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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 942 Introduced in Senate (IS)]

  1st Session
                                 S. 942

To promote increased understanding of Federal regulations and increased 
   voluntary compliance with such regulations by small entities, to 
provide for the designation of regional ombudsmen and oversight boards 
 to monitor the enforcement practices of certain Federal agencies with 
 respect to small business concerns, to provide relief from excessive 
 and arbitrary regulatory enforcement actions against small entities, 
                        and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                June 16 (legislative day, June 5), 1995

 Mr. Bond (for himself, Mr. Domenici, Mr. Warner, Mrs. Hutchison, Mr. 
  Burns, Mr. Frist, and Mr. Coverdell) introduced the following bill; 
  which was read twice and referred to the Committee on Small Business

_______________________________________________________________________

                                 A BILL

 
To promote increased understanding of Federal regulations and increased 
   voluntary compliance with such regulations by small entities, to 
provide for the designation of regional ombudsmen and oversight boards 
 to monitor the enforcement practices of certain Federal agencies with 
 respect to small business concerns, to provide relief from excessive 
 and arbitrary regulatory enforcement actions against small entities, 
                        and for other purposes.
    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Small Business 
Regulatory Fairness Act of 1995''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
      TITLE I--REGULATORY SIMPLIFICATION AND VOLUNTARY COMPLIANCE

Sec. 101. Definitions.
Sec. 102. Compliance guides.
Sec. 103. No action letter.
Sec. 104. Voluntary self-audits.
Sec. 105. Defense to enforcement actions.
      TITLE II--SMALL BUSINESS RESPONSIVENESS OF COVERED AGENCIES

Sec. 201. Small business and agriculture ombudsman.
Sec. 202. Small business regulatory fairness boards.
Sec. 203. Services provided by small business development centers.
  TITLE III--FINANCIAL ACCOUNTABILITY OF COVERED AGENCIES RELATING TO 
                           FEES AND EXPENSES

Sec. 301. Administrative proceedings.
Sec. 302. Judicial proceedings.
SEC. 2. PURPOSES.

    The purposes of this Act are--
            (1) to change the relationship between regulators and small 
        entities;
            (2) to ameliorate the concern of small entities regarding 
        the effects of arbitrary Federal regulatory enforcement actions 
        on small entities;
            (3) to increase the comprehensibility of Federal 
        regulations affecting small entities;
            (4) to make Federal regulators accountable for their 
        actions; and
            (5) to provide small entities with a meaningful opportunity 
        for the redress of arbitrary enforcement actions by Federal 
        regulators.

      TITLE I--REGULATORY SIMPLIFICATION AND VOLUNTARY COMPLIANCE

SEC. 101. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:
            (1) Compliance guide.--The term ``compliance guide'' means 
        a publication made by a covered agency under section 102(a).
            (2) Covered agency.--The term ``covered agency'' has the 
        same meaning as in section 30(a) of the Small Business Act (as 
        added by section 201 of this Act).
            (3) No action letter.--The term ``no action letter'' means 
        a written determination from a covered agency stating that, 
        based on a no action request submitted to the agency by a small 
        entity, the agency will not take enforcement action against the 
        small entity under the rules of the covered agency.
            (4) No action request.--The term ``no action request'' 
        means a written correspondence submitted by a small entity to a 
        covered agency--
                    (A) stating a set of facts; and
                    (B) requesting a determination by the agency of 
                whether the agency would take an enforcement action 
                against the small entity based on such facts and the 
                application of any rule of the agency.
            (5) Rule.--The term ``rule'' has the same meaning as in 
        section 601(2) of title 5, United States Code.
            (6) Small entity.--The term ``small entity'' has the same 
        meaning as in section 601(6) of title 5, United States Code.
            (7) Small business concern.--The term ``small business 
        concern'' has the same meaning as in section 3 of the Small 
        Business Act.
            (8) Voluntary self-audit.--The term ``voluntary self-
        audit'' means an audit, assessment, or review of any operation, 
        practice, or condition of a small entity that--
                    (A) is initiated by an officer, employee, or agent 
                of the small entity; and
                    (B) is not required by law.

SEC. 102. COMPLIANCE GUIDES.

    (a) Compliance Guide.--
            (1) Publication.--If a covered agency is required to 
        prepare a regulatory flexibility analysis for a rule or group 
        of related rules under section 603 of title 5, United States 
        Code, the agency shall publish a compliance guide for such rule 
        or group of related rules.
            (2) Requirements.--Each compliance guide published under 
        paragraph (1) shall--
                    (A) contain a summary description of the rule or 
                group of related rules;
                    (B) contain a citation to the location of the 
                complete rule or group of related rules in the Federal 
                Register;
                    (C) provide notice to small entities of the 
                requirements under the rule or group of related rules 
                and explain the actions that a small entity is required 
                to take to comply with the rule or group of related 
                rules;
                    (D) be written in a manner to be understood by the 
                average owner or manager of a small entity; and
                    (E) be updated as required to reflect changes in 
                the rule.
    (b) Dissemination.--
            (1) In general.--Each covered agency shall establish a 
        system to ensure that compliance guides required under this 
        section are published, disseminated, and made easily available 
        to small entities.
            (2) Small business development centers.--In carrying out 
        this subsection, each covered agency shall provide sufficient 
        numbers of compliance guides to small business development 
        centers for distribution to small businesses concerns under 
        section 21(c)(3)(R) of the Small Business Act (as added by 
        section 202 of this Act).
    (c) Limitation on Enforcement.--
            (1) In general.--No covered agency may bring an enforcement 
        action in any Federal court or in any Federal administrative 
        proceeding against a small entity to enforce a rule for which a 
        compliance guide is not published and disseminated by the 
        covered agency as required under this section.
            (2) Effective dates.--This subsection shall take effect--
                    (A) 1 year after the date of the enactment of this 
                Act with regard to a final regulation in effect on the 
                date of the enactment of this Act; and
                    (B) on the date of the enactment of this Act with 
                regard to a regulation that takes effect as a final 
                regulation after such date of enactment.

SEC. 103. NO ACTION LETTER.

    (a) Application.--This section applies to all covered agencies, 
except--
            (1) the Federal Trade Commission;
            (2) the Equal Employment Opportunity Commission; and
            (3) the Consumer Product Safety Commission.
    (b) Issuance of No Action Letter.--Not later than 90 days after the 
date on which a covered agency receives a no action request, the agency 
shall--
            (1) make a determination regarding whether to grant the no 
        action request, deny the no action request, or seek further 
        information regarding the no action request; and
            (2) if the agency makes a determination under paragraph (1) 
        to grant the no action request, issue a no action letter and 
        transmit the letter to the requesting small entity.
    (c) Reliance on No Action Letter or Compliance Guide.--In any 
enforcement action brought by a covered agency in any Federal court, or 
Federal administrative proceeding against a small entity, the small 
entity shall have a complete defense to any allegation of noncompliance 
or violation of a rule if the small entity affirmatively pleads and 
proves by a preponderance of the evidence that the act or omission 
constituting the alleged noncompliance or violation was taken in good 
faith with and in reliance on--
            (1) a no action letter from that agency; or
            (2) a compliance guide of the applicable rule published by 
        the agency under section 102(a).

SEC. 104. VOLUNTARY SELF-AUDITS.

    (a) Inadmissibility of Evidence and Limitation on Discovery.--The 
evidence described in subsection (b)--
            (1) shall not be admissible, unless agreed to by the small 
        entity, in any enforcement action brought against a small 
        entity by a Federal agency in any Federal--
                    (A) court; or
                    (B) administrative proceeding; and
            (2) may not be the subject of discovery in any enforcement 
        action brought against a small entity by a Federal agency in 
        any Federal--
                    (A) court; or
                    (B) administrative proceeding.
    (b) Application.--For purposes of subsection (a), the evidence 
described in this subsection is--
            (1) a voluntary self-audit made in good faith; and
            (2) any report, finding, opinion, or any other oral or 
        written communication made in good faith relating to such 
        voluntary self-audit.
    (c) Exceptions.--Subsection (a) shall not apply if--
            (1) the act or omission that forms the basis of the 
        enforcement action is a violation of criminal law; or
            (2) the voluntary self-audit or the report, finding, 
        opinion, or other oral or written communication was prepared 
        for the purpose of avoiding disclosure of information required 
        for an investigative, administrative, or judicial proceeding 
        that, at the time of preparation, was imminent or in progress.

SEC. 105. DEFENSE TO ENFORCEMENT ACTIONS.

    (a) In General.--No covered agency may impose a fine or penalty on 
a small entity if the small entity proves by a preponderance of the 
evidence that--
            (1) the covered agency rule is vague or ambiguous; and
            (2) the interpretation by the small entity of the rule is 
        reasonable considering the rule and any applicable compliance 
        guide.
    (b) Interpretation of Rule.--In determining whether the 
interpretation of a rule by a small entity is reasonable, no deference 
shall be given to any interpretation of the rule by the agency that is 
not included in a compliance guide.

      TITLE II--SMALL BUSINESS RESPONSIVENESS OF COVERED AGENCIES

SEC. 201. SMALL BUSINESS AND AGRICULTURE OMBUDSMAN.

    The Small Business Act (15 U.S.C. 631 et seq.) is amended--
            (1) by redesignating section 30 as section 31; and
            (2) by inserting after section 29 the following new 
        section:

``SEC. 30. OVERSIGHT OF REGULATORY ENFORCEMENT.

    ``(a) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Board.--The term `Board' means a Small Business 
        Regulatory Fairness Board established under subsection (c).
            ``(2) Covered agency.--The term `covered agency' means any 
        agency that, as of the date of enactment of the Small Business 
        Regulatory Fairness Act of 1995, has promulgated any rule for 
        which a regulatory flexibility analysis was required under 
        section 605 of title 5, United States Code, and any other 
        agency that promulgates any such rule, as of the date of such 
        promulgation.
            ``(3) Ombudsman.--The term `ombudsman' means a Regional 
        Small Business and Agriculture Ombudsman designated under 
        subsection (b).
            ``(4) Region.--The term `region' means any area for which 
        the Administrator has established a regional office of the 
        Administration pursuant to section 4(a).
            ``(5) Rule.--The term `rule' has the same meaning as in 
        section 601(2) of title 5, United States Code.
    ``(b) Ombudsman.--
            ``(1) In general.--Not later than 180 days after the date 
        of enactment of the Small Business Regulatory Fairness Act of 
        1995, the Administrator shall designate in each region a senior 
        employee of the Administration to serve as the Regional Small 
        Business and Agriculture Ombudsman in accordance with this 
        subsection.
            ``(2) Duties.--Each ombudsman designated under paragraph 
        (1) shall--
                    ``(A) on a confidential basis, solicit and receive 
                comments from small business concerns regarding the 
                enforcement activities of covered agencies;
                    ``(B) based on comments received under subparagraph 
                (A), annually assign and publish a small business 
                responsiveness rating to each covered agency;
                    ``(C) publish periodic reports compiling the 
                comments received under subparagraph (A);
                    ``(D) coordinate the activities of the Small 
                Business Regulatory Fairness Board established under 
                subsection (c); and
                    ``(E) establish a toll-free telephone number to 
                receive comments from small business concerns under 
                subparagraph (A).''.

SEC. 202. SMALL BUSINESS REGULATORY FAIRNESS BOARDS.

    Section 30 of the Small Business Act (as added by section 201 of 
this Act) is amended by adding at the end the following new subsection:
    ``(c) Small Business Regulatory Fairness Boards.--
            ``(1) In general.--Not later than 180 days after the date 
        of enactment of the Small Business Regulatory Fairness Act of 
        1995, the Administrator shall establish in each region a Small 
        Business Regulatory Fairness Board in accordance with this 
        subsection.
            ``(2) Duties.--Each Board established under paragraph (1) 
        shall--
                    ``(A) advise the ombudsman on matters of concern to 
                small business concerns relating to the enforcement 
                activities of covered agencies;
                    ``(B) conduct investigations into enforcement 
                activities by covered agencies with respect to small 
                business concerns;
                    ``(C) issue advisory findings and recommendations 
                regarding the enforcement activities of covered 
                agencies with respect to small business concerns;
                    ``(D) review and approve, prior to publication--
                            ``(i) each small business responsiveness 
                        rating assigned under subsection (b)(2)(B); and
                            ``(ii) each periodic report prepared under 
                        subsection (b)(2)(C); and
                    ``(E) prepare written opinions regarding the 
                reasonableness and understandability of rules issued by 
                covered agencies.
            ``(3) Membership.--Each Board shall consist of--
                    ``(A) 1 member appointed by the President;
                    ``(B) 1 member appointed by the Speaker of the 
                House of Representatives;
                    ``(C) 1 member appointed by the Minority Leader of 
                the House of Representatives;
                    ``(D) 1 member appointed by the Majority Leader of 
                the Senate; and
                    ``(E) 1 member appointed by the Minority Leader of 
                the Senate.
            ``(4) Period of appointment; vacancies.--
                    ``(A) Period of appointment.--
                            ``(i) Presidential appointees.--Each member 
                        of the Board appointed under subparagraph (A) 
                        of paragraph (2) shall be appointed for a term 
                        of 3 years, except that the initial member 
                        appointed under such subparagraph shall be 
                        appointed for a term of 1 year.
                            ``(ii) House of representatives 
                        appointees.--Each member of the Board appointed 
                        under subparagraph (B) or (C) of paragraph (2) 
                        shall be appointed for a term of 3 years, 
                        except that the initial members appointed under 
                        such subparagraphs shall each be appointed for 
                        a term of 2 years.
                            ``(iii) Senate appointees.--Each member of 
                        the Board appointed under subparagraph (D) or 
                        (E) of paragraph (2) shall be appointed for a 
                        term of 3 years.
                    ``(B) Vacancies.--Any vacancy on the Board--
                            ``(i) shall not affect the powers of the 
                        Board; and
                            ``(ii) shall be filled in the same manner 
                        and under the same terms and conditions as the 
                        original appointment.
            ``(5) Chairperson.--The Board shall select a Chairperson 
        from among the members of the Board.
            ``(6) Meetings.--
                    ``(A) In general.--The Board shall meet at the call 
                of the Chairperson.
                    ``(B) Initial meeting.--Not later than 90 days 
                after the date on which all members of the Board have 
                been appointed, the Board shall hold its first meeting.
            ``(7) Quorum.--A majority of the members of the Board shall 
        constitute a quorum for the conduct of business, but a lesser 
        number may hold hearings.
            ``(8) Powers of the board.--
                    ``(A) Hearings.--The Board or, at its direction, 
                any subcommittee or member of the Board, may, for the 
                purpose of carrying out the provisions of this 
                section--
                            ``(i) hold such hearings, sit and act at 
                        such times and places, take such testimony, 
                        receive such evidence, administer such oaths; 
                        and
                            ``(ii) require, by subpoena or otherwise, 
                        the attendance and testimony of such witnesses 
                        and the production of such books, records, 
                        correspondence, memoranda, papers, documents, 
                        tapes, and materials as the Board or such 
                        subcommittee or member considers advisable.
                    ``(B) Issuance and enforcement of subpoenas.--
                            ``(i) Issuance.--Each subpoena issued 
                        pursuant to subparagraph (A) shall bear the 
                        signature of the Chairperson and shall be 
                        served by any person or class of persons 
                        designated by the Chairperson for that purpose.
                            ``(ii) Enforcement.--
                                    ``(I) In general.--In the case of 
                                contumacy or failure to obey a subpoena 
                                issued under subparagraph (A), the 
                                United States district court for the 
                                judicial district in which the 
                                subpoenaed person resides, is served, 
                                or may be found may issue an order 
                                requiring such person to appear at any 
                                designated place to testify or to 
                                produce documentary or other evidence.
                                    ``(II) Contempt of court.--Any 
                                failure to obey the order of the court 
                                issued under subclause (I) may be 
                                punished by the court as a contempt of 
                                that court.
                    ``(C) Witness allowances and fees.--Section 1821 of 
                title 28, United States Code, shall apply to witnesses 
                requested or subpoenaed to appear at any hearing of the 
                Board. The per diem and mileage allowances for any 
                witness shall be paid from funds available to pay the 
                expenses of the Board.
                    ``(D) Information from federal agencies.--Upon the 
                request of the Chairperson, the Board may secure 
                directly from the head any Federal department or agency 
                such information as the Board considers necessary to 
                carry out the provisions of this section.
                    ``(E)  Postal services.--The Board may use the 
                United States mails in the same manner and under the 
                same conditions as other departments and agencies of 
                the Federal Government.
                    ``(F) Donations.--The Board may accept, use, and 
                dispose of donations of services or property.
            ``(9) Board personnel matters.--
                    ``(A) Compensation.--Members of the Board shall 
                serve without compensation.
                    ``(B) Travel expenses.--Members of the Board shall 
                be allowed travel expenses, including per diem in lieu 
                of subsistence, at rates authorized for employees of 
                agencies under subchapter I of chapter 57 of title 5, 
                United States Code, while away from their homes or 
                regular places of business in the performance of 
                services for the Board.''.

SEC. 203. SERVICES PROVIDED BY SMALL BUSINESS DEVELOPMENT CENTERS.

    Section 21(c)(3) of the Small Business Act (15 U.S.C. 648(c)(3)) is 
amended--
            (1) in subparagraph (O), by striking ``and'' at the end;
            (2) in subparagraph (P), by striking the period at the end 
        and inserting a semicolon; and
            (3) by inserting immediately after subparagraph (P) the 
        following new subparagraphs:
                    ``(Q) providing assistance to small business 
                concerns regarding regulatory requirements, including 
                providing training with respect to cost-effective 
                regulatory compliance;
                    ``(R) developing informational publications, 
                establishing resource centers of reference materials, 
                and distributing compliance guides published under 
                section 102(a) of the Small Business Regulatory 
                Fairness Act of 1995 to small business concerns; and
                    ``(S) developing a program to provide confidential 
                onsite assessments and recommendations regarding 
                regulatory compliance to small business concerns and 
                assisting small business concerns in analyzing the 
                business development issues associated with regulatory 
                implementation and compliance measures.''.

  TITLE III--FINANCIAL ACCOUNTABILITY OF COVERED AGENCIES RELATING TO 
                           FEES AND EXPENSES

SEC. 301. ADMINISTRATIVE PROCEEDINGS.

    Section 504 of title 5, United States Code, is amended--
            (1) in subsection (b)(1)(B)--
                    (A) by striking ``, or (ii)'' and inserting ``, 
                (ii)''; and
                    (B) by striking the semicolon at the end of the 
                subparagraph and inserting the following: ``, or (iii) 
                a small entity as such term is defined in subsection 
                (g)(1)(D);'' and
            (2) by adding at the end the following new subsection:
    ``(g)(1) For purposes of this subsection, the term--
            ``(A) `covered agency' has the same meaning as in section 
        30(a) of the Small Business Act;
            ``(B) `fees and other expenses' has the same meaning as in 
        subsection (b)(1)(A), except that--
                    ``(i) clause (ii) of such subparagraph (A) shall 
                not apply; and
                    ``(ii) attorney's fees shall not be awarded at a 
                rate of pay in excess of $150 per hour unless the 
                adjudicative party determines that regional costs or 
                other special factors justify a higher fee;
            ``(C) `prevailing small entity'--
                    ``(i) means a small entity that raised a successful 
                defense to an agency enforcement action by a covered 
                agency in an adversary adjudication; and
                    ``(ii) includes a small entity that is a party in 
                an adversary adjudication in which the adjudicative 
                officer orders a corrective action or penalty against 
                the small entity that is less burdensome than the 
                corrective action or penalty
                 initially sought or demanded by the covered agency; 
and
            ``(D) `small entity' has the same meaning as in section 
        601(6).
    ``(2) For the purpose of making a finding of whether an award under 
subsection (a)(1) is unjust, in any case in which fees and other 
expenses would be awarded to a prevailing small entity as a prevailing 
party--
            ``(A) the adjudicative officer of the agency shall not 
        consider whether the position of the agency was substantially 
        justified; and
            ``(B) special circumstances shall be limited to 
        circumstances in which--
                    ``(i) the matters in the adversary adjudication are 
                matters for which there is little or no legal 
                precedent; or
                    ``(ii) findings of fact or conclusions of law are 
                based on inconsistent interpretations of applicable law 
                by different courts.
    ``(3) If a prevailing small entity is awarded fees and other 
expenses as a prevailing party under subsection (a)(1), such fees and 
other expenses shall include all fees and expenses incurred by the 
small entity in appearing in any proceeding the purpose of which is to 
determine the amount of fees and other expenses.
    ``(4) Fees and other expenses awarded to a prevailing small entity 
as a prevailing party under this section shall be paid by the covered 
agency from funds made available to the agency by appropriation or from 
fees or other amounts charged to the public if authorized by law. A 
covered agency may not increase any such fee or amount charged for the 
purpose of paying fees and other expenses awarded to a prevailing small 
entity as a prevailing party under this section.''.

SEC. 302. JUDICIAL PROCEEDINGS.

    Section 2412 of title 28, United States Code, is amended--
            (1) in subsection (d)(2)(B)--
                    (A) by striking ``, or (ii)'' and inserting ``, 
                (ii)''; and
                    (B) by striking the semicolon at the end of the 
                subparagraph and inserting the following: ``, or (iii) 
                a small entity as defined under subsection (g)(1)(D);'' 
                and
            (2) by adding at the end the following new subsection:
    ``(g)(1) For purposes of this subsection, the term--
            ``(A) `covered agency' has the same meaning as in section 
        30(a) of the Small Business Act;
            ``(B) `fees and other expenses' has the same meaning as in 
        subsection (d)(2)(A), except that--
                    ``(i) clause (ii) of such subparagraph (A) shall 
                not apply; and
                    ``(ii) attorney's fees shall not be awarded at a 
                rate of pay in excess of $150 per hour unless the court 
                determines that regional costs or other special factors 
                justify a higher fee;
            ``(C) `prevailing small entity'--
                    ``(i) means a small entity that raised a successful 
                defense to an agency enforcement action by a covered 
                agency in a civil action; and
                    ``(ii) includes a small entity that is a party in a 
                civil action in which the court orders a corrective 
                action or penalty against the small entity that is less 
                burdensome than the corrective action or penalty 
                initially sought or demanded by the covered agency; and
            ``(D) `small entity' has the same meaning as the term 
        `small entity' in section 601(6) of title 5.
    ``(2) For the purpose of making a finding of whether an award under 
subsection (d)(1)(A) is unjust, in any case in which fees and other 
expenses would be awarded to a prevailing small entity as a prevailing 
party--
            ``(A) the court shall not consider whether the position of 
        the United States was substantially justified; and
            ``(B) special circumstances shall be limited to 
        circumstances in which--
                    ``(i) the matters in the civil action are matters 
                for which there is little or no legal precedent; or
                    ``(ii) findings of fact or conclusions of law are 
                based on inconsistent interpretations of applicable law 
                by different courts.
    ``(3) If a prevailing small entity is awarded fees and other 
expenses as a prevailing party under subsection (d)(1)(A), such fees 
and expenses shall include all fees and expenses incurred by the small 
entity in appearing in any proceeding the purpose of which is to 
determine the amount of fees and other expenses.
    ``(4) Fees and other expenses awarded to a prevailing small entity 
as a prevailing party under this section shall be paid by the covered 
agency from funds made available to the agency by appropriation or from 
fees or other amounts charged to the public if authorized by law. A 
covered agency may not increase any such fee or amount charged for the 
purpose of paying fees and other expenses awarded to a prevailing small 
entity as a prevailing party under this section.''.
                                 <all>
S 942 IS----2
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