OSE. All right, here’s our situation. We have two votes on the

Floor, one a 15 and one a 5. After conversing with Mr. Schrock,

what we’re going to do is we’re going to recognize Ms. Velazquez

for the purpose of asking one question, then we’re going to recess,

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and recessing with great respect, and I apologize for doing this, because otherwise you’re going to be here real late. We’re going to go

ahead and dismiss this panel. We will submit our questions to you

in writing. Then, when we come back, we will have our second

panel.

Gentlemen, I’m sorry, you came down here, you prepared, I know

you’re all ready to give us what-for. But, circumstances moved

against us.

Ms. Velazquez. Thank you, Mr. Chairman.

Dr. Graham, I have to tell you, I’m really quite disappointed in

the work that you have done so far since we passed the Small Business Paperwork Relief Act. You come here today, you present a report, you provide to us a report. Two years later after we passed

this law, you say that you have a long way to go. Just answering

questions from the chairman, you say that you have delegated, basically, your responsibility to SBA and then to the Office of Advocacy to convene meetings. What message are we sending to small

businesses which are suffering so much?

The Federal Register, that is the publication that lists all proposed and enacted regulations by agency, says that it increased to

75,000 in 2002, more than 1,000 pages above both the previous

record set in 2000. And, it represents an annual regulatory burden

nearly of $7,000 per employee, almost 60 percent higher than that

of firms with 500 employees or more. This is all you have to

present to us?

Mr. GRAHAM. Well, I’m pleased to report that we have achieved

in this administration a sharp reduction in the growth of the Federal regulatory burden on the private sector and especially of small

businesses, quantified in my testimony on the order of 70 percent,

compared to the previous administration, and compared to the

Bush 41 administration. It’s a very unusual time for me to be criticized for having too many regulations out there, but we are in fact

making substantial progress.

Ms. VELAZQUEZ. Regarding the Government Accountability Office

study that pointed out that there were a number of good internet

based ideas for regulatory management in using the Federal Government and State and local government, the report recommends

that you meet with agencies to share information about best practices for putting information systems in place. It also said that

OIRA should set up a system to discuss and share good ideas between agencies regularly. Did you ever do anything to implement

those recommendations?

Mr. GRAHAM. In fact, the task force that was mandated by the

law we’re discussing had representation from a number of those

agencies. They discussed alternative ways of implementing electronic approaches to burden reduction for small businesses and the

Business Gateway initiative that I discussed in my oral testimony

is the outcome of that activity.

Ms. VELAZQUEZ. Your participation with the task force?

Mr. GRAHAM. Absolutely. I’m co-chair of the task force. I’m sure

the agencies will tell you they had just a few e-mails and phone

calls from OMB during the last 2 years on this task force——

Ms. VELAZQUEZ. How many meetings?

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Mr. GRAHAM [continuing]. Almost as many as Chairman Ose’s

staff had with these agencies?

Ms. VELAZQUEZ. How many meetings the task force has conducted, sir?

Mr. GRAHAM. There were, I believe two meetings in person in

each of the first and second years.

Ms. VELAZQUEZ. In 2 years.

Mr. GRAHAM [continuing]. And a variety of conference calls

and——

Ms. VELAZQUEZ. In 2 years? Thank you, Mr. Chairman.

Mr. OSE. The gentleman from Maryland? OK, we’re going to go

ahead and recess. Again, this will be two votes. Gentleman, thank

you. We’ll send our questions in writing. We appreciate your showing up. I apologize for the circumstances. We’re in recess for 25

minutes.

[Recess.]

Mr. OSE. We will reconvene the hearing.

Our second panel is composed of three witnesses. We’re pleased

to be joined today by Mr. Joseph Acker, who is the President of the

Synthetic Organic Chemical Manufacturers Association; Ms. Anita

Drummond, who is the Director of Legal and Regulatory Affairs for

Associated Builders and Contractors, Inc.; and by Mr. John

DiFazio, who is the Assistant General Counsel for Legal, Regulatory and Scientific Affairs, at the Consumer Specialty Products

Association.

As you saw in the first panel, we swear all of our witnesses in.

So, if you would please rise.

[Witnesses sworn.]

Mr. OSE. Let the record show the witnesses answered in the affirmative.

Our first witness in the second panel, as I introduced them, is

Mr. Joseph Acker. He is the president of the Synthetic Organic

Chemical Manufacturers Association. Sir, we’ve received your testimony. It’s been entered into the record. You’re recognized for 5

minutes for summary.

STATEMENTS OF JOSEPH ACKER, PRESIDENT, SYNTHETIC ORGANIC CHEMICAL MANUFACTURERS ASSOCIATION; ANITA

DRUMMOND, DIRECTOR, LEGAL AND REGULATORY AFFAIRS,

ASSOCIATED BUILDERS AND CONTRACTORS, INC.; AND

JOHN DI-FAZIO, ASSISTANT GENERAL COUNSEL, CONSUMER

SPECIALTY PRODUCTS ASSOCIATION

Mr. ACKER. Thank you. Mr. Chairman, members of the committee, I appreciate the invitation to speak with you today regarding

paperwork burdens on small businesses, and in particular the

Small Business Paperwork Relief Act of 2002. I am the President

of the Synthetic Organic Chemical Manufacturers Association, or

SOCMA, a trade association that represents specialty chemical

manufacturers. Before becoming the President of SOCMA, I spent

over 30 years in industry, most recently as the President and CEO

of Danchem Technologies, Inc., in Danville, VA.

Many SOCMA member companies, by virtue of being small businesses, are at an inherent disadvantage. The Federal Government

typically approaches regulations in a one size fits all manner, not

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recognizing the differences between small and large businesses.

Unlike larger companies in the highly regulated chemical industry,

small businesses usually do not have the internal support mechanisms dedicated to regulatory compliance. Employees, especially

those working in environment, safety and health, often wear multiple hats and have fewer resources than their counterparts in larger companies. These conditions make it more expensive and more

difficult to understand and comply with the myriad Federal, State

and local regulations that affect the chemical industry.

In my written testimony, I distinguish between two manufacturing process, batch processing and continuous processing. Batch

processing does not utilize equipment dedicated to a specific product line, while continuous processing does. Batch processors are

flexible and produce chemicals on customer demand. Consequently,

a small batch company’s product lines will fluctuate throughout the

year and may include several hundred different products. Regulatory requirements associated with each product or process, therefore, add significant paperwork burdens to batch manufacturers,

which tend to be smaller companies.

The point that I am trying to emphasize is that the size of the

company versus the number of regulations is not a linear relationship. Consider my former company as an example to illustrate this

point. Danchem Technologies is a single facility specialty batch

manufacturer with approximately 100 employees, only one of whom

is assigned full time to ensuring compliance with environment,

safety and health regulations. This one facility is subject to more

than 150 environmental regulatory conditions. Even more relevant

to today’s hearing is that the company is required to submit more

than 38 reports relating to these regulations each year to Federal,

State and local officials, and up to 100 reports if you include other

regulatory requirements. This is an enormous and an unwieldy

burden, and it is a significant drag on productivity.

I am particularly interested in discussing the concept of a single

agency point of contact. We have had some experiences with the

single contact concept, and I’d like to share some of the positives

and negatives that we have observed. The Environmental Protection Agency serves as an excellent example here. EPA has a small

business ombudsman that serves to facilitate communications between the small business community and EPA. The EPA ombudsman does serve a valuable role. But, as was stated in the task force

report, the single point of contact concept has certain limitations.

Because there are so many small business interests with very diverse characteristics, the ombudsman cannot effectively address

every industry-specific concern. In this era of specialized regulations designed to address very specific problems, that becomes

quite important.

SOCMA has also been involved with the Sector Strategies Division in EPA’s Office of Policy, Economics and Innovation. Through

this program, particular industries have been identified and assigned a staff contact who serves as the Agency’s expert on that

particular industry’s sector of which specialty batch chemical manufacturing is one. This program has been very successful. Through

the sector contact, we are connected to the agency staff who works

on issues impacting our industry. Our contact is able to focus on

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detailed issues and attends many intra-agency meetings, ensuring

that she is kept well informed. Consequently, there is constant

communication between SOCMA and relevant EPA staff.

One of the more frustrating burdens that I encountered during

my time in industry is the numerous instances of overlapping jurisdiction and regulation by various agencies, both within the Federal

Government and between the Federal, State and local authorities.

The task force specifically recommended broadening and improving

partnerships among agencies with similar or overlapping information requirements. These partnerships would play a valuable role

in eliminating overlapping requirements among various agencies

and between the Federal, State and local governments. This improved coordination would reduce the paperwork burden on the

regulated community and promote increased collaboration among

these agencies.

It would be great if EPA’s sector program could be replicated in

other agencies, then the various agency representatives for a particular sector could meet regularly and eliminate regulatory overlap and industry would still have a single point of contact specifically for its sector.

In closing, if regulators can take more time to learn about the

industries they are regulating, and, if they reach out to interested

parties as early as possible, then there will be opportunities to reduce burden and eliminate regulatory overlap. Thank you for your

support and leadership in addressing a critical problem. We look

forward to working with this committee and with any government

official to try to reduce paperwork and other burdens. I’ll be

pleased to answer any questions.

[The prepared statement of Mr. Acker follows:]

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Mr. OSE. I thank the gentleman.

Our next witness is Ms. Anita Drummond, who is the Director

of Legal and Regulatory Affairs for the Associated Builders and

Contractors. Welcome, your statement has been entered into the

record. You are recognized for 5 minutes to summarize.

Ms. DRUMMOND. Thank you, Mr. Chairman. I would like to keep

my comments very straightforward and simple. In this process, I’ve

been working on paperwork on basically this side of the table for

15 years. I’ve seen the agencies really in many ways have good intentions trying to eliminate paperwork burdens.

But, what it comes down to is there’s no comprehensive, strategic

way that the government evaluates paperwork. I think that this

legislation was exactly on point with that intention, and the outcomes have not really reached the point that we would like. I have

two main comments as a result of those reports and their efforts.

One is that a business that’s trying to identify all the laws that

apply to them at a Federal level needs a mechanism to look at the

government as a whole, some type of decision tree. I would believe

that the act is an obvious beginning to that. What classification are

they? How many employees do they have? What are their assets?

What are their annual receipts—which is some legislation is the

trigger—and, go through the series of questions, procurement. That

would help identify what would apply to them.

The next question is how do we answer that question? The burden should really be on the Federal agencies. It’s interesting, we’ve

turned this on its head. We’ve said, businesses, you go out and figure out which laws apply to you. If you look at the bottom line intent of the Regulatory Flexibility Act, it was to identify if there was

a significant impact on a substantial number of small businesses.

If agencies had complied with that act to begin with, they would

have this type of critical information. They would know which sectors it applies to, how large are those industries, what if we change

the size of business that it applies to, how much is it going to cost.

They have not done that. They have found every way possible not

to answer those questions in a transparent manner. I believe that

one of the first things they should do is go back and identify answers to questions such as those.

Then going forward, I think every time a regulatory flexibility

analysis is completed, at the proposed rule stage, they have to put

on the record in their analysis what that impact is based on those

questions. That will drive what kind of policies they make. It will

also drive what kind of compliance assistance fits.

The other outcome of that analysis is that, if the government did

go back and answer these questions, you as policymakers would

have a rational answer to the question you had earlier: why is it

25 employees, why is that the cutoff? Well, many times it’s driven

by statute. You look at the COBRA. Under COBRA, if you have 25

or more employees, you must provide continuous insurance after

their termination or other critical events. There’s new notice provisions that just came out from the Department of Labor. That type

of thing is driven by statute in part and by the agency in part. It’s

a new paperwork requirement. If the Government took this seriously and did an analysis on that basis, you would have better answers to your questions.

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The second part of the outcome of these OMB reports that’s very

disappointing is how to make the information better available. A

very easy answer that the Federal Government has engaged in is,

oh, it’s up on our Web site. Someone’s testimony indicated there is

something like 40 million Government Web sites. That’s astronomical to a business. I absolutely believe they need to seriously consider how businesses get their information. The most simple way

to get information is to use the agency they always go to, which

is their licensing agency. State governments, it depends on the

State, some States you have to get a license, or you at least register with the State. I’m not calling for unfunded mandates. I’m

talking about doing some type of partnership. If we had one central

Web site, one single Web site, where you would have triggered a

decision tree, that’s all you would send them to. I look at the report, and as I said, I’ve been looking at this stuff for 15 years.

I’m overwhelmed by the number of Web sites that keep cropping

up. Well, it’s really Business.gov, no, it’s really e-Regulations. No,

it’s really this. Which one is it? To the everyday business, they

don’t know which one to go to and which one to trust. So, if it was

one central location that was driven by a decision tree, you could

use one Web site, and Business.gov seems a logical one, where you

would get partnerships with State governments, the agencies, and

that’s usually the Secretary of the Commonwealth in Virginia, for

example, that licenses or registers a business and says, here’s your

registration and here’s a Web site to find out what laws you have

to comply with. The second is, they’ve completely ignored media. I

don’t mean just simply TV media. I mean Web site media. There’s

a whole world out there that businesses rely on, and they didn’t

even begin to crack that. That is the conclusion of my comments.

[The prepared statement of Ms. Drummond follows:]

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Mr. OSE. I thank the gentlelady for her comments. We’ll come

back with questions, I’m sure.

Our third witness is Mr. John DiFazio, who is the assistant general counsel for legal, regulatory and scientific affairs at the Consumer Specialty Products Association. Sir, you’re certainly welcome

here. Your written statement has been entered into the record.

You’re recognized for 5 minutes to summarize.

Mr. DIFAZIO. Thank you, and good afternoon. I welcome the opportunity to testify on behalf of the Consumer Specialty Products

Association, now in our 90th year representing formulators, packagers and marketers of household and commercial consumer specialty products, such as cleaning products, disinfectants and

polishes.

About one-third of our 240 member companies are small businesses. I’d like to discuss briefly some of our interactions with EPA

on the toxics release inventory after I present our thoughts on the

report of the Small Business Paperwork Relief Act Task Force,

issued June 28th.

CSPA generally supports the primary recommendations described in the report’s executive summary—specifically, improving

the organization and classification of information, and providing a

single Web point of access for relevant regulatory information on

all Federal forms. Clearly, the 20,000 separate Federal Government home pages and 40 million Federal Government Web pages

as of 4 years ago present a formidable burden for any business to

process and function efficiently or effectively. We certainly agree

with the issues identified by the SBA’s Office of Advocacy earlier

this year and cited in the report.

The report’s vision of a Business Gateway is logical and feasible,

building the infrastructure to provide useful regulatory information

and compliance assistance tools in one place, while eliminating redundant data collection is an ambitious but worthwhile and ultimately achievable task. To allow small businesses to submit information common to multiple forums one time and have it re-used

many times will increase productivity meaningfully.

The report properly notes the greater role that trade associations

can play in assisting with classification of Federal information to

improve accessibility. Along those lines, CSPA strongly supports

the cross agency approach to outreach discussed in the report, as

well as the determination of ways that associations can become viable and trusted collection and dissemination points. Unfortunately,

the report misses the opportunity to facilitate the growth or association membership and thus expedite those processes. Thus, an

addendum to this report addressing the specific topic of promoting

association growth certainly would be appropriate.

Further, the report focuses on only a portion of the problem: how

to get information efficiently from the Federal Government. It fails

to ask the fundamental question, does each Federal agency really

need to collect all the information it does? To that end, we recommend that your committees investigate ways of putting each

Federal regulatory agency on notice to reduce unnecessary paperwork.

EPA’s implementation of the toxics release inventory is a prime

example of unnecessary burden. CSPA has been working to alleviVerDate 11-MAY-2000 11:19 Apr 04, 2005 Jkt 000000 PO 00000 Frm 00085 Fmt 6633 Sfmt 6633 D:\DOCS\98121.TXT HGOVREF1 PsN: HGOVREF1
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ate unnecessary TRI reporting burdens since 1992. Though we

achieved some success with the promulgation of the Form A in

1994, the doubling of the list of TRI chemicals and the subsequent

facility expansion served to nearly double the overall TRI reporting

burden from 4.9 million hours in 1992 to 9.5 million hours in 2000.

Compounding the predicament are the numerous State and local

piggyback requirements, taxes, fees, pollution prevention plans and

the like imposed on Form R submissions, no matter how insubstantial the releases in all or part of 37 States, which neither EPA nor

OMB takes into account when determining the financial impact of

TRI reporting. CSPA has filed comments with both EPA and OMB

on each of the five subsequent TRI information collection requests

and watched as OMB established meaningful terms of clearance

only to have them in large part ignored by EPA and unenforced by

OMB.

Despite 10 public comment periods on the five ICRs in the past

8 years, EPA chose to create two online dialogs over the past 2

years on possible burden reduction scenarios. We are not expecting

a proposed regulation on TRI burden reduction until next year, and

have been advised by EPA staff it will likely be 18 months from

proposal until a final rule is promulgated. Thus, under the present

scenario the regulated community, including the small businesses

that desperately need relief would see no burden reduction until reporting in 2007. In addition, we have no assurances that any burden reduction would be meaningful.

Furthermore, EPA’s current enforcement practice of finding a

violation when a Form A was filed in good faith, although upon further review a Form R should have been submitted, has discouraged

use of the Form A. Utilization of the Form A has decreased in each

of the last 4 years for which data are available. Ending this enforcement practice likely would reverse that trend.

CSPA commends your leadership in tackling these matters that

too often go unrecognized by those with the authority to remedy

them. We support your efforts to remove unnecessary barriers to

improving productivity and growing the economy, while maintaining corporate accountability and data integrity.

Thank you.

[The prepared statement of Mr. DiFazio follows:]

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Mr. OSE. I thank the gentleman for his testimony.

Mr. Schrock, would you like to proceed first?

Mr. SCHROCK. Thank you, Mr. Chairman, and thank you all for

being here, Mr. Acker, Mr. DiFazio, thank you for your first time

visits. And, we’ve seen Anita Drummond several times and are

glad to have her back.

I think two of you said it best when you said 20,000 separate

Federal Government home pages and 40 million Federal Government Web pages. How any business big or small could deal with

any of that is a mystery to me. We’ll be creating acts here one of

these days to reduce those as well, because it’s just absolutely out

of control.

If I had had an opportunity to ask Dr. Graham a question, I was

going to ask him, and I’d like all of you to comment on it, if I put

each of you in a position of responsibility and said, eliminate $50

billion in regulatory compliance costs and 1 billion hours per year

of paperwork, what would you do? That’s a loaded question, I

guess.

Mr. DIFAZIO. Who are you asking? Any of us?

Mr. SCHROCK. All of you.

Mr. DIFAZIO. I really think each agency should take a good hard

look at what they really need as far as data collection. I think they

can cut reporting requirements in half quite easily. Too often

they’re unsure of the congressional direction, so they ask for three

times as much as what they really need to accomplish congressional intent.

Even in the Form A, for example, it only requires 17 reporting

data elements for the report. I looked at it said, you can do this

in nine. So, even the short forms can be reduced in half in our

opinion.

Mr. SCHROCK. It’s amazing, I think you hit the nail on the head.

They interpret the way they want to interpret it. We think we’re

doing one thing and they go out and interpret and say, well, this

is the way we’ve interpreted what you said, and I don’t know how

you come to grips with that. Maybe we don’t speak in plain English

up here. In fact, most times we don’t.

Mr. DIFAZIO. Perhaps the Government Accountability Office

should be let loose maybe a little bit more often to check on that.

Mr. SCHROCK. Yes. Mr. Acker.

Mr. ACKER. Mr. Congressman, until rules are simplified and

redundancies eliminated, there will be no reduction. At the company that I ran, we had one professional, and he spent three to 4

hours every day keeping regulatory paperwork up to date. You

have to go back and you have to eliminate the redundancies in

every agency, and every agency has to work on it.

The problem is that the industry, small businesses are so diverse

that I really believe that the sector approach is essential to attacking this problem. The issues that the chemical industry deals with

are not the same issues that the transportation industry deals

with, they’re not the same issues that the mining industry deals

with. I think you have to, you have to approach this by sectors and

by the individual agencies.

Mr. SCHROCK. As you probably know, I think there’s a move afoot

to try to even regulate more the chemicals industry based on some

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of the things I’ve heard over the weekend. I was watching a TV

show with one of our Congressman, and the last thing they need

to do is that. That just makes a bad problem even worse.

You came from Danville to here?

Mr. ACKER. Yes, Danville. I’ve been in Washington a little over

a year.

Mr. SCHROCK. You have sacrificed greatly to come from Danville

to here. You are to be admired, believe me. Danville’s great.

Mr. ACKER. Well, I found it amusing today when I came, this is

my first opportunity to speak before the subcommittee, and it happened to be on one paperwork reduction. I had to bring 100 copies

of my testimony. [Laughter.]

Mr. SCHROCK. Shot well deserved.

Ms. Drummond.

Ms. DRUMMOND. I would say that, I would not single out any

particular rules as much as the process of doing a full scale analysis, which is what you’ve asked OMB to really do. Because you may

find the duplications, I would reiterate the comments about EPA

and DOT’s overlaps, particularly.

But, even in Department of Labor, there’s a lot of various elements picking up different information. The compliance office is

also doing the same thing as the Solicitor under its responsibility

of Davis Bacon Act and the Service Contracts Act. So there is a lot

of room to consolidate information.

I do want to say one thing about information collection that I

support, and that is the business census that’s done. The business

census, a lot of businesses grumble, why do I have to complete this

information. It’s some of the best information we get about the size

of business by receipts, payroll, employees, that can guide Congress

and agencies about what the makeup of businesses really are.

That’s also true to some extent of the Bureau of Labor Statistics.

So, that’s one piece of information, which as collected, is a burden, but it’s limited.

There’s one other thing on information collection. The way the

system currently works, when there’s a proposed rule, the information request comment period does not coincide with the proposed

rule. OMB goes out separately. As a result, you get very limited

comments. It is a bifurcated system. I’ve never understood why

OMB interpreted it that way. I think it would make a lot more

sense to do information collection analysis at the same time as

you’re doing proposed rule analysis.

Mr. SCHROCK. Thank you. Thank you, Mr. Chairman.

Mr. OSE. I want to touch on a couple of things. Have any of you

gone to the Business Gateway that Dr. Graham was talking about?

Mr. Acker, no. Ms. Drummond?

Ms. DRUMMOND. I’ve gone to it, but I have to say I did it in anticipation of the last meeting that we had with the task group. It

was up at that time, and it was my understanding, that’s my recollection, and we looked at the paperwork. It’s overwhelming. At the

time it was, the paperwork was overwhelming, on how much you

had to go through and sort through and identify what was required

of you.

Mr. OSE. So it’s really not, the bumps or curves have not been

leveled out here in terms of making it flow easily?

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Ms. DRUMMOND. It didn’t at that time, and that would have been

in, before the last report was issued.

Mr. OSE. Like 3 or 4 months?

Ms. DRUMMOND. Right.

Mr. OSE. Mr. DiFazio, have you been on it?

Mr. DIFAZIO. I have not, no.

Mr. OSE. OK. In your everyday dealings, either yourself or your

membership, have you experienced any reductions in paperwork

burden by the Bush administration? What I’m referring to is, I

know that it’s either proposed or it’s already been done, is that the

quarterly reporting for payroll deductions? If you’re aggregated

below $2,500, I think, you don’t have to do it except for on an annual basis. Have you seen any such things of that nature come

through to affect either yourselves or your members? Mr. Acker.

Mr. ACKER. Mr. Chairman, unfortunately very little. But I would

say, in our industry, the EPA and OSHA probably issue more regulations than any other agency. There are numerous rules that

should be revisited. There are rules that have been proposed that

would reduce paperwork significantly, but they have yet to be finalized. That’s the RCRA burden reduction proposal and the hazardous waste generator initiative. Those are two examples of rules

that would significantly reduce paperwork for small businesses

that need to be finalized.

Mr. OSE. Those are pending now?

Mr. ACKER. They are pending now.

Mr. OSE. All right. Ms. Drummond.

Ms. DRUMMOND. I can’t think of any off the top of my head, to

be honest. In fact, for OSHA, I hate beating up on OSHA, because

they’re not always comfortable with it, but right now they have,

what is it, six, seven new proposed rules that we’re dealing with

instead of less rules. The list is long and they’re very busy. Many

of those rules will, in fact, have new paperwork requirements.

Hexavalent chromium, which is driven by the courts, still has

provisions within it for medical monitoring. Silica is expected to

have medical monitoring. Beryllium is supposed to have medical

monitoring. And, these are very paperwork intensive and not necessarily a good connection between the risks that are identified

through the paperwork and that which they are trying to supposedly solve. So, OSHA, I would say is one that we hear a lot

about. And, mostly that’s driven by health standards versus safety

standards.

Mr. OSE. Mr. DiFazio, how about your members?

Mr. DIFAZIO. Nothing as of yet. Earlier this year, Congress

passed the Pesticide Registration Improvement Act. Some of our

members make pesticide products. EPA has not had the opportunity to implement any of those provisions yet. We’re hopeful by

the end of this year perhaps we’ll see some burden reduction in

that area, but nothing as of yet.

Mr. OSE. Mr. Acker, you suggested that, a couple places for improvement in terms of the rulemaking. In fact, you cited two pending rules that need to be finalized. Are there others, in addition to

those, that you would cite?

Mr. ACKER. I’m sure there are, and I would like to get back to

you.

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Mr. OSE. All right. We’ll put a question to you accordingly.

Ms. Drummond, other than OSHA and the six or seven that you

say are pending, are there specific ones that come to mind?

Ms. DRUMMOND. No. To be honest, that’s probably been the most

active, none that are really, there has been a slowdown.

Mr. OSE. In terms of the?

Ms. DRUMMOND. Increased rate.

Mr. OSE. Rate of increase has fallen?

Ms. DRUMMOND. New paperwork. In our industry, you have to

consider that we’re an industry that’s pretty stable in terms of its

operating systems. There’s not such a dynamic change that there

are new paperwork requirements that they think of.

However, the largest portion of things that change tend to be occupational regulations, safety regulations. So it’s the dynamic of

our industry.

Mr. OSE. Mr. DiFazio, anything you want to add?

Mr. DIFAZIO. No.

Mr. OSE. The gentleman from Virginia.

Mr. SCHROCK. Thank you, Mr. Chairman.

Mr. Acker, you cited an interesting problem. I’m glad regulators

are actually doing a good job in visiting facilities that regulations

will affect. But, how do we get these same regulators to visit small

facilities, small business facilities where regulations have a far

more negative impact than on others? How do we get them to do

that?

Mr. ACKER. Congressman, I believe that it has to start with an

awareness from the agencies and then working through trade associations. At Danchem, we actually had the EPA, about 10 people

from the EPA, come and visit the site and learn about batch chemical manufacturing. That was the first time they had ever been in

a small chemical facility. It was a real learning experience for

them, as well as for us. There are a lot of hurdles to get over when

you do this.

My vice president of manufacturing said to me, Joe, I can’t believe you actually invited the EPA to come in to visit. He was astonished. But, it’s something that I think businesses are very willing to do. I think they are more open to it than they have been in

the past. And, I think the agencies have to become more aware

that they have small businesses that they need to pay attention to

as well.

Mr. SCHROCK. Do you think there’s a reluctance on the part of

small business to do what you did, invite people in?

Mr. ACKER. I believe in the past there was. Because——

Mr. SCHROCK. Fear?

Mr. ACKER. Absolutely. Whenever you invited government, whenever a government agency shows up at your door, it’s usually not

good news.

Mr. SCHROCK. It’s not a good day.

Mr. ACKER. But, as I said, I really think that the chemical industry has done a lot of work to move beyond that, and a lot of credit

I give to the EPA and other agencies in being proactive.

Mr. SCHROCK. Good. Ms. Drummond, you mentioned the success

of the Department of Labor’s e-Laws site. Do you know how much

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time or what resources were required to produce it and whether it

would be easy to duplicate in other agencies or government-wide?

Ms. DRUMMOND. I am not naive to believe it would be easy. But,

I do believe it’s their responsibility. The Department of Labor

spent, I would say, a good 12 months trying to find out the common

elements, and that’s not an official number, obviously, I’m not a

representative for them. But, to find the common elements among

all the statutes and regulations. That is an important thing, you

need to know what questions you need to ask. That will make it

very difficult, Federal-wide.

But, I do believe that they should, agencies should be able to

identify what are the triggers for their law to cover a business, and

using different types, I was using an OSHA regulation that covers

the manufacture, exposure of a chemical. But, a business that’s of

a certain size doesn’t have to comply for 3 years after those of a

larger size. I mean, those are the kinds of questions that are nuances that the agency needs to understand, this law doesn’t apply

to you today, but it will in 3 years.

So, that process is time consuming. But, I think, if they had been

doing it right to begin with, they would have this information

available.

Mr. SCHROCK. Clearly, Department of Labor was the first agency

to do this. They were the ground breakers, they were breaking new

ground. But, couldn’t other agencies or government-wide entities

use that as a template from which to create their own, which would

cut the time line down dramatically and benefit everybody?

Ms. DRUMMOND. Absolutely, yes.

Mr. SCHROCK. I wonder why they won’t do that.

Ms. DRUMMOND. Well, agencies tend to be silos. Or, let me say

this, departments tend to be silos. The Department of Labor has

cut across those silos and made all their agencies talk the same

language, at least to an extent. It’s a first step. I would not say

that necessarily happens, say, at the Department of Transportation, where you have, they regulate all types of industries. But,

that does not mean a particular agency, excuse me, industry, is not

regulated by a number of agencies.

So, I would say Department of Transportation would be a next

good goal, because they do have good information on their programs. Both to break it down and find common elements among

them.

Mr. SCHROCK. OK, thank you, Mr. Chairman. I yield back.

Mr. OSE. Ms. Drummond, you talked about a number of members

you said, I think you said 240, of which one-third were smaller. I

don’t remember exactly.

Ms. DRUMMOND. Most construction firms, outside of ABC even,

most construction firms are small. What do we mean by small?

Even less than 20 employees. We’re talking about 85 percent of the

industry.

Mr. OSE. I’m trying to figure out, you heard me ask Dr. Graham

about the threshold of fewer than 25, what the impact would be if

it was fewer than 35 or fewer than 50?

Ms. DRUMMOND. Right.

Mr. OSE. One way to reduce paperwork is to raise the threshold

below which you don’t have to report.

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If 85 percent of your members are 20 or fewer, that’s really not

going to have a big bang in terms of the construction industry.

Ms. DRUMMOND. Right.

Mr. OSE. Mr. Acker, I’m wondering over on your side of things

whether or not that threshold issue would have a huge impact?

Mr. ACKER. That would have a very large impact. It was interest- ing to note that the threshold for GSA was $10 million, for OMB

it was 25 employees. In the chemical industry, a company with revenues of $10 million would probably have 100 employees, or I’m

sorry, would probably have around 50 employees. Danchem was a

$20 million business and we had about 100 employees. It sort of

goes that way.

So, that’s just an example.

Mr. OSE. Mr. DiFazio, how about over in your area?

Mr. DIFAZIO. Yes, unfortunately with EPA, which is a large regulator of our members, a lot of times, statute by statute the thresholds are different. So, a company needs to pick and choose where

on the continuum they are as to exactly which regulations they

need to follow. At TRI it’s 10 employees or more, you’re subject to

reporting.

Mr. OSE. But is that statutory or regulatory?

Mr. DIFAZIO. Statutory.

Mr. OSE. It’s specified in the law?

Mr. DIFAZIO. Yes.

Mr. OSE. Ten or more. OK.

Mr. DIFAZIO. So, not only does each regulatory agency have to

take a look at that, but the Congress also needs to look at the

thresholds for each of the statutes.

Mr. OSE. Mr. Acker, is this the linear relationship, you said, if

I recall correctly that there wasn’t necessarily a linear relationship

between size and reporting requirements?

Mr. ACKER. That’s true, particularly in environmental and safety

regulations. You have to fill out the paperwork, you have to send

in the reports regardless of the size of your business.

Mr. OSE. Give me an example. I want to make sure I understand

your comment about a lack of a linear relationship.

Mr. ACKER. The TSCA reporting, as an example, regardless of

the size of your company, if you have certain chemicals that you’re

using, you have to report that to the EPA. OSHA, as an example,

you have to fill out your form 200 reports for OSHA. The size of

the company is not an issue.

Mr. OSE. Because it’s one or more employees is basically the

threshold?

Mr. ACKER. Yes. That’s correct.

Mr. OSE. You also talked about a regulatory overlap. I presume

that means that information you’ve submitted to one agency is also

requested by a second agency?

Mr. ACKER. That’s correct.

Mr. OSE. Give me an example of that and how we might go about

streamlining that.

Mr. ACKER. My experience has dealt with regulations between

EPA and the DOT. It takes a lot of time for companies just to determine jurisdiction and in some areas you have to submit duplicate reports. I can get you specific examples. I don’t know right off.

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Mr. OSE. All right. Mr. DiFazio, do your members have a similar

situation?

Mr. DIFAZIO. Yes, they do.

Mr. OSE. From a regulatory standpoint, they’re making substantially or at least significantly the same report to one agency as to

the next?

Mr. DIFAZIO. Oftentimes even within a single agency, for example, EPA requires a lot of the same information on TSCA reports

and TRI reporting, for example.

Mr. OSE. What is the impediment to making one report out of

two? It would seem to me that if——

Mr. DIFAZIO. Data entered into completely separate systems.

They can’t talk to each other, so the information is maintained separately by each office within an agency.

Mr. OSE. It’s a piece of paper as opposed to an electronic form?

Mr. DIFAZIO. They’re switching more and more to electronic reporting. But, there are still issues with sharing information.

Mr. OSE. Ms. Drummond, you talked about periodic information

collection budget requirements versus analyses of rules. How do

rules get proposed that are not necessarily aligned with what’s

being asked for in terms of the information collection budget?

Ms. DRUMMOND. What occurs is, when an agency proposes a rule,

they at the same time publish a regulatory flexibility analysis.

They maybe in that rule, they explain there’s going to be an information collection. Once that occurs, it goes to OMB. OMB does a

second notice saying, we have an information collection request,

meaning an agency is asking to collect this information or asking

for a business to collect information from a third party.

In that process, they separate out information collection and that

analysis is often missed in the comment period, because the agency

hasn’t gone through in its own analysis, it hasn’t conferred with

OMB at the early stages about what the real costs are, how many

hours it’s going to take, how much of the cost is going to be associated with it, how many businesses are going to be affected by it.

That information collection request analysis by OMB occurs after

the rule is essentially finalized. It’s a very convoluted process.

Mr. OSE. That seems backward.

Ms. DRUMMOND. It is. It is backward.

Mr. OSE. Is that continuum, is that sort of defined by statute?

Ms. DRUMMOND. When the statute was written for the Paperwork Reduction Act, there was a lot of debate within interagency

about exactly what the time line would be when this information

collection request approval would occur. The information collection

approval is occurring after the rule is finalized. It goes to OMB to

finalize.

But, it seems logical that information collection approval process

could occur at the time the rule is proposed, or at least information

specific to that approval gets published at the same time. So, the

public is not in the position of having to comment, a second time

when OMB puts this notice out, without reference to what might

have been said during the proposed rule stage. OMB comes later

in approving the information.

But, what the criteria is and what OMB puts out should be done.

OMB should do the work sooner, so the proposed comment rule peVerDate 11-MAY-2000 11:19 Apr 04, 2005 Jkt 000000 PO 00000 Frm 00098 Fmt 6633 Sfmt 6633 D:\DOCS\98121.TXT HGOVREF1 PsN: HGOVREF1
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riod, they can comment on that. It is statutory and it is convoluted.

But, there are ways the agency could do a better job so that OMB’s

process isn’t a novice process; it’s already been discussed in the

public record.

Mr. OSE. I want to ask each of you this question in turn. Mr.

Acker testified, in his written testimony stated, too often compliance assistance is longer than the rule. That’s on page 12 of your

testimony. I’m a little bit curious about your respective views of

agency compliance resources and performance.

Mr. DiFazio, have those been helpful, intrusive or otherwise a

means of backdoor enforcement?

Mr. DIFAZIO. I think the intentions are good. But again, you

start with the legislation, which is fairly narrow, fairly focused, it

starts expanding with the regulation and the preamble to the regulation which contains extra legal information. Then, you get into

guidance documents and compliance assistance. You really don’t

know where on the continuum you are. Again, if the agencies focus

on just gathering what they needed when they first come out with

the regulation implementing the legislation, I think there would be

less need for guidance documents and less need for compliance assistance.

Mr. OSE. Are you saying there’s mission creep on this stuff?

Mr. ACKER. Well put, yes.

Mr. OSE. Or information creep? Maybe that’s better.

Mr. ACKER. Both.

Mr. OSE. Ms. Drummond, do you agree with that?

Ms. DRUMMOND. My answer would be, it depends. If the statutes

are very clear, then the regulations should be clear and self-evident. On the other hand, there are times when the agencies read

ambiguities into the statute and, therefore, have had to expand

upon it. The ambiguity in and of itself might be as simple as the

OSH Act, it is a pretty open-ended regulation, to regulate safety

and health.

So, as a result, there’s this tremendous leeway to try to explain

what they want, even if the regulation says, well, you need to regulate beryllium. But, what if beryllium, how do you do that, what

are some of the measures? That’s one instance of the compliance,

it can get way out of hand because it wasn’t straightforward to

begin with.

Interestingly, OSHA has just spent a tremendous amount of time

developing a draft guidance document on hazardous communications. The actual regulation in column form, I looked it up, it’s

about 20 pages long, that addresses hazard communication. But,

the compliance document, which did include a lot of Power Point

presentations for your employees and so forth, was close to 200

pages long.

So, the compliance got out of hand. The intent was good, but the

compliance is a little out of hand. Assistant Secretary Henshaw has

decided to pull back and try to identify a more effective way to help

businesses with that.

But, another compliance assistance problem is, when an agency

goes about regulating things that are not in the regulation by form

of advice. OSHA has proceeded to develop ergonomic guidelines.

Those guidelines are a measure of trying to say, our general duty

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clause, we couldn’t get an ergonomics regulation, and our general

duty clause, which is a vague regulation, which is open-ended, allows us to regulate this. As a result, we’re going to give you compliance assistance. But, they don’t call it that. They call it guidance.

As a result, the compliance assistance is larger than the regulation, because the regulation is about one paragraph long.

Mr. OSE. Your members are aware that guidance is not binding?

Ms. DRUMMOND. We are aware of that. But, the reality of it is

that the compliance officer walks in, and I would say that we are

probably not the industry that’s targeted as those that have more

repetitive elements, such as the poultry industry, the nursing industry, those industries where they have repetitive motions. They

are the ones that are getting cited. You can see the citations that

are ergonomics. The way the agency is trying to say, hey, if you

don’t want to get cited under the general duty clause, use these

guidance documents.

Mr. OSE. Mr. Acker, is that what you’re referring to as the nightmare that Ms. Drummond has highlighted for us?

Mr. ACKER. Yes, it is. I would say that mission creep is an excellent example.

I would also add another example, the MTSA, the Marine Transportation Safety Act that was passed I believe at the end of last

year. The guidance documents for that, which are extensive, came

out after you had to be in compliance with the regulation. So, obviously, that was not very helpful.

The only other point I would make is that, and folks have said

it before, the clarity of the regulations is very important. These

agencies have to work with industry at the beginning so that these

things can be understood and be simplified and clarified.

Mr. OSE. The gentleman from Virginia.

Mr. SCHROCK. I have no further questions now, Mr. Chairman.

Mr. OSE. Mr. Schrock and I have a number of questions, but

given the hour, we’re going to submit them to you in writing. We

would appreciate a timely response. The record of this hearing will

be left open for 10 days. That would be to allow us to get you the

questions so you can make timely response to them. There may be

Members who were not in attendance today or who were here and

had to leave who may have questions for you. So we’ll make sure

we get those organized and off to you.

I have nothing further, and with that, we’re going to go ahead

and adjourn the hearing. Thank you for attending.

[Whereupon, at 5 p.m., the subcommittees were adjourned.]

[Additional information submitted for the hearing record follows:]

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