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106th Congress                                             Report 106-8
  1st Session           HOUSE OF REPRESENTATIVES              Part 1   

=======================================================================



 
       SMALL BUSINESS PAPERWORK REDUCTION ACT AMENDMENTS OF 1999

                                _______
                                

                February 5, 1999.--Ordered to be printed

                                _______


    Mr. Burton of Indiana, from the Committee on Government Reform, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 391]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Government Reform, to whom was referred 
the bill (H.R. 391) to amend chapter 35 of title 44, United 
States Code, for the purpose of facilitating compliance by 
small businesses with certain Federal paperwork requirements, 
to establish a task force to examine the feasibility of 
streamlining paperwork requirements applicable to small 
businesses, and for other purposes, having considered the same, 
report favorably thereon without amendment and recommend that 
the bill do pass.

                                CONTENTS

                                                                   Page
   I. Purpose.....................................................     2
  II. Need for Legislation........................................     4
 III. Committee Action............................................     8
  IV. Section-by-Section Analysis.................................     8
   V. Oversight Findings..........................................    10
  VI. Budget Analysis and Projections.............................    10
 VII. Congressional Budget Office Estimate........................    10
VIII. Constitutional Authority Statement..........................    13

  IX. Changes in Existing Law Made by the Bill, as reported.......    13
   X. Committee Recommendations...................................    16
  XI. Congressional Accountability Act; Public Law 104-1..........    17
 XII. Unfunded Mandates Reform Act; Public Law 104-4, Section 425.    17
XIII. Federal Advisory Committee Act (5 U.S.C. App) Sec. 5B.......    17

Minority Views....................................................    19

                               I. Purpose

    The purpose of the ``Small Business Paperwork Reduction Act 
Amendments of 1999'' is to reduce the burden of Federal 
paperwork on small businesses by requiring the publication of a 
list of all the Federal paperwork requirements on small 
businesses; requiring each Federal agency to establish one 
point of contact for small businesses on paperwork issues; 
requiring the agencies to allow small businesses to correct 
first-time paperwork violations before civil fines are 
assessed, except when doing so would harm or threaten public 
health and safety, impede criminal detection, or involve an 
internal revenue law; requiring the agencies to further reduce 
paperwork for small businesses with fewer than 25 employees; 
and forming a task force of agency representatives to study the 
feasibility of streamlining Federal reporting requirements on 
small businesses. The bill amends Chapter 35, Title 44, 
otherwise known as the ``Paperwork Reduction Act of 1995'' 
(PRA).

                                Summary

    In brief, the Small Business Paperwork Reduction Act 
Amendments of 1999 are intended to do the following:
          A. Require the Office of Management and Budget's 
        (OMB) Office of Information and Regulatory Affairs 
        (OIRA) to publish a list annually on the Internet and 
        in the Federal Register of all the Federal paperwork 
        requirements for small business.
          Section 2 (a) requires the Director of OMB to 
        authorize the Administrator of OIRA to publish this 
        list. The definition for ``small business,'' in this 
        section and throughout the bill, is the one used in the 
        Small Business Act (15 U.S.C. 631 et seq). Small 
        business is defined as an enterprise which is 
        ``independently owned and operated and which is not 
        dominant in its field of operation.'' It is further 
        defined by the Small Business Size Regulations (13 CFR 
        121), which set the size standards businesses must meet 
        to qualify as a small business. ``Collection of 
        information'' is the term used throughout the PRA to 
        define paperwork. It includes requirements for 
        reporting to the government and disclosure to third 
        parties, as well as recordkeeping.
          B. Require each agency to establish one point of 
        contact to act as a liaison with small businesses.
          Section 2(b) requires each agency to establish one 
        point of contact to act as a liaison between small 
        businesses and the agency regarding paperwork 
        requirements and the control of paperwork.
          C. Suspend civil fines on small businesses for first-
        time paperwork violations so that the small businesses 
        may correct the violations.
          Section 2 (b) provides that civil fines may be 
        suspended for six months unless the agency head 
        determines that the violation has caused actual serious 
        harm; that waiving the fine would impede the detection 
        of criminal activity; that the violation is a violation 
        of the internal revenue laws or any law concerning the 
        assessment or collection of a tax, debt, revenue or 
        receipt; or that the violation presents an imminent and 
        substantial danger to the public health and safety. If 
        the agency head determines that the violation presents 
        an imminent and substantial danger to the public health 
        and safety, the agency head may impose a fine or 
        suspend the fine for 24 hoursto allow the small 
business to correct the violation. In making this determination, the 
agency head shall take into account all the facts and circumstances of 
the violation, including the following factors: (1) the nature and 
seriousness of the violation, including whether it is willful or 
criminal; (2) whether the small business has made a good faith effort 
to comply and correct the violation; (3) the previous compliance 
history of the small business, including any past enforcement actions 
against its owners or principals; and (4) whether the small business 
has obtained a significant economic benefit from the violation. Only 
civil fines may be suspended, not criminal fines. Only fines assessed 
for violations of collection of information (paperwork) requirements 
may be suspended, not fines for violations of other regulatory 
requirements. The suspension of fines provisions of this section also 
apply to States that are administering Federal regulatory requirements.
          D. Further reduce paperwork for businesses with fewer 
        than 25 employees.
          Section 2(c) requires each agency to make further 
        efforts to reduce paperwork for small businesses with 
        fewer than 25 employees, in addition to meeting the 
        current paperwork reduction requirements of the PRA.
          E. Establish a task force, convened by OIRA, to study 
        the feasibility of streamlining reporting requirements 
        for small businesses.
          Section 3 establishes a task force to study the 
        feasibility of streamlining reporting requirements for 
        small businesses. The Director of OMB will authorize 
        the Administrator of OIRA to appoint the members of the 
        task force. The members will include representatives 
        from different agencies, including the Bureau of Labor 
        Statistics (BLS) and the Occupational Safety and Health 
        Administration (OSHA) of the Department of Labor (DOL), 
        the Department of Transportation (DOT), the 
        Environmental Protection Agency (EPA), and the Office 
        of Advocacy in the Small Business Administration (SBA), 
        in addition to other agencies that the Director 
        determines could contribute to this effort. The task 
        force will examine the feasibility of requiring the 
        agencies to consolidate reporting requirements in order 
        that each small business may submit all information 
        required by the agency to one point of contact at the 
        agency, in a single format or using a single electronic 
        reporting system, and on one date. After one year, the 
        task force will report its findings to the House 
        Government Reform and Small Business Committees and the 
        Senate Governmental Affairs and Small Business 
        Committees. If the task force finds that consolidating 
        reporting requirements so that small businesses can 
        make annual submissions to each agency on one form or a 
        single electronic reporting system will not work or 
        reduce the burden in a meaningful way, the task force 
        will make recommendations to the Committees on what 
        will work to streamline and reduce the burden of 
        reporting requirements for small businesses.

                        II. Need for Legislation

    The burden of federal regulations on the American public 
continues to grow. Total regulatory costs in 1998 were 
approximately $700 billion. When these costs are passed on to 
the consumer, the typical family of four pays approximately 
$6,875 per year in hidden regulatory costs. Families spend more 
on regulation than on medical expenses, food, transportation, 
recreation, clothing, and savings. In fact, U.S. regulatory 
costs in 1997 ($688 billion) were estimated to exceed 1996 
personal income taxes ($631 billion) and 1995 corporate profits 
($601 billion).1
---------------------------------------------------------------------------
    \1\ Clyde Wayne Crews, Jr., ``Ten Thousand Commandments: A 
Policymaker's Snapshot of the Federal Regulatory State'', 1998 Edition.
---------------------------------------------------------------------------
    Small businesses are particularly hurt by the regulatory 
burden. The SBA reports that the smallest firms carry the 
heaviest regulatory burdens--small businesses bear 63 percent 
of the total regulatory burden. Firms with 20-49 employees 
spend, on average, 19 cents out of every revenue dollar on 
regulatory costs. The total regulatory burden on small 
businesses is $247 billion and on large businesses is $148 
billion.2
---------------------------------------------------------------------------
    \2\ Small Business Administration, ``The Changing Burden of 
Regulation, Paperwork, and Tax Compliance on Small Business'', 1995.
---------------------------------------------------------------------------
    Not only are regulatory costs higher for small businesses 
but also they are harder to absorb. Small businesses cannot 
afford to comply with regulations in the same way that large 
businesses can. The high cost of regulations often makes it 
impossible for small businesses to expand, threatens their 
ability to stay afloat, or prevents them from opening in the 
first place. At the National Economic Growth, Natural Resources 
and Regulatory Affairs Subcommittee's May 16, 1996 hearing, 
``The Impact of Regulations on Employment,'' a small business 
owner from Sumner, Washington testified that the cost of 
regulations stopped her from opening a new business. When Judi 
Moody and her husband tried to open a small bookstore and cafe, 
they ran into so much regulation and paperwork that they could 
not proceed. She recalled at least 25 forms they would have to 
complete, and those were from DOL alone. They would have needed 
to hire a lawyer before they even opened the door. Mrs. Moody 
and her husband just wanted to hire a couple of employees to 
sell books and coffee. But because of government paperwork, 
they were not able to realize their dream and create more jobs.
    Small businesses need a break on regulations and regulatory 
paperwork, not only because they bear more of the costs but 
also because they are a crucial part of the American economy. 
There are 22 million small businesses in the United States. 
Small businesses with fewer than 500 employees make up the vast 
majority of all employer firms--99.7 percent. And small 
businesses generate approximately 50 percent of U.S. jobs and 
sales. One of small businesses' biggest contributions to the 
economy is that they hire a greater proportion of individuals, 
who might otherwise be unemployed, than large businesses. Very 
small firms (fewer than 10 employees) hire part-time workers at 
a rate almost twice that of very large firms (1000 or more 
employees). Small firms employ a higher proportion of workers 
under age 25 and age 65 and over. Small firms have a higher 
ratio of employees with lower educational levels--a high school 
degree or less--than large firms. Small firms employ more 
individuals on public assistance than large firms.3
---------------------------------------------------------------------------
    \3\ Small Business Administration, ``Characteristics of Small 
Business Owners and Employees'', 1997.
---------------------------------------------------------------------------
    The single most costly type of regulation is paperwork 
compliance. Regulatory paperwork costs are higher than any 
other regulatory costs, particularly for small businesses. For 
firms with fewer than 20 employees, paperwork regulations cost 
$2,017 per employee per year. For firms with 20 to 499 
employees, paperwork regulations cost $1,931 per employee per 
year. For firms with 500 or more employees, paperwork 
regulations cost $1,086 per employee per year.4
---------------------------------------------------------------------------
    \4\ Thomas D. Hopkins, ``Regulatory Costs in Profile'', 1996.
---------------------------------------------------------------------------
    One of the main areas of concern voiced by representatives 
at President Clinton's 1995 White House Conference on Small 
Business was paperwork burden. The sheer scope of government-
mandated paperwork explains why it is such a problem--the 
estimated total paperwork burden for 1998 was 7 billion 
hours.5 Unfortunately, past efforts to fix the 
problem are not working. The PRA's legal requirement for 1996--
a 10 percent reduction in paperwork--was not achieved. 
Paperwork was only reduced 2.6 percent in 1996. Instead of 
another 10 percent reduction in 1997, paperwork was increased 
2.3 percent. Instead of a five percent reduction in 1998, 
paperwork was increased an additional 1.0 percent.6 
According to the General Accounting Office, the agencies were 
unlikely to meet OMB's goal of a 25 percent reduction in the 
cumulative paperwork burden by the end of fiscal year 1998. EPA 
officials confirmed that their agency would not meet the 
goal.7 The total cost of the paperwork burden in 
1998 is estimated to be $229 billion.8 Paperwork 
(categorized as process regulation) accounts for one third of 
total regulatory compliance spending--a dramatic increase from 
one fifth in 1977.9 Paperwork in 1992 accounted for 
some 40 percent of total business regulatory costs and the 
burden is increasing.10
---------------------------------------------------------------------------
    \5\ Office of Management and Budget, Information Collection Budget 
of the United States Government, 1998.
    \6\ Office of Management and Budget, ``Information Collection 
Budget of the United States Government'', 1998.
    \7\ General Accounting Office 1997 Testimony, ``Paperwork 
Reduction: Government Goals Unlikely to be Met.''
    \8\ Small Business Administration, ``The Changing Burden of 
Regulation, Paperwork, and Tax Compliance on Small Business'', 1995.
    \9\ Thomas D. Hopkins, ``Regulatory Costs in Profile'', 1996.
    \10\ Small Business Administration, ``The Changing Burden of 
Regulation, Paperwork, and Tax Compliance on Small Business'', 1995.
---------------------------------------------------------------------------
    Another area of concern to small businesses is the 
enforcement of regulations and the levying of fines for 
violations. The Federal agencies were required by the Small 
Business Regulatory Enforcement Fairness Act (SBREFA), passed 
in 1996, to make appropriate allowances for small businesses in 
the enforcement of regulations. In particular, SBREFA required 
the agencies which enforce regulations for small businesses to 
develop plans forwaiving and/or reducing fines as appropriate. 
They were required to submit these plans to Congress by March 31, 1998. 
But many of the agencies still have not submitted their plans to 
Congress. These include: the Department of Justice (DOJ), which is the 
sixth biggest non-tax agency assessing penalties; five other cabinet 
departments; the Architectural and Transportation Barriers Control 
Board; and several other independent agencies. In fact, only 22 
agencies have submitted plans out of the 77 agencies that assess 
penalties. Furthermore, OMB ignored SBREFA completely in its June 1998 
``Federal Financial Management Status Report and Five-Year Plan,'' 
which reports to Congress under the Federal Civil Penalties Inflation 
Adjustment Act of 1990, as amended, on the Federal agencies'' annual 
assessment of civil monetary penalties.
    Many of the plans the agencies did submit to Congress do 
not include sufficient data to evaluate performance under 
SBREFA. For example, the Internal Revenue Service (IRS) and the 
Health Care Financing Administration (HCFA) did not include any 
information on the penalty reductions and waivers they granted 
to small businesses, if any, and the biggest penalty assessors 
--IRS, the Department of Health and Human Services, DOL, EPA, 
the Federal Reserve, DOJ, and the rest of the Department of 
Treasury, did not include the proportion of dollars waived of 
those assessed on small businesses. Many of the agencies that 
have submitted penalty waiver and reduction plans have not made 
significant waivers or reductions as a result of implementing 
these plans. In fact, the penalty policies that have been 
adopted by the agencies under SBREFA are, for the most past, 
settlement policies. When civil penalties are assessed for 
violations, a small business is forced to enter into 
negotiations with the agency to reduce or eliminate the 
penalties. The negotiation process can be a legal nightmare for 
these small companies.
    On March 5, 1998, the Subcommittee held a hearing on the 
bill when it was introduced in the 105th Congress (as H.R. 
3310). At the hearing small business owners stressed the need 
for this legislation. They testified that the paperwork burden 
is so large and costly that, in many cases, their companies'' 
growth is stunted and they are unable to create more jobs. They 
also emphasized that most small business owners fear unknown 
regulations and paperwork more than known regulations and 
paperwork. Jere Glover, Chief Counsel of the SBA's Office of 
Advocacy, also testified in support of the bill. He stated that 
paperwork and reporting requirements remain a major cost 
problem for small businesses. He also stated that the 
legislation addresses almost all the concerns reported by the 
1995 White House Conference on Small Business.
    The bill addresses many of the concerns which the small 
business owners voiced at the hearing. The bill's requirement 
that OIRA publish an annual list of all paperwork requirements 
on small business would help eliminate the fear of the unknown. 
For the first time, small business owners would be able to go 
to one source to discover all the paperwork they must complete. 
At the suggestion of William Saas, one of the witnesses at the 
hearing, Chairman McIntosh and Representative Kucinich amended 
the bill in the last Congress to require OIRA to make the list 
available on the Internet so that small businesses can access 
it easily. This comprehensive list will be particularly helpful 
to an entrepreneur who wants to start a small business. By 
referring to this list, any entrepreneur will be able to easily 
discover all the paperwork requirements he or she will have to 
meet. This list would also bring to light all the duplicative 
paperwork requirements placed on small business, providing 
Congress with the information it needs to eliminate these 
unnecessary burdens in the future.
    The bill's provision to suspend civil fines for first-time 
paperwork violations, except in cases of actual serious harm or 
an imminent threat to public health and safety, would relieve 
small business owners of the fear that they will be fined for 
an innocent mistake or oversight. Chairman McIntosh wrote the 
bill with these concerns in mind. After hearing from small 
business owners at 18 field hearings, he particularly wanted to 
relieve them of fines for innocent violations of paperwork 
requirements. The witnesses testified that they would benefit 
from this provision in cases of omission due to ignorance of 
the requirements. They emphasized that it is practically 
impossible to be aware of and keep up with all the Federal 
paperwork requirements, particularly because new requirements 
are issued by the various Federal agencies every year.
    Gary Roberts, the owner of a small company which installs 
pipelines in Sulphur Springs, Indiana, testified that he was 
fined $750 by OSHA in May 1997 for not having a Hazardous 
Communication Program at a particular job site. The inspector 
was told that the program was in the main office, and that all 
the workers had been trained to follow it. One of the workers 
retrieved the program from the main office during the 
inspection. But, OSHA would not waive the fine. The consensus 
among the witnesses was that small business owners genuinely 
want to comply with regulations, but they are overwhelmed by 
the accompanying paperwork.
    Since then, the Committee has learned of other small 
business people who have been given hefty fines for first-time 
paperwork violations. Mr. Van Dyke, a muck crop farmer from 
Michigan, was fined in January 1999 for not having the proper 
employment disclosure paperwork. This omission was his first 
violation, and he settled for $17,000. Mr. Howes, who operates 
a small potato, pickle and strawberry farm, settled for $20,000 
because he did not have similar paperwork filed. This fine was 
for his first violation too. Struggling farmers and other small 
business owners cannot afford to pay high fines for innocent 
mistakes. Their biggest concern is not the paperwork 
requirements they know, but those they do not know.
    The bill would also make it easier for small business 
owners to receive answers to their paperwork questions because 
it requires each Federal agency to establish one point of 
contact to act as a liaison between the agency and small 
businesses on paperwork collection and control.
    Finally, the bill takes an important step toward 
streamlining and consolidating paperwork requirements for small 
businesses by establishing a task force of officials from 
several of the major regulatory agencies as well as SBA and 
OIRA. The task force would study the feasibility of 
streamlining and reducing the burden of reporting requirements 
so that small businesses could report to one point of contact 
at each agency, once a year, on one form. It would report its 
recommendations to the Congress after one year.
    On March 17, 1998, the Subcommittee held a second hearing 
to provide the Federal agencies with an opportunity to comment 
on the bill. Representatives from DOT, DOJ, the Securities and 
Exchange Commission (SEC), and DOL's OSHA testified at the 
hearing. All of the agency witnesses were concerned about the 
provision of the bill which would suspend fines for first-time 
paperwork violations. It was clear from the testimony that the 
agencies ignored the bill's carefully-crafted exceptions for 
violations which would result in actual harm or threaten public 
health and safety. All of the witnesses testified that the 
agencies should retain the authority to issue fines for first-
time paperwork violations in every instance with absolutely 
norestrictions.

                         III. Committee Action

    The ``Small Business Paperwork Reduction Act Amendments of 
1999'' (H.R. 391) was introduced on January 19, 1999, by 
National Economic Growth, Natural Resources and Regulatory 
Affairs Subcommittee Chairman David McIntosh.
    After introduction, the bill was referred to the Committee 
on Government Reform, and in addition, to the Committee on 
Small Business. On February 3, 1999, the Government Reform 
Committee held a mark up of the bill. By voice vote, the 
Committee approved reporting H.R. 391, as introduced, to the 
full House.
    Chairman Jim Talent, on behalf of the Small Business 
Committee, waived jurisdiction over H.R. 391, after reviewing 
the legislation and the legislative history.

                    IV. Section-by-Section Analysis

Section 1: Title

Section 2: Facilitation of compliance with federal paperwork 
        requirements

            Annual publication of federal paperwork requirements
    Section 2(a) amends Section 3504(c) of the PRA to require 
the Director of the Office of Management and Budget (OMB) to 
authorize the Administrator of the Office of Information and 
Regulatory Affairs (OIRA) to publish a list annually in the 
Federal Register and on the Internet of all the Federal 
paperwork requirements for small business. The list will be 
organized or indexed into useful categories by industry type to 
help small businesses identify which paperwork requirements 
apply to them. This includes categorization according to the 
North American Industrial Classification System and other ways 
that will be helpful and readily described. The first 
publication of the list will be not later than one year after 
the date of enactment of the Act. ``Collection of information'' 
is the PRA's term for paperwork. It is defined as ``the 
obtaining, causing to be obtained, soliciting, or requiring the 
disclosure to third parties or the public, of facts or opinions 
by or for an agency, regardless of form or format, calling for 
either--(i) answers to identical questions posed to, or 
identical reporting or recordkeeping requirements imposed on, 
ten or more persons, other than agencies, instrumentalities, or 
employees of the United States; or (ii) answers to questions 
posed to agencies, instrumentalities, or employees of the 
United States which are to be used for general statistical 
purposes.'' ``Small business concern'' is the term for a small 
business as it is used in the Small Business Act. It is defined 
as an enterprise which is ``independently owned and operated 
and which is not dominant in its field of operation.'' It is 
further defined by the Small Business Size Regulations (13 CFR 
121), which set the size standards businesses must meet to 
qualify as a small business.
            Establishment of agency point of contact for small business
    Section 2(b) amends Section 3506 of the PRA to require each 
agency to establish one point of contact to act as a liaison 
between small businesses and the agency regarding paperwork 
requirements and the control of paperwork.
            Suspension of fines for first-time paperwork violations
    Section 2(b) further provides that agencies shall suspend 
civil fines on small businesses for first-time paperwork 
violations so that the small businesses may correct the 
violations. If a small business does not correct the violation 
within the prescribed time period, the fine may be imposed. The 
fine shall be suspended for six months unless the agency head 
determines: (1) that the violation has caused actual serious 
harm to the public; (2) that failure to impose the fine would 
impede or interfere with the detection of criminal activity; 
(3) that the violation is a violation of an internal revenue 
law or any law concerning the assessment or collection of any 
tax, debt, revenue or receipt; or (4) that the violation 
presents an imminent and substantial danger to the public 
health or safety.
    If the violation presents an imminent and substantial 
danger to the public health and safety, the agency head may 
either impose the fine or suspend it for 24 hours so that the 
small business may correct the violation. In determining 
whether to give the small business 24 hours to correct the 
violation, the agency shall take into account all of the facts 
and circumstances of the violation, including: (1) the nature 
and seriousness of the violation, including whether the 
violation is technical or inadvertent or involves willful or 
criminal conduct; (2) whether the small business has made a 
good-faith effort to comply and remedy the violation in the 
shortest practicable time; (3) the previous compliance history 
of the small business, including whether its owners or 
principal officers have been subject to past enforcement 
actions; and (4) whether the small business has obtained 
significant economic benefit from the violation. If the agency 
head opts to impose the fine in this case, he or she must 
notify Congress of the decision within two months. Only civil 
fines may be suspended, not criminal fines. Only fines assessed 
for violations of collection of information (paperwork) 
requirements may be suspended, not fines for violations of 
other, related regulatory requirements. The suspension of fines 
provisions of this section also apply to States that are 
administering Federal regulatory requirements.
            Paperwork reduction for businesses with fewer than 25 
                    employees
    Section 2(c) amends Section 3506(c) of the PRA to require 
each agency to make further efforts to reduce paperwork for 
small businesses with fewer than 25 employees, in addition to 
meeting the paperwork reduction requirements of the Act.

Section 3: Establishment of a task force on the feasibility of 
        streamlining reporting requirements

    Section 3 adds a new Section to the PRA, Sec. 3521, to 
establish a task force to study the feasibility of streamlining 
reporting requirements for small businesses. The Director of 
OMB shall authorize the Administrator of OIRA to appoint the 
members of the task force. The members will include 
representatives from different agencies that could contribute 
to this effort, including DOL's BLS and OSHA, DOT, EPA, and 
SBA's Office of Advocacy. The task force will examine the 
feasibility of requiring the agencies to consolidate reporting 
requirements in order that each small business may submit all 
information required by the agency to one point ofcontact at 
the agency, in a single format or using a single electronic reporting 
system, and on one date. After one year, the task force will report its 
findings to the House Government Reform and Small Business Committees 
and the Senate Governmental Affairs and Small Business Committees. If 
the task force finds that consolidating reporting requirements so that 
small businesses may make annual submissions to each agency on one form 
or a single electronic reporting system will not work or reduce the 
burden in a meaningful way, the task force will make recommendations to 
the Committees on what will work to streamline and reduce the burden of 
reporting requirements for small businesses.

                         V. Oversight Findings

    Pursuant to Rule XIII, clauses 3(c)(1), of the Rules of the 
House of Representatives, the results and findings for these 
oversight activities are incorporated in the recommendations 
found in the bill and in this report.

                  VI. Budget Analysis and Projections

    H.R. 391 provides for no new authorization, budget 
authority or tax expenditures. Consequently, the provisions of 
section 308(a)(1) of the Congressional Budget Act of 1974 are 
not applicable.

             VII. Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, February 5, 1999.
Hon. Dan Burton,
Chairman, Committee on Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 391, the Small 
Business Paperwork Reduction Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are John R. 
Righter (for federal costs) and Susan Sieg (for the state and 
local impact).
            Sincerely,
                                                     ------
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 391--Small Business Paperwork Reduction Act Amendments of 1999

    Summary: H.R. 391 generally would seek to provide relief to 
small businesses by: (1) waiving civil fines and penalties for 
first-time violations of paperwork requirements, (2) directing 
the Office of Management and Budget to publish annually a list 
of applicable paperwork requirements, (3) requiring that 
agencies provide a single point of contact, and (4) 
establishing a multi-agency task force to study the feasibility 
of streamlining requirements for collecting and reporting 
information to the federal government.
    CBO estimates that enacting H.R. 391 would result in a net 
loss of government receipts of about $4 million a year, 
beginning in fiscal year 2000. That amount includes an 
estimated annual loss of civil monetary penalties (CMPs) of 
about $5 million, net of increased income and payroll taxes. 
(We estimate that any loss of receipts in fiscal year 1999 
would total less than $500,000.) Because the bill would affect 
receipts, pay-as-you-go procedures would apply. Agencies would 
also incur additional annual costs to publish a list of 
paperwork requirements and to participate in the multi-agency 
task force, but CBO expects that such costs would not be 
significant.
    H.R. 391 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
CBO estimates that complying with the provisions of the bill 
could cause states that are administering certain federal 
enforcement programs to forego revenues of less than $2 million 
a year.
    Estimated cost to the Federal Government: By waiving civil 
fines and penalties for first-time violations of paperwork 
requirements by small businesses, H.R. 391 would affect the 
collection of CMPs by federal regulatory agencies. CBO 
estimates that federal receipts would decline by about $4 
million a year beginning in 2000.
    The bill would prohit federal agencies from assessing CMPs 
for first-time paperwork violations, except for cases where the 
agency determines that the violation has caused serious harm or 
presents an imminent and substantial danger to the public 
health or safety, or where the violation is not corrected 
within six months of notification. The one-time relief also 
would not apply to violations involving the collection of any 
tax, debt, revenue, or receipt. In addition, the bill would 
allow an agency to forgo assessing a firm for violations that 
it considers to present an imminent and substantial danger to 
the public health or safety. If the agency elects not to waive 
the fine or penalty, the bill would require that it notify the 
Congress of the decision within 60 days.
    Agencies annually collect approximately $300 million in 
non-tax CMPs--excluding those collected by the Internal Revenue 
Service. Such fines are recorded as governmental receipts. The 
vast majority of such collections, however, are for non-
paperwork violations. Paperwork violations generally involve 
the failure to record and report information required by 
federal regulatory agencies to assist in enforcing health, 
safety, and environmental laws. Additionally, several federal 
statutes, including the Small Business Regulatory Enforcement 
Fairness Act of 1996, and Administration policy already require 
that agencies provide relief to small businesses from first-
time fines for paperwork violations. Among other things, 
agencies are required to consider a firm's size, its compliance 
history, whether it benefited economically from the violation, 
and its efforts to correct the violation in determining the 
amount of any fine or penalty.
    H.R. 391 would broaden this relief so as to prevent 
agencies from imposing any fine for the vast majority of first-
time offenses. Unfortunately, information from the agencies we 
contacted, including the Environmental Protection Agency (EPA), 
the Occupational Safety and Health Administration (OSHA), and 
the Departments of Justice and Transportation, indicates that 
agencies do not track the assessment or collection of CMPs by 
whether a penalized firm is a small business, a first-time 
offender, or in most cases, even whether the fine is for a 
paperwork violation. Consequently, the amount of collections 
that would be forgone under H.R. 391 is very uncertain.
    Based on limited information provided by OSHA, including 
the amount of fines assessed and collected for certain 
paperwork violations in 1997, the most recent year for which 
data are available, CBO estimates that annual collections by 
that agency would decrease by between $1.5 million and $2 
million. OSHA and EPA each account for close to one-quarter of 
all non-tax CMPs. Thus, we estimate that EPA would forgo a 
similar amount in collections of CMPs. For other agencies, 
which account for roughly one-half of the remaining non-
taxCMPs, but which appear to affect small businesses to a lesser 
degree, we estimate the government would forgo another $1 million to $2 
million annually. Thus, in total, CBO estimates that enacting H.R. 391 
would result in an annual loss of governmental receipts from CMPs of 
around $5 million. After adjusting for the income and payroll tax 
offset, CBO estimates a reduction in net governmental receipts of $4 
million, beginning in fiscal year 2000. Assuming the bill is enacted by 
this summer, we estimate that the net loss in governmental receipts for 
fiscal year 1999 would be less than $500,000.
    The bill also would increase annual discretionary costs for 
agencies to publish a list of paperwork requirements and to 
participate in the multi-agency task force, but CBO does not 
expect such increases to be significant.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in governmental receipts that are subject to pay-as-
you-go procedures are shown in the following table. For the 
purposes of enforcing pay-as-you-go procedures, only the 
effects in the current year, the budget year, and the 
succeeding four years are counted.

                                                         [By fiscal year, in million of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   1999    2000    2001    2002    2003    2004    2005    2006    2007    2008    2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays..............................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)
Changes in receipts.............................................       0      -4      -4      -4      -4      -4      -4      -4      -5      -5      -5
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Not applicable.

    Estimated impact on state, local, and tribal governments: 
H.R. 391 contains no intergovernmental mandates as defined in 
UMRA. However, states that have taken over the enforcement of 
federal programs, such as occupational safety and health, and 
safe drinking water, would be limited in their ability to 
enforce first-time paperwork violations. Because states have a 
choice whether to administer these programs and are not 
compelled to do so, changes in law governing the imposition of 
fines for paperwork violations would not constitute a mandate. 
States that are enforcing federal regulations under state 
programs could be expected to forgo penalties of less than $2 
million.
    Estimated impact on the private sector: H.R. 391 would 
impose no new private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal Costs: John R. Righter, 
Impact on State, Local, and Tribal Governments: Susan Sieg.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                VIII. Constitutional Authority Statement

    Clauses 1, 14 and 18 of Article I, Section 8 of the 
Constitution grants the Congress the power to enact this law.

       IX. Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(g) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

               CHAPTER 35 OF TITLE 44, UNITED STATES CODE

         CHAPTER 35--COORDINATION OF FEDERAL INFORMATION POLICY

Sec.
3501. Purposes.
     * * * * * * *
3521. Establishment of task force on feasibility of streamlining 
          information collection requirements.

Sec. 3504. Authority and functions of Director

  (a) * * *

           *       *       *       *       *       *       *

  (c) With respect to the collection of information and the 
control of paperwork, the Director shall--
          (1) * * *

           *       *       *       *       *       *       *

          (4) maximize the practical utility of and public 
        benefit from information collected by or for the 
        Federal Government; [and]
          (5) establish and oversee standards and guidelines by 
        which agencies are to estimate the burden to comply 
        with a proposed collection of information[.];
          (6) publish in the Federal Register on an annual 
        basis a list of the requirements applicable to small-
        business concerns (within the meaning of section 3 of 
        the Small Business Act (15 U.S.C. 631 et seq.)) with 
        respect to collection of information by agencies, 
        organized by North American Industrial Classification 
        System code and industrial/sector description (as 
        published by the Office of Management and Budget), with 
        the first such publication occurring not later than one 
        year after the date of the enactment of the Small 
        Business Paperwork Reduction Act Amendments of 1999; 
        and
          (7) make available on the Internet, not later than 
        one year after the date of the enactment of such Act, 
        the list of requirements described in paragraph (6).

           *       *       *       *       *       *       *


Sec. 3506. Federal agency responsibilities

  (a) * * *

           *       *       *       *       *       *       *

  (c) With respect to the collection of information and the 
control of paperwork, each agency shall--
          (1) * * *
          (2)(A) except as provided under subparagraph (B) or 
        section 3507(j), provide 60-day notice in the Federal 
        Register, and otherwise consult with members of the 
        public and affected agencies concerning each proposed 
        collection of information, to solicit comment to--
                  (i) * * *
          (B) for any proposed collection of information 
        contained in a proposed rule (to be reviewed by the 
        Director under section 3507(d)), provide notice and 
        comment through the notice of proposed rulemaking for 
        the proposed rule and such notice shall have the same 
        purposes specified under subparagraph (A) (i) through 
        (iv); [and]
          (3) certify (and provide a record supporting such 
        certification, including public comments received by 
        the agency) that each collection of information 
        submitted to the Director for review under section 
        3507--
                  (A) * * *

           *       *       *       *       *       *       *

                  (J) to the maximum extent practicable, uses 
                information technology to reduce burden and 
                improve data quality, agency efficiency and 
                responsiveness to the public[.]; and
          (4) in addition to the requirements of this Act 
        regarding the reduction of paperwork for small-business 
        concerns (within the meaning of section 3 of the Small 
        Business Act (15 U.S.C. 631 et seq.)), make efforts to 
        further reduce the paperwork burden for small-business 
        concerns with fewer than 25 employees.

           *       *       *       *       *       *       *

  (i)(1) In addition to the requirements described in 
subsection (c), each agency shall, with respect to the 
collection of information and the control of paperwork--
          (A) establish one point of contact in the agency to 
        act as a liaison between the agency and small-business 
        concerns (within the meaning of section 3 of the Small 
        Business Act (15 U.S.C. 631 et seq.)); and
          (B) in any case of a first-time violation by a small-
        business concern of a requirement regarding collection 
        of information by the agency, provide that no civil 
        fine shall be imposed on the small-business concern 
        unless, based on the particular facts and circumstances 
        regarding the violation--
                  (i) the head of the agency determines that 
                the violation has caused actual serious harm to 
                the public;
                  (ii) the head of the agency determines that 
                failure to impose a civil fine would impede or 
                interfere with the detection of criminal 
                activity;
                  (iii) the violation is a violation of an 
                internal revenue law or a law concerning the 
                assessment or collection of any tax, debt, 
                revenue, or receipt;
                  (iv) the violation is not corrected on or 
                before the date that is six months after the 
                date of receipt by the small-business concern 
of notification of the violation in writing from the agency; or
                  (v) except as provided in paragraph (2), the 
                head of the agency determines that the 
                violation presents an imminent and substantial 
                danger to the public health or safety.
  (2)(A) In any case in which the head of an agency determines 
that a first-time violation by a small-business concern of a 
requirement regarding the collection of information presents an 
imminent and substantial danger to the public health or safety, 
the head of the agency may, notwithstanding paragraph 
(1)(B)(v), determine that a civil fine should not be imposed on 
the small-business concern if the violation is corrected within 
24 hours of receipt of notice in writing by the small-business 
concern of the violation.
  (B) In determining whether to provide a small-business 
concern with 24 hours to correct a violation under subparagraph 
(A), the head of the agency shall take into account all of the 
facts and circumstances regarding the violation, including--
          (i) the nature and seriousness of the violation, 
        including whether the violation is technical or 
        inadvertent or involves willful or criminal conduct;
          (ii) whether the small-business concern has made a 
        good faith effort to comply with applicable laws, and 
        to remedy the violation within the shortest practicable 
        period of time;
          (iii) the previous compliance history of the small-
        business concern, including whether the small-business 
        concern, its owner or owners, or its principal officers 
        have been subject to past enforcement actions; and
          (iv) whether the small-business concern has obtained 
        a significant economic benefit from the violation.
  (3) In any case in which the head of the agency imposes a 
civil fine on a small-business concern for a first-time 
violation of a requirement regarding collection of information 
which the agency head has determined presents an imminent and 
substantial danger to the public health or safety, and does not 
provide the small-business concern with 24 hours to correct the 
violation, the head of the agency shall notify Congress 
regarding such determination not later than 60 days after the 
date that the civil fine is imposed by the agency.
  (4) Notwithstanding any other provision of law, no State may 
impose a civil penalty on a small-business concern, in the case 
of a first-time violation by the small-business concern of a 
requirement regarding collection of information under Federal 
law, in a manner inconsistent with the provisions of this 
subsection.

           *       *       *       *       *       *       *


Sec. 3521. Establishment of task force on feasibility of streamlining 
                    information collection requirements

  (a) There is hereby established a task force to study the 
feasibility of streamlining requirements with respect to small-
business concerns regarding collection of information (in this 
section referred to as the ``task force'').
  (b) The members of the task force shall be appointed by the 
Director, and shall include the following:
          (1) At least two representatives of the Department of 
        Labor, including one representative of the Bureau of 
        Labor Statistics and one representative of the 
        Occupational Safety and Health Administration.
          (2) At least one representative of the Environmental 
        Protection Agency.
          (3) At least one representative of the Department of 
        Transportation.
          (4) At least one representative of the Office of 
        Advocacy of the Small Business Administration.
          (5) At least one representative of each of two 
        agencies other than the Department of Labor, the 
        Environmental Protection Agency, the Department of 
        Transportation, and the Small Business Administration.
  (c) The task force shall examine the feasibility of requiring 
each agency to consolidate requirements regarding collections 
of information with respect to small-business concerns, in 
order that each small-business concern may submit all 
information required by the agency--
          (1) to one point of contact in the agency;
          (2) in a single format, or using a single electronic 
        reporting system, with respect to the agency; and
          (3) on the same date.
  (d) Not later than one year after the date of the enactment 
of the Small Business Paperwork Reduction Act Amendments of 
1999, the task force shall submit a report of its findings 
under subsection (c) to the chairmen and ranking minority 
members of the Committee on Government Reform and Oversight and 
the Committee on Small Business of the House of 
Representatives, and the Committee on Governmental Affairs and 
the Committee on Small Business of the Senate.
  (e) As used in this section, the term ``small-business 
concern'' has the meaning given that term under section 3 of 
the Small Business Act (15 U.S.C. 631 et seq.).

                      X. Committee Recommendations

    On February 3, 1999, a quorum being present, the Committee 
on Government Reform ordered the bill favorably reported by 
voice vote.

       Committee on Government Reform--106th Congress Record Vote

    Date: February 3, 1999.
    Amendment No. 1.
    Offered by: Hon. Dennis J. Kucinich (OH).
    Failed by Record Vote, 17 Ayes to 22 Nays.
    Vote by Members: Mr. Burton--Nay; Mrs. Morella--Aye; Mr. 
Shays--Nay; Ms. Ros-Lehtinen--Nay; Mr. McHugh--Nay; Mr. Horn--
Nay; Mr. Mica--Nay; Mr. Davis of Virginia--Nay; Mr. McIntosh--
Nay; Mr. Souder--Nay; Mr. Scarborough--Nay; Mr. LaTourette--
Nay; Mr. Sanford--Nay; Mr. Barr--Nay; Mr. Miller--Nay; Mr. 
Hutchinson--Nay; Mr. Terry--Nay; Mrs. Biggert--Nay; Mr. 
Walden--Nay; Mr. Ose--Nay; Mr. Doolittle--Nay; Mrs. Chenoweth--
Nay; Mr. Waxman--Aye; Mr. Owens--Aye; Mr. Towns--Aye; Mr. 
Condit--Aye; Mrs. Mink--Aye; Mr. Sanders--Aye; Ms. Norton--Aye; 
Mr. Fattah--Aye; Mr. Cummings--Aye; Mr. Kucinich--Aye; Mr. 
Blagojevich--Aye; Mr. Davis of Illinois--Aye; Mr. Tierney--Aye; 
Mr. Turner--Aye; Mr. Allen--Aye; Mr. Ford--Aye.

         XI. Congressional Accountability Act; Public Law 104-1

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(B)(3) of the Congressional Accountability Act (P.L. 104-1).

    XII. Unfunded Mandates Reform Act; Public Law 104-4, Section 425

    The Committee finds that the legislation does not impose 
any Federal Mandates within the meaning of Section 423 of the 
Unfunded Mandates Reform Act (P.L. 104-4).

   XIII. Federal Advisory Committee Act (5 U.S.C. APP.) Section 5(B)

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., Section 5(b).

                          House of Representatives,
                               Committee on Small Business,
                                  Washington, DC, February 3, 1999.
Hon. Dan Burton,
Chairman, Committee on Government Reform,
Washington, DC.
    Dear Mr. Chairman: This letter responds to your request 
that the Committee on Small Business waive its jurisdiction 
over H.R. 391, the Small Business Paperwork Reduction Act 
Amendments of 1999, as introduced on January 19, 1999. After 
reviewing this legislation and the detailed legislative history 
created by your Committee on these issues in the 105th 
Congress, I have agreed to waive the jurisdiction of the 
Committee on Small Business over this legislation.
    H.R. 391 would provide small businesses with much-needed 
relief from government paperwork. Specifically, the bill would: 
(1) put on the Internet a list of all Federal paperwork 
requirements for small business, organized by industry; (2) 
offer small businesses compliance assistance instead of fines 
on first-time paperwork violations, except in cases of actual 
harm or an imminent threat to public health and safety; (3) 
establish a Paperwork Czar at each agency who is the contact 
point for small businesses on paperwork requirements; and (4) 
establish a task force, including representatives from the 
major regulatory agencies, to study how to streamline reporting 
requirements for small businesses. These are all common sense 
approaches to help small business and I applaud your 
Committee's prompt action on this important measure.
    As you know, House Rule X, Organization of Committees, 
grants the Committee on Small Business with jurisdiction over 
``paperwork reduction.'' Our waiver of jurisdiction over H.R. 
391 is not designed to limit our jurisdiction over any future 
consideration of paperwork reduction legislation.
    I would like to thank you and your staff for your 
dedication and hard work on this issue. I look forward to 
working with you on this and other issues throughout the 106th 
Congress.
            Sincerely,
                                           James M. Talent,
                                                          Chairman.

                             MINORITY VIEWS

    The business community often complains about the burden of 
government regulations and the resulting paperwork. In response 
to this concern, Congress has passed paperwork reduction 
legislation such as the Paperwork Reduction Act (PRA) and the 
Small Business Regulatory Enforcement Fairness Act (SBREFA). 
Moreover, the Administration has streamlined regulations by 
reinventing government and implementing many of the 
recommendations made by the White House Conference on Small 
Businesses. We fully support efforts to reduce unnecessary 
paperwork for small businesses.
    There are a number of provisions in H.R. 391 that address 
streamlining paperwork requirements on small businesses. They 
require agencies to publish annually paperwork requirements on 
small businesses, to establish a small business liaison, to 
make efforts to reduce further the paperwork burden on small 
businesses with fewer than 25 employees, and to establish a 
task force to study the feasibility of streamlining paperwork 
requirements. However, we oppose the provisions in H.R. 391 
that prohibit the assessment of civil penalties for most first-
time violations of information collection requirements.

       I. Concerns About the Civil Penalty Provisions in H.R. 391

    The civil penalty provisions in section 2(b) of H.R. 391 
prohibit agencies from assessing civil fines for most first-
time information-related violations. These provisions remove 
agency discretion and create a safe haven for willful, 
substantial, and longstanding violations. They also preempt 
state law.

                     a. h.r. 391 has a broad scope

    Section 2(b) of H.R. 391 does not address merely technical 
violations of paperwork requirements. It applies to all federal 
reporting, recordkeeping, and disclosure requirements, 
including the failure to disclose important information to the 
public, such as warning consumers of the dangers of a product 
or prescription drug.
    Moreover, although the bill purports to address violations 
by ``small businesses,'' the definition of a ``small business 
concern'' includes many large businesses, including oil 
refineries with 1,500 employees and pharmaceutical 
manufacturers with 750 employees.

                  b. h.r. 391 impedes law enforcement

    H.R. 391 has been called ``The Lawbreaker's Immunity Act'' 
because it prevents federal agencies from levying fines even in 
cases where a business deliberately violates federal law. 
According to the Department of Justice: ``an automatic pass for 
first time offenders would give bad actors little reason to 
comply until caught. The bill will reward bad actors and those 
who would knowingly or in bad faith violate federal information 
collection requirements.'' 1
---------------------------------------------------------------------------
    \1\ Letter from Dennis Burke, Acting Assistant Attorney General, 
U.S. Department of Justice, to Chairman Dan Burton (February 2, 1999).
---------------------------------------------------------------------------
    The range of adverse effects of H.R. 391 is extraordinarily 
broad. If enacted, it would undermine enforcement of nursing 
home standards, environmental and labor laws, and food safety 
regulations. It would also affect drug enforcement, illegal 
immigration, pension security, financial markets, highway 
safety, product safety, and more.

        c. the exceptions in h.r. 391 do not protect the public

    The sponsors of H.R. 391 argue that it will not adversely 
affect public health because it contains exceptions in cases 
where violations ``caused actual serious harm'' or created ``an 
imminent and substantial danger.'' The point of many reporting 
requirements, however, is to prevent situations where the 
public is harmed or in imminent and substantial danger. It 
defeats the purpose of these requirements to require that the 
public be actually harmed or endangered before enforcement 
actions can be taken.

                      d. h.r. 391 preempts states

    Many federal laws--such as environmental and labor laws--
are enforced at the state level. In these situations, H.R. 391 
preempts state officials from making their own determinations 
regarding whether it is appropriate to fine first-time 
violators.
    Eliot Spitzer, Attorney General for the State of New York, 
wrote, ``The most objectionable element of the legislation is 
the preemption of State enforcement efforts found in Section 
2(b)(4). State and local regulators are the officials with the 
closest contact with the regulated community. Given their close 
intimate knowledge of the businesses they regulate, they are in 
a much better position than Congress to judge whether a 
particular small business is deserving of leniency of a first-
time violation. * * * Their jobs are difficult enough without 
further interference from Washington.'' 2
---------------------------------------------------------------------------
    \2\  Letter from Eliot Spitzer, Attorney General for the State of 
New York, to Chairman Burton (February 2, 1999).
---------------------------------------------------------------------------

                         II. Kucinich Amendment

    Unfortunately, the Committee did not adopt the provisions 
in an amendment offered by Rep. Kucinich. This amendment would 
have provided appropriate relief for first-time violations. It 
specifically provided that agencies must establish policies to 
reduce or waive civil penalties for first-time violations in 
appropriate circumstances. These policies would have taken into 
accountthe nature and seriousness of the violation, good faith 
efforts to comply and remedy violations, previous compliance history, 
financial benefit from the violation, and other relevant factors. This 
amendment would have dovetailed the penalty relief policies required 
under SBREFA, yet would have gone a step farther by expressly providing 
relief for first-time violators.

             III. Examples of Problems Created by H.R. 391

               A. H.R. 391 Undermines Environmental Laws

Reporting of toxic emissions

    Under EPA's Toxic Release Inventory (TRI), companies that 
meet reporting thresholds must report their emissions of toxic 
pollutants into a community's air or water. This requirement 
that businesses disclose their toxic emissions has prompted 
significant voluntary emission reductions. H.R. 391, however, 
would prevent agencies from assessing civil penalties against 
first-time violations, effectively waiving public reporting 
requirements until a business is caught. It would thus cripple 
an effective, voluntary, nonregulatory method of reducing 
pollution.

Drinking water protection

    Self-monitoring and reporting are the foundations of the 
Clean Water Act and the Safe Drinking Water Act. These 
reporting requirements are designed to give environmental 
protection officials knowledge of environmental compliance 
before any harm occurs. Under H.R. 391, however, EPA could not 
assess a fine unless it inspected the public water system and 
was able to prove that the failure to report the pollutant 
posed a substantial and imminent threat. This is an impossible 
burden. EPA only has enough staff to inspect our 200,000 public 
water systems once every 40 years. Moreover, the contamination, 
not the failure to report the contamination, creates the 
threat.

            B. H.R. 391 Undermines Consumer Protection Laws

Food safety regulations

    In 1996, the FDA implemented the Hazard Analysis Critical 
Control Point (HACCP) system of seafood inspection. This 
process replaces the century-old ``poke and sniff'' test as the 
primary method of preventing the sale of seafood contaminated 
with dangerous pathogens. HACCP requires seafood companies to 
identify local food safety hazards, such as toxins, parasites, 
and bacteria, and develop procedures to monitor on-site 
preventative control measures. Shellfish producers are also 
required to keep records of the origin of shellfish in case a 
recall is necessary. This entire system depends on processing 
plants to report their own compliance with food safety 
requirements. Under H.R. 391, however, FDA officials would be 
unable to enforce seafood safety laws, because initial 
violations of the recordkeeping requirements would be 
unenforceable. FDA's only alternative would be to take 
enforcement action after consumers become sick from eating 
poisoned seafood.

Lead-Poisoning regulations

    The Residential Lead-Based Paint Hazard Reduction Act of 
1992 requires persons who sell or lease housing to give buyers 
and renters a pamphlet describing lead-based paint hazards. The 
entire purpose of the law is to prevent children from becoming 
lead-poisoned by requiring that information about the risks of 
lead be distributed before a family moves into a home. Under 
H.R. 391, however, this law becomes unenforceable. Even if a 
real estate broker or landlord deliberately failed to 
distribute the pamphlet, EPA could not take enforcement action 
until after the health of a child has been injured or 
imminently endangered.

             C. H.R. 391 Undermines Worker Protection Laws

Firefighter safety

    Firefighters and emergency workers depend on having 
adequate information to respond safely and effectively to 
chemical or fire emergencies. If a business does not report its 
hazardous chemical inventories as required under the Emergency 
Planning and Community Right-to-Know Act, firefighters'' lives 
would be endangered if they were called to respond to a fire at 
the facility. Under H.R. 391, however, the failure to report 
hazardous chemical inventories would not be enforceable until 
after a dangerous situation has already developed.

Accident notification

    Federal labor laws require employers to report when an 
accident takes place in the workplace. These reporting 
requirements show the government where there might be a safety 
problem. The resulting inspections and enforcement actions have 
made work places safer. Injuries declined an average of 22% in 
workplaces where OSHA inspected and penalized employers for 
violations. If these reports are delayed or not filed, as is 
likely under H.R. 391, OSHA may not correct the problem in time 
to prevent another similar accident.

Employee education

    H.R. 391 would immunize employers from liability for 
failing to abide by information collection requirements 
relating to (1) telling workers the health effects of chemicals 
they work with and how to prevent illness and (2) training 
workers regarding the correct maintenance and service of 
factory machinery. Under H.R. 391, if there was a workplace 
accident, it would be difficult, if not impossible, to prove 
that the lack of employee education, not other factors, caused 
the accident. Therefore, under H.R. 391, agencies would rarely 
be able enforce these requirements.

Pension security

    The Employee Retirement Income Security Act (ERISA) 
currently establishes compliance incentives for pension 
administrators which are based on reporting requirements. 
Pension administrators must file an annual report with the 
government on the amount and type of plan assets, the income 
and expenses of the plan, and other vital information. H.R. 391 
would prohibit civil fines for first-time violation of this 
annual requirement. If a pension plan administrator were 
mishandling pension funds, H.R. 391 would shield the 
administrator from sanctions by prohibiting civil fines for 
first-time violations.

        D. H.R. 391 Undermines Laws that Protect Senior Citizens

Nursing homes

    Millions of elderly and disabled Americans receive care in 
thousands of nursing homes across the country. The federal 
government, through the Medicare and Medicaid programs, paid 
these homes nearly $28 billion in 1997. With millions of 
American lives at stake and billions of taxpayers dollars 
involved, the federal government has an important 
responsibility to ensure that the nursing homes are complying 
with federal law.
    An integral and critical component in ensuring that nursing 
homes are compliant is the reporting of accurate and reliable 
information by nursing homes on the health status of, and care 
provided to, residents.
    These reporting requirements are designed to give state and 
federal health officials knowledge of the residents' health and 
functional status, as well as to determine whether the quality 
of care they are receiving is adequate. The effectiveness of 
oversight is dependent on the receipt of accurate, reliable 
data that reflects the true state of residents' health and the 
nursing homes' provision of health care. If these reporting 
requirements are not met or if inaccurate data is provided, 
health officials will be unable to ensure that the health care 
provided to our most vulnerable citizens is of the highest 
standard.
    Nursing homes are required to report on a number of 
elements that reveal the functional status of the resident and 
the quality of care. A few examples of quality indicators are 
the number of contracturers (joints which are immobilized), the 
amount of unplanned weight loss, and the use of restraints on 
senior citizens. The inaccurate reporting of these indicators 
could result in health care officials failing to identify 
problems that affect the safety and health of nursing home 
residents.
    Under this legislation, a nursing home that deliberately 
underreports these problems would not be subject to civil 
fines. None of these reporting failures would fall into the 
bill's exceptions. It would be difficult, if not impossible, to 
show that the failure to report weight loss or use of 
restraints caused actual serious harm or presented an imminent 
and substantial danger to the public health and safety.

                E. H.R. 391 Deters Criminal Enforcement

Detecting drug trafficking and money laundering.

    Under federal law, financial institutions must report cash 
transactions exceeding $10,000. This requirement helps the 
federal government identify suspicious transactions that might 
indicate criminal activity. Under H.R. 391, however, there is 
little incentive for financial institutions to comply 
diligently with these requirements because, once caught, they 
cannot be fined. The bill provides that an agency may assess a 
penalty if ``the failure to impose a civil fine would impede or 
interfere with the detection of criminal activity.'' However, 
Dennis Burke, Acting Assistant Attorney General at the 
Department of Justice, wrote that this exception is ``an 
inappropriate standard. The failure to provide information * * 
* is what interferes with the detection of criminal activity. * 
* * [I]t may be difficult for an agency to determine that the 
failure to impose penalties `would' in a given case interfere 
with detection of criminal activity.''

Preventing illegal diversion of controlled substances.

    The Drug Enforcement Agency (DEA) requires pharmaceutical 
companies to verify the legitimacy of controlled substance 
sales to ensure that drug inventories are not lost or 
improperly diverted. H.R. 391 would make it easier for a 
physician or pharmacy who is illegally trafficking highly 
abused controlled substances. This is because the DEA would not 
be able to assess civil fines when it discovers that someone 
did not file the documentation.

              F. H.R. 391 Undermines Investor Protections

Investor protections.

    Many investors rely on investment advisors to provide 
professional help in managing or guiding their retirement and 
education savings. Advisors must disclose detailed information 
about their services and charges in SEC filings and in written 
form to investors. Under H.R. 391's penalty waiver provisions, 
an advisor with a suspicious history could avoid properly 
disclosing fees, disciplinary history, investment strategies, 
or other vital information to investors and be confident that 
the SEC could not assess a civil fine when he or she is finally 
caught.

                                   Henry A. Waxman.
                                   Elijah Cummings.
                                   Major R. Ownes.
                                   Edolphus Towns.
                                   Eleanor H. Norton.
                                   Bernard Sanders.
                                   John F. Tierney.
                                   Danny K. Davis.
                                   Rod R. Blagojevich.
                                   Dennis J. Kucinich.
                                   Tom Lantos.
                                   Bob Wise.
                                   Harold Ford, Jr.
                                   Carolyn B. Maloney.
                                   Patsy T. Mink.
                                   Thomas Allen.
                                   Paul E. Kanjorski.
                                   Chaka Fattah.