House Report 106-8 - SMALL BUSINESS PAPERWORK REDUCTION ACT AMENDMENTS OF 1999

[House Report 106-8]
[From the U.S. Government Publishing Office]

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) * * *

* * * * * * *

(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.