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93–639 PDF 2004

WHAT IS THE ADMINISTRATION’S RECORD IN

RELIEVING BURDEN ON SMALL BUSINESS?

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 BUSNIESS

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

JANUARY 28, 2004

Serial No. 108–142

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

JOHN SULLIVAN, Oklahoma

NATHAN DEAL, Georgia

CANDICE S. MILLER, Michigan

TIM MURPHY, Pennsylvania

MICHAEL R. TURNER, Ohio

JOHN R. CARTER, Texas

MARSHA BLACKBURN, Tennessee

——— ———

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

———

BERNARD SANDERS, Vermont

(Independent)

PETER SIRH, Staff Director

MELISSA WOJCIAK, Deputy Staff 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

CHRISTOPHER SHAYS, Connecticut

JOHN M. MCHUGH, New York

CHRIS CANNON, Utah

JOHN SULLIVAN, Oklahoma

NATHAN DEAL, Georgia

CANDICE S. MILLER, Michigan

——— ———

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 KAHLOW, Staff Director

MELANIE TORY, Professional Staff Member

ANTHONY GROSSI, 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

FRANK BALLANCE, North Carolina

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]

J. MATTHEW SZYMANSKI, Chief of Staff

PHIL ESKELAND, Policy Director

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT

EDWARD SCHROCK, Virginia, Chairman

ROSCOE BARTLETT, Maryland

SUE KELLY, New York

TRENT FRANKS, Arizona

JEB BRADLEY, New Hampshire

STEVE KING, Iowa

THADDEUS MCCOTTER, Michigan

[RANKING MEMBER IS VACANT]

DONNA CHRISTENSEN, Virgin Islands

ENI F. H. FALEOMAVAEGA, American

Samoa

ANI ́BAL ACEVEDO-VILA ́ , Puerto Rico

ED CASE, Hawaii

DENISE MAJETTE, Georgia

ROSARIO PALMIERI, Senior Professional Staff

(V)

C O N T E N T S

Page

Hearing held on January 28, 2004 ......................................................................... 1

Statement of:

Graham, John, Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget .................................................... 17

Igdaloff, Harold, president, Sungro Chemicals, Inc., California; and Andrew Langer, manager, regulatory policy, National Federation of Independent Business .......................................................................................... 100

Pizzella, Patrick, Assistant Secretary for Administration and Management, Department of Labor; Jeffrey Rosen, General Counsel, Department of Transportation; and Kimberly Terese Nelson, Assistant Administrator for Environmental Information, Environmental Protection

Agency ............................................................................................................ 47

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

Graham, John, Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget, prepared statement of ............. 20

Igdaloff, Harold, president, Sungro Chemicals, Inc., California:

Information concerning reports ................................................................ 164

Prepared statement of ............................................................................... 104

Langer, Andrew, manager, regulatory policy, National Federation of Independent Business, prepared statement of ................................................... 112

Nelson, Kimberly Terese, Assistant Administrator for Environmental Information, Environmental Protection Agency, prepared statement of ..... 68

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

Pizzella, Patrick, Assistant Secretary for Administration and Management, Department of Labor:

Followup questions and responses............................................... 81, 87, 93, 96

Prepared statement of ............................................................................... 50

Rosen, Jeffrey, General Counsel, Department of Transportation, prepared

statement of ................................................................................................... 56

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

of Virginia, prepared statement of .............................................................. 14

Tierney, Hon. John F., a Representative in Congress from the State

of Massachusetts, prepared statement of ................................................... 32

(1)

WHAT IS THE ADMINISTRATION’S RECORD IN

RELIEVING BURDEN ON SMALL BUSINESS?

WEDNESDAY, JANUARY 28, 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 2:05 p.m., in room

2247, Rayburn House Office Building, Hon. Doug Ose (chairman of

the Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs) presiding.

Present for the Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs: Representatives Ose, Schrock,

Shays, Cannon, Deal, and Tierney.

Present for the Subcommittee on Regulatory Reform and Oversight: Representatives Schrock, Bartlett, Kelly, King, Majette, and

Velazquez.

Staff present: Barbara Kahlow, staff director; Melanie Tory, professional staff member; Anthony Grossi, legislative clerk; Megan

Taormino, press secretary; Krista Boyd, minority counsel; and Jean

Gosa, minority assistant clerk.

Mr. OSE. Good afternoon. Welcome to the joint meeting between

the Government Reform Subcommittee on Energy Policy, Natural

Resources and Regulatory Affairs and the Small Business Subcommittee on Regulatory Reform and Oversight, chaired by the

gentleman from Virginia, Mr. Schrock.

Here is what we’re going to do. We could have votes here in short

order or it could be quite some time. To the extent we have votes,

I don’t know, we’ll just have to accommodate it. The way this subcommittee works is in each occasion where my subcommittee gathers, it being the Subcommittee of Government Reform, we always

swear our witnesses in. Before we do that, we will have opening

statements from myself and Mr. Schrock and any other Members

who wish to make them, and we’ll swear the witnesses in, and the

first panel and the second panel.

The first panel, we’ll go through the questions with them and the

testimony. Then we’ll have the second panel up. The way we’ll alternate is we’ll have someone from my subcommittee. Then we’ll

have someone from Mr. Schrock’s subcommittee. Then we’ll have

someone from my subcommittee and Mr. Schrock’s subcommittee

and on and on and on.

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Today the subcommittee will examine the administration’s record

in relieving burden on small business, with particular attention to

its further implementation of the Small Business Paperwork Relief

Act of 2002. This law required the Office of Management and

Budget to take certain actions by June 28th of last year, and Federal agencies to take additional actions by December 31st. Both

hours spent and penalties paid by small business affect productivity, jobs and economic growth. A special concern to small business

are penalties levied by Federal agencies for innocent first-time violations of Federal paperwork and regulatory requirements.

Today, OMB will update the status, since our July 2003 hearing

of the implementation actions for the complete listing of each of the

agencies’ single point of contact that will act as a liaison between

small business and the agency, which was due on June 28th. They

will update us on their actions for a complete listing of agency compliance, assistance resources available to small businesses, which

was also due June 28th.

We’ll get an update on the timely agency enforcement reports,

which were due December 31st, an update on OMB’s interagency

task force report to Congress, and an update on further significant

paperwork reduction accomplishments and plans to benefit small

business.

In addition to the OMB, we have three key regulatory agencies

joining us today. That would be the Departments of Labor and

Transportation and the Environmental Protection Agency, and

what they are joining us here to do is to discuss their track record

in relieving enforcement burdens on small business and their significant paperwork reduction accomplishments and plans to benefit

small business.

OMB estimates the Federal paperwork burden on the public of

8.2 billion hours. In April of last year, OMB estimated that the

price tag for all paperwork imposed on the public was $320 billion

per year.

In 1980, Congress passed the Paperwork Reduction Act and established an Office of Information Regulatory Affairs [OIRA] in

OMB. OIRA’s principal responsibility is paperwork reduction. In

1995 and 1998, the year 2000 and 2002, Congress enacted additional legislation with the objective of decreasing paperwork burden. Nonetheless, paperwork has increased in each of the last 7

years.

On June 27, 2003, OMB published two Small Business Paperwork Relief Act documents. The first was a listing of the agencies

single point of contacts and compliance assistance resources. The

first chart on display, that would be the one on my right as I’m facing them. The first chart on display that reveals that, as of this

week, 14 agencies with OMB approved paperwork are still without

a single point of contact, and OMB has still not indicated compliance assistance resources for 18 agencies.

OMB’s second June 27th document was a notice of availability of

its initial task force report. During our July 2003 hearing, we encouraged OMB to submit a final task force report by the June 28,

2004 statutory deadline.

In the June 2002 Small Business Paperwork Relief Act, Congress

intentionally did not require the initial agency enforcement reports

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until December 31, 2003 in order to allow agencies sufficient time

to adjust their data systems.

Unfortunately, guidance was not provided to the agencies about

the Small Business Paperwork Relief Act until late October 2003,

and, as the first chart on display reveals, that would be the same

one I pointed to earlier, as of this week, 42 of 69 applicable agencies have not yet submitted their enforcement reports. Twenty apparently were unaware of this statutory obligation, and that included the Small Business Administration.

The second chart on display presents an analysis of the regulatory enforcement reports of six Federal agencies, including the

three with us today. That is the one on the left, the smaller one.

The chart reveals that 46 percent of both Department of Labor’s

and Department of Transportation’s enforcement actions were

against small entities in contrast to only 11 percent of EPA’s.

In addition, the Department of Labor reduced or waived only 21

percent of its enforcement fines and penalties levied on small business. In contrast, 44 percent were reduced or waived by EPA. The

Internal Revenue Service and Department of Labor reduced or

waived $1.9 billion and $16 million, respectively, in fines or penalties levied on small business.

The bottom line is that we could do better in complying with the

letter and spirit of the Small Business Paperwork Relief Act.

As an owner of various small businesses, I am especially disappointed at our progress to date. I do not understand how we can

pick and choose which laws to fully implement.

Congress has asked for small business results, which are fewer

hours spent on government paperwork, lower compliance costs and

resulting increase in productivity and profits and jobs.

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

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Mr. OSE. I am pleased to introduce Chairman Schrock for the

purpose of an opening statement.

Mr. SCHROCK. Thank you, Chairman Ose, and good afternoon everyone. In 1996, Congress passed the Small Business Regulatory

Enforcement Fairness Act. Part of the act required every single

agency to develop a policy whereby they would reduce or waive

civil penalties in enforcement actions against small businesses

when appropriate.

One of the things we have learned from NFIB surveys is that a

majority of small businesses learn about government regulations

for the first time in the normal course of doing business or when

an enforcement action has begun. Compliance assistance is not the

same as playing ‘‘got-you’’ with small business. A typical small

business person is worried about making payroll next week or renewing health insurance for her employees or problems with a

shipment that is late. She is not sitting at home studying the Federal Register for possible new regulations that may affect her business. In fact, I hope no one sits at home reading the Federal Register.

She cannot afford to hire someone to handle regulatory compliance. Dealing with the government, once a penalty or fine is imposed, can be extremely onerous and can throw a typical small

business’s life and livelihood into utter chaos.

As part of our ongoing oversight of the Small Business Paperwork Relief Act, we are looking at agency enforcement reports, and

we have with us today representatives from EPA, the Department

of Labor and Transportation and OMB to help us figure out if the

Federal Government is treating small business with the sensitivity

that is required.

A small businessman or woman that is working hard providing

jobs and growth to our economy, paying their taxes and trying to

comply with the regulations of the Federal Government should be

held harmless for their innocent mistakes. I hope that the enforcement attitude demonstrated by some regulatory agencies is changing for the better.

In addition, I have long been a crusader against the ever increasing regulatory and paperwork burden that is imposed upon our

small businesses.

Our President again repeated his call in the State of the Union

address when he said our agenda for jobs and growth must help

small business owners and employees with relief from needless

Federal regulation. That doesn’t sound to me like the President

thinks that there is just the right amount of regulation or just the

right amount of paperwork imposed by the Federal Government. It

is a call to action, and I look forward to working with all of you

to implement the President’s agenda for regulatory relief. Thank

you.

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

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Mr. OSE. If I might just interject, I do want to assure the gentleman that my subcommittee staff does, in fact, read, on a daily

basis, the Federal Register.

Mr. SCHROCK. If mine did, I wouldn’t keep them.

Mr. OSE. I’m pleased to welcome for the purpose of an opening

statement Ms. Velazquez.

Ms. VELAZQUEZ. Thank you, Mr. Chairman. Small businesses in

the United States face many challenges that hinder their overall

success. One of these obstacles is trying to understand and comply

with the overwhelming array of Federal regulations. Many times,

small business owners find themselves buried under a mountain of

paperwork, when they could be helping their customer and expanding their enterprises. Evidence shows that paperwork requirements

are on the rise. The Federal Register, the publication that lists all

proposed and enacted regulations by agencies, increased to 75,606

pages in 2002, more than 1,000 pages of what the previous record

was in 2000.

The Federal compliance price tag for small firms is high. It has

reached nearly $7,000 per employee per year, which is 56 percent

higher than large firms with 500 or more employees.

Today, we are holding the second hearing on OMB’s implementation of the Small Business Paperwork Relief Act to address this

issue. I am anxious to hear from Dr. Graham, who has testified before the Small Business Committee numerous times on the

progress of Federal agencies in working to reduce the regulatory

burden on small businesses.

I’m also interested in hearing the agency representatives testify

about their 2003 enforcement reports. These reports are a critical

tool in identifying the impact that rules and regulations have on

small businesses.

I’m disappointed to hear that almost half of the agencies failed

to submit their enforcement reports by the December 31st deadline.

We cannot allow this to happen. Agencies cannot adopt the mindset that it is not necessary for these reports to be turned in.

Congress relies on these reports not only to identify problems but

also to present solutions to these challenges and to move forward

in combatting high regulatory costs. These agencies must be held

accountable for their efforts in making this happen.

The Small Business Committee has looked at the regulatory

challenges facing small businesses on many occasions in the past.

We can probably all agree that Federal regulations are necessary.

They serve an important purpose, such as protecting our workers

and the environment.

In response to these concerns, this committee worked to draft the

Regulatory Act and the Small Business Regulatory Enforcement

Fairness Act, which were passed into law. This legislation requires

agencies to examine how the rules impact small businesses and to

consider alternatives that will reduce the imposed costs or increase

the benefits to them.

The more clarity we can bring to this process, the better. Broad

visions are always a good place to start, but, if we are going to

change the environment, we cannot be afraid to propose bold solutions.

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I do believe that, if undertaken in a constructive manner, we can

make real improvements. Let’s hope that, in this hearing today, we

can better understand how to build off the OMB’s work to improve

the findings and ensure the future endeavors provide a more comprehensive product. And, let’s hope that the 2004 task force report

can determine better practices in order to enable agencies to comply with reducing one of the biggest burdens on small business, paperwork.

The design of the Small Business Paperwork Relief Act of 2002

was not to help small firms skirt regulations but merely to reduce

the burden of compliance. OMB must take an active role in this

process to make sure that agencies are involved in this process in

order to ensure that our small businesses are treated fairly in the

Federal rulemaking process. As the engine of the American economy, I believe we owe them that. Thank you, Mr. Chairman.

Mr. OSE. I thank the gentlelady.

We are joined by the gentleman from Georgia, Mr. Deal, who I

understand does not have a statement.

Mr. DEAL. I do not.

Mr. OSE. You’re certainly welcome to make one if you’d like.

And we are also joined by the gentlelady from Georgia, Ms.

Majette. You’re recognized for the purposes of an opening statement if you so choose.

Ms. MAJETTE. I do not. Thank you.

Mr. OSE. All right. As we discussed earlier, my subcommittee

under Government Reform, we always swear the witnesses in, so

we’re going to do that again here today and keep with tradition.

So Dr. Graham, if you would, please.

[Witness sworn.]

Mr. OSE. I thank the gentleman. Let the record show that he answered in the affirmative.

We are joined today by a frequent visitor of our subcommittee.

That would be the distinguished gentleman Dr. John D. Graham,

who is the Administrator for the Office of Information Regulatory

Affairs at the Office of Management and Budget.

Sir, you’re certainly welcome. We’re glad you’re here. We are

going to await your testimony with baited breath and you’re recognized for 5 minutes.

STATEMENT OF JOHN GRAHAM, ADMINISTRATOR, OFFICE OF

INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND BUDGET

Mr. GRAHAM. Thank you, Mr. Chairman and other members of

both subcommittees. I’m delighted to be here this afternoon. It’s a

little embarrassing to be a person to have to admit how many

hours he has spent reading the Federal Register in the last 3

years, and as you can imagine, I’ve had a few people put issues of

the Federal Register in front of me and point to specific paragraphs

with disconcerting statements about those paragraphs, but I think

that is perfectly appropriate.

One of the good things about this hearing is we come together

with a common goal, how to reduce the unnecessary paperwork

that is hurting the development and the growth of small businesses

in this country. I think the tougher challenge is to design the most

18

effective strategies to solve this problem, and in my opening remarks, I’d like to talk about four general strategies that have some

promise in this area.

The first is for agencies and OMB to be more vigilant in reviewing the information collection requests that the government imposes on small businesses. This is a very labor-intensive, tedious

job form by form, question by question, but, since small businesses

have to answer them, we think agencies and OMB should have to

review these forms.

The remedies in this area are to reduce the number of questions,

to simplify the questions or to reduce the number of respondents

who are required for each of these surveys.

Examples include the Department of Labor’s reducing the sample

size of its annual employment survey or the Department of Health

and Human Services, while engaged in a good thing, an evaluation

of treatment providers, finding that it could achieve the evaluation

with a 30 percent reduction in the size of the evaluation form, in

particular, reducing the time period for activity logs that needed to

be recorded in order to perform the evaluation. This is the bread

and butter work between agencies and OMB of reviewing forms

and reducing burdens.

Strategy 2, reform or rescind regulations and guidance documents that impose paperwork burdens. For example, the Environmental Protection Agency has proposed a major rewrite of rules

under the Resource Conservation and Recovery Act, and those proposals are estimated to save 929,000 hours of paperwork burden

and $120 million in overall costs. Our hope is that this rulemaking

will be finalized in 2004.

The Occupational Health and Safety Administration has proposed health standards updates that cover an estimated 18 different information collections, with an estimated burden reduction

of 208,000 hours.

And, third and most interestingly, the Department of Transportation has recently rescinded entirely the regulation of the airline

ticketing industry, removing CRS companies and travel agents

from the entire network of regulation. It’s hard to have a paperwork burden if you’re not covered by the regulation. We should

keep in mind that paperwork burden and regulatory reform are

closely connected.

Another example, which you can hear about more today from

Kim Nelson, is EPA’s white paper of options on burden reduction

under the toxic release inventory program. I’ll let her give you the

specifics, but it’s a very promising step forward to maintain the environmental objectives of the toxic release inventory program while

reducing the burden particularly on small businesses.

Strategy 3, I would be remiss if I didn’t say Congress had a role

in reducing paperwork burdens on small business. Ideally, we

might engage in simplification of the tax code at some point, and

that might have something to do with the lion’s share of the IRS

burden that we are all aware of in terms of paperwork burden.

But, let me give you a very concrete example. The bad news was

the 2002 farm bill, which contained a provision requiring the U.S.

Department of Agriculture to mandate country of origin labeling of

foods by September 2004. There were no safety advantages for this

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mandated rulemaking, no quantified benefits, and, at the proposal

stage, we estimated $3.9 billion in first-year costs and 33 million

hours in recurring annual recordkeeping burden.

Mr. Chairman, I’ve appreciated your leadership in trying to get

a reconsideration of this issue, and the good news is in the omnibus

budget bill, we have a 2-year delay in this particular regulation,

but ultimately we need a careful and more serious evaluation of

what we’re doing in that area.

When Congress passes laws with mandated rulemakings and

heavy paperwork burdens, that makes our job at OMB and the

agencies more difficult.

And, fourth, we can replace paperwork with electronic communication and recordkeeping. This is the E in the President’s management agenda, particularly we’re interested in Business Gateway, a priority for helping small businesses get electronic information about all their compliance assistance requirements.

These, we believe, are the basic strategies of paperwork reduction in all four areas. We believe that the administration is making

progress here and there. We’re certainly open to constructive criticisms and we look forward to the suggestions from both of these

subcommittees. Thank you very much.

[The prepared statement of Mr. Graham follows:]

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Mr. OSE. I thank the gentleman. We’re pleased to be joined today

by my good friend and colleague from Massachusetts, Mr. Tierney,

who has agreed to submit his statement into the record.

We’re going to go to questions now, and as we said earlier, we

will alternate between the subcommittee that I chair and the subcommittee that Mr. Schrock chairs, back and forth, back and forth

between the subcommittees. And within those, we’ll go back and

forth, back and forth between this side and that side. So if I get

this screwed up, which I probably will, I just want to make sure

that somebody is watching and we can handle it from there. Each

Member will be given 5 minutes. We’ll have multiple rounds if

that’s what everybody desires.

So, I’m going to go ahead. Dr. Graham, I do want to go to the

fourth item that you mentioned in terms of the efforts. You have

more vigilance. You have the reform and the guidance documents,

the congressional mandates. I apologize. I didn’t get the fourth one.

Mr. GRAHAM. Electronic communication.

Mr. OSE. E-government. OK. Dr. Graham, you and I have discussed this on a number of times. I want to cover a couple of things

that we’ve discussed in the past. I read your testimony in terms of

the updated of the single point of contact issue. It’s our understanding that there are 14 agencies still without a single point of

contact. I believe in the left-hand column of the large chart over

there, they’re listed. And, my question is we’d like to update that

chart so we can change the noes to yeses. Do you have updates that

we can add to that list, or do you know when we might expect the

remaining 14 in that first column over there on single point of contact to be in compliance? I can’t read it from here, Dr. Graham.

Mr. GRAHAM. Well, I’m pleased to see we’ve got more yeses this

time than the last time we went through this exercise, and I think

one of the good things about an oversight committee is they put a

little heat on the executive branch to try to get a few things done.

I do think in the last week or so, we’ve had a little bit more

progress than you have up there, in part because of this hearing

of course, but I will get you the specifics on whether there are more

of those Ns that should be Ys in writing after the hearing.

Mr. OSE. How frequently do you review who is or isn’t—or who

has or has not established a single point of contact?

Mr. GRAHAM. Well, I think that you raise an interesting question. As we read the statute that we’re discussing here, that’s a requirement on the agencies. It’s not a requirement of OMB. And, as

a consequence, we view that ultimately—we don’t have the ability

at OMB to review every law that’s applied to every agency to make

sure that they’re covering every single law, and this is one of those.

However, this committee has expressed an interest in making

sure that this gets done, and, as a consequence, this individual has

been engaged in activity which we would not normally engage in

to try to get more of these agencies to take these steps.

Finally, we can do more than that, but that’s our reading and understanding of the situation.

Mr. OSE. I’m willing to have all the agencies come in individually

and we’ll have a hearing. I’m just trying to figure out if we can do

that just administratively, and as we discussed in the past, I’m

looking to you, and you’ve been very effective on these other agenVerDate 11-MAY-2000 12:56 Jun 16, 2004 Jkt 000000 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 D:\DOCS\93639.TXT HGOVREF1 PsN: HGOVREF1
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cies in terms of encouraging them to establish those single points

of contact. So we are going to——

Mr. GRAHAM. We’ll keep working on those last 14.

Mr. OSE. All right. You had some comments about the training

for each agency in terms of the point of contact, and the question

I have is, given the wide variety of—the wide portfolio—that might

exist in any single agency, how do we go about establishing some

training regiments so that we have a consistent application of the

single point of contact interaction with the taxpayer, if you will?

Mr. GRAHAM. I think that’s a good question. I think each of the

agencies, you know, has a responsibility to make sure that the person who is designated as the single point of contact has at least

enough knowledge of the agency’s programs and activities that they

know where to point the small businessperson in the agency to find

more detailed information. We don’t think we’re there yet with all

the single points of contact. The agencies have identified people in

many cases.

Take the Department of Health and Human Services, a huge,

complicated bureaucracy. A single point of contact at that agency

has a tremendous challenge. But, we’re in the process of trying to

encourage agencies to make sure that at least at that initial call,

that initial contact point, that person knows enough to then refer

people to the right people in the agency to answer their questions.

Mr. OSE. Are there ongoing training programs within the agencies to accomplish that?

Mr. GRAHAM. I don’t know that I would refer to them as training

programs, but, in the context of the task force that is mandated

under the statute where we have representatives from various

agencies, we are encouraging the members of those task forces to

reach out to their single points of contact and make sure that they

have the appropriate knowledge.

Mr. OSE. All right. The gentleman from Virginia.

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

Graham. Let me first say I agree with you on the country of origin

thing. It just exacerbates an already bad problem and adds burden

and grief to businesses which are already experiencing it. So I absolutely agree with it. And, yes we do too much mandating up here.

How we stop that, I don’t know. I think over time, hopefully, that

will happen.

The IRS—is anybody from IRS here? Good—accounts for not only

80 percent of all the paperwork living on the public, but also the

lion’s share of the Federal enforcement fines and penalties levied

on small businesses. Enforcement reports show that IRS directs 66

percent of its discretionary enforcement actions against small business and has only reduced or waived 12 percent of the fines or the

penalties levied on small business.

Is OMB willing to meet with IRS about reducing its enforcement

penalties on small business, and, if not, what do you recommend?

Because they seem to be the biggest culprits in this.

Mr. GRAHAM. Well, it seems at first blush like a reasonable question, however, I have raised that topic of the words IRS enforcement and OMB in a conversation with OMB legal counsel and

White House general counsel, and quite frankly, they don’t have

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any interest in the Office of Management and Budget’s being involved in enforcement activities of the Internal Revenue Service.

And, this relates to a very longstanding relationship between

OMB and Treasury that I believe I wrote about 3 pages of testimony for it at a previous hearing for Chairman Ose’s committee.

So it seems reasonable at first blush, but we’ve got a lot of people

to persuade if we’re in the business of turning OMB into an oversight unit on the IRS enforcement operation.

Mr. SCHROCK. How do we break that logjam? How do we get

them to do it?

Mr. GRAHAM. How do we get the idea of OMB as an overseer?

I think you’re talking about a discussion of the relationship between the Treasury Department and the Office of Management and

Budget after a transition of 20 years of a different operating arrangement.

Just to give you a sense of perspective, the people at Treasury

who work on paperwork are larger in total size than all of the people at OMB who work on paperwork of every agency. I mean,

you’re talking about a very significant change in the nature of the

priorities at OMB to move them into an aggressive vigilant role.

And, in the enforcement area particularly, you’re going to have a

much more difficult challenge getting any consensus that we

should be involved in enforcement activities.

Mr. SCHROCK. Well, maybe that’s a challenge Chairman Ose and

I would take on, because this is just totally out of control. And,

maybe we can do that this year before Chairman Ose escapes to

California to live the good life.

Mr. GRAHAM. Well, he’s been giving me a good earful on this for

about 3 years now.

Mr. SCHROCK. Oh, he has. All right. Well, when he leaves——

Mr. GRAHAM. One of these areas when stubborn Graham hasn’t

been able to deliver any goods.

Mr. OSE. It’s the rock and the hard spot now. He’s the rock. I’m

the hard spot.

Mr. SCHROCK. OK. As we discussed at our July 18th hearing and

in correspondence with OMB, both before and after the hearing,

the subcommittees found that initial OMB chaired task force report

to be largely nonresponsive to congressional intent.

Your written testimony reveals that since OMB’s June 27th publication of the report, OMB has convened only one task force meeting last week on January 20th, which, I think, is kind of coincidental, to develop the final task force report which is statutorily due

on June 28th. Will any of the topics that we found not adequately

covered in the initial report be addressed? Do you think they will

be reexamined? If so, which ones, and, if not, why?

Mr. GRAHAM. Well, as I recall, the statute lays out specific responsibilities for the task force in the second year report versus the

first year report. So, our priority in the second year will be on those

second-year activities.

I don’t know whether nonresponsive is necessarily the most appropriate way to describe that. There were some ideas that staff of

the committee and subcommittee had about what they thought the

task force should conclude with regard to those activities. The various agency representatives looked at those, and they reached some

31

different conclusions. There may be differences in judgment, but I

don’t think nonresponsive to the statute is a fair characterization.

Mr. SCHROCK. My time is up, so I think I’ll pass to somebody

else, Mr. Chairman.

Mr. OSE. Before I recognize the gentleman from Massachusetts,

I want to welcome the gentleman from Maryland, Congressman

Bartlett, the gentlelady from New York, Congresswoman Kelly to

the hearing.

And the Congressman from Massachusetts.

Mr. TIERNEY. Thank you, Mr. Chairman. Dr. Graham, how are

you?

Mr. GRAHAM. Good to see you, sir.

Mr. TIERNEY. Good to see you. Thanks.

Mr. Chairman, I wonder as a first order of business if I might

just ask unanimous consent that the hearing record be held open

for 10 days for individuals or groups like the Environmental Entrepreneurs to allow them to submit a statement?

Mr. OSE. Without objection.

Mr. TIERNEY. Thank you. Mr. Schrock made a comment about

the IRS, and Dr. Graham, you just started talking about that. I

just make a note that I had the opportunity to serve as the minority member for this committee on the joint congressional committee

on oversight on the IRS on their periodic review, and it seems to

me that one of the problems we have there is just how we allocate

our resources and where we direct the IRS’s attention.

In large part, the Commission was testifying that our failure to

audit a number of businesses, particularly those involved in transfer of pricing schemes for tax avoidance, was costing us billions and

billions of dollars every year. So, sometimes paperwork is worthwhile, but once you have it, you have to have enough resources and

people to point in that direction to try and make sure that we save

this government some money, the taxpayers some money on that.

Do you have any examples that you might want to share with

us of agencies that have done particularly well in finding better

ways to access information or use information and report on it?

Mr. GRAHAM. Well, in the electronic information area, which is

the fourth of the strategies that I described to you for reducing paperwork, I think both the Department of Transportation and the

Environmental Protection Agency are widely recognized within the

Federal Government as pioneers of both electronic government generally and electronic rulemaking in particular, and I’m pleased that

you have Kim Nelson, who certainly is one of the governmentwide

leaders in that area, is on the second panel, and I’d encourage you

to address that question to her specifically.

Mr. TIERNEY. I will. Thank you.

Mr. Chairman, I have no other questions at this time. I actually

have another Postal Committee hearing that I have to go to, so I’m

going to turn it back to you and I know Ranking Member Velazquez will carry it from here.

[The prepared statement of Hon. John F. Tierney follows:]

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33

34

35

Mr. OSE. You realize we all envy going to the Postal Committee

hearing.

Mr. TIERNEY. I’ll bet you are.

Mr. OSE. The gentlelady from New York.

Ms. VELAZQUEZ. Thank you, Mr. Chairman. Dr. Graham, could

you please describe the type of progress that the interagency task

force has made in raising awareness of the disproportionate impact

that rules and regulations have on small businesses?

Mr. GRAHAM. Well, the task force it has basically been working

internally within the government to simplify the arrangements as

we relate to agencies and small businesses, but the awareness of

the burden of regulation and paperwork on the small business community, quite candidly, I would not give any credit necessarily to

the task force on that. I would give it to the Advocacy Office of the

Small Business Administration, which, for example, commissioned

a major report examining the degree of regulatory and paperwork

burden of companies of different sizes, and we refer to that at OMB

as the Crain-Hopkins report, the two authors. It has some very

useful information that describes the extra burden of paperwork

and regulation on the small business community.

Ms. VELAZQUEZ. But, how do we know that those agencies are

aware?

Mr. GRAHAM. How do we know the agencies are aware? Well,

first of all the, I think this subcommittee—both subcommittees—

have played a very important role in making sure that those agencies are aware. In fact, a task force that we’re now engaged in was

created because of the activities of these two subcommittees and

the Congress generally, and I think that there are pockets of professionals within various agencies that know a lot about the small

business impact and that care a lot about the small business impact.

However, to be quite candid with you, that is not a universal sentiment through all of the professionals in the various agencies, and

one of the key challenges we face is how do we strengthen the hand

in the agencies of those professionals who do understand the small

business impacts and care enough that they want to make a difference in reducing burden on small businesses.

Ms. VELAZQUEZ. Can you tell us about any agencies that are particularly severe violators of the effort to reduce the paperwork burden on small businesses?

Mr. GRAHAM. I think that there is in the Crain-Hopkins report

that I mentioned to you—this is the report commissioned by the

Small Business Administration, an evaluation of regulation in different areas and an estimate of the burdens in different areas.

And, it starts with the clear conclusion that the Treasury Department and IRS obviously account for a substantial fraction of the

overall burden, well over a majority of that burden, but, if you look

in the areas of labor and environmental regulation, there are also

substantial paperwork and recordkeeping requirements in those

areas as well. So, I would say it’s broadly based across the government with an emphasis in those areas.

Ms. VELAZQUEZ. Is it feasible, Dr. Graham, that we could set

up—or you can set up a reward program for agencies who meet the

36

goals of the Paperwork Reduction Act? Do you believe that agencies

will be more responsive if there were incentives for compliance?

Mr. GRAHAM. I think it’s possible. I think the question becomes

the nature of those incentives that are created, do we have the effect of increasing the influence within the agency of those professional names who know about the small business impact and care

about that, and I think that depends on the details of exactly how

the incentive system is set up and how it relates to the activities

of those individuals.

Ms. VELAZQUEZ. Thank you, Mr. Chairman.

Mr. OSE. The gentleman from Georgia.

Mr. DEAL. I believe I’ll pass, Mr. Chairman.

Mr. OSE. The gentlelady from Georgia.

Ms. MAJETTE. Thank you, Mr. Chairman, and thank you, Dr.

Graham for being here this afternoon. I’d like to find out your opinion regarding the recommendation to reduce the penalty for firsttime offenders of the regulations. Do you have an opinion on that

recommendation?

Mr. GRAHAM. Well, I think that there clearly needs to be discretion in the enforcement operations of different agencies, and we at

OMB don’t have experience or authority in that enforcement area.

I would actually encourage you to ask each of the agency representatives today what the practices of the agencies are in that

area, and my understanding is a lot of the agencies already engage

in that practice to a significant extent.

Ms. MAJETTE. From your perspective, do you think that there is

something that we should do on a broader scale to lessen the impact on those first-time offenders?

Mr. GRAHAM. Well, I would be reluctant to freelance a broadbased answer to that question, but I think I clearly agree with the

basic sentiment of your question that there needs to be—it’s worth

looking into the question of whether that broad-based type of action

would be appropriate.

Ms. MAJETTE. So do you think, though, that it should be left to

the individual agency to make a decision——

Mr. GRAHAM. Based upon what I know, which is not a lot, because as I try to emphasize, OMB is not in the enforcement business, or even in the review of the enforcement business. I’d encourage you to ask the people from the agencies that question.

Ms. MAJETTE. All right. Thank you. I yield.

Mr. OSE. The gentlelady yields back.

The gentleman from Maryland.

Mr. BARTLETT. Thank you very much. In a former life, I was a

small business person. I was 1 of maybe 35 people that came here

as a member of NFIB, and so I noted with interest Mr. Schrock’s

observations about the enormous burden that IRS is to small business.

If a homeowner finds that a large crocodile has inhabited his

backyard fish pool, he may find it more productive to remove the

crocodile rather than trying to domesticate him.

I wonder, sir, what thought you have given to eliminating the

problem of IRS by simply eliminating the IRS and going to something like the consumption tax or the fair tax, in which case small

business would not be taxed?

37

As a matter of fact, as you know very well, you can’t tax a business. It simply becomes a part of the cost of doing business, and

so it’s passed on to the consumer. And, this is a very regressive tax.

It is one of our most regressive taxes, because the poorest of the

poor must buy the products and services of our businesses that

simply pass on this tax.

Sir, where are you and the organization you represent relative to

eliminating the problem of the IRS by simply eliminating IRS and

going to something like the fair tax, the tax on consumption?

Mr. GRAHAM. Well, let me start by saying that the OMB in our

testimony in a variety of hearings has emphasized the point that,

if IRS paperwork reduction is a primary objective—and that certainly is one of the objectives of the Paperwork Reduction Act

itself—we do have to ask fundamental questions about whether our

tax code has too much complexity and too many nuances to really

have a simple, easy way for taxpayers to deal with it.

So, I think simplification of the tax code is a necessary, critical

step toward reducing IRS paperwork, but I think there are other

people who are more authoritative on tax policy in the administration that really should get into the meat of your question, but I

definitely agree with its basic sentiment.

Mr. BARTLETT. So, from your perspective, substituting another

tax structure for the IRS would not necessarily be unproductive

and impossible?

Mr. GRAHAM. From a paperwork reduction perspective, one can

imagine either alternative income taxes or various consumption

taxes that would have a lot less paperwork burden than what we

have with the current tax code.

Mr. BARTLETT. Is there any movement on the part of the administration to encourage at least a discussion of that kind of a

change?

Mr. GRAHAM. I think that’s a good question to pose to our colleagues in Treasury. I think those are the right people to—who

think hard about those questions.

Mr. BARTLETT. OMB is not involved in this?

Mr. GRAHAM. One of the comments I made—I forget if you were

in the room earlier—there was a very long and treasured distinction between the responsibilities of the Office of Management and

Budget and the Treasury Department, and as you may know, the

remnants of OMB or the origins of OMB, I should say, were in the

Department of the Treasury at one point, and then we were moved

out. I think really the revenue side and the expenditure side,

there’s sort of an alliance that the two agencies are going to be primarily responsible for those two separate entities, and that has led

quite frankly to OMB’s not being the primary player in the administration on the particular subject that you raise on tax reform.

Mr. BARTLETT. Thank you. Thank you, Mr. Chairman.

Mr. OSE. The gentlelady from New York.

Mrs. KELLY. Thank you, Mr. Chairman. Dr. Graham, I’m glad

you’re here today. I am very pleased of the work that you’ve been

doing in the agency.

A number of years ago, I got passed and signed into law by President Clinton a law that would allow a separate office in the GAO

to examine all the rules and regulations that were promulgated

38

and finalized by the agencies of the United States that would allow

this office then to have a look at them, and they would look at

them for three things, the cost-benefit analysis, a look at the redundancy of rules and regulations, and the overlap of rules and

regulations.

It seems to me if we’re really going to cut paperwork, those are

some things we need to look at, especially with regard to redundancy and overlap, and I would ask you, Dr. Graham, if there’s any

movement at OIRA today to have a look at redundancy and overlap? There ought to be a way in an electronic age we can eliminate

both redundancy and overlap and relieve the burden on our small

businesses that way. Can you?

Mr. GRAHAM. I think there are modest steps that we can take in

the executive branch, even without any new legislation, to provide

progress in this direction.

For example, in 2002, we issued a request for public nominations

of regulatory reforms that would reduce paperwork, reduce burden

on businesses and consumers without compromising the benefits of

the regulatory system, and we received from over 1,700

commentors more than 300 unique, distinct recommendations, and

today the agencies are still working through which of those to

adopt, which of those are not good ideas, which of them might be

a good idea if they were modified or fashioned a little bit.

So, in our annual report to Congress, we actually describe the

agency’s progress in each of these areas, and what you’re going to

hear today from several of the agencies is some information on

progress that they’re making on some of those regulatory reforms.

Mrs. KELLY. Are you, in any way, wielding a stick in terms of

trying to get these things done?

Small businesses are strangling. They have been strangled repeatedly and for far too long, by way too much paperwork. The red

tape for simple people who are running a small business that may

have three or four people only as their employees. It’s really horrible, and it’s not just the IRS. It’s every agency of government. It’s

an agency requiring someone like a building contractor to respond

to the agency on who they’re employing and very personal questions about why they’re employing these people and what those

people are doing. That type of thing takes time. It takes cost. There

have been estimates that are as high as—well, $7 million a year

or something like that. Maybe more. Maybe that’s way underestimating what the cost is for small businesses.

I think that there’s got to be a time, and I certainly sense that

this administration is interested in trying to stop this kind of thing

from happening. What kind of a stick do you have to wave at the

agencies to try to get them—to prod them along?

Mr. GRAHAM. Well, maybe it needs more than a stick. Maybe I

need both an Air Force and a Navy and an infantry. But I think

that the tools that we have at OMB are to stimulate proposals for

smart regulatory reforms and to jawbone our agencies into taking

them seriously and trying to look at them, and we, of course, appreciate the efforts of this committee to help us do oversight on

their implementation of those.

One of the promising ideas that I mentioned in my earlier remarks is the effort at the Environmental Protection Agency to modVerDate 11-MAY-2000 12:56 Jun 16, 2004 Jkt 000000 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 D:\DOCS\93639.TXT HGOVREF1 PsN: HGOVREF1
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ernize and improve the toxic release inventory program, and this

is a very sensible program to provide communities information

about how much pollution is being emitted from various sources.

But it turns out that they are requiring a number of sources, including small businesses, that report zero or near zero emissions

to continue to have to report each year those types of numbers, and

I’m pleased that Kim Nelson is with us today and can describe

some efforts that they’re undertaking to try to bring more burden

reduction into the toxic release inventory program.

Mrs. KELLY. Thank you. I’m running out of time, but again, I

would encourage you and ask us for legislation if you need it, to

help eliminate the redundancy and overlap. Simply that would

help. If you could do that, that would be very helpful. Thank you,

Mr. Chairman.

Mr. OSE. Thank you. Does the gentleman from Iowa wish to have

an opportunity to ask questions in this round?

Mr. KING. I’ll pass. Thank you, Mr. Chairman.

Mr. OSE. OK. I do want to go back to one thing. I want to clarify

something. I’m not quite clear on, Dr. Graham. It’s my understanding that the Paperwork Reduction Act requires OMB approval for

all paperwork requests, including IRS. Am I——

Mr. GRAHAM. That’s correct.

Mr. OSE. That is correct. So before they can use it, they’ve got

to come to OMB and get your sign off on it.

Mr. GRAHAM. For the information collection requests, yes.

Mr. OSE. Not the——

Mr. GRAHAM. Not the guidance document, not the regulation but

the information collection request.

Mr. OSE. OK. All right. Now, I want to go back to a subject we

were getting to. We talked about single points of contact. The second column over there on the large chart is compliance. It has to

do with compliance assistance. And, one of the requirements of the

Small Business Paperwork Relief Act was that, in addition to the

single point of contact, there was supposed to be point to which

people could go for compliance assistance.

Now, the act required OMB to publish on June 28, 2003 a listing

of the agency compliance assistance resources available to small

business. In that middle column of the large chart, you’ll see a

bunch of yeses and noes, Y’s and N’s. There are 18 N’s still on that

chart, including the GSA and FERC. The GSA is the agency that

contracts with so much of small business. It’s the one on the right,

Dr. Graham, and then FERC obviously is—well, at least in California, it’s a very important agency.

I’m trying to find out when we’ll be able to get those 18 agencies

to have their compliance assistance much like the single points of

contact in the 14 agencies. Do you have any sense of that?

Mr. GRAHAM. Well, let me start. It’s a reasonable question, and

the good news is that we feel we have tackled a lot of the major

departments and agencies, and we are left with, well, there are a

large number of those agencies, while they do not account for, you

know, a majority or even a substantial fraction of the overall issue

here.

I think GSA is particularly frustrated, and it’s really appropriate

for you to be asking this, why we can’t get GSA to do that since

40

they do, in fact, have a lot of interaction with the small business

community.

FERC, you probably have the insight there just by knowing that

it is, in fact, an independent agency in most of its activities outside

the purview of Executive Office of the President oversight. But

again, there’s no problems with us picking up the phone and reminding them of their responsibilities under the Paperwork Reduction Act.

Mr. OSE. Would you like us to send you a letter so you can——

Mr. GRAHAM. I was assuming I was going to get one, Mr. Chairman.

Mr. OSE. Well, I am interested. I mean, GSA procures all sorts

of services from lots of small businesses I think you’re correct, they

have at best a very small percentage, but GSA is one of those that

I think is on a daily basis interacting with small business, and I’d

like to see that compliance point—see the compliance resources

made available to small business.

Now, the second question I have is that one of the questions that

we found in our last meeting was that when we asked about the

forms that people could use off the Internet, in other words, go to

each agency’s Web site and pull it down, for paperwork requirements and the like, you responded on September 11th that there

were staff limitations that constrained your ability to collect that

information or collect those forms.

So, what I had done was my staff called all of the 71 different

agencies and asked them to send us a copy of their information collection pieces, and we have them right down here.

Mr. GRAHAM. Wow.

Mr. OSE. We’ll be happy to give them to you. In fact, we’re going

to give them to you.

Mr. GRAHAM. Do I have to read each——

Mr. OSE. No. What I want you to do is post them with a link on

your Web site so people can get to them without any major challenge, so to speak. I mean, we tried to take the staff issue off the

table by——

Mr. OSE. You’ve done that, sir. So, what can we expect in terms

of getting OMB to post these forms on the Web site, either by link

or otherwise, so that people can access them off the Web?

Mr. GRAHAM. Well, let me give you an initial reaction to that and

not a final one, and that is supposing I am a small business person,

whether I’m working in dry cleaning or kind of a service industry

of some sort, and I want to get on OMB’s Web site, and I want to

find out which of these net books, which tab in which notebook applies to me. We need more than the notebooks up there. We need

a software system that will allow that person to say, I am in a dry

cleaning business, these are my sort of parameters of my business,

and then there needs to be a software capability that kicks out,

these are the forms that are relevant to you.

Just posting all of the forms on our Web site without any ability

for the person to access those forms that are relevant to them, my

initial instincts tell me—though I’m always persuaded, Mr. Chairman—that is not going to solve the problem. And that’s what Business Gateway is all about. Business Gateway says here are the parameters of my business. Now tell me with the engine—the softVerDate 11-MAY-2000 12:56 Jun 16, 2004 Jkt 000000 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 D:\DOCS\93639.TXT HGOVREF1 PsN: HGOVREF1
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ware engine behind it, which of those notebooks and tabs in those

notebooks apply to me.

Mr. OSE. I remember the last time I travelled to Washington, I

started with a step. So I’m thinking this might be a step in the

right direction.

Mr. GRAHAM. Well, we’re certainly willing to consider that, Mr.

Chairman.

Mr. OSE. Mrs. Kelly, you had a request to——

Mrs. KELLY. Well, I just wanted—I’d like to just point out that

year after year we’ve been trying to do something to help small

businesses rid themselves of this enormous burden and costly burden. It’s costly for all of us. It drives up the price of everything we

do with small business.

But, I note here that 24 agencies didn’t bother to provide with

requested copies of all of the paperwork that was applicable to

small businesses, and I also notice here that in these—this line

of—with noes with noncompliance, the OMB is noncompliance

straight across the board. Now, I know you will give me reasons

for that, but it would, I think, be helpful if we could have some

strong explanations about why some of these agencies, 24 agencies

that govern small businesses, haven’t bothered to send in paperwork that they require the small businesses themselves to file.

That is obscene. I’m not after you, Dr. Graham. I’m just infuriated

that somehow, somewhere in this government we are not responsible.

I shouldn’t say ‘‘we.’’ The agencies are not responsible. I don’t

know what it’s going to take, but year after year. Ms. Velazquez

and I have held hearings before, and this has gone on year after

year. I am so glad, Mr. Chairman, that you are holding this hearing now, and I think it needed to be pointed out that the agencies

don’t even bother to respond when you have a joint hearing up here

on Capitol Hill.

Again, if this is going to require legislation, then so be it. We will

have to write a rule.

Mr. OSE. Well, if I may be so bold, I believe the legislation already exists requiring them to report, and one of the things that

we struggle with is finding the agency, in this case our opinion is

that it’s OMB, which can just kind of sit there and hover and say

where is it? Where is it? Where is it?

Mrs. KELLY. Mr. Chairman, I’m suggesting at this point that we

consider penalties.

Mr. OSE. Ms. Velazquez.

Ms. VELAZQUEZ. I have no more questions.

Mr. OSE. Mr. Bartlett. Ms. Majette.

Ms. MAJETTE. I just need clarification, Dr. Graham. Are you saying that there is a need to develop the software that would do what

you are suggesting or that the software exists but somehow it’s not

being used effectively or at all?

Mr. GRAHAM. It’s in the early stages of being developed right

now. As a part of the interagency task force that this law created,

and the project goes under the name Business Gateway, the gateway for a small business to learn about which of those requirements apply to them. But we have challenges in the next year or

more to develop the appropriations, to develop the evaluation, to do

42

the technical work, to develop Business Gateway, because as you

can imagine, the software that is necessary to reliably provide the

answer to the questions I described, given all those notebooks, it’s

a pretty sophisticated engine that’s going to do that.

Ms. MAJETTE. With respect to the appropriation, is there in the

upcoming budget—is there going to be a need for additional funding that you think will be above the levels that you’re expecting to

be authorized?

Mr. GRAHAM. I think for the next fiscal year we have funding we

need, but it’s going to require more than 1 year. This is an ongoing

activity that we need to provide adequate priority to.

Ms. MAJETTE. What kinds of figures are you talking about?

Mr. GRAHAM. I don’t have the precise ones off the top of my head,

but if you want them, I’ll get them for you.

Ms. MAJETTE. Yes, please. Thank you.

Mr. OSE. If I might be so bold on that, it may be possible, it may

be as simple as putting a link on, for instance, OMB’s Web site to

the agencies where these forms might exist. It wasn’t—it’s not—it

may not be a question of requiring some fancy new software on. On

a Web-based system, it may be as simple as creating a link.

Ms. MAJETTE. If I understand Dr. Graham’s concern, if you’re

dealing with a small business owner who wants to be in compliance

but may not know exactly where in the books to turn to find all

of the forms that he or she may need in order to be in compliance,

then you’re talking about having a mechanism by which that business owner will be notified that these are the four—if the business

owner provides the parameters of the business then the software

would somehow kick back to the business owner, forms 1, 5, 7, 29,

86 and 103 so that then the owner can go ahead and fill those

forms out, knowing that those are the forms that need to be completed in order to be in compliance.

Mr. GRAHAM. That’s right, and it will require, unfortunately,

more than just a link from OMB’s Web site to the agency’s Web

site, because even if I’m a small business that works with the Department of Health and Human Services, there are a wide range

of notebooks. There’s probably a whole bunch of notebooks in there

of Health and Human Services, and I need to know which of those

apply to me, given that I am a small health maintenance organization, for example. I think the premise of your question is correct.

It is a nontrivial task to generate an engine that will allow that

kind of information to be provided, and consider how important it

is that it be reliable, because if that information that comes back

from the engine misleads the small business person into believing

they only need these forms, they don’t need these forms, then you

have a very messy situation developing. So, obviously, the task

force wants that product business gateway to be done with accuracy, a high degree of accuracy.

Ms. MAJETTE. Yes. And, I guess the analogy would be what happens a lot of times with the IRS if someone calls in to ask a question, assuming that person that they receive the answer from is

knowledgeable enough to answer the question properly, they are

then relying on that information. And, if they have not been given

correct information, they may not be in compliance or they may not

do everything they need to do. So, the question is on——

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Mr. GRAHAM. Bingo. You’re hitting it right on——

Ms. MAJETTE. Where does the burden rest? Does it rest with the

individual business owner or does the burden rest with the agency

that’s requiring compliance to provide sufficient information so

that——

Mr. GRAHAM. I don’t know the legal answer to your question, but

I do know the task force feels very strongly that the Federal Government should not venture some half-concocted software system

that purports to give this information that isn’t very adequate. We

want a quality system put up from the start and then improve it

over time, and that is why it is not going to happen overnight, this

type of exercise.

Ms. MAJETTE. Is there anything we can do to facilitate that process?

Mr. GRAHAM. I think it will be very useful to continue to have,

in fact at some point to have a hearing at this committee where

you hear from some people from the agencies working on Business

Gateway to learn more specifically what are the challenges they

are facing, what are the extra steps that are needed. That would

be a useful thing to do.

Mr. OSE. From an identification standpoint, if people contacting

the agencies—there is a thing called NAICS, North American Industrial Classification System, which Chairman Manzullo has been

pushing very strongly, the purpose of which would be to allow that

dry cleaner or allow that engine manufacturer or allow whomever

to be able to identify which forms electronically. And, we have had

a significant debate over time about whether or not that is the appropriate system of classification and the like. We haven’t come to

a resolution yet. I think that accurately characterizes our discussions.

Mr. GRAHAM. I think the task force thinks that is a constructive

idea, but not necessarily the best approach. Business Gateway, the

way they are developing it will allow the small business person to

say modest things about the nature of their business without getting into the codes, and then in the software it will provide those

answers.

Ms. MAJETTE. Yes. Thank you.

Mr. OSE. OK. Mr. King from Iowa.

Mr. KING. As I sit here and try to get up to speed on this conversation, I might have missed this in your testimony, Mr.

Graham, but the origin of the Business Gateway project, when was

that conceived and how was it conceived and what is the thrust for

driving it at this point?

Mr. GRAHAM. It arises out of the President’s management agenda

and the effort to promote—both to promote electronic commerce

and electronic government. So it has emerged out of the entire effort in the President’s management agenda.

Mr. KING. When was that?

Mr. GRAHAM. It started several years ago, because it was started

in the talk phase and then in the design phase and now we are at

the very early stages of actually trying to develop the kind of software we are talking about here.

Mr. KING. Is it this President?

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Mr. GRAHAM. I believe it was. I am sure there may have been

conversations about it previously, but its real seriousness began in

this administration.

Mr. KING. The thought that occurs to me, try to get accuracy out

of the IRS. It is pretty hard to find three answers that are all the

same, or even two that are the same when you make that call and

ask them, yet we don’t have any hesitation about enforcing IRS

regulations. We aren’t insisting upon 100 percent accuracy before

we enforce IRS laws. And, that has been a burden on the public.

But it seems to me that if you could deploy a Business Gateway

plan and do so fairly quickly, at a significant degree of accuracy,

we would be able to refine those inaccuracies by simply the problems that arise from that and make corrections as you go. It seems

to me that it wouldn’t be a difficult piece of software to write. And,

if someone calls in and asks for advice and says that I am running

a particular type of business, what do I need for forms? Those data

I would think are easily available. Isn’t that transferred into the

electronics?

Mr. GRAHAM. I agree with the basic premise of your question.

And, please don’t misunderstand me, that I am not suggesting that

this thing should have to be 100 percent accurate before we would

begin to field test it or pilot it in some way, but I think you can

understand that we wouldn’t want a system like this to be highly

error prone early in its development because the reputation that

will develop because of that will ultimately cause a premature casualty in the development of that innovation.

But, it doesn’t require 100 percent effectiveness. I don’t think

that the availability of the information you just described, which is

what Chairman Ose has been pushing me on for 3 years, I don’t

think it is quite as straightforward. And, that’s one of the reasons,

it’s very hard for small business people to get their arms around

this, even fairly sophisticated, knowledgeable people to try to access the various systems that now exist don’t get easy answers to

their questions about which of these forms is applicable to me. It

is not an easy thing.

Mr. KING. I would suggest that if there was a profit incentive

here, if business were actually in control of this development, we

would have it done.

Mr. GRAHAM. Or a competitive bidding process to develop this

system.

Mr. KING. Thank you, Mr. Graham.

Mr. OSE. I have but a couple more questions for Dr. Graham and

if anyone has any questions, we will go on. We have heard about

the 14 missing responses on the single point of contact, the 18 on

compliance assistance. Ms. Kelly talked about the 24 who didn’t

even respond to our request for their paperwork applicable to small

business.

Mr. GRAHAM. I was unclear. Twenty-four that did not respond to

your requests? So, we have 24 more notebooks that we haven’t seen

yet?

Mr. OSE. I want to followup on the enforcement reports. The

Small Business Paperwork Relief Act required each agency to submit its initial agency enforcement reports by December 31, 2003,

and yet we are missing 42 of them by our last count. And, what

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I am trying to find out is whether or not you will help us get those

42?

Mr. GRAHAM. Facts: One, these were statutory requirements of

the agency. Two, this subcommittee encouraged us to make sure

agencies were aware of it and we issued the President’s Management Council memo because of this subcommittee’s interest. We

will take further steps at your suggestion to make them aware.

That’s where we are at the present time.

Mr. OSE. I did pick up—one of the things we thought we figured

out on that memo for the President’s Management Council——

Mr. GRAHAM. The deputies of all the major departments and

agencies within the purview of the President.

Mr. OSE. There were 20—I think we found there were 20 agencies who were unaware of it.

Mr. GRAHAM. It will be interesting to know how many of those

Cabinet departments or agencies or how many are outside——

Mr. OSE. None of them are. There are actually—they are smaller.

Mr. GRAHAM. A lot of them are independent agencies.

Mr. OSE. Second bracket there on that larger poster. But GSA is

one of them. SBA.

Mr. GRAHAM. I think your concerns are very well taken.

Mr. OSE. Anyway.

Mr. GRAHAM. The SBA one is fascinating. That’s a headline.

Mr. OSE. I just want to get the information put together in a single location and have it be responsive to the congressional legislation. So, if you could help us with that, we will give you what we

have accordingly.

Ms. VELAZQUEZ. Mr. Chairman, aren’t you amazed by the fact

that SBA doesn’t know that they need to have a notebook to tell

businesses what the compliances are?

Mr. GRAHAM. And, they are extremely involved in the task force.

Ms. VELAZQUEZ. I can see that.

Mr. OSE. Ms. Kelly.

Mrs. KELLY. Dr. Graham, this only points out my prior comments. Can you help us, help us make the agencies listen to what

our requests are and respond? If not, I don’t see any route for us

to take except take a legislative one, which then would have to

have some kind of punitive damage. I don’t think one agency would

decide they would not comply if we had an automatic self-enacting

or automatic rule that would apply if the requests from Congress

weren’t meant that caused them to lose 10 percent of their budget

straight off the top. There are things we can do and there are

things we may have to do. This has gone on year after year after

year and it is from one administration after another. The agencies

have an unparalleled arrogance in the way they treat this committee and the way they treat the Small Business Committee in our

requests for information. That has to stop and we need your help.

Mr. GRAHAM. As you know, I have been as helpful as I can be.

And you are going to hear from three agencies here shortly, and

I will be eager to hear the kind of responses you get. However, in

the design of this hearing, you put together three agencies that

have been pretty darn good. So I think you may have to schedule

another one to get at the root of what your question is about.

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Mr. OSE. I did just want to—Ms. Kelly used the word ‘‘request.’’

These are not requests, but statutory requirements. There is a

very, very specific difference that needs to be highlighted here.

Mrs. KELLY. All the more reason why there needs to be a very

strong message delivered to the agencies that when the statutory

request comes in, they are to respond. There is no other way we

can help small businesses in this Nation. And, what about the

small businesses? What about the guy that’s running Alphie’s Garage or Nydia’s Nails or something like that and they request information? Well, Nydia’s Nails happens to be in my hometown, Nydia.

And, so is Alphie. He is also there.

Ms. VELAZQUEZ. I thought you admired my nails.

Mrs. KELLY. Well, I do. In all honesty, these people when they

ask for requests, they are treated the same way we are. This has

to stop. There has to be a point where the people who are elected

to represent the small businesses of this Nation, we say enough;

and we enact something that is going to make these agencies stand

up and listen.

Where are those notebooks? Why haven’t these people responded? Nydia will tell you, we have done this repeatedly in the

Small Business Committee by ourselves and we get the same thing.

I am just simply the voice. I am not the only Member of Congress

who feels this way. I really feel that it is time that the agencies

got this message. It has never been delivered by me this harshly

and this time it is. We have had it.

Mr. SCHROCK. Ms. Kelly is absolutely right. They are going to ignore us until we take legislative action. Dr. Graham can knock on

their doors all day long, but they are going to thumb their nose at

us because they have been doing it and getting away with it. Unless we do it legislatively—I don’t want to—let’s take 25 percent of

their budget away. Try to make it hard on them and make severe

penalties on the people who run those organizations. But, we can

sit up here all day long and do this every week, every month, every

year, and unless we take some drastic action, nothing is going to

get done. I think the time is now. These small businesses are dying

out there. And, the sooner we do it, the better.

Mr. OSE. Congresswoman Majette.

Ms. MAJETTE. I was just admiring Nydia’s nails.

Mr. OSE. What you hear up here is a certain level of frustration

on the part of all the Members. And, what we are attempting I

think to convey to you is that, under the rubrick of Office of Management and Budget, these agencies come to you or your entity for

various things. From where we sit, we think you are the gatekeeper, if you will, and we look to you for enforcement of these

things. That may be an agenda that you don’t wish, but that is an

agenda we have and are going to put forward.

Mr. GRAHAM. It’s an idealistic vision and we will keep working

as hard as we can to deliver better responsiveness both from OMB

and the agencies.

Mr. OSE. I think you will find up here everyone is an eternal optimist. Dr. Graham, we thank you for joining us today. The record

will be open for 10 days, per Mr. Tierney’s comments earlier, for

questions. We are going to take a recess so that the next panel can

gather up here.

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[Recess.]

Mr. OSE. We will reconvene here. I want to welcome to the committee our next three witnesses. Joining us from the Department

of Labor is the Assistant Secretary for Administration and Management, Mr. Patrick Pizzella. Also joining us is General Counsel from

the Department of Transportation, Mr. Jeffrey Rosen. And, our

third witness is the Assistant Administrator for Environmental Information at the Environmental Protection Agency, Ms. Kimberly

Nelson.

As I indicated earlier, we swear in our witnesses as a matter of

course here. If you please rise and raise your right hands.

[Witnesses sworn.]

Mr. OSE. Let the record show the witnesses answered in the affirmative. Before I recognize Mr. Pizzella and go forward with his

statement, I do want to advise everybody we expect a vote shortly—actually, two votes which will require us to temporarily recess

because of the issue of two votes. In any case, we will come back

and finish the panels. So, our first witness on the second panel is

the Assistant Secretary for Administration and Management and

Chief Information Officer at U.S. Department of Labor.

Mr. Patrick Pizzella, glad you could join us and you are recognized for 5 minutes.

STATEMENTS OF PATRICK PIZZELLA, ASSISTANT SECRETARY

FOR ADMINISTRATION AND MANAGEMENT, DEPARTMENT

OF LABOR; JEFFREY ROSEN, GENERAL COUNSEL, DEPARTMENT OF TRANSPORTATION; AND KIMBERLY TERESE NELSON, ASSISTANT ADMINISTRATOR FOR ENVIRONMENTAL INFORMATION, ENVIRONMENTAL PROTECTION AGENCY

Mr. PIZZELLA. Thank you, Mr. Chairman. Good afternoon Chairman Ose, Chairman Schrock and other members of the subcommittees. Thank you for inviting me here today to discuss DOL’s implementation of the Small Business Paperwork Relief Act and the Fiscal Year 2003 Regulatory Enforcement Report which was required

by the act.

I appreciate this opportunity to discuss DOL’s responsibilities

under the act and our efforts to provide relief and fair treatment

to small business owners.

DOL is committed to reducing the burdens on America’s small

businesses and what they deal with as a result of Federal regulations and paperwork. Both the SBPRA and the Paperwork Reduction Act are important tools for DOL to use to reduce unnecessary

paperwork burdens on small businesses. Additionally, expanding

the availability of government services and information via the

Internet not only reduces the paperwork burden on citizens and

businesses but also offers convenience to small business owners.

The Department strives to inform small businesses about the extensive compliance assistance resources provided by our agencies,

whether they are found on the Internet or through our local and

national offices.

DOL takes seriously our responsibilities under the SBPRA and

the Paperwork Reduction Act and we believe we are fulfilling the

requirements of the acts. DOL has decreased the paperwork burden reported in our information collection budget in 7 out of the 8

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years under the 1995 PRA, yielding a nearly 40 percent decrease.

This decrease includes both program changes and adjustments. The

information collection budget reporting process does not provide for

a separate accounting of paperwork burden for small businesses.

However, we can state that, in general, small businesses will benefit as we eliminate or simplify paperwork requirements for businesses of all sizes.

This year our information collection budget does detail one nonelectronic paperwork reduction initiative which exceeds the

100,000-hour threshold. This was accomplished as part of OSHA’s

efforts to revise provisions of its standards.

Now, I would like to discuss the Department’s Fiscal Year 2003

Regulatory Enforcement Report. In December 2003, DOL submitted our initial regulatory enforcement report as required by the act.

This report presents data on the number of DOL-agency enforcement actions in which a civil penalty was assessed, the number of

these enforcement actions for which small entities were assessed,

the number of enforcement actions in which the civil penalty was

reduced or waived, and the total monetary amount of these reductions or waivers.

Within the Department of Labor, the Employee Benefits Security

Administration, the Employment Standards Administration, the

Mine Safety and Health Administration, and the Occupational

Safety and Health Administration reported enforcement actions in

which civil monetary penalties were assessed. It should be noted

that reductions or waivers for small entities are in many cases already factored into the formulas used to compute penalties. In addition, agencies reduce penalties before assessment. The Wage and

Hour Division field managers make preassessment adjustments before assessing penalties against small entities.

Reductions or waivers were granted in 99 percent of the 5,283

EBSA actions against small entities for a total of approximately

$3.4 million. For purposes of the report, EBSA defined small entities to refer to employee benefit plans with 100 or fewer participants. ESA’s Wage and Hour Division reported 2,117 enforcement

actions including 1,018 against small entities. Reductions or waivers were granted in 26 percent of the actions against small entities

totaling $650,000. For purposes of the report, the Wage and Hour

Division defines small entities as businesses with 50 or fewer employees. As noted above, Wage and Hour makes its preassessment

adjustments to civil penalties, including calculating further reductions and waivers.

The Mine Safety and Health Administration is required by statute to impose a civil penalty for every violation. MSHA is not authorized to waive penalties in any case. However, prior to determining proposed penalties, MSHA considers 6 statutory criteria, including business size. Thus, business size does not affect proposed

penalty amounts. In addition, a mine operator may request a review of the business’s financial situation after MSHA issues a proposed civil penalty as a justification for further reduction of the

penalty.

In 2003, MSHA proposed penalties in 104,000 enforcement actions, 96 percent of which for operations with fewer than 500 persons; 45 percent of all proposed penalties were for mines employing

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fewer than 20 persons, MSHA’s definition of a small mine. MSHA

investigated 6 requests for financial review during fiscal year 2003,

but did not reduce the penalty in any of the six cases. OSHA—shall

I continue? My time is up.

Mr. OSE. I do want to clarify one thing you said. You talked

about MSHA and business size. The transcript is going to say,

thus, per your words, ‘‘business size does not affect proposed penalty amounts,’’ but your testimony says, ‘‘thus business size does

affect proposed penalty amounts.’’ I just want to clarify that. You

said the word ‘‘does not.’’

Mr. PIZZELLA. It is one of the six criteria that is taken into consideration. So then it does.

Mr. OSE. So it does affect.

[The prepared statement of Mr. Pizzella follows:]

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Mr. OSE. Now that is the bell for our first vote. We have in fact

three votes: 15, 5 and a 5. We will all depart as best we can. We

are going to get through your 5 minutes and we will probably call

a halt to it and come back for Ms. Nelson’s opening statement. I

understand this is your first time in front of a congressional committee, having recently been confirmed. Congratulations on being

confirmed. And, second, my regrets on having to appear here.

Mr. ROSEN. Thank you and good afternoon, Chairman Ose and

Chairman Schrock, as well as members of both committees, and

thank you all for the opportunity to testify here today. I did hear

your comments during the previous panel, so I do want to underscore that the Department of Transportation takes very seriously

our responsibilities under both the Small Business Paperwork Relief Act and the earlier Small Business Regulatory Enforcement

and Fairness Act. And because we pay close attention to those

laws, we believe we have done a good job in developing rules that

reduce, to the extent possible, the burdens that we impose on small

businesses and that we are giving appropriate consideration to

small entities in our enforcement actions, although there is always

more to be done.

I was gratified when in looking at the long chart, the second

chart on the right, that we had submitted our regulatory enforcement report in a timely fashion. We had provided our single point

of contact, who is actually here today, I am pleased to say. And,

we have also provided our listing of compliance resources. So, on

that score, we have done the three requirements of the Small Business Paperwork Relief Act.

Since you have our report, I want to try to highlight just three

things here today. First, just a few brief numbers. As you know,

we have six operating administrations at DOT that assess civil

penalties. During fiscal year 2003, those six agencies reduced or

waived, as your first chart indicates, in excess of $6.7 million in

civil penalties that were assessed against small entities. The two

operating administrations with the highest civil penalty assessments against small entities were the FAA and our Federal Motor

Carrier Safety Administration, the agencies that regulate aviation

and trucking.

If you focus on those two, which have the highest civil penalty

assessments, the numbers are interesting. Of all the enforcement

actions that FAA initiated in fiscal year 2003, only 20 percent were

initiated against small entities. But small entities received 47 percent of the reductions or waivers that were provided that year. For

motor carriers, where small businesses predominate, small businesses were only 47 percent of all the enforcement actions that the

agency took and the small entities received a roughly proportionate

43 percent of the reductions or waivers of penalties.

But, and this is my second highlight for today, because I do want

to emphasize that the numbers don’t tell the whole story and that

is important as you look at our overall report. The reason that is

so is that discretion plays a very large role in whether the Department even initiates an enforcement action against a small entity.

For example, small businesses represent approximately 87 percent

of trucking companies, but only 47 percent of the enforcement actions that were taken by the Federal Motor Carrier Safety AdminVerDate 11-MAY-2000 12:56 Jun 16, 2004 Jkt 000000 PO 00000 Frm 00060 Fmt 6633 Sfmt 6633 D:\DOCS\93639.TXT HGOVREF1 PsN: HGOVREF1
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istration. Our operating administrations try to emphasize that

compliance is the goal rather than the assessment of civil penalties.

This is especially true when there has been a good faith effort to

comply and the alleged violation does not involve criminal wrongdoing or serious threat to health, safety or environment, and where

there is instead an indication that the violator was attempting to

comply or is ready to take remedial actions. Once it has been pointed out that they did not, unfortunately—and this is why I say the

numbers do not tell the whole story—our operating administrations

do not keep records of this type of informal consideration that they

give in the process of determining whether to commence an enforcement action at the outset. Thus for some of our operating administrations, their numbers——

Mr. OSE. That means you have a minute, Mr. Rosen.

Mr. ROSEN. Their numbers do not tell the whole story.

My third and last observation for today is I just wanted to note

that, of the more than roughly 8,000 information collection requests

authorized by OMB throughout the entire Federal Government, I

have been told that DOT is responsible for only 34 that have been

identified as imposing significant burdens on small entities.

Perhaps, since I see my time is out, in the question period, I can

tell you about what our efforts are to do better with regard to

those. With my time up, let me just say I can assure you that as

the new general counsel of the Department, I will continue to monitor this important initiative and our effective compliance.

Mr. OSE. Thank you for your testimony.

[The prepared statement of Mr. Rosen follows:]

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Mr. OSE. Now we are going to take a recess here. Probably it will

be 4 p.m. until we get back.

[Recess.]

Mr. OSE. Ms. Nelson, you are recognized for 5 minutes.

Ms. NELSON. Thank you.

Good afternoon, Mr. Chairman. I appreciate being here today to

talk to you about the Small Business Paperwork Relief Act and, in

particular, to talk about EPA’s report to Congress where we were

able to highlight our enforcement actions and penalties for the last

fiscal year. I will not go into all the details because you already

highlighted in your opening remarks that just about 11 percent of

EPA’s enforcement actions were taken against small businesses.

We were able to reduce our civil penalties for about half of those

actions by about $4.8 million.

I think it is also important to note that we were able to reduce

or completely waive civil penalties for small businesses by over

$457,000 in cases where small businesses made a good-faith effort

to comply by discovering violations on their own part as part of a

voluntary compliance assistance program.

EPA is taking a two-pronged strategy to both improve compliance assistance as well as reduce paperwork. On the compliance

side, the agency announced last year our smart enforcement approach in which we are putting emphasis on providing compliance

assistance to regulated entities as well as preventing environmental violations. Key to this strategy is 13 sector-based compliance centers that we have created and published information alerts

that we have sent out to over 700,000 entities, and small businesses particularly benefit from these services.

As I have mentioned, our small business compliance policy provides guidelines for the reduction or waiver of civil penalties to be

paid by small businesses for environmental violations whenever a

good-faith effort has been made to comply by discovering violations

as part of a government-sponsored compliance assistance or voluntary audit. In addition, virtually all of EPA’s penalty policies

have provisions which respond to financial concerns of small businesses. The agency, for instance, does not seek penalties in settlements which, combined with the cost of coming into compliance and

remedying the harm that was caused, would be beyond the financial capacity of the violator to pay.

We also have a small business strategy aimed at integrating an

awareness of small business needs and issues into all of our agency

core functions, with special attention to the impact our regulatory

activities may have on small businesses. The small business work

group is in the final stages of developing an implementation plan

for that strategy, and we hope that will be ready in the spring.

In terms of paperwork reduction, we have designated our EPA

small business ombudsman as our single point of contact under

this law. That ombudsman, who is here with us today, is now leading an agency-wide work group that is going to focus specifically

on paperwork reduction and quantifiable measures for reporting reductions.

Dr. Graham mentioned two specific areas that I will go into and

just highlight briefly.

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One is our Toxics Release Inventory program, and we do have

proposals on the street today to seek stakeholder input in particularly three areas. We are looking at putting higher thresholds in

for small businesses that would eliminate reporting. We are looking

at modifying requirements that would actually allow small businesses to use what we call Form A, which is a certification that

they are below certain thresholds. We are looking at expanding

that use.

And, one that I particularly like is substituting reporting with a

new form that would allow small business to say there was no significant change in their processes and thereby their releases for the

last year, and, if they can do that, they can just sign one page and

submit that, and we use those numbers for the previous year.

Clearly, as Dr. Graham said, we have to balance the burden associated with the program while still maintaining the practical utility of the data, and we think some of these proposals do that.

Another really important area is our Resource Conservation and

Recovery Act. In that program we have made significant improvements. That is the program that actually runs the hazardous waste

programs for the Nation. We have estimated that between the

States and the regulated community we are going to save over

$120 million in compliance costs and almost $1 million in person

hours responding to those program requirements. What is most important about that is the way we reduce the burden. There is a tremendous undertaking by the program to only request the information that is used. So, they have looked at every single piece of information requested and, if somebody is not using it, we will no longer

ask for it in the future.

There is one particular provision that is specific to small businesses and that deals with our self-inspection frequencies for small

generators. We are changing that from a daily self-inspection requirement to a weekly requirement for small generators which tend

to be small businesses. Again, we are looking at anywhere between

200,000 and 600,000 hours a year that small businesses would

save.

Through all of our activities, we recognize that small businesses

are an important partner in our efforts to maximize environmental

protection and to protect human health, and we look forward to

working with you and the committee to move forward in our efforts

to do that. Thank you.

Mr. OSE. Thank you, Ms. Nelson.

[The prepared statement of Ms. Nelson follows:]

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Mr. OSE. I just want to go to one thing. I want to recommend

that you find your counterpart in the Department of Agriculture

where your form says ‘‘no change from previous year’’ and just drop

him a note saying, you can do this.

Ms. NELSON. OK.

Mr. OSE. All right. I have a series of questions here that are applicable to each agency, so as we go through them we will just go

boom, boom, boom, and the like.

I want to focus first on the policies you have for waivers and reduction of penalties for first-time violations by small business. So,

Mr. Pizzella, what is your agency’s policy for first-time violations

by small business that are judged to not have the potential to

cause serious harm to the public?

Mr. PIZZELLA. It does vary amongst some of our enforcement

agencies. The Mine Safety and Health Administration is required

by statute to propose a civil penalty for every type of violation.

However, in the Wage and Hour area, they usually would not assess a penalty for a first-time paperwork violation. OSHA also is

unlikely to assess a penalty for a first-time paperwork violation.

There are several criteria that get taken into account in determining whether or not to proceed with an assessment: the size of

the business, the history behind the business, whether it is a firsttime infraction. It is not one-size-fits-all. We like to think, particularly with the Secretary’s initiative on compliance assistance, that

we have gotten out of the ‘‘gotcha’’ game, and we are trying to help

businesses comply with the rules and regulations that are out there

and not rack up numbers just for the sake of racking up numbers.

We believe we are implementing the act effectively, but we think

we can even do better.

I hope I have answered your question.

Mr. OSE. You have. I appreciate your response.

Mr. Rosen.

Mr. ROSEN. Within DOT, as I mentioned in my opening statement, there are six agencies that have the authority to effectuate

civil penalties; and each of them has adopted a policy that would

call for them to waive civil penalties for small businesses who are

first-time offenders or allowing the small businesses to use the

money that would otherwise pay a civil penalty to be used toward

compliance efforts.

Now, each of the operating administrations has somewhat different criteria as to how they effectuate that in terms of their requirements for it being a good-faith violation, that is a good faith

that they were attempting to comply and that the offender is taking steps to correct the issue. But, in general, across the administrations the policy is to waive the penalties for small businesses

who are first-time offenders under the circumstance that I was

identifying.

Mr. OSE. Thank you.

Ms. Nelson.

Ms. NELSON. We do have a practice that allows us to reduce the

penalty for first-time violations. I would say in fact it goes broader

than that. We will reduce penalties even if people have previous

violations, particularly where they can show that they, in fact, discovered the violations, they promptly disclosed it to us, and they

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promptly corrected the violation. So, we believe there is a lot of

latitude and, in fact, the numbers support that.

Mr. OSE. All right. Let me go back to each of the policies your

respective agencies have.

Has the policy that you are now implementing, changed since the

June 2002 enactment of the Small Business Paperwork Relief Act?

Mr. PIZZELLA. The biggest change has to deal with compliance

assistance. I mean, that permeates our department now. The single

point of contact in our department is a senior executive in the office

of our Assistant Secretary for Policy. She is responsible for driving

the compliance assistance initiative throughout the department. In

all of the agencies—MSHA, OSHA, Wage and Hour—compliance

assistance is a huge part of their program.

So that is the big single difference, and we like to think it is having an impact, and we are much more friendly, as friendly as you

can be from the government, with those that we regulate.

Mr. OSE. Mr. Rosen, was the June 2nd enactment important to

these changes?

Mr. ROSEN. I think it was important, but my understanding is

that the 1996 act, the Regulatory Enforcement Fairness Act, was

the initial prompt that caused each of our agencies to adopt policies

regarding the penalties with regard to first-time offenders. Then,

with the passage of the 2002 act, there was additional guidance

provided and some refinements and improvements to those policies,

including guidance as to reporting to enable us to provide our report to you.

And, there are ongoing refinements. For example, the recent FAA

reauthorization bill, the Vision 100 bill, changed the levels of civil

penalties associated with violations up to $25,000, and there is an

explicit difference for small businesses where there is a ceiling of

$10,000. So, we are going back and taking a look at what revisions

we need to make, for example, with regard to the aviation area.

Mr. OSE. Ms. Nelson.

Ms. NELSON. Our policy was in place in 1996. It was expanded,

actually, just a month before the Paperwork Reduction Act was

passed. So our expansion occurred in May. So, we were a little bit

ahead of the curve there. When the act was passed, we felt that

our new revised policy was consistent with the intention of the act.

Mr. OSE. OK. Thank you all.

We are talking about paperwork in this case, though the charts

also reflect compliance in regulatory issues. Do you have different

policies for first-time violations by small business of paperwork requirements versus first-time violations of regulatory requirements?

Ms. Nelson, we will start with you.

Ms. NELSON. In EPA, we do not.

I will say from my own State experience—I had 14 years in a

State environmental agency before coming here. In fact, we did distinguish these in Pennsylvania, but I will say, although we don’t

distinguish them here, it is very hard, even when you do distinguish them, to make a difference between what is a paperwork violation and something that has an environmental impact. Because

something like a spill, a prevention plan that should be onsite may

seem a little bothersome to people to fill out but, in fact, if it is

not there, could be extremely harmful to human safety, to public

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health and safety if, for instance, firefighters come onsite during an

emergency and the list of chemicals that are onsite is not readily

available to them.

So, we do not make that distinction here. But I will say for those,

when we are negotiating, if it appears it is purely paperwork and

there was no impact on human health or the environment, it is

rare, if ever, we take a real action against somebody for that purpose.

Mr. OSE. Mr. Rosen.

Mr. ROSEN. Well, what I am told is that, as a formal matter, we

do not make that distinction in terms of a policy up front. But as

a practical matter, when the agencies have to take enforcement actions, it would, of course, be a greater concern on things that involve health and safety, for example. If a violation involves something that is purely paperwork, it is much more likely as a practical matter that there would not be penalties and that could happen, not just on the first violation but even on the second or third,

if the more important objective there is to obtain compliance. So

there may be in practice some differentiation, but as a matter of

what is the policy for first-time violation, we do not as a formal

matter separate out between paperwork violations and regulatory

violations.

Mr. OSE. Mr. Pizzella.

Mr. PIZZELLA. Very similar. By statute, all of these agencies include the gravity of the infraction when assessing penalties. A simple paperwork violation that does not endanger workers’ health

and safety would naturally be less grave and may be not considered in that first case. For a first-time paperwork violation that did

endanger worker health, a penalty would likely be assessed. OSHA

has some internal guidelines where they make distinctions for their

field staff. But, in general, again, it deals with the gravity of the

infraction.

Mr. OSE. So there is no distinction between a paperwork or regulatory infraction in each case?

Mr. PIZZELLA. Yes.

Mr. OSE. I mean, if you say yes, there is no distinction, would

that accurately reflect, Mr. Pizzella, your agency? Gravity might

have something, but there is no distinction at the outset kind of

thing?

Mr. PIZZELLA. Yes, I think that is correct.

Mr. OSE. OK. Mr. Rosen.

Mr. ROSEN. That is right. There is no automatic distinction at

the outset.

Mr. OSE. Ms. Nelson.

Ms. NELSON. That is correct.

Mr. OSE. OK. Now do you track first-time violations by small

business owners, Mr. Pizzella?

Mr. PIZZELLA. Well, a first-time violation would be noted in a

case file by the employee on staff doing that, but these notations

are not accounted for centrally in the office. So in order to gather

that specific type of information, we need to go through every individual case file to accumulate it right now. We don’t have that at

the moment.

Mr. OSE. All right. Mr. Rosen, how about transportation?

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Mr. ROSEN. Something similar. We track the initiation of an enforcement action. We would have a formal record of that. But in

terms of tracking the earlier phase of whether there was a violation for which there was not an enforcement action, for example,

we do not have a systematic tracking of that. We might have a

record with a given inspector somewhere, but in a systematic way

what we track is the enforcement action.

Mr. OSE. So, until and unless there is an enforcement action,

there is no track?

Mr. ROSEN. No systematic one, that is right. There could be a

record of an inspector somewhere, but it would not be systematic.

Mr. OSE. All right. Ms. Nelson.

Ms. NELSON. Our answer would be similar. We do not have a

data field that says first-time violation. We track every violation

and we can tell when we pull up a record for a company if they

have ever had any violation before. So, if they are in our data base

and there is no history of any violation, then that may become the

first violation. But I could not today go into the system and say

how many violations were first-time violations, because we do not

keep track of those separately.

Mr. OSE. Are each of your records or data bases electronic?

Ms. NELSON. Ours are, yes, in EPA.

Mr. OSE. OK.

Mr. ROSEN. I believe ours vary among the six agencies. Some are

and some are not.

Mr. PIZZELLA. It also varies. The case file is not—as I mentioned

earlier, sometimes a notation is made in a case file, but that is not

electronically right now available to us.

Mr. OSE. So it is all manual in your case?

Mr. PIZZELLA. Not all manual. A lot of the data is collected electronically, but in the case of the first-time violation, it might be

noted in the case file, but it would not be—it is not centrally accumulated at the department.

Mr. OSE. All right. So we were talking about whether or not the

agencies track first-time violations by either paperwork or regulatory requirements, and the answer is no, correct? No, no, no.

Ms. NELSON. Correct.

Mr. ROSEN. Correct.

Mr. PIZZELLA. Correct.

Mr. OSE. Now, Mr. Pizzella, OSHA reduced 78 percent of all enforcement dollars from October 1, 2002 to September 30, 2003, so—

the last fiscal year. So $40.5 million of the $51.6 million that was

originally assessed was reduced or waived. Do you have any information about what percent of this $40.5 million or of the $51.6 million involved first-time violations?

Mr. PIZZELLA. No, because the number was not part of the report; and it is not easily tracked in our department for two reasons.

First, we do not have a different citation for first offense versus

just offense. However, as I mentioned previously, a penalty in all

cases takes into consideration whether there is a pattern of violations. So, naturally, a first offense would not exhibit a pattern.

Second, many of these violations are never cited, so they never

have a penalty imposed; and, subsequently, there is no penalty to

be later reduced.

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Mr. OSE. Are the same criteria applied on small businesses as on

nonsmall businesses within OSHA?

Mr. PIZZELLA. You know, I will have to get back to you specifically on that.

[The information referred to follows:]

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Mr. OSE. All right. We will make a note of that.

On the Mine Safety and Health Administration, there were a little over 47,000 enforcement actions against small entities, and then

the testimony is that MSHA is not authorized to waive civil penalties. Please tell me what the thinking was behind the prevention

of waiver within MSHA as opposed to elsewhere and whether or

not this is something we need to look at as Members of Congress.

Mr. PIZZELLA. I can only speculate that the safety and health

issues that involve MSHA—the nature of the Mine Safety and

Health Administration’s work is probably what triggered that. I

think it would be improper for me to speculate on what type of

change or no change that Congress may want to be thinking about.

Mr. OSE. All right. Mr. Rosen, the Department of Transportation’s enforcement report shows that DOT reduces or waives 42

percent of the penalties and fines it imposes. I am trying to get a

sense of why, from an overall perspective. Is there some reason

why small businesses have their penalties and fines waived 34 percent of the time and nonsmall businesses have it waived and reduced more so?

Mr. ROSEN. Well, I think to truly get at the bottom of the numbers would require looking at all or most key individual cases one

at a time. But, I think the way I could address that falls into two

categories.

First is, as I mentioned in my opening statement, discretion

plays such a big part at the front end of whether there is an enforcement action at all, or whether penalties are sought at all, I

think is a big part of what happens with regard to the small businesses which are first-time offenders, they are not even assessed a

penalty that needs to be waived. So that tends to have an influence

in skewing some of the numbers.

I think the second thing is a little bit of what I would think of

as a statistical anomaly of two types. One is, if you have a large

entity, you may have started with a very large civil fee assessment,

say $1 million, and, if you wind up compromising that or reducing

it in some fashion to half a million, you get a very large reduction

of a fee that might not have ever been assessed against a small entity and it then tends to create numbers that look larger for the

big entities.

The other half of that, of the statistical kind of question, is, as

I have alluded to, we have six agencies. The two that had the largest penalties against small entities were the Motor Carrier Administration and the FAA, aviation; and in those two the numbers

point to a different direction.

I think if you think about motor carriers, roughly 87 percent of

those, of the regulated businesses, are small businesses. Whereas

if you look at, for example, the RSPA is one of our agencies, Research and Special Programs Administration, one of the things it

regulates is pipelines, natural gas pipelines, ammonia pipelines

and so forth. You probably do not find a lot of small businesses

among those pipelines, or at least the proportion is significantly

less than it is in the motor carrier area. So you almost have to look

behind subsets of the data to have a better understanding of both

the numbers. But, even then, as I said, the discretion at the front

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end is such a big factor that I think you have to take that into account as well.

Mr. OSE. All right. Ms. Nelson, the information we have shows

that only 11 percent of EPA’s enforcement actions involve small entities, small businesses. Frankly, I find that refreshing. I am trying

to find out what do you guys have in place, if you will, that might

be transferable to other agencies. Are there nuances to the manner

in which you guys do this that we need to explore here?

Ms. NELSON. Well, certainly we would be happy to share whatever we have in place. I mean, when you look at the reductions and

waivers for small businesses versus all entities, there is a higher

percentage that gets waived or reduced for small businesses. It is

almost 50 percent versus only about 30 percent for all businesses.

So, we would be happy to share policies and see if that is useful.

I do think it is fair to point out, because I did spend 14 years

in a State environmental agency, that many environmental laws

are delegated to States to enforce. So, if you were to look at these

numbers, for instance, for a State environmental agency, you may

see something a little bit different because some of the environmental laws do not cover some of the smallest businesses, like the

Clean Air Act. Permits do not cover the smallest businesses. They

are often covered by State environmental laws. So that may be a

factor there.

Mr. OSE. So, it may be that the number is higher at the State

level in the instance of your portfolio, so to speak, compared with

theirs?

Ms. NELSON. It could very well be. We did a lot of compliance assistance at the State level. We had similar small business policies.

I would have to go back and look at that number. But, given the

delegation—and EPA is fairly unique in the delegations that we

have to States to implement programs as well as the enforcement

authority for the Federal laws.

Mr. OSE. OK. I will go vote.

Mr. SCHROCK [presiding]. I am in the Postal Commission hearings as well, so I have to get my mindset here.

I am sorry I have not been able to hear you, Ms. Nelson, but the

followup question is, how many hours of burden reduction does

EPA estimate if these changes are proposed and then finalized, and

then what is the timetable for the issuance of the proposed rule

and then the final rule?

Ms. NELSON. The question I think you are referring to is the proposals we have on the street for the Toxic Release Inventory program.

Mr. SCHROCK. It is.

Ms. NELSON. To be quite honest, we have not calculated the

exact burden reduction by hours or dollars for each one of those options. To some degree, because some of those are overlapping and

there are still some issues with some of those—for instance, the option that calls for perhaps certifying no change to last year, one of

the things we have to consider is does no change mean within 5

percent or 10 percent of last year’s processor report, and that parameter may affect considerably the universe which would be covered. So, we will start to calculate those burden reductions as we

move forward with the rule.

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In terms of the timeframe for a proposed rulemaking, the comment period closes next week. From my perspective, this will be

one of the highest priorities of my office. We will move aggressively

in evaluating those comments. It is unlikely we will have a rule

out—a proposed rule out for comment before January of next year.

When you consider the regulatory process, OMB needs 60 to 90

days to review, and we have to go through our own process internally. So, when I lay out the steps we have to go through to write

a proposed rule, we are probably looking at about a year from

today.

Mr. SCHROCK. Believe it or not, I did run through the testimony

here, and one of the questions we have is, in your written testimony you also mentioned a two-part EPA burden reduction initiative that is going to occur. EPA estimates the first part would

eliminate 929,000 hours. What is proposed for that elimination? It

sounds good to me, but what is proposed?

Ms. NELSON. That was an incredible undertaking by the hazardous waste program. What they did was looked back over the history of the program since it has been in place, and they looked at

every single piece of information that program collects from States

or regulated entities, every single piece of information. And, if

there was not somebody someplace who used that piece of information or can document the use of that piece of information, then they

put it on the list to be eliminated. As a result, there was over, I

think, about 100 pieces of information that we will no longer collect

because there was not anyone who said I use that and this is how

I use it. That is I think a very, very broad undertaking.

Mr. SCHROCK. My guess is your agency is not the only agency

that could say that if they would come up here and say it.

I think the thing that interests me is they file all of these claims

or whatever it is against these small businesses, and it seems like

they reduce or waive most of them. What is that all about? It just

seems to me like people are sitting downtown to justify existences,

creating this stuff, and then it just gets thrown out, and these

agencies just continue to get bigger and bigger and bigger doing

that stuff. I do not understand that.

I know, Mr. Rosen, you have a lot on your plate. There is no

question about that. I would be curious about what your spin is on

that. Because it seems to me a lot of this stuff just makes absolutely no sense whatsoever.

Ms. NELSON. You know, from EPA’s perspective, I think a very

small percentage of our actions are taken against small businesses,

only 11 percent.

Mr. SCHROCK. You are right, 10.6.

Ms. NELSON. I think we take that into consideration when we are

developing our enforcement policies. We have a strong emphasis on

compliance assistance. For instance, I personally am responsible for

the Toxic Release Inventory program. In the 21⁄2 years I have been

at EPA, we have not taken an enforcement action. Our emphasis

has been on compliance assistance. We have had some new rules

which I know have been a burden, but our entire emphasis has

been developing question and answer documents, getting compliance assistance materials out, and working with facilities to come

into compliance.

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I think within EPA there is a strong history of that. Last year,

when we did an inventory of compliance assistance activities, I

think we had about 350 different compliance assistance activities

across the agency.

Mr. SCHROCK. Well, labor and transportation certainly have big

percentages, and obviously there is a reason for that. In transportation, I gather it is trucking. Am I wrong in that assumption,

trucking violations of some kind?

Mr. ROSEN. Well, that is obviously an important one, as are the

aviation ones. And, then, just in terms of the statistics, we also

have some civil penalties issued by NHTSA regarding automotive

safety and also RSPA regarding pipeline safety, and then hazardous materials, which is enforced both by the Federal Rail Administration and by the Motor Carrier Safety Administration.

So, there is a series of challenges there, but I think the point you

made is a valuable one.

I guess one anecdote I would like to mention is the Motor Carrier

Administration had a new hours of service rule that went into effect at the start of this year, and one of the things they did was

put out publicly a policy statement on enforcement to indicate that,

as they transition to the new version of the rule, that it is their

intention to focus on education and compliance assistance and not

on enforcement and certainly not on penalties.

Mr. SCHROCK. OK. You forgot to turn the clock on, didn’t you?

That is all right.

Let me turn to Mr. King.

Mr. KING. Thank you.

I will see if I can catch my breath here.

Mr. SCHROCK. I know. I told them I ended up in the basement

instead of here.

Mr. KING. As I sit here and listen to the pieces of testimony that

I have had the privilege to hear—and it has been a little bit

patchy, so forgive me if there are some gaps in my knowledge of

your testimony. But, as I left here for the vote, we were on the subject matter of first-time violations and how those first-time violations are tracked. As I gathered, the best way any of you have to

identify which ones are first-time violations would be if there is a

violation. Then you can look at the file and see if a previous file

exists, whether it be on paper or whether it be electronic. That

would be a summary of the last thing as I stepped out of the room.

I notice also that with the statistics in this report that is here,

and I will borrow Mr. Schrock’s when he is not looking, it shows

that you have the reduced or waived violations, particularly with

Labor, Mr. Pizzella, roughly at 20 percent of those violations where

the penalty would be reduced or waived, but I do not see a distinction between the reductions and the waivers. Do you have a number on that?

Mr. PIZZELLA. To reductions and to waivers?

Mr. KING. I think there is a real distinction there between those

two. A reduction and a fine could be an incremental percentage decrease; and a waiver, of course, is far more dramatic and far more

forgiving than a minor reduction of a fine.

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Mr. PIZZELLA. Because I am responding on behalf of several enforcement agencies, I want to get back to you in writing on that

one, because there are probably distinctions amongst them. So I

would ask the committee to let me respond in followup.

[The information referred to follows:]

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Mr. KING. I would appreciate that, if you could report to the committee in writing on those distinctions, particularly with regard to

the small entities that are listed here.

I see that about roughly half of your enforcement is—a little less

than half of it is small entities, and then the reductions and waivers are about 20 percent of the whole. So I would just ask conceptually then a question of you, and I will deal with the hypothetical

circumstance. I am concerned about the weight of regulations, the

enforcement of those regulations on small business.

Say a hypothetical situation where you have someone who operates I will say a fast food facility—and I am going to be guessing

at some of this—that the normal investigation might be such that

a representative of the Department of Labor might visit the region,

stop and look up the employees and interview the employees as to

the employment practices and the safety regulations and how they

might be enforced or not within a company. I am just going to hypothetically say that we have someone who is under the age of 18,

17 years and 11 months and 29 days, who had announced that they

had run the french fryer and maybe the pizza dough maker and

possibly even worked after 7 p.m. on a school night. Now, if that

company had been in business for a number of decades without any

violations, it could be discerned when you looked at their file,

would that be an appropriate candidate for a waiver?

Mr. PIZZELLA. It sure sounds like it. I mean, there has to be a

sense of reasonableness that is involved in enforcing these regulations.

As I mentioned earlier, one of the Secretary’s big initiatives is

compliance assistance. Our single point of contact at the Department of Labor happens to also be the person who is spearheading

the compliance assistance program at the department. We have

been getting away from the ‘‘gotcha’’ game, and we do everything

we can to ensure, whether it is through the Internet, through

training sessions, or through 1–800 numbers, that businesses are

familiar with what they have to do to comply with this large

amount of regulations. And, your example, I think, strikes me as

a perfect example of the type of first-time possible violator that

someone out in the field should try to assist, rather than play

‘‘gotcha’’ with.

Mr. KING. In your response, Mr. Pizzella, you have also acknowledged the responsibility to educate, and I absolutely agree that is

a far better method, particularly with small business. I started a

business in 1975, and I was never afraid of the work; I was never

afraid that I could not get the customers or satisfy them or bill

them or collect the money. What I was afraid of was who are all

the regulators out there who might descend upon me that I am not

aware of and how do I deal with that and how do I anticipate that

nightmare that could come down upon my head. I think the specter

of that is intimidating. We have entrepreneurs that punch a time

clock today that might be writing paychecks to employees, but they

fear the weight of regulation.

Mr. PIZZELLA. Two of our enforcement agencies, MSHA and

OSHA, actually have offices dedicated to small businesses specifically, in addition to the compliance assistance activities that run

throughout their agencies. So, we understand the particular

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uniqueness of the small businessman and woman who—the entrepreneur who is taking the risk, and the Department of Labor does

not want to be putting a thumb down on the next generation of

businesses that are developing. I think and I hope that you will see

from the Department of Labor a fresher approach to cooperate and

particularly through compliance assistance ensure that businesses

are doing what they should be doing and not overburdening them

with trying to comply with all of these regulations.

Mr. KING. Well, then in the case of the hypothetical that I had

stipulated here, if that fine is not waived and then that sends a

message throughout all the people in that community, young and

old alike, future entrepreneurs, failed entrepreneurs, and those

who will not try, a message that it is rigid, a rigid department. So,

my question to you would be then, how do I approach your department to rectify those situations with the least amount of resistance?

Mr. PIZZELLA. You mean as a businessman?

Mr. KING. No, as a Congressman.

Mr. SCHROCK. There are different rules now.

Mr. PIZZELLA. I guess I can throw away my notes.

Mr. SCHROCK. Pull out your Congressman tab.

Mr. PIZZELLA. I would say, I think I brought with me something

that we provided to every Member of Congress and to many of our,

many businesses in the country, a compliance assistance program

that we have. We share this with as many businesses as we can

through training sessions, and it is on our Web site. We also have

an Employment Law Guide that we have updated that we try to

get into the hands of many businesses as possible. We do find that

many congressional offices request these for their constituents, so

you should feel free to request as many as you might like.

Mr. KING. At the conclusion of this hearing, I will step over there

and personally receive that from you.

Thank you very much, and I appreciate all of your testimony

here today.

Mr. SCHROCK. Mr. Pizzella, let’s get to OSHA for a second. Well,

let’s talk about OSHA for a second. How many paperwork hours

were reduced by DOL’s June 30, 2003, final version of its 19 January 2001, revised OSHA recordskeeping rule which imposes 3.4

million hours of public burden? What percent of that burden affected small businesses?

Mr. PIZZELLA. I think I was earlier discussing this, that we are

not sure of that, because the number is not part of the report. It

is not easily tracked for a couple of reasons, Mr. Congressman.

First, we do not have a different citation for the first offense versus an offense. However, as we mentioned, the penalty in all cases

takes into consideration whether there is a pattern of violations.

So, naturally, a first offense does not exhibit a pattern. So that

makes complying with that data a little difficult.

Second, many of these violations are never cited, so they never

have a penalty imposed and subsequently there is not a penalty to

be later reduced. So, a field inspector finishes his inspection and

consults his policy guidelines, and if the policy guidelines say no

citation shall be issued for a minor paperwork violation, then that

is what will follow.

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Mr. SCHROCK. You are not talking about OSHA recordkeeping?

Mr. PIZZELLA. Yes. I thought I was—yes, my response was regarding OSHA.

Mr. SCHROCK. OK. During and after Chairman Ose’s subcommittee hearing on April 11 of last year, his paperwork hearing, we

asked OSHA Administrator John Henshaw: In your testimony you

mentioned that employers with 10 or fewer employees are not required to compile injury and illness logs. This could be increased

to exempt more employers. How about to 20 or 25? Some of the material I read before we started this process today, some agencies

look at small businesses as 5, some 20 to 25, some 50, some 100.

So there is just a whole bag of different figures out there, and it

seems to me that if there was one figure that everybody was working with, it would make it a lot easier, agreed?

Mr. PIZZELLA. You know, it makes so much logical sense to me.

I cannot disagree with you, but I will say I will have to take that

up with Mr. Henshaw on that. Because each of these enforcement

agency heads, they have some particular reason as to why the way

they count is the way they count. Some I know is imposed statutorily, but there is some flexibility. In most cases, there is flexibility.

Mr. SCHROCK. So, one small business guy could have the Department of Labor looking at him where they consider 10 or fewer employees, but then the next week EPA, for instance, could look at

them as a small business, 20 to 50. The poor business people are

out there terribly confused because they do not know what a small

business is. They know they are, but they do not know what the

numbers are.

Mr. PIZZELLA. I would defer to my colleague.

Mr. SCHROCK. No, no, no. I just used EPA as an example. I don’t

want to put her on the spot. No answer. That is a tough one, isn’t

it?

Mr. PIZZELLA. Yes. The question is very logical, and I will have

to get back to you.

Mr. SCHROCK. I would be curious to know. Because when I was

reading the testimony late last night, I mean, some of the paperwork they gave, they were saying it could be a range this big. And

I thought, huh, what is it, really?

I yield back.

Mr. OSE [presiding]. I want to followup on Mr. Schrock’s comment. I do not build a lot of roads other than when I am building

subdivisions, and I do not deal necessarily with EPA other than

generally on delineation of wetlands and all that sort of stuff, but,

on labor, I will just tell you for a fact that the entities in which

I have an interest are designed to prevent me from going afoul of

these thresholds. In other words, if I start bumping up against a

10-person threshold, I will say, you know what? Time to set up another entity.

It sounds maddening, but it is a very economically driven decision, and that is it is cheaper for me to set up another entity with

the checkbooks and the letterhead and the accounting and the tax

returns and all of this other stuff than it is for me to exceed the

threshold on the employee level. Which begs the question which I

think Mr. Schrock was hammering at, is if the threshold is 50, then

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I would not have to set up so many entities. So, if I am over here

dealing with this agency, maybe I am at 50, but I am over here

at this one, I am at 10. What I am trying to figure out is whether

or not the setting of those thresholds, just very specifically, is that

discretionary or is it not?

Mr. PIZZELLA. There is discretion on the part of the agencies. I

cannot speak for the Assistant Secretary of OSHA in particular on

this, because I am not familiar with the reasoning behind it all, but

I will get you those answers.

Again, as I mentioned to the Congressman from Virginia, the

question is so logical it begs some appropriate answer, and I will

get the correct answer.

[The information referred to follows:]

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Mr. SCHROCK. There needs to be a standard somewhere.

Mr. OSE. Mr. King.

Mr. KING. No more questions.

Mr. OSE. I have another question. See these binders right down

here? They have the forms that a lot of different agencies use for

reporting purposes. I am wondering whether or not on your respective Web sites you guys have posted the forms that small businesses need, together with a system whereby a small business

owner can sort through and get the right forms? I will start with

the EPA today.

Ms. NELSON. I will have to look into that in terms of—most of

our forms are posted. I will talk with our ombudsman in terms of

whether they are in a single location.

We are working with the business gateway project that Dr.

Graham mentioned, and we have already submitted to them the 60

or so forms that are applicable to EPA for businesses. So we are

working with them to post those in one place and have already

submitted those.

Mr. OSE. Mr. Rosen, how about transportation?

Mr. ROSEN. Mr. Chairman, I do not actually know the answer to

that for each of the agencies. I suspect that we do not. I know that

we are working with the business gateway initiative also to accomplish fundamentally that objective. I would have to look into each

of the agencies to see what the correct answer to that is and report

back to you if you would like me to. I suspect that the question of

the electronic storage is one that is probably a little outside my capability.

Mr. OSE. Mr. Pizzella.

Mr. PIZZELLA. Most of our forms are posted. Whether it is as easy

as you described for the small businessperson to access them, I

cannot answer that right now, but I will get you an answer on that.

[The information referred to follows:]

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Mr. OSE. The reason I ask the question is twofold, No. 1, to indicate an interest, but, No. 2, to tell you that there were 24 agencies

that did not provide us the requested copies of all paperwork applicable to small business, and the Department of Labor and the Department of Transportation were 2 of those 24. I think we got the

wrong thing from Labor, and I would like to see it corrected.

Mr. PIZZELLA. You will have it from the Department of Labor on

Monday.

Mr. ROSEN. Today was the first I heard of that, Mr. Chairman,

and we will certainly address it.

Mr. OSE. Will you fix it?

Mr. ROSEN. Yes.

Mr. OSE. OK. By Monday?

Mr. PIZZELLA. Sorry, Jeff.

Mr. OSE. I am through negotiating with him.

Mr. ROSEN. Well, if I knew what the burden involved, I could

commit more readily, but, if you do not mind, I would like to figure

out from people more knowledgeable than I how burdensome that

would be. I would hope it would not be, and then we could do it

very quickly.

Mr. OSE. Our original request was made in July, and I just think

there might have been some confusion as to what we were looking

for.

Mr. ROSEN. I suspect that is the case. Obviously, July was before

I had joined the Department. It does not excuse it, but it means

that I need to look into it.

Mr. OSE. I have somebody on my staff who would be happy to

facilitate that. Her name is Barbara Kahlow, and you can call her

directly if you have any questions. But, if we could get that by

Monday, that would be great.

I want to go to the enforcement stuff. Ms. Nelson, in terms of

EPA, the June 2002, Small Business Paperwork Relief Act required

the collection of enforcement data so that it could be reported to

us by December 31, 2003. Now I am operating on the presumption

that EPA has adjusted its data systems in order to collect those enforcement data. Am I operating on the correct assumption?

Ms. NELSON. You are correct. We did do that. We are in the process of upgrading our system and were able to accommodate those

changes.

Mr. OSE. So that is done at EPA?

Ms. NELSON. Yes, correct.

Mr. OSE. OK. At Transportation?

Mr. ROSEN. My understanding is that my staff, at the time that

the act passed, asked each of the relevant agencies to make that

happen and was successful for the most part, except it appears we

have one area, the Federal Railroad Administration, with regard to

the question of shippers that were small businesses where we have

had a miscommunication that we have been working on fixing since

the time we put together our report last December. We are correcting that. It will be in our next report. We will have been fixed.

But, other than that glitch, I believe that we have otherwise already taken care of our systems to report appropriately.

Mr. OSE. Mr. Pizzella, over at Labor?

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Mr. PIZZELLA. Yes. Congressman, we believe that our data systems are capable now to help us produce that enforcement data.

Mr. OSE. So there will not be any difficulty in getting it then?

Mr. PIZZELLA. No.

Mr. OSE. OK. My time has expired.

Any further questions, gentleman? Mr. King.

Mr. KING. Thank you, Mr. Chairman.

I think I would just like to go down through a list that kind of

sticks in my head over the years of some of the things that come

up with regard to child labor. I know we have laws and then we

have interpretations of laws and interpretations of rules, actually,

seldom of laws, and issues that come up. One would be a material

safety data sheet required for soap that is used to wash vehicles

at a car dealership. Therefore, anyone under the age of 18 cannot

wash the vehicles because it has an MSD sheet, even though the

chemical composition would be identical to the shampoo they used

in their hair that morning. That would be one.

Another one would be prohibition toward anyone under 18 going

above more than 2 feet off a floor. So they can’t get in on a low

stepladder. Prohibition of teenagers, I’ll say candy stripers, from

being in the vicinity of blood-borne pathogens. So, it has severely

constricted the flexibility of young people learning a dedication to

the health care industry.

And then, things such as—and these are more justifiable certainly—young people maybe getting on a forklift to drive it from

one place to another, transfer it, somebody that is 17 years and 11

months old and 29 days old can’t get on the lawn mower and cut

the grass.

The implications of these—and I bring these up partly for a response of those interpretations, but also for an opportunity to address what happens in this country when we tie so many regulations in place that young people lose their opportunities to work,

and at the very age where they need to learn their work ethic, we

tell them it’s too dangerous for you to use this soap or climb up on

that stepladder or drive this lawn mower or move this forklift or

run this piece of dough mixer or the french fryer.

So, consequently, they need to be doing something, so they end

up on the streets with drugs and alcohol and fast cars, which are

readily available, and we don’t seem to be too concerned about that.

Do you get very much comment on that? And, is there much

feedback? And, is there anything you’d like to take issue with that

I’ve laid out here?

Mr. PIZZELLA. I will take issue with nothing that you’ve laid out.

The expertise in answering those questions really rests within the

assistant secretaries that have the enforcement responsibility for

those particular areas. Obviously, OSHA encompasses most of what

you just discussed, and the Wage and Hour Division, and the Employment Standards Division encompasses the rest.

And, I’ll make two proposals. One is that we’ll try to answer

what you’ve asked in writing, but more importantly perhaps we

can arrange a meeting with the Assistant Secretary of OSHA and

the Administrator of the Wage and Hour Division to sit down and

talk with you and go over some of these hypothetical theoretical

situations and perhaps even some actual cases, so we can sort of

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eliminate a lot of the smoke and blue mirrors and you can hear

firsthand the way these regulations, in some case statutes, are

being enforced and interpreted.

And perhaps, based certainly on the way you’ve presented them,

there’s room for corrective action.

Mr. KING. Would that also provide an opportunity to look at any

statistics that might be there as to injuries that occur with young

people who are violating the regulations that we have?

Mr. PIZZELLA. If those statistics are available.

Mr. KING. And I wonder if we might be able to compare those

statistics to the injuries—this gets far more subjective, and the

question really—the blunt question is, are they safer at work or are

they safer at play under the circumstances that we have? And,

that’s more rhetorical than not, but I look very much forward to a

meeting to sit down and discuss these issues, Mr. Pizzella; and I

will invite my colleague, Mr. Schrock, as well. Thank you very

much.

That would conclude my questions, Mr. Chairman.

Mr. OSE. Thank you. I want to thank this panel for appearing

today and giving us your testimony and answering our questions.

We appreciate it.

Mr. ROSEN. I’d like to thank the committees for having us here,

and if there are other ways that I can be helpful after today, I hope

you’ll certainly take the opportunity to let me know.

Mr. OSE. Well, we’re going to give you a chance because we’re

going to leave the record open for 10 days so that we can send

questions to you that might arise within the membership. We

would appreciate a timely response.

Thank you all. We’ll take a 2-minute recess for this next panel.

[Recess.]

Mr. OSE. If we could have the third panel join us, please. I see

Mr. Langer is here. Is Mr. Igdaloff here?

Mr. LANGER. Yes. He’ll be back in a moment.

Mr. OSE. All right. We’ll take another 2-minute recess.

[Recess.]

Mr. OSE. We’ll reconvene. First of all, I want to welcome both our

witnesses, Mr. Igdaloff from California, Mr. Langer from the National Federation of Independent Business.

Gentlemen, if you’d both rise, please. We swear all our witnesses

in, so you’re not getting special treatment.

[Witnesses sworn.]

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

the affirmative.

Now, Mr. Igdaloff, I understand you have a 7 o’clock flight out

of National?

Mr. IGDALOFF. Yes.

Mr. OSE. OK. Mr. Langer, how is your time?

Mr. LANGER. My wife is waiting for me at National.

Mr. SCHROCK. He lives here. Don’t let him kid you.

Mr. LANGER. She’s just waiting for me to pick her up.

Mr. OSE. Have you ever heard the phrase rock and roll?

You all are recognized for 5 minutes for the purposes of a statement.

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STATEMENTS OF HAROLD IGDALOFF, PRESIDENT, SUNGRO

CHEMICALS, INC., CALIFORNIA; AND ANDREW LANGER, MANAGER, REGULATORY POLICY, NATIONAL FEDERATION OF

INDEPENDENT BUSINESS

Mr. IGDALOFF. Thank you, Chairman Ose and Chairman

Schrock, and ranking members of the committee for the opportunity to speak on behalf of the National Small Business Association, the Nation’s oldest nonpartisan small business advocacy group

reaching more than 150,000 small businesses across the country.

As the president of Los Angeles-based Sungro Chemicals, Inc., I’d

like to thank your two committees for your ongoing commitment to

America’s small business.

Sungro is a formulator of pesticide products with over 50 products registered with the Environmental Protection Agency. I’d like

to talk specifically about the difficulties I’ve encountered there, as

well as discuss in broad context the concerns of NSBA members.

The last time I testified before a congressional body was in 1996,

right before you passed the Small Business Regulatory Enforcement Act. Since that time, you’ve passed the Small Business Paperwork Relief Act. Both laws have strived to greatly alleviate the

headaches I was dealing with in 1996. However, as you know and

have already stated, agency compliance with these laws, specifically the Small Business Paperwork Relief Act, sometimes leaves

much to be desired.

Before I launch into specifics, I’d like to remind you, paperwork

is a symptom, not the root problem. Government’s tendency to

overregulate is the source of burdensome paperwork. Due to a simple directive requiring a change in wording on our pesticide labels

from Precautionary Statements, which had been acceptable for over

25 years, to First Aid, we had to revise each of our labels, send

each one to EPA for review, and approval, frequently getting contradictory responses to the warning statements on the same labels

for the same products. And, after we got a stamp-approved label

from EPA, we then had to send each one of these labels to each

State agency that regulates pesticides and wait for their approval

process. We estimate just this one change probably took 2 to 3

man-months to implement.

By their very nature, unnecessary Federal regulation and paperwork burden discriminate against small business. We don’t have

large staffs of accountants, benefit coordinators, attorneys or personal administrators. Small businesses are often at a loss to implement or even keep up with the overwhelming paperwork demands

of the Federal Government, and most Federal officials who develop

regulations are largely unaware of the many activities and requirements of their fellow agencies.

I’d like to call your attention to another example of voluminous

paperwork, the pesticide reregistration booklets. The Office of Pesticide Programs within EPA issues these lengthy, complex booklets

on each active pesticide ingredient, which we have to review and

sort through to find out what we have to do to conform, and then

submit the paperwork under a protocol that requires one sheet of

paper for each item. If you’ve got page 2 instead of page 3 out of

order, they send it back to you for further review.

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A few hours of extrapolation and condensation by a knowledgable

staff would significantly reduce the size of the publications as well

as the time and complexity required to conform.

We also have a problem with the DOT regulations relative to

hazardous waste shipments. You have to have an advanced college

degree to cross-sort all of the cross-references that are in that particular regulation to decide what we should put on the shipping papers for a particular commodity.

The regulatory and paperwork overloads are gradually eliminating participation. As an example, we have to report annually our

total sales and production of each pesticide product. In my testimony in 1996, I pointed out the problems with this antiquated form

that is used. This sheet contains three products per page, and we

have to take data off of a spreadsheet that comes out of our computer and hand-transmit all of this information to the 16 pages of

the report. A tabular spreadsheet would replace this 16-page report

we have to submit.

It not only takes us time to do it, but we get calls from the regional agency saying, well, you put a ‘‘G’’ in this particular square

instead of an ‘‘L’’; is this supposed to be pounds or is this supposed

to be gallons?

We have to put over 500 pieces of data hand transcribed into this

simple form. There seems to be little concern for paperwork reduction in the OPP relative to their internal procedures or external

communication. As a result, the practice typified by the example

above, the OPP has chosen to increase the maintenance fees for

each product that we have approved from $600 per year to over

$3,000 per year. This, coupled with additional fees imposed by each

State—California has gone from $200 per product to $750 per product—is essentially taking the small business community right out

of the pesticide formulating business.

The new law that just came out of Congress defined a small busi- ness as a business doing $60 million. Now, if the mindset defines

$60 million a year as a small business, what are they basing their

criteria for performance on. We talked to Karen Brown this morning about perhaps making an amendment to that law to put another category below the $60 million level to take care of the small

business people. We have to lay out $100,000 in fees in January

before we can offer a product for sale.

In terms of EPA’s compliance with the Small Business Paperwork Relief Act, I would like to voice a number of concerns. While

increased flexibility for small business in terms of the EPA audit

policy and small business compliance policy may reduce the penalties assessed in a formal investigation process, it has the potential of strong-arming small businesses into admitting and paying

for something they may not agree with. I would also argue that

even though EPA has implemented a discount penalty based on

violation, there should be further discounts reserved only for small

businesses who unknowingly commit one of those violations.

We have been forced in instances and cancellations to waive our

6-month right for appeal to a 30-day appeal in order to keep our

products in the business stream, and we’ve been displaced in our

marketplace as a result of some of the big chemical companies

trading off their marketplaces for the small business marketplace.

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I don’t have resources on a par with those of large business to

ensure compliance with what you see are notebooks full of paperwork requirements, and I see you’ve got them.

The EPA, in their enforcement actions report to Congress for fiscal year 2002, stated that due to the complexity of the environmental enforcement process and the variety of settlement options,

the data maintained by EPA cannot be classified this neatly.

The EPA has quite eloquently proved my point here. If the EPA

cannot even collect their own information because the process is too

complex, how can they justify requiring small business owners to

comply with their quagmire of rules and regulations?

Mr. SCHROCK. Bingo.

Mr. IGDALOFF. I find it interesting that less than 30 percent of

agencies are in full compliance with SBREFA with only 28 percent

filing their enforcement report. I suggest that the compliance rate

for small businesses on any number of agency regulations is far

above 20 percent.

In addition to my concerns with EPA, I also want to make mention of enforcement practices of OSHA in fiscal year 2002. Of all

enforcement actions on businesses through OSHA, a whopping 84

percent were penalties on businesses with fewer than 25 employees.

One important discrepancy among many of the reports is the definition of a small business. The SBA has established certain size

standards based upon revenues or employee size under the NAICS

industry classification system. The overwhelming majority of industries under NAICS have a 500-employee cap to be a small business.

However, the EPA defines a small business as 100 or fewer employees within. Within the Department of Labor there are varied

definitions for each—20, 50 and 250, all use the small business employer cap.

So, how can any agency evaluate the impact on small business

when they don’t know which small business community they’re

having their impact on, when everybody has a different definition?

I would urge all agencies to use the SBA size guidelines or get

together and agree on some rational standardization system of

classifying small businesses of different categories, and then, based

on the particular environment of companies that they’re working

with, apply their regulations consistent with the activities of those

companies.

Potential solutions: First and foremost, streamline the paperwork, eliminate the duplication of paperwork and coordinate due

dates. This will save businesses countless hours. And, there’s a lot

of overlapping of information that’s submitted both to the Federal

Government and to the State agencies, and I think some coordination between the State agencies and the government would tend to

help reduce that burden.

Small business assistance and compliance: Small business owners are smart, entrepreneurial, creative and quick students. We are

not, however, regulatory experts. Increase the importance of burden reduction through additional dedicated staff. I know what it

means to be short-staffed and I understand that people can only do

so much. Regulatory cost/benefit analyses should be done on every

piece of new regulation. This is common-sense business policy. FedVerDate 11-MAY-2000 12:56 Jun 16, 2004 Jkt 000000 PO 00000 Frm 00108 Fmt 6633 Sfmt 6633 D:\DOCS\93639.TXT HGOVREF1 PsN: HGOVREF1
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eral agencies should be required to submit the estimates of costs

as well as benefits associated with rules and paperwork for each

of their programs.

In closing, I would like to commend Chairman Ose and Chairman Schrock for their efforts and dedication to the small business

with the Paperwork and Regulatory Improvements Act of 2003.

NSBA supports this legislation, and I look forward to working with

you.

Congress and the administration need to take a bottom line look

at the mountains of reporting small businesses face. Paperwork is

paperwork, regardless of whether it’s good or bad. When I’m completing the annual production report to EPA, revising labels for

pesticide products and reporting the same basic information and

data to State agencies, I’d like to let you know what I’m not doing.

I’m not researching ways to provide the most competitive health insurance packages to my employees. I’m not creating new pesticides.

I’m not looking for ways to make more environmentally friendly

pesticides. I’m not selling additional product. I’m not growing my

business. I’m not hiring new employees.

Thank you.

Mr. OSE. Thank you, Mr. Igdaloff.

[The prepared statement of Mr. Igdaloff follows:]

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Mr. OSE. Mr. Langer.

Mr. LANGER. Chairman Ose, Chairman Schrock, and staff who

are here, I want to thank you for letting me participate today on

behalf of the 600,000 small business owners represented by the

NFIB. I’d like to thank you for the opportunity to appear before

you to discuss the current status of paperwork burden reduction

and the importance of this effort to our members and to small business businesses in general.

Small businesses are being buried under mounds of paperwork.

It costs them time and it costs them money. Not only do we know

this, but we’ve measured it a number of ways. Small businesses

have told us, they’ve told Congress, what the extent of this problem

is.

So, what do we know? We know that regulatory costs are higher

for small firms and that for firms with under 20 employees, it costs

them an average of nearly $7,000 per employee per year to comply

with regulations.

NFIB’s own research foundation recently surveyed small businesses around the country and found that the average cost per

hour for paperwork was nearly $50. To dovetail into what you said

earlier, Chairman Ose, if we were to take your number of 8.2 billion hours for paperwork, for Federal paperwork, that’s a cost not

of $320 billion a year, but close to $400 billion a year in lost time

for paperwork. This cost shoots up to $75 for tax preparation which comprises,

of course, the bulk of the paperwork. That poll is discussed in detail in my written testimony, and the complete poll is attached as

an appendix to it.

We know that it’s the complexity of the paperwork, combined

with the sheer amount of it that are the primary concerns of small

business owners, neither of which should be surprising to anybody.

I won’t recount the history of congressional efforts to minimize paperwork and regulatory impacts. A number of Members of Congress have taken ownership of the paperwork reduction issue and

have introduced some stellar pieces of legislation. Unfortunately,

however, those initiatives have met with real incalcitrance on the

part of certain agency bureaucracies.

When I testified here in July, it was on the subject of single

points of contact regarding paperwork within Federal agencies and

the efforts of the OMB to bring agencies in line with Federal law.

But here we are 6 months after congressional inquiries into the

first issue, and 14 agencies still aren’t complying with the directive

to have a single point of contact down from 33. To be fair, a jump

of more than 19 agencies is a good thing, but still short of the ultimate goal.

Having a single point of contact at an agency is not something

that the Federal agencies can take lightly. From my own personal

experience in July of dealing with the document, running around

from office to office to track down information about that Superfund ability-to-pay claim form, I know that it can take hours. And,

again, I’m a professional. I know where to go to find answers to

questions about documents. But for the small business owner already spending precious hours filling out Federal paperwork, it is

a terrible waste of time and money.

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What is more disheartening is the continued absence of identifiable compliance assistance efforts from 18 Federal agencies, including the GSA and FERC.

As I stated a moment ago, complex and confusing paperwork is

a paramount concern to the small business owner, and while a single point of contact is essential to answering questions, proactive

assistance by agencies in helping businesses comply with the law

can go a long way toward answering those questions before they

need to be asked. Moreover, in the case of agencies like the EPA

and OSHA, and let’s say FERC, it goes a long way toward making

sure that those regulations are complied with properly.

As I note in my written testimony, we have experienced firsthand the problems of creating compliance-friendly guidance when

it came to the development of the TRI rules for lead. And, my written testimony discusses the lead TRI issue in greater detail.

Small business owners want to comply with the law, but they

have to be told simply and succinctly what they need to do. I mention as one possible solution the development of a business gateway, which I worked on as the Business Compliance One-Stop System, as an aid to this end. But, that system is some time from

being ready to use. In the interim, agencies have to take ownership

of this problem and be held accountable for it.

I was disappointed to learn that nearly two-thirds of the required

agencies hadn’t completed reports on their enforcement activities

against small entities, and that 21 of those agencies, including

GSA, have been unaware of the requirement to do so. The importance of this information is reinforced by those agencies that did

submit reports. Small entities make up a great percentage of those

against which enforcement actions were taken.

For instance, in the case of the Department of Agriculture, out

of 536 enforcement actions, 506 of them were against small entities.

It is especially helpful in understanding the vastness, the

hugeness of enforcement, especially when it comes to the most burdensome and complex paperwork-requiring agencies like the IRS.

The IRS claims more than 15 million small entity assessments,

versus just over 23 million total enforcement assessments. To me,

that’s a staggering number.

I don’t want to extrapolate, but when you consider that according

to our poll, small businesses are spending $75 per hour on average

in tax preparation, that 15 million enforcement assessments

against those entities represents a huge cost. Think about it, 15

million assessments can all not be chalked up to people cheating

on their taxes. I would suspect that a significant amount of that

is simple mistakes, which means that people are spending large

amounts of money only to find their preparation to be mistaken.

That, too, reconfirms the problems with compliance assistance

and paperwork reduction itself and the need to make Congress’ paperwork efforts stick to the IRS. Right now, IRS believes itself to

be largely immune from having to reduce its paperwork through

various memoranda of understanding within OMB, though I do

note that OMB has been directed to focus staff attention on reducing that paperwork.

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Tax paperwork accounts for 80 percent of the paperwork burden

imposed on small business. It is hugely expensive and, as the IRS’s

own report shows, fraught with potential liabilities. The time has

come for another stab at forcing the IRS to comply with the rules

that other agencies comply with, or at least are supposed to. At the

very least, OMB needs to take much greater steps to ensure that

serious paperwork reduction is being undertaken at IRS and that

MOUs that exist between them should be scrapped or at the very

least reevaluated.

I urge you to do what needs to be done to help these small businesses free themselves of their paper shackles.

Thank you once again for allowing me to testify today, and I look

forward to any questions that you might have.

Mr. OSE. Thank you, Mr. Langer.

[The prepared statement of Mr. Langer follows:]

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Mr. OSE. Mr. Langer’s testimony begs the question, given Dr.

Graham’s comments, we really need to think about that since Dr.

Graham is reluctant to involve OMB in Treasury’s activities, particularly at the IRS. Well, exactly who is the IRS accountable to?

Mr. SCHROCK. That’s exactly right.

Mr. OSE. I mean, it just begs that question. I may have to get

back to him on that.

Mr. SCHROCK. Are we going to have them in front of us, the IRS,

on April 20th?

Mr. OSE. Yes.

Mr. SCHROCK. OK, then we are. That ought to be an interesting

hearing.

Mr. OSE. Mr. Igdaloff, I’m looking at this EPA form, pesticide report for pesticide-producing and device-producing establishments,

which I believe you filled out on February 17, 2003. You’ve signed

it, and there—I just want to make sure, you have a portfolio of 50

products or 500?

Mr. IGDALOFF. 50.

Mr. OSE. 50. So you have to take—it says this is page 1 of 16.

So you’ve got 16 pages of this thing that you filled out. And, I notice on the different lines——

Mr. IGDALOFF. To go to an instruction sheet and then——

Mr. OSE. Well, my question is amount produced, repackaged or

relabeled last year; amount sold or distributed last year, U.S.;

amount sold or distributed last year, foreign; and amount to be produced, repackaged, relabeled this year.

I’m trying to figure out if——

Mr. IGDALOFF. They want an annual production report. So, I

mean, we just have to put all these things in a column across the

top, list the products and just put all that information in a simple

sheet.

Mr. OSE. Yet, this is the form they’re using, so you have to transcribe it from this one sheet to 16 pages?

Mr. IGDALOFF. Yes, with errors.

Mr. OSE. Can you do this electronically?

Mr. IGDALOFF. Not currently.

Mr. OSE. What happens if you have a product that you have the

same amount being produced this year as last year? Can you check

a box that says no change from last year?

Mr. IGDALOFF. No. I just have to go and cross these off, re-sort

them from my spreadsheet, put the numbers on. And, since nobody

can read my writing, give it to my office girl. We have two women

in the office that handle sales and everything else, and then she

takes 3 or 4 hours to fill them out.

She may miss one sheet or another. Then they call me from Compliance in San Francisco, and we go back over the thing, item by

item, to make sure that we have the right ‘‘Gs’’ and the ‘‘Ls’’ and

the ‘‘Ps.’’

Mr. OSE. Do you pull this form down electronically off the Web?

Mr. IGDALOFF. No. No. We get this mailed to us, Registered Letter, Certified. We have to sign for it. And, if you don’t comply, some

of the other companies have been fined $4,000 to $5,000 for not

submitting a production report.

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Mr. OSE. Well, this is something I find very interesting. I notice

on the form that up in the upper right-hand corner, the mailing

label is clearly generated from EPA. Sungro Chemicals, Inc.

Now, it seems to me that you turned in one of these last year.

Why can’t the EPA also enter into these items here the chemical

numbers and the amounts produced, U.S., produced, foreign, from

last year; and, then, if there’s a change, you just scratch it out and

put the accurate number.

Mr. IGDALOFF. Yes. The only thing that changes are the numbers

here, the other statistical information is essentially the same.

Mr. OSE. I mean, the product name probably doesn’t change.

Mr. IGDALOFF. No.

Mr. OSE. And, the EPA product registration number doesn’t

change?

Mr. IGDALOFF. We submit a similar report to the State of California quarterly, where we pay a mill tax for everything we do. And,

so, we get a printout from them, the name of the product and the

column just to fill in the numbers, you know, on two pieces of

paper.

Mr. OSE. Do you have a copy of that with you?

Mr. IGDALOFF. Not with me, but I can send you one.

Mr. OSE. We want to ask for that. Perhaps we could expedite paperwork at EPA by suggesting they take some of the wisdom from

California and bring it here.

[The information referred to follows:]

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Mr. SCHROCK. You should know for the record, he’s a Californian.

Mr. OSE. Well, at least it would help one gentleman.

Mr. SCHROCK. You’d better believe it. It would probably help

thousands.

Mr. OSE. Mr. Schrock.

Mr. SCHROCK. Let me ask you a question, Mr. Igdaloff. You sell

50 different products?

Mr. IGDALOFF. Right.

Mr. SCHROCK. That means you pay $150,000 a year for maintenance fees?

Mr. IGDALOFF. No. They have a cap of—it’s $3,000 a product, but

you—once you get to 50, then they have a cap of $50,000. We’ve

got the new law here. So, once you get 16 products, if you have 16

products, there’s no way to reduce your costs. Everything from 16

to 50—registrations cost $50,000.

Mr. SCHROCK. What is the maintenance fee? What’s it for?

Mr. IGDALOFF. Well, in 1989, Congress passed a law that EPA

was to reregister all pesticides within 10 years. I received a letter

from the EPA then that the registration fee would never exceed

$600 or $36,000 maximum fee per year. Each year——

Mr. SCHROCK. Careful when the Congress says ‘‘never.’’

Mr. IGDALOFF. So, what happened as a result of Congress giving

their wisdom to this, 50 percent of the registrations were canceled.

People said, we aren’t going to pay the fee. So, in order to raise the

same $15 million, EPA said, all right, we’ve got to get twice as

much money from every registrant, and thus the fees have been increasing. The legislation that Congress has just passed in this latest document have increased the fees. Our cap for our 50 products

for last year was $50,000. We just paid $50,000, for 2004.

It says, for registrants holding not more than 50 registrations,

the annual maintenance fee cap for small businesses, which are defined at $60 million a year, at $59,000 for the fiscal year 2004;

$61,000, each of the fiscal years 2005 to 2006; $48,000 for 2007;

$38,000 for 2008.

Mr. OSE. You’re saying that was a law passed by the Congress?

Mr. IGDALOFF. Just came out.

Mr. OSE. What’s the number?

Mr. IGDALOFF. The Pesticide Registration Improvement Act that’s

contained in a conference report to accompany H.R. 2673, the Consolidated Appropriations Act of 2004. And, then they have a whole

schedule of service fees which is another subject. There are both

the maintenance fee and a service fee.

Mr. OSE. Facts are facts.

Mr. IGDALOFF. Pardon me?

Mr. OSE. I appreciate your candor.

Mr. IGDALOFF. I mean, I’ve been fighting it for 15 years now.

Mr. SCHROCK. Andrew, thank you. You were here 6 months ago

today. I hope you’re not busy July 28th. So you’ll probably be here

again. We have simply got to do something about this stuff.

I’m just surprised Mr. Igdaloff even stayed in business. It’s nonsense. By the time the Federal and the State get done with you,

what’s left?

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Mr. IGDALOFF. Well, we thought it was going to sunset 2 years

ago, and, someplace in the Indian Affairs Act they put a couple of

lines to increase——

Mr. SCHROCK. In the Indian Affairs Act?

Mr. IGDALOFF. Yes.

Mr. SCHROCK. I’m not even going to ask. I have no idea.

Mr. OSE. Mr. Igdaloff, in your testimony on page 4 you talk

about ways to eliminate duplication of paperwork and coordinate

the due dates and then, you cite the paperwork for filing mandatory emergency plans as an excellent example of the opportunity

that exists there.

Would you elaborate on that a little bit? Why is coordinating due

dates—why would that reduce your paperwork, for instance?

Mr. IGDALOFF. All right. For example, the report that you have

there is due March 1st. We have to submit our maintenance fee

schedule to EPA by January 15th with a fee. Now, if those were

coordinated, since we don’t have on January 15th our production

analysis from the prior year, we could use the data from the production report to know which products to include on the maintenance fee report for the following year.

These two reports could be combined into one report that lists all

the products—all that is required is the addition of a couple more

columns on the maintenance report to include the production and

sales data. A duplicate copy could be sent to the regional offices to

satisfy their needs. By combining the two reports, we could do the

job one time and send the whole thing in.

Mr. OSE. One is a Federal report and one is a State report?

Mr. IGDALOFF. No. One goes to the EPA in Washington, and the

production reports go to the regional, the EPA regional office.

Mr. OSE. In San Francisco or in Los Angeles?

Mr. IGDALOFF. Right.

Mr. OSE. Mr. Langer, do you have any suggestions along those

lines?

Mr. SCHROCK. We need to get Mr. Igdaloff to the airport.

Mr. OSE. You’re right. Mr. Igdaloff, we’re going to do something

out of the ordinary here, because you’ve got a 7 o’clock plane.

Mr. Langer, if you’ll just hang a minute.

Mr. Igdaloff, I want to thank you for coming, traveling back here

at your expense and the like, to visit with us and share with us

the association’s testimony. We are going to leave the record open,

so if we have additional questions, we may send them to you.

Mr. IGDALOFF. Surely.

Mr. OSE. To the extent we can get timely responses, that would

be wonderful.

Mr. IGDALOFF. If you could give me a couple extra days, though,

because I’ll be gone next week.

Mr. OSE. And, we also need that form that you’re using with the

State of California that’s different from this. OK. I see your assistant in the back nodding her head.

Mr. IGDALOFF. We’ll put that in and the maintenance form that

EPA used.

Mr. SCHROCK. We’re going to find that piece of legislation you

talked about and work that back and find out how that happened

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and why it happened. We have our guesses, but we’re going to find

out.

Mr. IGDALOFF. Well, I cannot for the record suggest that the

large chemical companies are not interested in maintaining the

small chemical people in business.

Mr. SCHROCK. Your words, not mine, but you’re probably right.

Mr. OSE. We will note that was not for the record, OK? Thank

you for coming.

Mr. SCHROCK. Thank you very much.

Mr. IGDALOFF. Thank you for having me.

Mr. OSE. All right, Mr. Langer, you have some suggestions as to

where we might look for significant decreases in paperwork for

small business?

Mr. LANGER. Yes.

Mr. OSE. Could you step us through those, please?

Mr. LANGER. Well, sure. One of those that we have been talking

about, at the very least, to step back for a second, to dovetail onto

what Mr. Igdaloff said, eliminating duplicative paperwork is something that NFIB has been talking about for quite some time. The

elimination of duplicative paperwork is absolutely essential.

Mr. OSE. When you say duplicative, you mean between Feds and

State?

Mr. LANGER. No, between Federal agencies. If you’re filing Federal paperwork for, say, EPA, Department of Transportation, or

EPA and OSHA, finding some way to streamline that paperwork

would be excellent; then, moving onto sort of electronic reporting,

we have been supporting the efforts to develop this business gateway, which I helped—was a part of, when it was part of—when it

was called the business compliance one-stop.

That’s down the road, but something needs to happen in which

a small business owner can log onto his computer, type in his

NAICS code or enter into some sort of North American Industrial

Classification Code; or, more to the point, if there is some sort of

a system where you can enter in what kind of business he has, and

it will be able to interpret that, and then it will spit out every regulation that this person has to comply with, that would be incredibly

helpful. The problem is that it is down the road, and right now, according to our own polling, only 90 percent of small businesses are

using computers.

Mr. OSE. Only 90 percent?

Mr. LANGER. Only 90 percent.

For the last few years we have been using the statistic of 80 to

85 percent, so it’s improving as the cost of computers come down

and more things are being done on line, but, the fact is there will

always be a small amount of small businesses that are not on line,

in which case, compliance assistance is going to be essential to help

those businesses, active outreach on the part of the agencies to

help these businesses figure out what they need to do.

As Chairman Schrock said, it is incredibly unfortunate the first

time a small business owner finds out about our regulations is

when they’re being enforced against, and, unfortunately, as you can

see the number of binders here and the number of laws on the

books, Paul Rosenzweig of the Heritage Foundation is trying to

find out a number that carry criminal penalties. He can’t get an

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answer to that question. So, the fact is it’s a constant minefield for

the small business owner in terms of trying to find out exactly

what they need to do to be in compliance with the law, and they

want to comply.

Mr. OSE. So, why is it when I go on the Internet and get to

Google or MSN.com and hit search, I can get 250,000 references to

some keyword, but we cannot figure out how some person who can

survive the winds of fate in the economy—I mean, why is it we

cannot have that person go on the Internet and figure out which

of these forms they need?

Mr. LANGER. Well, because it gets confusing; I mean, when you

are talking about 225,000, the agencies don’t make it easy.

When you are an expert in these sorts of things, you know which

keywords to use.

The fact is a small businessman can’t go on line. He may not

know that MSDS stands for material safety data sheet, or he may

not know that he ought to look under boric acid under pesticides,

I don’t know, but there are all sorts of new answers that are out

there that your average person does not—your average person does

not speak bureaucratese. That is part of the problem, and the career civil servants, unfortunately, do not think in the same way

that small business owners do. And, there are ways to get around

that and sort of get them to start thinking like small business owners, but there is a lot of training involved, and I can offer up suggestions to that, but——

Mr. OSE. Well, let me ask you a question: How is the case proven

that small business owners who can run their own enterprises

aren’t able to use the NAICS code or something else to sort through

to get their forms?

Mr. LANGER. Well, largely because they are not all in the same

place. It really comes down to time and effort and really just wanting—being so consumed with getting their businesses up and running and moving forward that, in order to take the time and effort

to sort of learn the new answers of the bureaucratic language and

to learn where to go in each different place, that is a lot to ask of

someone who is working 7 hours a day, you know, running their

small dry cleaner or running their auto repair shop, as Congressman Kelly raised.

Mr. OSE. Seems to me that if you constructed—and I just want

to explore this a little bit. Seems to me if you constructed a Web

site to which I could click through, starting at OMB, with a link

that says regulatory whatever, and I can click on that, and that

takes me to the NAICS codes, and it says, please select the code

most applicable to your enterprise, I ought to be able to figure out

which of these codes is most applicable.

Mr. LANGER. I agree with that.

Mr. OSE. OK. So, then, we got to that point; then I click on that

thing, and it takes me to the various agencies that might have—

or a list of various agencies that might have a regulatory burden

applied to that, right?

Mr. LANGER. Yes.

Mr. OSE. Pretty simple so far. I do not think we have Einstein

involved yet.

Mr. LANGER. Not yet.

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Mr. OSE. So, then I would click on, oh, I don’t know, EPA. I go

to EPA, and they have a form. OK. Then I click back and I go back

to that list, and I click Transportation, and it would click me

through to that form. What is so complicated about that?

Mr. LANGER. I mean, I do not want to belabor that point. There

are two basic problems with that, because it needs to be simpler

than that, if you can believe it.

No. 1, starting at OMB, the average small business owner is not

going to think about that. It would have to be business compliance,

small business compliance, or small business regulations, or small

business rules. You know, that would have to be

smallbusinessrules.gov.

It is like right now what they have in sort of e-rulemaking side

of things is regulations.gov. That’s pre-KISS; keep it simple stupid.

That’s KISS, simple, right there, and you go to that Web site, and

all you have to do is go to regulations.gov and click on the agencies,

and it spits out everything that you need, all the new rules that

are being proposed.

So, the idea is to do it on the other side. Type in what sort of

business you are, and it should spit out everything. There should

be no sort of click through, click through, click through, because

that takes precious time. Every minute spent clicking through is a

small business owner’s time wasted, so it should really be that simple. You click in your small dry cleaner in, say, Carmel, CA, and

it should just come out and spit out exactly what you need to do

to comply with every regulation.

You know, I am an optimist. I don’t see why that should be so

difficult, though.

Mr. OSE. Well, we can put a computer on Mars with 156—256-

bit memory. I don’t know why we can’t do that.

Mr. LANGER. There you go.

Mr. OSE. Mr. Schrock.

Trying to draw a connection to the reduction in paperwork that

would come from that.

I got one other question. I need to find it here.

Mr. Langer, the agency compliance assistance resources and the

performance from the agencies, do you have any view as to the degree to which those resources have been helpful or the performance

of the agency personnel have been helpful and how we might improve that, if at all?

Mr. LANGER. I don’t have a ready answer to that. I think that

every effort that the agencies can make to be more helpful is good,

but it never, ever goes far enough really. You know, either the

agencies themselves do not specifically know what language to put

it in to make it small-business-friendly—there is almost always too

much small business language in compliance guides. Agencies are

sort of reluctant to make it as simple as possible, largely because

it covers their own—well, it covers themselves. If they get too specific in how to be helpful, you know, they think that—well, they

think that they will not be able to assess fines or go after people,

but, you know——

Mr. OSE. Too helpful?

Mr. LANGER. You know, I have always gotten the feeling they do

not want to make it too helpful for people. They do not want to

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make it simple enough. That way, if there is any political

blowback, they can say, well, it was not that specific.

I will give you an example, a case that came out of Texas about

10 years ago in which a large chemical company was given an exemption from complying with the national emission standards for

hazardous air pollutants. This chemical company was given an express exemption from having to comply with tenets of this regulation, and several years later EPA came back and said, no, we were

wrong. We didn’t mean to tell you you were exempt, and we are

going to assess you a fine of $40 million, $2,000 per day, per violation.

I have always gotten the feeling that agencies don’t want to

make it that easy for businesses to comply in just sort of instances

like that, where they can go back—if you have a new administration that comes in that may have different priorities for how to enforce, you know, they want to be able to go back and revisit things

and change guidance and change interpretation. So I would like to

see agencies go further. They can always go further, as far as I am

concerned.

In the instance of lead TRI, to give you an example lately, we

went through the guidance documents lately with senior EPA officials including, Kim Nelson, and I was met with a great deal of reluctance on the part of EPA to make that more clear. I wanted a

specific table of contents which specifically asks questions about

lead TRI: Here is where you go to get an answer to that question.

The EPA claimed—well, I don’t remember what they said, but they

were very reluctant to provide that guidance, and, as we all know,

many small businesses out there, they reported they had no releases whatsoever, and they still have to continue to fill out this

paperwork.

It just seems to me that EPA—there is always room for improvement, and the lead TRI example is a very good object lesson, as far

as I am concerned.

Mr. OSE. Anything?

All right. Anything else?

All right. We’re going to leave the record open for 10 days in case

other Members may have additional questions or we think there is

something that we forgot to ask.

Mr. LANGER. Great.

Mr. OSE. I want to thank you.

Mr. LANGER. Thank you very much.

Mr. OSE. For those agencies that are still in the room, we appreciate your taking part today. I think we made a little bit of

progress today, and I look forward to working with you in the future.

We are adjourned.

[Whereupon, at 6:12 p.m., the subcommittees were adjourned.]

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