<DOC> [108th Congress House Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:90867.wais] WHAT IS OMB'S RECORD IN SMALL BUSINESS PAPERWORK RELIEF? ======================================================================= JOINT HEARING before the SUBCOMMITTEE ON ENERGY POLICY, NATURAL RESOURCES AND REGULATORY AFFAIRS of the COMMITTEE ON GOVERNMENT REFORM and the SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT of the COMMITTEE ON SMALL BUSINESS HOUSE OF REPRESENTATIVES ONE HUNDRED EIGHTH CONGRESS FIRST SESSION __________ JULY 18, 2003 __________ Serial No. 108-82 __________ Printed for the use of the Committees on Government Reform and Small Business Available via the World Wide Web: http://www.gpo.gov/congress/house http://www.house.gov/reform ______ 90-867 U.S. GOVERNMENT PRINTING OFFICE WASHINGTON : 2003 ____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512ÿ091800 Fax: (202) 512ÿ092250 Mail: Stop SSOP, Washington, DC 20402ÿ090001 COMMITTEE ON GOVERNMENT REFORM TOM DAVIS, Virginia, Chairman DAN BURTON, Indiana HENRY A. WAXMAN, California CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania MARK E. SOUDER, Indiana CAROLYN B. MALONEY, New York STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland DOUG OSE, California DENNIS J. KUCINICH, Ohio RON LEWIS, Kentucky DANNY K. DAVIS, Illinois JO ANN DAVIS, Virginia JOHN F. TIERNEY, Massachusetts TODD RUSSELL PLATTS, Pennsylvania WM. LACY CLAY, Missouri CHRIS CANNON, Utah DIANE E. WATSON, California ADAM H. PUTNAM, Florida STEPHEN F. LYNCH, Massachusetts EDWARD L. SCHROCK, Virginia CHRIS VAN HOLLEN, Maryland JOHN J. DUNCAN, Jr., Tennessee LINDA T. SANCHEZ, California JOHN SULLIVAN, Oklahoma C.A. ``DUTCH'' RUPPERSBERGER, NATHAN DEAL, Georgia Maryland CANDICE S. MILLER, Michigan ELEANOR HOLMES NORTON, District of TIM MURPHY, Pennsylvania Columbia MICHAEL R. TURNER, Ohio JIM COOPER, Tennessee JOHN R. CARTER, Texas ------ WILLIAM J. JANKLOW, South Dakota BERNARD SANDERS, Vermont MARSHA BLACKBURN, Tennessee (Independent) Peter Sirh, Staff Director Melissa Wojciak, Deputy Staff Director Rob Borden, Parliamentarian Teresa Austin, Chief Clerk Philip M. Schiliro, Minority Staff Director Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs DOUG OSE, California, Chairman WILLIAM J. JANKLOW, South Dakota JOHN F. TIERNEY, Massachusetts CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California JOHN M. McHUGH, New York PAUL E. KANJORSKI, Pennsylvania CHRIS CANNON, Utah DENNIS J. KUCINICH, Ohio JOHN SULLIVAN, Oklahoma CHRIS VAN HOLLEN, Maryland NATHAN DEAL, Georgia JIM COOPER, Tennessee CANDICE S. MILLER, Michigan Ex Officio TOM DAVIS, Virginia HENRY A. WAXMAN, California Dan Skopec, Staff Director Barbara F. Kahlow, Deputy Staff Director Melanie Tory, Professional Staff Member Krista Boyd, Minority Counsel COMMITTEE ON SMALL BUSINESS DONALD A. MANZULLO, Illinois, Chairman ROSCOE BARTLETT, Maryland, Vice NYDIA VELAZQUEZ, New York Chairman JUANITA MILLENDER-McDONALD, SUE KELLY, New York California STEVE CHABOT, Ohio TOM UDALL, New Mexico PATRICK J. TOOMEY, Pennsylvania FRANK BALLANCE, North Carolina JIM DeMINT, South Carolina DONNA CHRISTENSEN, Virgin Islands SAM GRAVES, Missouri DANNY DAVIS, Illinois EDWARD SCHROCK, Virginia CHARLES GONZALEZ, Texas TODD AKIN, Missouri GRACE NAPOLITANO, California SHELLEY MOORE CAPITO, West Virginia ANIBAL ACEVDEO-VILA, Puerto Rico BILL SHUSTER, Pennsylvania ED CASE, Haiwaii MARILYN MUSGRAVE, Colorado MADELEINE BORDALLO, Guam TRENT FRANKS, Arizona DENISE MAJETTE, Georgia JIM GERLACH, Pennsylvania JIM MARSHALL, Georgia JEB BRADLEY, New Hampshire MICHAEL RICHAUD, Maine BOB BEAUPREZ, Colorado LINDA SANCHEZ, California CHRIS CHOCOLA, Indiana ENI FALEOMAVAEGA, American Samoa STEVE KING, Iowa BRAD MILLER, North Carolina THADDEUS McCOTTER, Michigan J. Matthew Szymanski, Chief of Staff and Chief Counsel Phil Eskeland, Policy Director Michael Day, Minority Staff Director Subcommittee on Regulatory Reform and Oversight ED SCHROCK, Virginia, Chairman ROSCOE BARTLETT, Maryland CHARLES GONZALEZ, Texas, Ranking SUE KELLY, New York Democrat TRENT FRANKS, Arizona DONNA CHRISTENSEN, Virgin Islands JEB BRADLEY, New Hampshire ENI FALEOMAVAEGA, American Samoa STEVE KING, Iowa ANIBAL ACEVEDO-VILA, Puerto Rico THADDEUS McCOTTER, Michigan ED CASE, Haiwaii DENISE MAJETTE, Georgia Rosario Palmieri, Senior Professional Staff Member and Subcommittee Coordinator C O N T E N T S ---------- Page Hearing held on July 18, 2003.................................... 1 Statement of: Graham, Dr. John D., Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget........ 37 Kerrigan, Karen, chairman and founder, Small Business Survival Committee; and Andrew M. Langer, manager, regulatory policy, National Federation of Independent Business................................................... 63 Manzullo, Hon. Donald, a Representative in Congress from the State of Illinois.......................................... 20 Letters, statements, etc., submitted for the record by: Graham, Dr. John D., Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget, prepared statement of...................................... 40 Kerrigan, Karen, chairman and founder, Small Business Survival Committee, prepared statement of.................. 66 Langer, Andrew M., manager, regulatory policy, National Federation of Independent Business, prepared statement of.. 81 Manzullo, Hon. Donald, a Representative in Congress from the State of Illinois, prepared statement of................... 24 Ose, Hon. Doug, a Representative in Congress from the State of California: Information concerning single points of contact.......... 62 Prepared statement of.................................... 4 Report card.............................................. 117 Schrock, Hon. Edward L., a Representative in Congress from the State of Virginia, prepared statement of............... 15 Tierney, Hon. John F., a Representative in Congress from the State of Massachusetts, prepared statement of.............. 30 Voinovich, Hon. George, a Senator in Congress from the State of Ohio, prepared statement of............................. 18 WHAT IS OMB'S RECORD IN SMALL BUSINESS PAPERWORK RELIEF? ---------- FRIDAY, JULY 18, 2003 House of Representatives, Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs, Committee on Government Reform, joint with the Subcommittee on Regulatory Reform and Oversight, Committee on Small Business, Washington, DC. The subcommittees met, pursuant to notice, at 10 a.m., in room 2154, Rayburn House Office Building, Hon. Doug Ose (chairman of the Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs) presiding. Present from the Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs: Representatives Ose, Sullivan, and Tierney. Present from the Subcommittee on Regulatory Reform and Oversight: Representatives Schrock, Kelly, Franks, and Gonzalez. Staff present: Dan Skopec, staff director; Barbara Kahlow, deputy staff director; Melanie Tory, Rosario Palmieri, and Tim Slattery, professional staff members; Yier Shi, press secretary; Krista Boyd, minority counsel; and Cecelia Morton, minority office manager. Mr. Ose. Good morning. Welcome to today's hearing of the Government Reform Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs, and actually it is a joint hearing between our subcommittee and the Small Business Subcommittee on Regulatory Reform and Oversight. I am pleased to welcome my colleague Ed Schrock of Virginia, who is the chairman of the Small Business Subcommittee on Regulatory Reform and Oversight for today's hearing. Today, the subcommittees, represented by Congressman Schrock, me, and the others who will join us, will examine the track record of the Office of Management and Budget over the past 2\1/2\ years in paperwork reduction to benefit small businesses. Since many small businesses are not connected to the Internet, the hearing focus will be on the accomplishments, not including either electronic filing opportunities or other e-government initiatives. OMB estimates the Federal paperwork burden on the public at 8.2 billion hours. The IRS accounts for over 80 percent of that total. In April 2003, OMB estimated that the price tag for all paperwork imposed on the public is $320 billion a year. $320 billion a year. This is a huge burden especially on small businesses. In 1980, Congress passed the Paperwork Reduction Act and established an Office of Information and Regulatory Affairs. We are going to refer to that as OIRA from now on within OMB. OIRA's principal responsibility is paperwork reduction. In 1995, 1998, 2000 and 2002, Congress enacted additional legislation with the objective of decreasing paperwork burden. Also, last July, Congress directed OMB to identify and review proposed and existing IRS paperwork. Nonetheless, paperwork has increased in each of the last 7 years, with the largest increases in the last 2 years. And, OMB continues to devote less than one full-time equivalent staff position to IRS paperwork reduction. In its 2003 draft annual regulatory accounting report, OMB did not present an analysis of impacts on small business, as required by law. And, its final 2002 annual regulatory accounting report included a less than one page analysis of impacts on small business. In addition, in May 2003, OMB only identified e-government initiatives to reduce burden on small businesses; that is, instead of identifying any paperwork reduction initiatives to reduce frequency of small business reporting, introduce thresholds below which reporting is not required, use sampling versus universe reporting, create short forms for small businesses, etc. The Small Business Paperwork Relief Act of 2002, which is Public Law 107-198, required OMB to take certain actions by June 28, 2003, including publishing the first annual list of all compliance assistance resources available to small businesses, having each agency establish one point of contact to act as a liaison between small businesses and the agency regarding paperwork requirements, and report to Congress on the findings of an interagency task force chaired by OMB. On May 9, 2003, OMB published its draft task force report. On May 21st, four chairmen, Senate subcommittee chairman, Senator George Voinovich, House chairman, Congressman Donald Manzullo, House subcommittee chairman, Congressman Ed Schrock, and I submitted a joint comment letter to OMB. It criticized OMB's draft, including its initial faulty assumption that existing paperwork is both minimal and necessary and its unacceptable conclusion that OMB could not organize a listing of paperwork applicable to small business that would fully meet small business needs. On June 27th, OMB published two documents. Both were unsatisfactory. The first was an incomplete listing of compliance assistance resources and contact information for agency single points of contact, and I would refer you to that chart there leaning against the wall, the long vertical one. The second notice was a notice of availability of its final task report. The task report was largely nonresponsive to congressional intent. The bottom line is that OMB has not fully complied with this new law. And, OMB's track record in small business paperwork reduction to date has been dismal. As a former owner of various small businesses, I am disappointed to say the least. I do not understand how OMB could pick and choose which laws to fully implement. Congress wants and America's small businesses deserve results, fewer hours spent on government paperwork and lower compliance costs to increase productivity and job creation. Now, I am pleased, as I said, to welcome my good friend from Virginia, Mr. Schrock, and I would yield the floor to him. [The prepared statement of Hon. Doug Ose follows:] [GRAPHIC] [TIFF OMITTED] T0867.001 [GRAPHIC] [TIFF OMITTED] T0867.002 [GRAPHIC] [TIFF OMITTED] T0867.003 [GRAPHIC] [TIFF OMITTED] T0867.004 [GRAPHIC] [TIFF OMITTED] T0867.005 [GRAPHIC] [TIFF OMITTED] T0867.006 [GRAPHIC] [TIFF OMITTED] T0867.007 [GRAPHIC] [TIFF OMITTED] T0867.008 [GRAPHIC] [TIFF OMITTED] T0867.009 Mr. Schrock. Thank you very much, Mr. Chairman, and good morning to all of you. I want to start by saying how pleased I am to be co-chairing this hearing this morning with my good friend from California, Doug Ose. Doug is a small businessman himself, has long been a champion of these issues for a very long time, and it is a pleasure to be sitting up here with him today addressing these issues. Our hearing today addresses the Office of Management and Budget's final task force report on the Small Business Paperwork Relief Act. You will hear from many of our witnesses today about their disappointment at a missed opportunity. We think that this task force had the potential to make some great strides in eliminating unnecessary paperwork burdens for small businesses. Instead, the task force decided that initiatives, such as the Small Business Administration's Business Compliance One-Stop, were enough already. They just need to make a few changes to satisfy the letter of the law, no matter that we are 5 years or more away from it being a comprehensive tool. Federal agency paperwork continues to increase Congress and the executive branch can share in the blame. No question about that. But, it doesn't excuse us from making every effort possible to reduce the burden to small businesses. I hope that everyone recognizes what a great drain on the creative resources of our entrepreneurs this burden has become, all those hours and all that money spent on doing things that have nothing to do with creating jobs or making a better life for that citizen and his or her family. What a great waste of our natural resources. One recent example of unnecessary paperwork burden comes from the Environmental Protection Agency. EPA's TRI lead rule now requires thousands of small businesses to spend time and money filling out paperwork only to tell the EPA they have zero releases. EPA's compliance cost estimates for this rule was $7,000 per business. Understand that, $7,000 per business. In this reporting year, over 3,000 businesses reported nothing. Small businesses pay $21 million--that may not be real money to some people, but to small businesses that's real money--to comply with the rule that provided no information and no public health benefit. It is very disheartening to see our citizens subjected to this kind of regulatory buffoonery. Small businesses continue to be the leader in restoring our country to better economic growth. In economic times like these I hope that we will make sure that small businesses face the minimum burden necessary to accomplish worthy governmental goals. As I have said many times and I say every place I go when I am talking about business, government creates nothing, absolutely nothing. They just get in the way of those people who try to create business, and we need to get off their backs. Small business is clearly the backbone of this country. There is no question about that. Every time we create a new regulation we make it more and more difficult for them. My question is why all the paperwork? Why all the paperwork? To justify the existence of agencies downtown? Maybe. But, if that's the case, we need to put a stop to it because, if we don't, we are going to ruin businesses in this country forever and we will never get them back to where they were before. So, Mr. Chairman, I am delighted to be here and, believe me, I look forward to the testimony of every person here today. Thank you. [The prepared statement of Hon. Edward L. Schrock follows:] [GRAPHIC] [TIFF OMITTED] T0867.010 [GRAPHIC] [TIFF OMITTED] T0867.011 Mr. Ose. I thank the gentleman. We are also joined by the ranking member of the Small Business Subcommittee, Mr. Gonzalez, who I am pleased to recognize for an opening statement. Mr. Gonzalez. Thank you very much, Mr. Chairman, and I will be real brief and I guess just start with a general observation in what we always seek and seem not to ever accomplish. But, I am one that believes in regulation as long as it's reasonable because it does serve a public purpose. It is about integrity. It's about leveling the playing field. Governmental regulation is about accountability and responsibility and duty. The problem is when it becomes burdensome and inefficient. But, we don't do away with regulation, reasonable regulation. And, I think we all can agree on that, whether you're Republican or a Democrat. So, we seek solutions on doing away with that which is not necessary and being efficient with that which is necessary. Unfortunately, I don't think we have ever accomplished that. This is only my 5th year in Congress and I guess we could do this just about every other year. Hopefully, we will make some real progress. My sense of it will always be there is no consequence to an agency or a department or any mandate that is charged with the responsibility of executing the desires of Congress. It's simply not done. We'll have a hearing. We'll hear about the efforts and how they fall short and nothing happens. I am hoping that will change and I do believe there should be consequences, and with that I look forward to the testimony and again thank you, Mr. Chairman. Mr. Ose. I thank the gentleman. I'd also like to welcome the gentleman from Oklahoma, Mr. Sullivan. I understand he does not have an opening statement and any time you want to come to this committee without an opening statement you are always definitely welcome. All right. We had scheduled here the appearance of Senator Voinovich, who has been called away. He has submitted testimony in writing and we are going to submit that testimony for the record. Without objection, so ordered. [The prepared statement of Hon. George Voinovich follows:] [GRAPHIC] [TIFF OMITTED] T0867.012 [GRAPHIC] [TIFF OMITTED] T0867.013 Mr. Ose. We have three panels here. Our first panel is going to be with Congressman Manzullo, the chairman of the Small Business Committee. Our next panel will be Dr. Graham, and our third panel will be Ms. Kerrigan and Mr. Langer. So, Mr. Chairman, this is your show. We are most grateful for your attendance. We'll give you a moment to collect your thoughts. STATEMENT OF HON. DONALD MANZULLO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS Mr. Manzullo. Well, thank you very much. Mr. Ose. I want to welcome the chairman of the Small Business Committee. Mr. Manzullo. Thank you. Before I begin my testimony, we have a distinguished visitor here from the European Parliament, from the Birmingham area of England, Malcolm Hargrove. Malcolm, do you want to stand up? Malcolm is involved with the Small Business Committee in England and, rather, with the European Parliament, and I think we should all give him a big American welcome for visiting us. Obviously he was thrilled by the speech yesterday by the Prime Minister. Chairman Ose and Chairman Schrock, I want to thank you for holding this hearing today. A full 13 months ago President George Bush signed the Small Business Paperwork Relief Act of 2002. This legislation was supposed to be the starting point to make communication between small businesses and agencies easier. It was also supposed to be the start of a new kind of dialog between Federal agencies. It was supposed to be the moment where individual agencies began to understand that they are not alone in creating paperwork requirements for small businesses. It reminds me of my children's complaints about teachers and homework. Each teacher is in his or her own world when it comes to assigning students homework and deadlines. And, so, unless those teachers talk to each other, they may never realize how their one small project is just one-fifth or one- sixth of all the work that's been assigned to that student. In the case of government, agencies don't realize that their individual requirements are often one-twentieth of the total burden that the government places on small businesses. I fear that the momentum we tried to create with the Small Business Paperwork Relief Act has passed us by. Chairman Ose made note of the fact that even something as simple as producing a list of compliance assistance resources and single points of contact for agencies was produced haphazardly and without much attention to detail. It is my hope that the Office of Management and Budget would take this task more seriously. I think most people would be shocked that it actually took a law to get the government to produce this unified list. Previously a small business would have to make telephone calls to each agency, speak with local Small Business Administration representatives for help, speak with their Congressman's office or just wait for an agency to contact them for noncompliance. The National Federation of Independent Business regularly reports on their surveys that many small businesses just bump into regulations and paperwork requirements in the course of doing business or they find out when an agency attempts to find them. My hope is that this list of resources for small businesses will be approved and distributed widely. Another problem with the report is its overreliance on e-government solutions to this problem. I'm a fan of e-government and its possibilities. It can produce significant cost savings for both government and the private sector. But its use as the primary weapon against unnecessary burdens on small business is short- sighted. I want to cite a few examples of what I mean. The EPA proposed a rule on electronic reporting 2 years ago. This supposed e-government innovation was to finally allow businesses to submit forms electronically to the EPA. However, they couldn't make it simple. They attached the recordkeeping requirement for any document produced on the computer that would require every facility to retrofit its systems to accommodate these regulations. Thousands of facilities, including many small manufacturers which are dealing with the toughest economic circumstances already, would have had to pay $40,000 up front to make this work and another $17,000 per year to maintain it. The other choice of course was to get rid of all the computers so they wouldn't have to comply with the so- called voluntary rule. Thanks to the many businesses who fought this along with the SBA's Office of Advocacy, American manufacturers were spared $18 billion in additional costs last year. Another recent example comes from the Department of Transportation. In the wake of the Firestone-Bridgestone tire catastrophe, DOT created an early warning report regulation. In its attempt to make reporting easier, the agency decided to require that all of these reports be filed electronically. As is often the case, regulators missed an important detail and that is that they included 2000 small manufacturers of trailers under 26,000 pounds. According to SBA's size standards, 96 percent of these are small businesses. DOT produced estimates of the cost of gearing up to comply with this rule at $230,000 per company. No wonder companies go to China. That figure right there will put most of those manufacturers out of business. These are just a couple of the brilliant and innovative e- government initiatives to reduce the paperwork burden. This task force is unable to break from the mindset that many in government have, which is risk averse, without creativity, and without true sensitivity to the plight of small businesses across the country. Finally, in our work with Chairman Ose on this bill last year, we stressed several points in our colloquy: One, that it was expected that OMB would provide not only a list of compliance assistance resources but also links to those agencies and their sections on paperwork. It was expected that this task force would seriously consider reducing the frequency of paperwork reporting or aligning deadlines of different paperwork requirements and three, that OMB and the task force would do more than just consider using NAICS or other industrial codes to help small business determine what paperwork requirements they had to comply with. I am disappointed that each of these items was only given a cursory reference and summarily dismissed as not practical for OMB implementation. A small business which wants nothing more than to fully comply with rules and regulations has no way to sift through every regulatory and paperwork requirement to figure out which ones apply. It should be the responsibility of each agency to provide small business with that information and to do it in a way that is simple. The added benefit of using NAICS codes is that we could truly begin to determine the compliance burden for individual industry sectors. Let me give you an example of what happened to my brother. Frank runs the family restaurant, 13 tables, 13 bar stools. The restaurant is open just on weekends. About 6 years ago, when the bar was full on a Friday evening and he was selling his catfish and lasagna and under the unpretentious name of Manzullo's Famous Foods, in walked a government man and in the midst of this crowded barroom of perhaps 15 to 20 people, he spoke to my brother over the bar and he said where is your sign that says pregnant women should not drink? My brother looked at him and said who the hell are you? And, there he was. He was some Federal liquor license inspector showing up. My brother said what are you talking about? Don't you know you have to have a sign posted that says pregnant women can be injured if they drink alcohol? Now, my brother has a high school education, did time in the service, got involved with the family restaurant when he was 20 years old. He's 60 years old now. Spent an entire lifetime in that restaurant. He worked 6 to 7 days a week, 18 to 20 hours a week trying to put out a good product and comply with all the laws. Why didn't this guy come in and say, Frank, there's a law? Here, let me give you a sign. You know what he did? He fined him $50. And, for years you can go in my brother's restaurant and he had a handmade sign, scribbled with a black pen that was an attestation to the stupidity of the Federal Government in the manner in which it treats small businesses, and it said if you're pregnant, don't drink. Finally, somebody got him a regular sign and so he put the sign on the bar on one of the walls of the barroom. The problem is that only the people on the left side of the bar can see the sign and those on the right side can't. So, I imagine that guy's going to come back and say you should have a sign that says pregnant women sit on the left side so you can see the sign, and, if you are not pregnant, you can sit on the right side. But, this is just a very homely indication of the tremendous pressures that people like Frank Manzullo, Jr., are under. And, that's my brother. I have tremendous respect for him. He's one little guy among hundreds of thousands of millions of entrepreneurs in this country lost in a sea of regulation. And, some clown comes up with a regulation and says you have to comply by e-mail. My brother just went up on the computer. I don't even know if he knows how to access these Federal agencies. Why not have one source--why not have the government say look, appoint one person such as a personal banker when you go to a larger bank, one person within the Federal Government that can be the access point for the Frank Manzullo, Jr.'s out there across the country. That would be too simple. The agencies would have to work together. So maybe what we should do is this. Maybe we should sunset every law and every regulation and say, unless by such and such a time there is a workable framework that the little guys in America can follow, we are just going to nullify all of these laws. Look at this. Use this. OMB. Listing of single points of contact for agencies with approved paperwork. Look at this. Must be 50 on there. Mr. Schrock. Actually 71. Mr. Manzullo. 71 agencies on here. Which is the one that perforates the paper? I mean, this is absolutely outrageous. And, then you wonder why are small businesses crumbling? Why do small manufacturers go to China? Do you know why? Do you know why we lose--one of the reasons we lose 54,000 manufacturing jobs each year? These guys just give up. We had a neighbor up the street, Wendell Smith, was making counter tops. Some guy from OSHA came in and said, oh, your employees can't sit on that makeshift balcony that you have to have their lunch unless you put an elevator in. And, it's one thing after the other. This long parade of Federal officials that come in and all these regulatory agencies. Look at this. What type of service are they doing to America's small businesses? That concludes my testimony. [The prepared statement of Mr. Manzullo follows:] [GRAPHIC] [TIFF OMITTED] T0867.014 [GRAPHIC] [TIFF OMITTED] T0867.015 [GRAPHIC] [TIFF OMITTED] T0867.016 [GRAPHIC] [TIFF OMITTED] T0867.017 [GRAPHIC] [TIFF OMITTED] T0867.018 Mr. Schrock [presiding]. Thank you, Mr. Chairman. I have shared with you some of the stories I have experienced with constituents of mine and they are very similar to what your brother Frank is going through, and it's pretty bad. Mr. Tierney from Massachusetts was here. And I welcome him and he does have a statement that he's going to put in the record. And, I want to welcome Congresswoman Sue Kelly from New York, who has joined us as well. [The prepared statement of Hon. John F. Tierney follows:] [GRAPHIC] [TIFF OMITTED] T0867.019 [GRAPHIC] [TIFF OMITTED] T0867.020 Mr. Schrock. Mr. Chairman, since OMB has clearly failed to publish a complete list of agency single points of contact, which is that list you have there, do you believe they should be asked promptly to produce such a list that you are going to be able to get through so you don't get an answering machine? I called a couple of those numbers yesterday and got nothing but answering machines. Mr. Manzullo. You know, Dr. Graham has done a phenomenal job at OIRA. I mean, this man, he has great credentials for that position. He dislikes government, which is wonderful because he understands the fact that the attitude is that Members of Congress are here to serve the individuals that we represent, and the purpose of government is also to complement that. But, perhaps, OMB has been given a task that it can't complete. Perhaps, there are so many agencies and there's so much work that for the single point of contact that it's a task that can't be completed, because I know a lot of people at OMB. I know they work very hard over there. Maybe it's just something that they can't do. And, then what do you do with this? Post this on the wall of a bar? You know, if you slip, you know, go to this one here. If you drink too much, go to this one here. If you get hit by a car outside the restaurant, go to this agency. You know, if you ingest this chemical, go to this one. I know it's an attempt and we are trying to do all types of stuff, but, maybe it is an assignment that they working as hard and diligent as they can and in good faith simply cannot accomplish. Mr. Schrock. But why? Mr. Manzullo. There's too much government. I mean, surely can't there be some way that the Frank Manzullos of this world can just pick up a phone and access one government agency that coordinates all of these things and tell him what's expected of him? Mr. Schrock. That would sound pretty reasonable. What kind of training would you recommend that OMB promptly provide to all agency single points of contact? And, do you think the small businesses or their representatives and their associations should assist in that training? Mr. Manzullo. I don't know, Congressman Schrock. I mean, there is such a chasm between small businesses today and the government. You know, if you're a large corporation you have a government compliance officer. And, sure it is a pain in the neck. But, at least they have one person totally dedicated to that who understands that and that's why the cost per employee of regulation for small business is extraordinarily high compared to that of the larger businesses. But, I don't know if this is a problem that can be solved unless we take a look at why we have all these regulations. Now, I mean there are lot of regulations that are good. Frank, for example, appreciates the Winnebago County Department of Health that puts on a school from time to time to teach safety in the kitchen and the different things that you can do. It is a 4-hour school. It's preventive. It teaches them what to do on it. I don't know if there is a solution to this. I don't know what training OMB or any other agency can do. And, besides that, when you are working in the kitchen for 16, 18 hours a day, when you are working in the shop, trying to keep that going, when you are under ferocious competition just to keep your doors open, do you have time to attend seminars on regulatory compliance, 72 of them? Mr. Schrock. Mr. Gonzalez. Mr. Gonzalez. Thank you very much. First of all, I don't believe that anyone leaves our domestic shores because of the regulatory burden. I think that's a contributing factor, but I think they go to China because you can hire somebody there at 12 years of age, work them for 80 hours, pay them $2 an hour, don't provide any benefits, and you don't have to worry about safety or health standards or any kind of benefits. That's a whole separate problem, Mr. Chairman. But, I do agree with you in principle and in essence. You are saying let's look at the regulatory scheme and do away with that which is not necessary. And, we attempt to do that accordingly, I think, and I always talk about that. We are here today to figure out, OK, well, what do we do with what we have in place. And, we are looking at a central point of contact, a clearinghouse. Surely there is something we can do to improve on the system as we go through there and try to cull the regulatory scheme and what is truly necessary to accomplish the legitimate governmental role which is just burdensome, inefficient and overkill. And, I think we are of like mind on that. My fear of course is that we always look at it and say, well, let's just do away with all regulation, and then we get into the philosophical and the partisan end of it. Mr. Manzullo. It's a safety issue. Mr. Gonzalez. Right. It has very legitimate reasons. But, where do we start? Mr. Manzullo. Well, let me give you one example. The National Restaurant Association--Frank doesn't belong to that, perhaps he should--has a Web site and if you key into that, it has a good core set of regulations that you're supposed to follow. And, first, as to any small business and then as to the restaurant business in particular, and the manual is quite thick and the National Restaurant Association has done a very commendable job on trying to have a one-stop shop for their members. I mean, that is one way to look at it. But the problem that we have is when the regulators issue these regulations without reference to other regulations in place. I mean, there are situations in this country today where companies are caught with conflicting regulations. You know, one was just issued this past week on raising the level of water. I can't remember in which river, but one agency said you have to do this and then another agency said you can't do that. And then the court got involved and these people just had no idea what to do. I think what we have to do is perhaps take a look and say as to every regulation, we need to have strict enforcement of the Regulatory Flexibility Act and SBREFA. I think we need a few good lawsuits. I think we need to empower-- and I have said this for years. We need to empower the Office of Advocacy within the SBA to bring class action lawsuits against government agencies, because the little guys out there can't afford to do it. And, you know, here's a conservative Republican talking about bringing lawsuits, but sometimes that's the only way in order to do something. We've got a situation going on now with HUD. They came out with these massive RESPA requirements--you're on that committee--and it is a $9 billion hit to small businesses. Their Regulatory Flexibility Act analysis was about 160 pages, absolutely totally inefficient. It just did not list all the problems. I mean there has to be a way to hold those agencies accountable to follow the laws over which our two committees have exclusive jurisdiction. And, maybe we should find a way to penalize HUD for doing that. You know, but I like the idea of empowering Tom Sullivan, who is a real tiger at Office of Advocacy, to begin a lawsuit on behalf of small businesses. Perhaps, you know, that would do something. Mr. Gonzalez. Well, again I think we all know the buck really does stop at the committees and, unfortunately, we really don't do anything. We definitely empower individuals and mandate certain agencies and departments to comply with what the intent of our laws are, but they are not doing it and there is no consequence. And, I don't know if it is a lawsuit--and I am a lawyer by training and such, and I still don't encourage litigation. But, I think we need to really start being more aggressive about it and we haven't been. The 5 years I have been here I think we just talked a heck of a good game. But, we don't do anything and I think the agencies and the departments know us well and they're going to wear us out and they're going to wait us out and it seems to me that the bureaucracy continues to win the battle. Mr. Manzullo. I think one of the things that may help is to give the committees the jurisdiction, the authority to stop the enforcement of regulations. I know there is a Constitutional problem in there, but surely this body that oversees the organic law that looks at the regulations, that passes the Regulatory Flexibility Act and SBREFA for its enforcement in courts, maybe we should bring before the committee on a periodic basis every time a regulation comes out. You know, sometimes just exposing people to the light to say you're not doing your job has a therapeutic effect. But that's not a long- term solution. Mr. Schrock. Mr. Chairman, I wonder too, when they create these regulations do the folks downtown go to middle America somewhere, Rockford, IL for instance, and ask the business person whose going to be impacted by that proposed regulation what's going to be the impact on you? Because, I think, if they did they'd either kill the regulation or word it in such a way where it isn't going to have an unintended consequence or impact on people. I think that's a real problem and I don't know how---- Mr. Manzullo. The problem starts with us. We passed organic laws and the people who do the regulations really are just doing their job. Mr. Schrock. I will tell you I think my friend Mr. Gonzalez is absolutely correct. We do all these wonderful things. We put this Paperwork Reduction Act into law and then we go off and do a million other things. Are we watching what's going on? No. But I think we are going to have to start doing that or this situation is going to get worse and worse and worse. Mrs. Kelly, who herself is a small businesswoman, a florist as I recall---- Mr. Manzullo. A florist. She knows about this stuff. Mrs. Kelly. Not just a florist. I've had three small businesses. Thank you very much. Mr. Manzullo, one of the problems that I think we are experiencing here with this very long list, which I can imagine every business wants to post in a prominent spot, since there is so much information on it--I'm saying that facetiously. It seems to me that one of our problems is that the agencies of government are promulgating a great many rules and regulations that are not clearly disseminated to the people that they are passing these rules and regulations to and about. Is that true? Mr. Manzullo. I would say so. I mean, you know, as a florist I'm sure you didn't get up in the morning, have your cup of coffee and read the Federal Register. And yet---- Ms. Kelly. Well, actually it's the kind of thing I imagine every florist in this Nation probably reads as bedtime reading. It is a good snore. I think that in all honesty, it's not just florists. It is every small business person in the United States of America. It is my husband, who is a small businessman. It is my son, who is a small businessman. It is one after another of people just like my family, me, my husband, my children, we are all small business entrepreneurs. We drive 80 percent of the U.S. economy and, yet, we are dragged down by experiencing about--from what I understand, I was just reading here somewhere it's something like 50 percent of the regulations come up from these agencies and hit us. We need obviously good points of contact, but we also need more information. Wouldn't you agree? Mr. Manzullo. We do. I just got paged. I've got an amendment on the floor. I agree entirely, Congresswoman Kelly. You know, I have stayed at your home there with your husband and your boys and know that the construction business and all the small businesses in which you're involved and you know what's going on, and you are as frustrated as everybody else and you do a great job on trying to cut through with these things. And, you know, maybe we need--I don't want to call a summit. Once in a while we have the White House Conference on Small Business, but somebody's got to do something to say small businesses can only do so much. Mrs. Kelly. Mr. Manzullo, do you know of any place besides this committee or your own committee where someone is looking at the vast rules and regulations that are being disseminated? From what I understand it's about 4,000 every year or two. Do you know of any place where someone is looking at the vast body of these for any kind of a cost-benefit analysis or redundancy or overlap? Mr. Manzullo. No, I don't, aside from the Office of Advocacy, which has, you know, an in-house law firm, and our oversight committees. And, of course the oversight committees, we have a hearing when somebody expresses to us that there's a problem. So, by the time we get involved, oftentimes it's too late to help out the individual. I do have to run to the floor for an amendment, and thank you so much. Appreciate it. Thanks for the opportunity to be here. Mr. Ose [presiding]. Thank you, Mr. Chairman. Ms. Kelly, do you wish to add anything else? Mrs. Kelly. I only want to say, Mr. Chairman, that several years ago a bill that I wrote called the Truth in Regulating Act was passed by this Congress. It was signed into law by President Clinton. Unfortunately, I was unable to get the small amount of money that was needed to establish what that bill required, which was an office in the General Accounting Office that would examine all of the agency's rules and regulations as they affected small business and it would look at them for a cost-benefit analysis and redundancy and overlap and would allow the GAO to come back with a report to Congress on these rules and regulations. Any requested rule and regulation we would be able to request that information for. It would give us a chance to affect what the rules and regulations that are affecting small businesses. We would have a chance to do something about that before they hit small business and be able to perhaps have an economic, a strong economic impact on this enormous body of regulation that is hitting our small businesses. I was unable to get the funding for it. Perhaps with our combined committees working together, we could reestablish that as law since it is now sunset, and I am going to have that law written again. I am going to drop it and I hope perhaps you all will help me sponsor that bill and help me get the money so we can get that office there. Small businesses, small business people really need the help. I yield back. Mr. Ose. I appreciate the gentlelady's observations. On Tuesday of next week we will be having a hearing on H.R. 2432, which would make that particular office a permanent part of the GAO. It is a bipartisan bill. Again the number is 2432 and the hearing is on Tuesday. Mrs. Kelly. If the gentleman will yield. Mr. Ose. Certainly. Mrs. Kelly. It would be wonderful to have a permanent office, but we have to fund it. We can't do it without the funding. And so, I'm hopeful that if we establish--I'll be glad to work with you on this because I want that to be a permanent office. Small business people need this. But, we also need the funding to make sure that the GAO has the funding available to set this office up. Several years ago when we looked at it, it was a $5 million bill. And, that in terms of our entire budget for the U.S. Government is a small bit to drop into the pockets of helping our small businesses of this Nation. So, if we can get that money allocated to make this office permanent, I would be delighted to work with you and I hope that perhaps you will let me sit in on that hearing. Mr. Ose. You're always welcome, Mrs. Kelly. You know that. Mrs. Kelly. Thank you. Mr. Ose. I'd also like to recognize the gentleman from Arizona, Mr. Franks. If he wishes to make an opening statement he'd certainly be welcome to. Mr. Franks. Well, Mr. Chairman, freshmen always do that. Mr. Chairman, I just want to suggest that this committee is well placed in doing what it can to reduce the regulation on business, and to not only help that reduction but also help in the compliance. You know I have been privileged to work in different countries of the world, and sometimes, depending on the scheme of the regulation itself, it is not always just the litany and the rules, but it is the cooperation of the bureaucracies that enforce those rules, I hope that this committee can continue to do what it can to improve the productivity of small business. Certainly, all of us understand the vital needs to do that, and I thank the chairman. Mr. Ose. I thank the gentleman. OK. Chairman Manzullo has departed and Senator Voinovich was not able to join us today for other reasons. So panel one is finished. I would now like to invite to the witness table Dr. John Graham, who is the administrator of the Office of Information and Regulatory Affairs with the Office of Management and Budget. Dr. Graham, as you know, this committee has a practice of swearing in every single witness, so if you'd rise. [Witness sworn.] Mr. Ose. Let the record show the witness answered in the affirmative. Dr. Graham joins us for what seems to be a regular series of hearings. He is, as I said the Administrator for the Office of Information and Regulatory Affairs at the Office of Management and Budget. We refer to that as OIRA at OMB. Dr. Graham, welcome. Please proceed. STATEMENT OF DR. JOHN D. GRAHAM, ADMINISTRATOR, OFFICE OF INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND BUDGET Dr. Graham. Thank you very much, Chairman Ose, and other members of the committees. A special thanks also to Chairman Schrock for cochairing and expressing a strong interest in these issues of small business and regulation. Let me start by saying that we at OMB and in the Bush administration generally are open to your suggestions from this committee on how to do our job better to reduce the burden of regulation and paperwork on the small business community. We at OMB do not profess to have all of the answers to this question and indeed the modest report that we have produced under this task force is just that, a modest effort to try to move the ball in the right direction. Let me start with a few general observations about how we think we can make progress in this area. The good news is we have a goal that I think is widely shared and bipartisan in nature--that is to reduce the needless paperwork burdens on small businesses. So, if the goal is so consensual, what are the possible strategies to achieve it? The first possible strategy is to pursue the electronic government strategy. This is a key element of the President's' management agenda on the theory that, for the majority of small businesses that do use electronic technology and are involved in the Internet, the eletronic government strategy will help them better access and understand the requirements they face and will reduce the burdens on them to comply. So, clearly there is an important part of the small business community for which we should invest energies to move the agenda of electronic government. It has, of course, a very serious limitation, this strategy, and that is that some small businesses are not currently active in the electronic world. Moreover, just moving on technology by itself doesn't necessarily reduce the total number of requirements out there that businesses face. And, a cynic might argue it just makes it easier for the government to create more requirements because now they can do it more efficiently and electronically. So, it's not a complete answer by itself. But it is one part of a portfolio of strategies. Second of all, there is regulatory reform, which is also a possible strategy for dealing with this problem. I think few people realize how many of those paperwork burdens are directly tied to specific Federal regulation. At the Office of Information and Regulatory Affairs, we are not specialists in small business. We rely heavily on our partner, particularly Tom Sullivan at the Office of Advocacy in the Small Business Administration, to identify for us what are those key regulations, whether new ones being developed or existing ones that impose a substantial burden on small business and are questionable in their necessity. We rely on SBA Advocacy to be our expert in this area. We would believe better regulations, smarter regulations can increase effectiveness and reduce compliance costs and paperwork burdens simultaneously. This strategy, regulatory reform, also has limitations. To change regulations that already exist is complex, it's time consuming and it's controversial. You know in this administration we have not been reluctant to face controversy on regulatory matters. But, that controversy slows the process down and makes it longer until we can get to a point where we can remove some of these unnecessary burdens. A third strategy is to try to slash these paperwork burdens directly by using the discretion that the agencies have for how much burden they include in a questionnaire without necessarily changing the regulation itself. This is the model and vision of the Paperwork Reduction Act, where agencies slash away the unnecessary paperwork requirements but maintain those requirements that are necessary for government to function. This involves line-by-line review of each information collection to identify question 4, question 12, knock this one out, knock that one out. It is a promising strategy and it can work in some circumstances. But, this third strategy has some important limitations. Most paperwork burdens in fact are mandated either by statute, by the Congress, or they are embedded in regulation. So in order to get rid of question 14, an agency may in some cases have to go back and change the regulation. So, it feeds back to the need for regulatory reform. To give you a sense of how the small business community feels the priorities are in this area, consider the President's request to the small business community through our office for nominating regulations, guidance documents, and paperwork requirements for reform. We received over 1,700 comments and 300 nominations. They were almost all in the areas of rules and guidance documents. The few paperwork burdens that were mentioned were paperwork burdens that were required by regulation. The final strategy is statutory reform. Simplify the Tax Code, exempt small businesses from certain laws that are unnecessary for being applied to them, and so forth. I do not need to explain to this committee the difficulty in passing new legislation. So, in conclusion, we have four strategies. The task force report before you, issued by me and my colleague Mark Forman, makes a modest and constructive step forward in the area of Internet technology as a vehicle for providing businesses one place to go to get answers. It will take time and money to implement this solution, and I look forward to the questions that you may have. Thank you very much. [The prepared statement of Dr. Graham follows:] [GRAPHIC] [TIFF OMITTED] T0867.021 [GRAPHIC] [TIFF OMITTED] T0867.022 [GRAPHIC] [TIFF OMITTED] T0867.023 [GRAPHIC] [TIFF OMITTED] T0867.024 [GRAPHIC] [TIFF OMITTED] T0867.025 [GRAPHIC] [TIFF OMITTED] T0867.026 [GRAPHIC] [TIFF OMITTED] T0867.027 [GRAPHIC] [TIFF OMITTED] T0867.028 [GRAPHIC] [TIFF OMITTED] T0867.029 [GRAPHIC] [TIFF OMITTED] T0867.030 [GRAPHIC] [TIFF OMITTED] T0867.031 Mr. Ose. Thank you, Dr. Graham. Before I start my questions, let me just preface my remarks. This committee typically goes through witness testimony and then Member questions, and I presume that's the way, Mr. Schrock, you run your committee. Everybody is allocated 5 minutes. The manner in which we are going to go today is I will start and then Mr. Schrock and then Mr. Gonzalez and then we'll come back over to this side for questions. Each person will get 5 minutes. If people want a second round, we'll go another round of 5 minutes. The record will be left open for 10 days for folks to submit questions in writing for our witnesses to respond to. That's our typical procedure, and that's what we'll do today. Now, I am going to take the first 5 minutes. I learned a lesson on Tuesday in Financial Services. I was witness to the excellent chairing of a committee with an absolute time imposition of 5 minutes by the Chairlady from New York, and I am going to hope to emulate her success at that hearing this morning, so the gavel will be heavy at 5 minutes. So, start the clock. Dr. Graham, my first question is, every information request that an agency puts out has to be vetted through OMB and has to have an OMB control number, and, if the information request lacks the number that indicates it hasn't been vetted and therefore it's not required to be responded to. That's my understanding of previous hearings that we have had. Dr. Graham. Yes, sir. Mr. Ose. So, if there is no OMB control number, is that an indication that the document is not a binding document. Is that an accurate statement? Dr. Graham. Well, you're asking a nonlawyer that question, but that is my understanding. It is an unenforceable collection if it doesn't have an OMB control number. Mr. Ose. All right. I always like to get that on the record, just kind of ground rule No. 1. Now, I want to go to the chart over here that's leaning against the wall, the one that's got the purple, blue, red and white on it. That is a chart of every agency which interacts with the public for which there is a paperwork requirement and for which we were seeking, under the law passed, a single point of contact and a single phone number for which the public could contact. Now, some of the agencies have not responded or maybe they have responded and have said they don't have anyone. I just want to go through the ones that are noted on that chart as either none or missing, and get that on the record. Do you have a copy? You have a copy of that? Dr. Graham. Yes, I have a copy right here, sir. Mr. Ose. OK. Now, Housing and Urban Development, number of single points of contact, that chart notes none. Did HUD respond? Did they just ignore your request? Do you have any recollection of that? I'm just going to go down the list here. Dr. Graham. Well, I'm aware that for three of these departments we could not in the final analysis get them to identify only one. That's not because we didn't try. Your data says two. I trust you. I knew there were a couple of them that have multiple contact names. Mr. Ose. OK. I see that Treasury has multiple contact names. Dr. Graham. Right. Mr. Ose. But, we're specifically referring to Housing and Urban Development and Labor. They have provided no single point of contact in accordance with the law that mandates this information. Dr. Graham. Meaning they have supplied more than one. There may have been one that didn't supply any, but my understanding, our problem in this territory was predominantly that we had some that didn't want to pick just one. Mr. Ose. Well, did they submit any? Dr. Graham. Some of them did, yes, submit more than one. Mr. Ose. Did some submit none? Dr. Graham. I don't remember. There may be some. Are you talking about just the departments at the top? Mr. Ose. I'm talking about---- Dr. Graham. Or are you talking about the whole list? For some of them we didn't get any response at all. Mr. Ose. Well, that's part of my question there. But, in turquoise you will see on that chart there are eight lines outlined in turquoise, the first of which is Housing and Urban Development, which notes that as a single point of contact, none. Dr. Graham. I'll check for you if you want whether that means they didn't supply anything or whether they supplied more than one. I don't remember. Mr. Ose. OK. That's also the same response for the Department of Labor? Dr. Graham. Oh, I know Labor supplied us information. They weren't nonresponsive. They were active. They just didn't want to pick one. Mr. Ose. Well, that begs the question. I mean, the law is very specific. Dr. Graham. They were well aware of the law. We read them the law. Mr. Ose. OK. Let's delve into this a little bit. Who at the Department of Labor is making the determination as to who shall be the single point of contact? Who makes that determination? Dr. Graham. I don't know that in a formal sense. I can tell you that for those agencies, including Labor, that did not provide a single contact and instead provided more than one, I can try to explain to you from their perspective why they chose to respond that way if that would be helpful. Mr. Ose. Well, I think that would be helpful, yes. Dr. Graham. Well, a number of these agencies, particularly cabinet agencies, have different units within the agency that have distinct statutory and regulatory responsibility, and they felt it would be more useful for the small business community to have the point of contact be at the level of a subagency rather than the agency as a whole. That was one form of their concern. Mr. Ose. All right. I have to drop the hammer on myself. Dr. Graham. All right. Mr. Ose. Mr. Schrock for 5 minutes. Mr. Schrock. Thank you, Mr. Chairman. I'm puzzled by a couple of words you said, Doctor. You talked about how you're generally open to getting hold of some of these regulations. Generally open means to me you're not really going to do so. In your opening statement, you said generally open, you and the administration are generally open to doing some of the things that we have tasked you to do. Do you remember saying that? Dr. Graham. Oh, absolutely, sir. Mr. Schrock. What do you mean, generally? I would think you would be totally open to that. Dr. Graham. Well, Mr. Ose has never asked for anything unreasonable so I would never have applied that restriction to him. But in your case, I have to be very careful. Mr. Schrock. OK. You talk about electronic strategy and I understand that. But I think, as I recall, and somebody will correct me if I'm wrong, I think 43 percent of small business didn't really have access to this. My guess is the Frank Manzullos of the world don't, and we seem to be starting off with that, and it seems like we're trying to put the roof on before we build the basement and I wonder how we get around that. Because the Frank Manzullos of the world are going to have to have some way to access these agencies, and is he going to want to spend a lot of time on the phone calling them when he doesn't know who he's calling? How do we help these people with that? And, while I'm on that, why don't we have 800 or 888 numbers on there? Why should some guy in Rockford, IL or Keokuk, IA have to call and probably get put on hold for 5 minutes, as happened to me yesterday, and be transferred from this person to that person? That's just another expense that small businesses don't need. I notice some agencies do and I wonder why the others don't. Dr. Graham. I think that's a great question, and I am going to leave this hearing and ask and find the answer, and, if there is not a good answer, then we are going to have 800 numbers on there. As to the first part of your question, just briefly I want to point out that the data that we are seeing on small business access to computers and Internet is more optimistic than I think some of the other data that's been referred to. According to the latest Dunn & Bradstreet study, we have 80 percent and increasing at about 5 percent per year. So, I think we should keep in mind there are a lot of small businesses out there which are very active with the Internet and which would like to have an ability to interface with the government electronically in a consolidated way, as intended by the statute. Mr. Schrock. OK. I can tell you, from a personal standpoint, when I ran for the Virginia State Senate the first time, I honest to God did not know how to turn on a computer. I didn't. Boy, have I learned. And, it is people like the people behind me who have taught me. But, I have some time to do that. If Frank Manzullo is frying fish all day long, I am not sure that he is going to have a lot of time to do it. I worry about those who don't do it, that they will be left out in the cold. Dr. Graham. I agree. We should worry about those. Mr. Schrock. You talked about paperwork limitations. Expand. You said there were limitations on what you could do. Dr. Graham. Yes. The Paperwork Reduction Act, as it is designed, calls for the review of each paperwork or information collection request. But, it doesn't simply call on agencies to eliminate these paperwork burdens. It says the agency needs to analyze them to see whether the information that is going to be collected is important or useful to the government program that is going to collect the information. That requires, then, a judgment call as to whether that information that is being collected is, in fact, really necessary for the conduct of that program. And, that is a line- by-line evaluation in terms of the paperwork. So, it is a very intensive job for an agency to develop its paperwork and for us to do paperwork review. Mr. Schrock. An example of that, during the Census, my wife and I got volumes of stuff they sent you in the mail. And, frankly, they asked information that was nobody's business. Nobody's business. And, I just wrote such on there. Of course, I didn't get fined and I am not in jail, but what gall. I mean, why do they do this sort of thing? Why don't they just ask, who is living there, what your ages are, your birth dates, and let it go at that? Why do they have to ask what kind of peanut butter I use, and they did ask crazy things like that. That is just one regulation. There are probably thousands and thousands of other regulations that do the same thing. And, when a lot of businesses know that, if they don't answer some of these regulations, they are going to get fined--I think businesses said, if they didn't answer them, they were going to get a $500 fine--God, why do we permit that kind of stuff? Why don't we just stop that altogether? Dr. Graham. I like the specificity of your question. If you give me the specific questions in the Census which you do not think need to be included, send them to me, and I will try to learn if the Census has good and sensible reasons to include them. Mr. Schrock. Well, I already sent it back to them, told them what they could do with it. So, I don't have it. But, I mean, everybody probably got that sort of thing. Dr. Graham. The reason I ask is, it is a big fight each time around on which questions to include in that form. That is not an easy thing to do, to include a question on that form. Mr. Schrock. Why do they have to do it in the first place? Why do they need to know what kind of peanut butter or pajamas I wear? Give me a break. Dr. Graham. If you have examples like that you would like me to look into, I am happy to do it, sir. Mr. Schrock. I am going to be gaveled out of here real quick, so I yield back. Mr. Ose. The gentleman's time has expired. The gentleman from Texas. Mr. Gonzalez. Thank you, Mr. Chairman. Dr. Graham, in the scheme of things and what we attempted to do here through legislation back then by passing on the responsibility to the individual agencies, what if an agency doesn't really review the impact on small businesses of any proposed regulation, anything that they are--back, second, they don't review to cull through the unnecessary, to streamline, which we have mandated that they do both, in essence, but they don't do it. They never do it. How do we get their attention? What should be the consequence? What are the tools available to us? Because, as long as things are aspirational, nothing ever gets done. I mean, I think that is a good rule in D.C., or anywhere else. So what would be an effective tool for this committee to look to to implement when it comes to these individuals and these agencies that obviously aren't really looking at those regs, the consequences, and how to streamline? Dr. Graham. Well, let me first say that I think that part of the responsibility to make sure that agencies are looking at small business impacts resides in our office, within OMB, in collaboration with the Advocacy Office of the Small Business Administration. And, when there are small businesses which feel that those analyses are being done poorly or not being done at all, when that happens, then they should feel comfortable coming to OMB and making that case; and, we will look into it and see why that isn't being done and how it can be fixed. And, we do have the authority to ask an agency to reconsider a regulation that they are developing if they have not looked carefully at small business impacts. Now, if your question is, what can be done outside the executive branch, I think that is a much bigger question in terms of, for example, what types of avenues should there be in the judicial system for small businesses to seek protection in the event that their interests are not considered carefully. That, I think, is a much bigger question, and frankly I don't know the legal aspects now, that well, to give you a firm answer to that. Mr. Gonzalez. I am looking at agency behavior, and I know that it is trite, but to say a bureaucracy environment, or culture, how do we enter that and make a difference, how do we say that we really mean business? We want you to look at the regulatory impact of your regulatory scheme before you create anything new in the way of proposals. We also want you to look where you have been and what you have on the books now that truly doesn't make any sense. How many complaints do we have to get for you guys to understand that surely some things are no longer relevant, but are still out there and, once in a while, are enforced with no practical effect or benefit? How do we do that? How do we enter that culture? How do we get people's attention? Dr. Graham. Well, one thing we've noticed in the task force that we worked with for the last year is that the representatives from the various agencies that came into the task force, by interest and orientation, did tend to have an interest in small business impacts. But, that is, by no means, fully representative of the agencies that they represent. There are a lot of people in the agencies who have many different interests and much different agendas than concerns about small business. That says to me that the committee needs to find ways--and we can work with you on this--to build units within these agencies that are designed with a mandate to care about the impact on small business. Mr. Gonzalez. And, you bring out a very good point, because it doesn't matter if you have a very dedicated person within that agency who sincerely wants to see all of these things bear fruit. But, the truth is, at the very top, if it is not encouraged, endorsed and embraced by real decisionmakers within the agency, it goes nowhere. The other day we had a hearing on contract bundling. There is not a department or agency out there that gets a passing grade on it. And, so, someone was saying, what is a consequence to them if they continue to bundle, ignore the 8(a) Program in the small business sector? There is no consequence. Unless, we started saying to them, all right, if you don't meet your percentages that are realistic, then maybe you shouldn't be able to bundle. You get to bundle fewer contracts. What could we do with agencies today that just aren't meeting the responsibility when they promulgate regulations and when they basically enforce or when there is a lack of efficiency and streamlining? I mean, I know what you are telling me, but I am just saying, as a practical aspect, I know there is some sort of--we can try some sort of incentive, reward. But, what about the other end that is the opposite of the reward, and that is some negative consequence for inaction? What is it? What form would it take? Do you have any suggestion? Dr. Graham. I don't claim to have the answer to your question, which I think is a sensible one and a reasonable one. But, I think looking at the end of the pipeline for what you do when things go wrong is only part of the solution. I think we need to build in the agencies the equivalent of the Advocacy Office of Small Business, the one we have now. We need to build that kind of orientation and perspective into these different regulatory agencies. I don't think it is realistic to think that we can do it without building that capability into the bureaucracy itself. And, some will say that is just adding to the bureaucracy, and that is a reasonable point as well. But, until you get that perspective guilt into the fabric of those regulatory agencies, it is going to be very hard to change. Mr. Gonzalez. Thank you. Mr. Ose. The gentleman's time has expired. The gentlelady from New York. Mrs. Kelly. Thank you, Mr. Chairman. Dr. Graham, I would like to ask you a couple of questions about your June 27th report. You recommended that there be a new electronic system, and, as you have heard this morning, there are many people in business who can't turn on a computer. They don't own a computer because of the cost. While it may be time-saving for you, people have other things to do with the money that they have as profits, because the profit margin on small business is quite small for many people, and they don't put it into computers. So, when you recommended electronic reporting, you also recommended that these small businesses self-identify applicable criteria that profile their business and self- identify a comprehensive list of applicable requirements. How the heck are they supposed to do that if they haven't read the Federal Register and don't know what is out there? I don't understand how that is supposed to work. It seems to me, given the state of technology today, we have telephones that are pretty good. It seems to me that most of us, while we hate them, can sit and listen to a telephone menu and punch the right numbers to get through. But, I would be at a loss to self-identify in one of my businesses for instance--say the florist business that I was in, I would be at a loss to self-identify. I know what I am trying to ask, but I don't know what pew it belongs in. So I have the church music, but I don't know where to sit and what pew. And, you are telling me that I have to do that? It seems to me we need another way around that. Have you got another answer to that? Dr. Graham. Well, I think your diagnosis of a problem is correct, which is, in order for the electronic interactive solution to work, either the small businessperson has to be able to describe its business sufficiently accurately so that the underlying software can then identify the appropriate requirements, OK? Or you have to have very well-designed software to take very limited information from the small businessperson. But, I agree with the premise of your question that it can't be that the answer is a small businessperson knows all of the applicable paperwork and business requirements first, and then they tell the business gateway system that is what they are. That is not going to work. I don't think that is the intention. Mrs. Kelly. But, that was in your final report. Dr. Graham. I would have to go and read the exact provisions you are talking about. My understanding, based upon the briefing that I had, is the idea that the florist--and I don't know that business at all--would say a few basic things about the business, information that any florist would know about the business, and then the underlying software structure has to be able to say, that means this agency, this paperwork requirement, that regulation. That is quite an engine that has to be within that software in order to accomplish that. Mrs. Kelly. Would you give me--the fact that it might be just as easy and possibly faster, because, in small business, time is money. It costs me money to call down here to Washington, it costs me time to sit on the telephone; and, if I am running a small business, I don't need to sit on that phone and spend a lot of time trying to punch buttons, trying to get my way through. There has to be a way that the OMB can help us help small business, first of all, know what the regulations are and get to a warm body that can answer some of the questions, because you cannot do it electronically. We need warm bodies with brains who know what is going on. The other thing is that, in your final report, you didn't address the feasibility of requiring the agencies to consolidate reporting requirements in order that every small business can submit all of the information required by the agency to one point. You didn't really address that. That is part of what my bill would have done, if we had done the thing at the GAO. So, I am wanting to--what I really guess I am saying is, would you work with us to try to help us help small business understand the rules and regulations, get a single point of contact where at least they will get a menu that they can scroll down through, or they can punch down through, so they can get the answers to--getting into the right pew so they can sit with the choir and sing the same music and figure out what their problems are? Can you work with us? Because this is your final report, and I don't think it is adequate enough to suffice to help small business. Dr. Graham. Yes. We are happy to work with you and the small business community. And, this was just the first, as I understand it, of a 2-year project. We have another task force report coming a year from now. And, if you have specific issues that you would like us to make sure that we turn our attention to, we are happy to talk with you and do the best we can. Mrs. Kelly. Just to followup, and I realize I've got a red light here, but I just want to followup and say we need this now, and the sooner we can get it--waiting for yet another report, we can study this thing to death. We've got to get it under way, because our small businesses are hurting. They form our economy. We need to support them, and the sooner the better. Thank you very much, though, for appearing here today. Mr. Ose. The gentleman from Arizona. Mr. Franks. Mr. Chairman, Dr. Graham, I know you have a very difficult job, especially when there is a lot of frustration; and there are a lot of former business people on this committee, and I happen to be one of them. It is not hyperbole to say that, in the course of our business, we sincerely spent probably 30 to 40 percent of the total office time and the total energies of our in-office--not in the field, but in the office, complying with or trying to navigate some type of regulatory scheme. And, I am just, of the opinion that the primary concern of the public is to prevent business from either endangering the public or from directly and demonstrably defrauding the public. But it occurs to me that if regulatory agencies were required, No. 1, to make those regulations--to say that any particular regulation, that they had to make in writing the statement to the Congress, that this regulation is absolutely mandated by statute, for all of those that are, so that we would know what was our fault. And, second, if the agencies were required that every regulation that they promulgated outside of a statutory mandate, that they had to meet a criteria of about three things. No. 1, that this was critically necessary to prevent demonstrable fraud or endangerment to the public; No. 2, that they said in writing, that this was absolutely necessary; and No. 3, that they had consulted with the other agencies to ascertain ways to give businesses the easiest possible road to compliance. Now, I know I have thrown a lot at you right there. But part of the challenge is, sometimes these regulations accumulate to the point that, when everyone just takes a look at the obvious and sees the type of regulation that small business faces, they are astonished. And, I am just wondering if any of those, or if you could respond to any of that? I realize it is kind of a conglomerate to respond to. Dr. Graham. There is a lot of constructive thought underlying the question, and a lot of good ideas in it. And, we do have some responsibility at OMB to be doing some of those things that you are talking about now, for example, making sure that multiple agencies within the government have a say in a regulation before it is adopted, rather than relying on one particular agency's perspective to dominate the view of the Federal Government. But, some of the other things that you mentioned, we don't currently have as part of our daily practice at OMB. We are eager to meet with you and talk with you about the practicality and the sensibility of those approaches. Mr. Franks. Just a last question, Dr. Graham. I am just wondering, do you think that it would be in the interest of small business and just the challenges that you face for some type of very simplified criteria that would be put forth by the Congress that would simply say that all regulation either has to be directly mandated by statute, or it has to meet one or two or three or four or five simple criteria, to where we all kind of are on the same page; and that the regulatory genesis, or the impulse for regulation all came from the same agreed- upon consensus or foundation? Do you think that some type of bill like that, I am sure that the gentlelady from New York has aimed in that direction already. But do you think that there is any efficacy in trying to pursue something like that in a new and a fresh way? Dr. Graham. Well, I certainly am going to go back and check the gentlelady from New York's bill, that I remember seeing a couple of years ago, but I don't remember it that well. But, I am going to look at that, particularly on the integrated point that you made in your comments. On those specific ideas, the basic idea that Congress would take steps through procedure or law to assume more accountability for regulations that are adopted in the Federal Government, I think, is a basic principle that is a great idea. Now, the specifics of how that would be implemented we would have to look at pretty carefully. There are some lawyers in the administration that would look at that pretty carefully too. But, I think that the basic thrust of your question is, shouldn't we find a way, not just for OMB to assume more accountability, but for Congress to assume more accountability in this area? I think that is a great idea. Mr. Franks. Thank you, Dr. Graham, Mr. Chairman. Mr. Ose. The gentleman's time has expired. We have been called for votes. There are five votes. The scheduled time on those votes is 45 minutes. So, Dr. Graham, we are constrained to be, as usual, respectful of your time. We are going to submit our questions to you in writing and ask for a prompt and timely response, as usual. We will go over for the votes, come back for the third panel. I know that Chairman Schrock is planning on coming back. I am certainly planning on coming back. That is the 10-minute bell. Is everybody OK with that? Mr. Gonzalez. That is fine. Mr. Ose. OK. I am going to go ahead and ask two questions of Dr. Graham. On this list over here, it has 71 agencies, listing the compliance assistance person and the single point-of-contact person. You have heard everybody up here talk about making sure that list is up to date with 800 numbers and all of that sort of stuff. Will OMB be publishing a revised document to include points of contact for all of the agencies? Dr. Graham. Given the premise of the chairman's question, we will be working hard on that. Mr. Ose. When do you think that can be accomplished by? Dr. Graham. I need to get a better feel, particularly for the independent agencies which are on your list, how realistic is it for us to accomplish that. I need to talk to my colleagues about that. Mr. Ose. Would you please remind them that it is the law? Dr. Graham. Yes, sir. Mr. Ose. If you could just do me a favor, those who balk, could you just drop me a note, you know, like their name and their phone number, and I can probably visit with them here. And we could ask them directly, why is it that you haven't provided this single point of contact to OIRA? I will be your bad cop. Dr. Graham. That will help me get the job done. Mr. Ose. I will be happy to do that, because it is the law. I would like to do it sooner rather than later. The other question I have is that we did something kind of entrepreneurial around here. We contacted some of the indicated single points of contact. Dr. Graham. I find that interesting. What did you learn? Mr. Ose. Well, we had mixed results, Dr. Graham. Some with whom we talked, who were identified on this list as the single point of contact, said, they didn't know anything about it. Some whom we talked with weren't able to answer our questions, which brings us to the heart of the matter. Has OMB done any training for those people who are answering these questions on paperwork for small business, or does OMB intend to provide any training, or the agencies provide any training and the like? I mean, there is a certain level of competence that has to be embedded in the responsive party. I am trying to get at how we get that into that person, and then how do we measure its effectiveness? Dr. Graham. I guess I think of it as a question of priority and importance that is an OMB role. If it is a training question, I have a feeling that we probably should have SBA or SBA Advocacy in the training role with us participating in collaboration with them. Mr. Ose. It seems to me that the only way we can get a consistent level of performance is to define what our expectations are from these single points of contact, and then make sure that level of expectation is met. The question really that I am trying to get at is, when will that training take place? How do we set the standard, whether it is a guidance or interagency communication, or whatever; and then how does that training get done? Dr. Graham. I would say, one useful standard would be, if you do a little bit of that sampling of phone calls a year from now, after we go through another round of this, it will be interesting to have those results. We will try to get you in much shorter order than that updated list. Mr. Ose. It won't be a year from now. It is likely to be next week or we might even do it tomorrow. Our purpose is to shine a spotlight on this thing, because we are intent on the law being followed. Dr. Graham. Will you share with us the calls that you have made so far, so we have a sense of where the soft spots are? Mr. Ose. Actually, you have a list of our calls here. Dr. Graham. Did any of them work, even a single one? Mr. Ose. Well, some people say, yes, some people say, no. But we were able to identify, as you see on that chart, single points of contact. And, then on another chart we have a list of the names and the phone numbers. But, again, that second chart of names and phone numbers mirrors the first chart in terms of some where we got a response of, we don't have someone yet; or, it is not us; or, it is missing, or the like. We will be happy to give you a list or a copy of this list. Dr. Graham. That would be useful. Mr. Ose. I think you may have it already. It looks like this. Can you see that from there? All of the fine print. Right? [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T0867.032 Mr. Ose. So, anyway, so we will be monitoring that in our unique way. So I would hope that it doesn't take a year to contact these folks and get them on the stick here so that we can get this stuff resolved. Now, again, I want to thank you for coming. We will direct our questions to you in writing. Obviously, we appreciate your time and response, which you have always done in the past. I have 4 minutes to get over to vote, so we are going to go into recess. We will reconvene at 12:30 for the benefit of the third panel. Dr. Graham, thank you for appearing. Dr. Graham. Thank you very much. [Recess.] Mr. Ose. The committee will reconvene. I want to welcome our second panel to the witness table. And, as you heard me with Dr. Graham, we swear everybody in here. So, if you all would raise and raise your right hands. [Witnesses sworn.] Mr. Ose. Let the record show that the witnesses answered in the affirmative. We welcome today to our third panel Ms. Karen Kerrigan, chairman of the Small Business Survival Committee, and Mr. Andrew Langer, manager of regulatory policy for the National Federation of Independent Business. Now, before you start, let me just share with you that we have received your written submittals. We have reviewed them. We are going to give you 5 minutes each to summarize. I will forewarn you that the other hearing that I am running back and forth to has had the same difficulty we have had. So, I may step out for a moment, in which case Mr. Schrock will take the Chair. Ms. Kerrigan, you are recognized for 5 minutes. STATEMENTS OF KAREN KERRIGAN, CHAIRMAN AND FOUNDER, SMALL BUSINESS SURVIVAL COMMITTEE; AND ANDREW M. LANGER, MANAGER, REGULATORY POLICY, NATIONAL FEDERATION OF INDEPENDENT BUSINESS Ms. Kerrigan. Thank you, Chairman Ose and Chairman Schrock. It is an honor to be part of this hearing today, and, on behalf of the Small Business Survival Committee and our membership, we appreciate being invited to present our views. First, let me thank you, both of you, for your leadership on this issue and for your interest in this issue. Government paperwork certainly is not the most riveting of topics in the political world or on Capitol Hill these days. Yet, excessive paperwork requirements and the burden imposed on small businesses remain a challenge and a key issue of concern for our sector. Again, my name is Karen Kerrigan. I am chairman of the Small Business Survival Committee, a nonpartisan nonprofit small business advocacy organization with more than 70,000 members nationwide. Modernizing the regulatory structures and processes in government is a central objective of our organization, and we have been engaged and certainly supportive of legislative solutions over the years to reduce the burden of regulation and paperwork requirements in the small business and entrepreneurial sector. Again, we applaud the hosting of these oversight hearings today, as we believe persistent and rigorous oversight by the Congress is the key to accomplishing the objectives of not only paperwork reduction, but so many other reform measures signed into law to improve our system of government. Certainly with respect to the Paperwork Relief Act of 2002, the ongoing interest and oversight of Congress, as well as the commitment of the administration and OMB, are central to seeing meaningful activity and changes within the agencies. And, let me add that our organization and members stand ready to assist and constructively participate in that process. With respect to where we stand today in the implementation of the act of 2002, the OMB's progress to date is decidedly mixed. Now, in fairness to the current administration and OMB, it has inherited a longstanding and very complex challenge. I believe the small business community has realistic expectations in what is and what is not accomplishable in a year's time. However, certain benchmarks were established by the act, and we find there is room for improvement in many areas. I do applaud their plans and progress to date for integrating technology to better inform and help small businesses with their paperwork obligations. Indeed, technology is an important tool to help the OMB strive to achieve PRA goals, as well as complementary ones established by the administration's e-gov initiative. Let me add, however, that these efforts should not supersede the central objective of paperwork reduction, which is actually to reduce paperwork. The essence and intent of the act captures many of the chief concerns and the needs of small businesses in regards to the complexity of accessing, understanding and complying with the Federal paperwork requirements. Therefore, progress in key areas would be very helpful, specifically, a single small business point of contact within each agency. The OMB's work in this initiative is unfinished. In reviewing the listing on the Federal Register, we found that for some agencies, there are multiple points of contact and for others none exist. From our perspective, it seems to make sense to have a consistent department across agencies be responsible for being the single small business point of contact. Such consistency could encourage both formal and informal dialog and coordination between agencies in regards to successfully performing this function, and I believe small businesses would receive more consistent direction. I also believe it would lead to a more productive and structured relationship with the small business community in conducting outreach and seeking input in developing and implementing measures to help small businesses understand and comply with paperwork rules, as well as identifying opportunities for reduction. It has been suggested by some in the small business community that each agency's single point of contact report directly to the Chief Information Officer, the rationale being that the CIO is the natural fit, due to its information collection responsibility. Our standard is that the single point of contact be able to consistently, quickly and accurately provide the small business owner with the information he or she needs to properly comply with Federal regulations or direct them to a knowledgeable person who can. Second, small businesses in the small business community have regularly requested that the Federal Government develop a central repository of all regulations and paperwork that they are required to comply with. It only makes sense that the government provide such a tool if they are serious about compliance. There simply has to be a way that the Federal Government can organize this information in one place, both in electronic and hard copy format. I can only emphasize what a useful resource a central listing or portal would be for small businesses. It could also serve as a potential pool for identifying opportunities for consolidation or reduction in paperwork. Putting all of those requirements under one roof or on one list will allow agencies, affected parties and the public the opportunity to not only understand the scope of the challenge but also may help to generate solutions from these parties. Let me just end by saying, the integration, the consolidation, and the frequency and redundancy of paperwork reporting truly is the larger objective; and in its recommendations, OMB went over certain steps and procedures to make that happen in terms of making agencies come up with a plan of action for reporting to the OMB on what their plan is. The bottom line is that there has to be a hammer somewhere. OMB has to follow through on this if something is to happen. Again, I thank you. There is the hammer right there. And, I see it coming this way if I don't close. But, again, we thank you for your oversight. As Mr. Gonzalez had mentioned, the bureaucracy is winning, and they know how to win if Congress doesn't play an active role in making sure that the objectives of the Paperwork Reduction Act are not achieved. So, again, I look forward to working with you. We look forward to working with OMB and the administration in making that happen. Thank you. [The prepared statement of Ms. Kerrigan follows:] [GRAPHIC] [TIFF OMITTED] T0867.033 [GRAPHIC] [TIFF OMITTED] T0867.034 [GRAPHIC] [TIFF OMITTED] T0867.035 [GRAPHIC] [TIFF OMITTED] T0867.036 [GRAPHIC] [TIFF OMITTED] T0867.037 [GRAPHIC] [TIFF OMITTED] T0867.038 [GRAPHIC] [TIFF OMITTED] T0867.039 [GRAPHIC] [TIFF OMITTED] T0867.040 [GRAPHIC] [TIFF OMITTED] T0867.041 [GRAPHIC] [TIFF OMITTED] T0867.042 [GRAPHIC] [TIFF OMITTED] T0867.043 [GRAPHIC] [TIFF OMITTED] T0867.044 Mr. Schrock [presiding]. Thank you, Karen. When I was reading your testimony last night, I looked at the cover sheet, and it said, ``Karen Kerrigan, Chairman and Founder, Small Business Survival Committee'' and I thought, isn't it a shame we have to have a title like that. Ms. Kerrigan. Yes it is. Mr. Schrock. If not for government, we would not have to have that sort of thing. Andrew, welcome back. Last time I saw you, your wife was getting ready to go to Iraq, but she didn't, right? Mr. Langer. Thankfully, she didn't have to go. She is back on the bubble, though, between now and December. So we are just kind of waiting expectantly. I appreciate you asking. Chairman Schrock, it is really a pleasure to be here. And, Mr. Gonzalez, thank you for having me. I am here representing the National Federation of Independent Business, the Nation's largest organization of small business owners, and I would like to highlight a few key points of my written testimony. Unreasonable government regulation, especially onerous paperwork burdens, continues to be a top concern for small businesses. Regulatory costs per employee are highest for small firms. NFIB continues to push for the lowering of this burden, and had high hopes that the efforts of the Office of Management and Budget would produce measurable results and a marked improvement. Unfortunately, the efforts of the Paperwork Task Force fell short of that mark. While recognizing that changes cannot be brought overnight, we had hoped that the task force would move far beyond where they were, begin cataloging the current burden and identify key areas where Federal agencies could begin reduction, laying out an agenda, and setting responsible parties on that agenda's path. As to the issue of single points of contact, I am going to draw on an example in a moment of my own problems recently with that. First, I would like to shed light on a question raised by Congresswoman Kelly earlier regarding comprehensive review of the overall burden faced by small businesses and businesses in general in the regulatory state. Paul Rosenszweig of the Heritage Foundation has been contacting the General Accounting Office and others to ask for an accounting, a full accounting, of just how many criminal laws, how many statutes carry criminal penalties for businesses and individuals that are on the books today. To this date, as far as I know, they have been unable to give him an answer. We don't even know how many laws are out there affecting people. There is something fundamentally wrong with that. I would like to take this time, though, to point out two examples of particularly onerous paperwork that were included in my written remarks, both unfortunately having to do with the EPA. Next to the burdens associated with tax preparation, paperwork associated with environmental and public health and safety rules remain the most troublesome to small businesses. Now up on the screen, as included in my written testimony, I would like to call your attention to my appendix A, what is called an ``Individual Ability to Pay Claim Financial Data Request Form.'' That is the form that is up there. If you have it in front of you, you will note that there is no OMB number on this form, which I and others have found rather puzzling. This is where I get to the points-of-contact issue. I spent most of yesterday afternoon trying to track down just what this document was. It came to me from one of our members. I am a professional in the regulatory community. I spend my days figuring out what it is that government is doing, what they are regulating and why and how. I have been in D.C. for the better part of 10 years, and it took me over a dozen calls and several hours of my afternoon's time to figure out just where this form came from, who was putting it out. I'll tell you a little bit about it. I contacted Kathleen West, Associate Regional Counsel of EPA Region 4, because that is where this member had gotten the document from. She didn't know where it came from and why there was no OMB number on it. I then, in my checking, began to do the search through the EPA. Eventually, I came upon the Office of Site Remediation and Enforcement in the Office of Enforcement and Compliance Assurance and asked the person in charge of site remediation, the person I spoke to, Tracy Gibson--I don't know if she is in charge of it--why there is no indication of OMB approval. Her explanation was that, because the form is sent out in individual cases to individuals, OMB approval for the form is not required. Well, that is just plain wrong as far as I know and as far as I am concerned. I note that under the relevant CFR section the law is clear. Because the same form is sent out to more than 10 people, OMB approval for this form is required regardless of whether or not it is only sent out to individuals. Now, if we can just turn to page 2 of this form. Right at the top and in the middle of the form itself, this is an especially intrusive form asking for, among other things, the amount of money earned by children in a household. This information is then processed by an EPA-hired financial analyst who calculates the potentially responsible party's ability to pay. I find it particularly galling that the EPA considers itself even possibly entitled to the earnings of a child who has nothing do with Superfund liability. As far as I am concerned, the fact that OMB had no control over this form not only makes the form's intrusiveness all the more egregious, it underscores that OMB and others engaged in paperwork burden reduction have their work cut out for them in assessing what is currently being imposed. Next, I would like to turn to the---- Mr. Schrock. Can I interrupt you a minute? From the time you picked up the phone the first time until you got this thing answered, how long was it? Mr. Langer. Two hours---- Mr. Schrock. But how about the cost to the businessman or businessperson who is trying to keep a business going? Mr. Langer. The fact is, that the businessperson looking for it wouldn't know where to go. I mean, I contacted friends and friends of friends. And, I knew where to go and it still took me quite a while. I would like to turn the committee's attention to a continuing problem that our small businesses are facing with burden reduction for lead under the toxics release inventory. The regulated community warned that the justification for a more strict standard for Lead TRI was unwarranted and that the paperwork was going to be overly burdensome. Nevertheless, the Environmental Protection Agency continued to press the regulated community to be expanded. EPA's own statements regarding our paperwork burden painted a bleak picture for first-time filers, and we know now that burden was terribly underestimated. How bleak was the picture? Roughly 100 hours, by EPA's own estimates, to figure out if you needed to do the paperwork and then to complete the paperwork itself. Two and a half weeks for one regulation of one small business's employee's or owner's time. And, over 40 percent of those reporting reported no emissions of lead whatsoever, which means that, within the Nation's small business community, again by EPA's own estimates, approximately 227,500 hours were spent doing paperwork which added nothing to the Nation's overall environmental health knowledge. That is over a century of man- years. Mr. Schrock. And the penalty for not filling it out? Mr. Langer. Well, I belive it is $2,000 per day per violation is generally what they do. At least that is as far as I know. We can only ask again that OMB and Congress take a look at this burden, especially in light of the other paperwork burdens faced by small businesses. As I have said before to both this committee and others, regulation is like death by 1,000 pin pricks. In the content of paperwork violations, however, perhaps it is more accurate to say that it is death by 1,000 papercuts. Once again, I appreciate the opportunity to testify today, and I look forward to any questions that you or Congressman Gonzalez or other members of the committee have. [The prepared statement of Mr. Langer follows:] [GRAPHIC] [TIFF OMITTED] T0867.045 [GRAPHIC] [TIFF OMITTED] T0867.046 [GRAPHIC] [TIFF OMITTED] T0867.047 [GRAPHIC] [TIFF OMITTED] T0867.048 [GRAPHIC] [TIFF OMITTED] T0867.049 [GRAPHIC] [TIFF OMITTED] T0867.050 [GRAPHIC] [TIFF OMITTED] T0867.051 [GRAPHIC] [TIFF OMITTED] T0867.052 [GRAPHIC] [TIFF OMITTED] T0867.053 [GRAPHIC] [TIFF OMITTED] T0867.054 [GRAPHIC] [TIFF OMITTED] T0867.055 [GRAPHIC] [TIFF OMITTED] T0867.056 [GRAPHIC] [TIFF OMITTED] T0867.057 [GRAPHIC] [TIFF OMITTED] T0867.058 [GRAPHIC] [TIFF OMITTED] T0867.059 [GRAPHIC] [TIFF OMITTED] T0867.060 [GRAPHIC] [TIFF OMITTED] T0867.061 [GRAPHIC] [TIFF OMITTED] T0867.062 Mr. Schrock. Thank you. My very alert counsel said it is $10,000, which is 500 times worse--or five times worse than we thought it was. Thank you both for coming here today. I am going to ask-- the question I am going to ask, I am going to ask it of both of you. You have heard the testimony. You have had an opportunity to hear Dr. Graham testify about the task force. Are you convinced that the task force has fully implemented the new law? Karen. Ms. Kerrigan. Certainly there has been an effort, but they are struggling. I mean, if you just look at the benchmarks in terms of what the OMB was supposed to hit or what they were supposed to reach just with the basic things, the single point of contact, they have been unsuccessful in doing that. I think there is sincerity on their part. I think they are probably working hard. But, if you look at the bottom line, there is not--they are not complying with what the law requires. Mr. Schrock. Why? Why do you think that is? Ms. Kerrigan. I go back to Mr. Gonzalez's statement, maybe the bureaucracy is winning. That is what he said before. But, you know, I don't know how bureaucracies work. I really don't want to know how bureaucracies work. But, it would seem to me that a simple thing such as putting together a small business point of contact is not unreasonable. And, someone at the OMB has got to get out the hammer in terms of contacting the agencies and say, look, this is not a suggestion that you put together a small business point of contact, a regulatory information officer, whatever you want to call them, inside the agencies; this is the law. Mr. Schrock. It sounds to me like they need to stop saying, pretty please, will you give it to us, and say, this is when we are demanding it, date certain. They certainly have the law behind them to take that kind of action. Mr. Langer. Except there isn't much that they are able to do, enforcement-wise, to get these agencies to comply. That is where oversight--and that is why hearings like this are so important in keeping the pressure on. I mean, the fact is that, if an agency is not willing to identify that one person, or as you guys have noted already, the points of contact don't even know that they are points of contact--I mean, there is something very fundamentally wrong, something endemic to the culture right now. I hate to think that we are all getting burdened down by this overwhelming noise. But I think, one tends to take a look at the hugeness of the problem, and you get overwhelmed by it. The problem, of course, is that you can't just pick at this thing on the margins and try to go for the easy win. You have to focus on the fundamentals, where you reducing 227,000 hours of paperwork in one instance. I mean, things have to be addressed. I wish that they had gone further, instead of pointing out what to me is obvious, which is that an assessment needs to be done--and I am paraphrasing what was in the final report--set an agenda, let us know when you are going to make that assessment and stick to it, and then tell us what you are going to do about it. I have nothing but respect and admiration for John Graham. I understand all too well the burden that he is facing. But someone needs to step up to the plate and say, I am going to do this and here is when. Ms. Kerrigan. My sense is that, based on this hearing and your oversight, we are going to get a single point of contact at each agency. I just have that sense, but I think what it demonstrates is that ongoing and consistent oversight by the Congress and the committees is necessary to get some of this stuff done. Mr. Schrock. As much respect as you might have for Dr. Graham, the fact is the buck stops at his desk, and he is in charge. What I would like to do--my staff has a fit every time I mention this; I got this from an Admiral friend of mine--I would like to get in the car one morning with one of my staff and say, what agency are we going to pull up in front of today? Walk in and say, I want to see the Secretary. Say, I want to know who your person is. Admiral Bob Natter, Commander in Chief of the Atlantic Fleet does that. Once a week when his aide and his driver picks him up, he says, OK, what ship are we going to this morning? You can't believe the results he gets. It works. It is called management by walking around. And, that is exactly what we need to do. I swear, some day I am going to be doing that. Because that is the only way we are going to get those numbers correct up here. Now, let me ask you--my time is running out. Let me yield to Mr. Gonzalez for a few minutes. Mr. Gonzalez. Go ahead. Mr. Schrock. OK. You talked about the single point of contact. Will businesses be best served by having one contact or a series of people who, and, if you dial person No. 1 and they not are not there, it just cycles to the next person, next person, until you get the person you are supposed to talk to? Because I don't see how one agency can have one person. You know, if they have one person at the IRS, or even two, how in the name of common sense are they ever going to be able to deal with that? Ms. Kerrigan. I don't necessarily think that a single point of contact may mean one person. Certainly, I think that we are looking for a single gateway to get into that regulatory information office, if you will, that a small businessperson can go to; and then that person, or that contact, will be able to tell the small businessperson--the expert advise. They are basically the gateway, then they get delivered or get sent to the right person, based upon the expert advice that small business owner needs. I do think it is important that we have that single point of contact. The Paperwork Relief Act of 2002 recognized, and rightly so, that burden is not just the filling out of the form. The burden was defined much more broadly than that, including all of the research, all of the work, all of the time, all of the resources that go into complying, maintaining, data collection, and then reporting to the Federal Government. So, if you can get from point A to point B much quicker in terms of that single point of contact, in fact, you are reducing burden. Mr. Langer. If I can just quickly say, that is perhaps the most frustrating thing in dealing with a regulatory agency, having to get someone's voice mail and not getting an answer and not getting a person. Yesterday this was the problem--my jumping around from person to person. I called this person, oh, well, you know, I talked to somebody who said, ``All right, call ABC.'' ABC would not be at his or her desk. And, I was preparing for this hearing; I needed to get an answer. You have small businesses who are under a lot more of a gun. They have a financial incentive. So getting them to talk to somebody is the most important thing. But, I think it should be one number. I don't think that they should have to have access to the Federal Yellow Book on line, like I do, to just draw down a list of numbers that they can call. They don't have that. Mr. Schrock. And, as I said, before I leave for a few minutes, they need to have 800 numbers or 888 numbers. These businesses that are on the far West Coast should not have to sit on hold for 2 hours like you did. Because I bet that would be their profits for the week. Thank you. Mr. Ose [presiding]. The gentleman from Texas. Mr. Gonzalez. Thank you very much. You are wondering why bureaucracies work that way and why government--because it is human nature, adverse to change for whatever reason. We have to recognize that, but not live with it. I think what you are all pointing out is going to be important. I recognize the big picture. The big picture is, we want reasonable and necessary regulation, and we need to do away with some that is out there that is totally useless, as you already pointed out, Mr. Langer. By the same token, you know that it serves a useful purpose, and we want to deal with that. I don't believe an agency or department even recognizes what is unnecessary that they have already promulgated years ago, that they enforce haphazardly, that presents problems. I think if you do have a point of contact, a gatekeeper, a clearinghouse, whatever you want to call it, in each one, I think it is going to be an education in and of itself to those individuals of what a mess they have in-house, and it will spur them on to clean it up, because it will make their jobs easier. But, I think what you are pointing out, Ms. Kerrigan--and my frustration has always been, the Admiral can go in there and say, who is your point person here, or whatever it is; and, if they don't find one, do you know what happens? Something goes in the personnel file. Something happens with--whether someone gets promoted or not. In government, there is no consequence. I think Ed and I can walk in there and say these things, and maybe for a week there will be some sort of change. But, then what is going to happen as a consequence of these guys being unhappy? Nothing. And, I think we do need to come up with something. It is unfortunately, you know, there is always--rewards work. But, the other thing, too, is the penalty or the unpleasant consequence of it. There has to be an unpleasant consequence for people's inaction and ignoring what is the obvious. And, OMB has to get tough, and we have to somehow arm people, supply whatever the mechanism is to make these people responsible. I share your frustration. I mean, the point is, these departments, agencies and individuals will be there way after we are gone. They do wait us out, and they wear us out because we have limited staff; we can't deal with it. They know you guys surely can't. But, they even know that the committee cannot. And, there is a way of making it work. So, I don't really have any particular question. I think we have identified the problem. Everybody here knows what it is. We have identified some simple solutions that we can attempt to institute immediately, and then work from that place. It is a matter of doing it. And, you know--but any comments based on what I just rattled off, stuff based on my own frustration? Mr. Langer. I will tell you that it is frustration in the sort of bureaucracy inertia. But, one of our big concerns is, when an agency makes a decision, and is wedded to that decision regardless of overwhelming evidence to the contrary. This is the problem that we face with lead TRI. We have told EPA--and I understand why EPA wouldn't want to take our advice beforehand. We are an association representing small businesses. They are solely in the business of protecting public health and safety and the environment. But, the fact is, once the evidence was coming in, the facts that are in my written testimony all came out of EPA's report on lead TRI that was just released. Yet EPA is still working around the edges in terms of reducing the paperwork burden. I sat in meetings with senior officials at EPA to discuss how to better implement the reg as it was when we didn't know what the outcome was going to be. And, I got reluctance and hesitation and opposition to even putting together a simple guidance document that wasn't 150, 200 pages long, that had a summary at the beginning which told people what they needed to do to comply. I think it is inertia. But, I think that there are people who are out there who see things done a particular way. There is a big problem with not wanting to change their mindset when mistakes have been made. And, I am not sure who is the best person to sort of enforce that. But, I think that these are sort of two halves of the same whole. Ms. Kerrigan. I would only make a comment to your point about the folks in the agency. You are right. I don't think that they know the information that they are collecting, whether it is useful or not. But, I do believe, as you say, that having a single point of contact or an entity that is on the front line, that is listening to small business owners and somehow being able to catalog this type of stuff, will be very useful. And, you know, the best business leaders and CEOs in this country listen to their frontline people. That is where innovation comes from. That is where the best ideas come from. So, I think the single point of contact in terms of being able to get information from business owners, mark it down, even the questions: Why do we have to--when a business owner has a question, why do I have to fill out this certain piece of data? Well, that is something that the bureaucracy should also be asking, too. Why do they have to fill this out? Is this really important? Is this really useful? So, having that single point of contact serves that role. But also, I do think that you need to have consistency across agencies in terms of where this function is housed. And, I just keep pointing to the CIO, the Chief Information Officer, because they deal with these types of information collection issues. And, having it in house and giving it some structure, I do believe will help these single points of contact communicate with each other more. It will create a structure where they can more easily and more readily communicate and do outreach to the small business community. There is just some structure to it that we can get our hands around in terms of helping them identify ways to reduce, integrate, consolidate paperwork for the constituency that we serve. Mr. Gonzalez. Thank you. Mr. Ose. Thank you. OK, I missed the testimony that Mr. Langer put forward about the thing I want to followup on. I want to make sure that I understand. There is a form that is attached to the back of your testimony? Mr. Langer. Yes, the appendix. Mr. Ose. Is that the form that accompanied the lead TRI deal? Mr. Langer. No. This is a form that was given to a company that was involved in a Superfund remediation issue. Mr. Ose. They were a contractor. Mr. Langer. No. No. This was a company that was a potentially responsible party, a PRP, as it is called in Superfund parlance. I received the letter from one of our members. I got a letter along with the form this week. He has been having problems with the EPA. I won't even get into the specifics of his issue. But, in looking at the form, I noted how intrusive the questions were, the things that were requested. Things like how much a household spends on wood in the wintertime to heat their homes. And, as I said in my oral presentation, how much money a child makes during a summer vacation, working as a camp counselor and learning the values of a good economy. These are the sorts of questions that are being asked. And, it was pointed out to me by someone else, ``Hey there's no OMB number on this.'' So I did some checking, and as I said earlier, I had to make over a dozen phone calls to various EPA-associated agencies in order to get an answer on this form. I called Region 4, which is where the form originated; was told by---- Mr. Ose. Region four is what part of the country? Mr. Langer. That's the South. This was someone in Atlanta, GA. Mr. Ose. So the office is based in Atlanta, GA? Mr. Langer. The EPA Region 4 Office based in Atlanta, GA. This particular form was being used for a site remediation, I believe, in Arkansas. Mr. Ose. OK. Mr. Langer. And I was told by the Associate Regional Counsel that she didn't know why the form didn't have an OMB number, but that it was used throughout the EPA. Mr. Ose. Did the Associate Regional Counsel say that the form was going to continue to be used? Mr. Langer. Yes. Mr. Ose. OK. What was her name? Mr. Langer. I believe her name is Kathleen West. Mr. Ose. I would like to confirm that, because I'd hate to have her put forward legal counsel that's not legal. Mr. Langer. Well, it is not. The thing is, this is not specific to Region 4. That was the point that I was going to make, is that this form is used throughout the EPA. And, that's what sort of set me on my journey of making over a dozen phone calls to the EPA, because I didn't know which office this came out of, and I eventually found out that it came out of the Office of Site Remediation and Enforcement, which is a division of the Office of Enforcement and Compliance Assurance. Mr. Ose. Where is that located? Mr. Langer. That is here, Washington, DC. Mr. Ose. OK. I mean this is quite a document. There certainly must be some pride of authorship. Were you able to track it down? Mr. Langer. I was not able to find the author. I was able to find someone in the office who was able to speak with me, Tracy Gibson. Mr. Ose. Were they able to cite any statutory basis for this form? Mr. Langer. I believe that it had to do with the various laws written under Superfund. You know, this form is used when people want to settle claims with the Environmental Protection Agency. They are asked to fill out this Ability-to-Pay Claim Form. I asked the person in the Office of Site Remediation Enforcement why this form did not have an OMB number, and she said quite plainly that it was her opinion that it didn't need an OMB number because this is not an information request that's governed by the relevant Code of Federal Regulations section-- -- Mr. Ose. So we don't need OMB review and approval? Mr. Langer. We don't need to have it approved by anybody, because in their opinion, it is only sent out to individuals. It is not sent out to groups of individuals. And, at that point, I just---- Mr. Ose. Individuals, as in citizens subject to the law of the United States? Mr. Langer. Yes. But as I said in my testimony, and I had actually written it out, but I edited my oral testimony because I was going long, the relevant CFR says quite plainly that, if it's a form that is--it doesn't matter if it's sent out to individuals, if it's sent out to multiple individuals, the same form requesting the same information, then it's governed, and then the PRA governs it. Mr. Ose. Well, it's my understanding that if the form is sent out containing the same questions to 10 or more persons, it is subject to the PRA and to the OMB review requirements. Mr. Langer. I agree with you 100 percent. That is my interpretation of the regs as well. I believe EPA is wrong. Mr. Ose. I just want to go through this form here. Mr. Langer. Please. I'll be happy to. Mr. Ose. First of all, we are going to enter the entire form into the record, if you haven't already done so. Mr. Langer. I have done so. Mr. Ose. Now, the statement is made under penalty of perjury. It asks for the name of the person filling it out, their signature, the name of their spouse, their address and their county of residence, and they have to date it. Then, it goes to the next page, and it asks for members of household. List the head of the household and all persons living with you. So for instance, let's say my mother-in-law stays with me. Would I have to list her on this? Mr. Langer. Yes. Mr. Ose. Would my minor children in third grade have to be listed on this? Mr. Langer. It is my belief, yes. Mr. Ose. For what purpose? Mr. Langer. Well, the EPA, I believe, believes that it is entitled to the wages of whomever is living in your household to be calculated into your ability to pay for Superfund remediation. Mr. Ose. Because they live with me? Mr. Langer. Yes. Mr. Ose. Then it asks for the employment. So potentially my mother-in-law, who is employed, in some unrelated activity would have to disclose on this form who her employer is. No, I would have to disclose on this form, or kick her out of my house, who her employer was, the length of her employment and her annual salary? Mr. Langer. Yes, sir. Yes. As I say, if your 14 or 15-year- old son or daughter is working in summer camp and is making $700 for that summer, according to this form, you have to list that. Mr. Ose. OK. The next question asks for a list of all income earned by persons in the household. If members of the household other than the applicant and spouse earn income, please itemize on separate pages. Then, it has a list--wages, salary, sales commission, investment income, meaning interest dividends, capital gains, net business income, rental income, retirement income, including pension and Social Security, child support, alimony, other income, please itemize. Then it has columns, applicant, spouse. Then to the right of the applicant and spouse, it has period of payment, check one: weekly, monthly, quarterly, yearly. Now, apparently, I would have to obtain from my mother-in-law, a break down of everything that she's receiving in income, simply because she resides with me. Is that the way you read this form? Mr. Langer. Yes. That's the way I read the form. Mr. Ose. Ms. Kerrigan are you familiar with this form? Ms. Kerrigan. I am not, no. Mr. Ose. OK. Mr. Langer. Again, I wasn't familiar with this form until earlier this week, until one of our members notified me about it. Mr. Ose. OK. Then we get to page 3. Current living expenses. Please list personal living expenses which were typical during the last year and indicate if any of these values are likely to change significantly in the current year. Please do not include business expenses. If you are the owner of an operating business, please attach any available financial statements. Living expenses: rent, home maintenance, auto, fuel maintenance, other transportation utilities, such as fuel, electricity, water sewer, telephone, and, under fuel, if it's gas, oil, fire wood, propane, food, clothing, personal care, medical costs. So this form requires the person filling it out to disclose under the EPA's requirement their medical expenses? Mr. Langer. Yes. Mr. Ose. Wow. Mr. Langer. Now, I don't know if that implicates HIPPA at all, but that's something to consider. Mr. Ose. Well, it does occur to me to ask about that since that's over on another committee I sit on. Then it goes to insurance, household insurance, life insurance, automobile insurance, medical insurance. Now, presumably the collection of these data have some connection to the EPA's interests in the Superfund site and the recovery of cost. What would medical insurance expenses have to do with that? Mr. Langer. Well, I think EPA wants to be able to squeeze whatever dollars and cents they can out of you if they believe you're a potentially responsible party. See they want to know exactly how much you can pay, and then they are going, to put it indelicately, to force you to cough it up. Mr. Ose. Well, let's just step through that. So apparently, you would list a number on here and EPA would in its wisdom, under this scenario, make a judgment as to whether or not you were buying too much medical insurance for your family. So, they would make some determination that, well, you don't need quite that much. You need a policy of something less? Mr. Langer. Yes. Mr. Ose. And, you need to reduce your expenditures here? And, the same for automobile insurance without regard to your driving record and your life insurance and whether or not you have adequate coverage for your household, property and casualty exposures. The next line is debt payments: mortgage payments, car payments, credit card payments, educational loan payments, and other. So apparently, the EPA is maneuvering itself into the position of collecting information and then deciding that you're paying too much of a mortgage payment? Mr. Langer. Well, again, I don't know if they analyze the end result of what you're paying out and they figure that if you make $50,000 and you spend $49,999, that they're going to be entitled to that last dollar, or if they're not, they're going to make you reduce your expenses. In other words, I don't know offhand. But that's one way to look at it, I suppose. Mr. Ose. OK. Then it goes down here to taxes, meaning property taxes, Federal income taxes, State income taxes, Social Security income taxes. Is the EPA going to tell me I'm paying too much in taxes? Mr. Langer. Possibly. Mr. Ose. Oh, that'd be sweet. Then it goes to other expenses, child care, current school tuition expenses, legal and professional services, other. Now, I thought information including compensation to your attorney was a privileged item? Mr. Langer. That I don't know. I can't answer that question. Mr. Ose. All right. Mr. Langer. I certainly know that the filling out of this form, if you're anybody involved in Superfund liability, certainly, your legal expenses are going to go up as a result of this form. Mr. Ose. This is fascinating to me. I've got another five pages I'd like to go through. The substance of this thing, I mean this is a very intrusive---- Mr. Langer. Chairman Ose, if I could just turn your attention, just really quickly, to page 6, item No. 9---- Mr. Ose. Page 6, personal property. Mr. Langer. Household goods and furniture, jewelry, art antiques collections, precious metals, etc., only list items with a value greater than $500. Mr. Ose. Amazing. So presumably, I could have received a watch that my great grandfather gave to his son and then he gave it to his son and then he gave it to me, and presumably, it would be relatively old, it'd be an antique, and, under the scenario that's apparently represented by this form, EPA would think that is something subject to its attachment? Mr. Langer. Yes. Mr. Ose. Now, let me ask the question. This is all fascinating, but I don't see any OMB number on this. Mr. Langer. No. There is not one. Mr. Ose. Do you know anybody who has filled this out? Mr. Langer. Yes. I know that at least one of my members has filled it out. I don't know offhand of anybody else. Mr. Ose. You know, without an OMB number, you heard Dr. Graham, I asked this question straight out today. No OMB number; it's not binding. Mr. Langer. Yes. Mr. Ose. He said that is correct. Mr. Langer. And, I think EPA's position would be in the end that, if you wanted to settle this, that they are requiring you to fill it out. I don't---- Mr. Ose. That's not what the law says. Mr. Langer. I understand that. Mr. Ose. The law says that's not part of the process. Mr. Langer. Yes. Mr. Ose. But, you don't know who came up with this form--I mean this is quite a thing. Mr. Langer. I don't know who the author is. I just know the office that it's issued from. I know I spoke to Tracy Gibson over at the Office of Site Remediation. Mr. Ose. We do want to followup and have them cite the statute and what have you that underlies EPA's ability to collect this information. Now, Ms. Kerrigan, over at the Small Business Survival Committee, your members basically struggle, rather significantly with paperwork and all this other stuff that gets dumped on them. Have your members seen any meaningful reductions in the paperwork burden placed on them by the Federal Government during the Bush administration? Ms. Kerrigan. I would say probably not. There has been small progress made over at the IRS in terms of some of the schedules that they had originally required, that they've gotten rid of some of those, Schedule L, Schedule M, Schedule F, and my understanding is in looking at a press release from the IRS just this week, that businesses continue to still file Schedule F, which is about 100,000 hours in wasted time from a business perspective. Mr. Ose. Before we leave that point, is it accurate to say that the requirement of those forms wasn't eliminated, but that the threshold above which people were subject to the reporting was actually raised? Ms. Kerrigan. Yes. Mr. Ose. So there were people who were within the threshold, then the threshold was raised and they were taken out? Ms. Kerrigan. Right. Right. Mr. Ose. OK. Ms. Kerrigan. I guess at SBSC and being with the group now for 10 years, how we've come to measure progress has been, are we seeing any moderation, and it's unfortunate, and we have to change how we think, and that's why we are very hopeful about this legislation. Has there been an increase in the regulatory and the paperwork burden? Thankfully, there's some pieces of legislation, for example, the Ergonomics piece that was rejected and the Office of Advocacy over at the SBA is doing a pretty decent job, a really good job, at letting the agencies know what their requirements are under SBREFA, the Small Business Regulatory Enforcement Fairness Act. But, in large part, and I can't really say for sure that perhaps through some of these electronic or E-Gov initiatives perhaps there has been some type of burden reduction in terms of more efficiency. I don't know. By and large, when I talked to a lot of my members this week and last week informing them that I would be up on the Hill on this issue, and asked do they have any ideas, on working on paperwork reduction, they laughed. So that is sort of the anecdotal information that I can give you. There really has not been a serious reduction in paperwork, and, under the current administration, I still think we're hopeful, and I think oversight by the Congress, I think this hearing today, we will begin to see some action over at the OMB. I think we're going to get the single point of contact and we're hopeful. Mr. Ose. Well, at the single-point-of-contact level, I can tell you we were discussing this when Mr. Schrock was asking questions, and you know one of the great things about summer in America is there are a lot of young people who want to work on Capitol Hill. I have lots of people who want to work in my subcommittee for obvious reasons. They share our concerns about regulatory intrusion and the like. We have decided that we are just going to have a daily drill. That one of the things our interns are going to do, is we are going to go at these agencies one by one, and they're going to call on my behalf saying: This is so and so; I'm an intern for Congressman Ose. With whom may I speak regarding the single point of contact for Paperwork Reduction? And we are just going to go one by one, day after day after day after day after day after day. Mr. Langer. I don't know if there are enough days in the summer for that, Congressman. Mr. Ose. I've got a lot of interns. I've got a lot of interns. So now---- Ms. Kerrigan. To answer your question, from a bottom line perspective, a lot more work needs to be done, and we know that, so---- Mr. Ose. Now, one other question, that begs the question--I mean, I just feel like you have teed this baby up. Where would you suggest OMB look for those opportunities for paperwork reduction to benefit small businesses? Ms. Kerrigan. Well, certainly, if you want to reduce the paperwork, you go where the paperwork is, and 80 percent of that comes out of the IRS. So I still believe there is a lot of opportunity for paperwork reduction at the IRS. Another place where they could look, where I think there's a lot of opportunity, is at the GSA in terms of the procurement process. A lot of small businesses just don't want to do business with the government. They want to, but the paperwork in terms of getting on the GSA schedule in terms of solicitation, is a major barrier to small businesses competing for government contracts. And, we need small businesses to get into that in order to benefit the taxpayers to the best extent that we can. Mr. Ose. Well, the GSA is on the chart we have over there-- maybe we'll just make them the first call. The point of contact on that form outlined in turquoise, there is no point of contact. Ms. Kerrigan. And, we need a point of contact. There is a lot of opportunity at the GSA, at the IRS. I think, you know certainly, as Andrew pointed out, from this form there's opportunity at the EPA immediately. Mr. Langer. Absolutely. Ms. Kerrigan. But, in all the agencies, there is an opportunity. If you want to go where the majority of the paperwork comes from, I mean it's generated at the IRS, and I think there's a huge opportunity to go there. In fact, Congressman Ose, I think it makes sense for the Office of Management and Budget to collaborate with the Taxpayer Advocacy Office at the IRS. I am 1 of 100 citizens that serves on the Taxpayer Advocacy Panel who were appointed by the Treasury Department, and we listen to taxpayers every day. There's ideas coming in every day. There's questions that come in every day. Why do we have to do this? Why do we have to--basically, the questions are the type of questions that we need to be sending over to the IRS, the information collection people that they ask. In terms of reviewing the forms and the paperwork--which small businesses are on the receiving end. Mr. Ose. Before we leave that point, this is an appointment from the executive branch to serve on this 100-person group? Ms. Kerrigan. Yes. Mr. Ose. Would it be appropriate to ask you to forward to us the most meritorious of those suggestions, and let us work it from the legislative side? Ms. Kerrigan. It may be, yes. Mr. Ose. I would appreciate a discussion to that effect within this advisory panel, and hopefully, we can resolve that. That would be great. Ms. Kerrigan. We have our regional working groups in terms of listening to the grassroots in Virginia. I'm a resident of Virginia, and we also have our national working groups. I happen to serve on the small business self-employed compliance area because they want to bring more small businesses into compliance. How do we reach out to them? Obviously, this makes sense. And, there's also other working groups. There may be a working group that you may want to suggest or the OMB may want to suggest to Nina Olson, the Taxpayer Advocate, on Paperwork Reduction. I think that they would get a lot of good ideas from around the country, from the tax-paying public, as well as practitioners, because there are practitioners that serve on this advisory panel. Mr. Ose. From sitting here right now, are there specific regulations or agencies that you can identify that we specifically ought to look at? Ms. Kerrigan. The GSA. I keep thinking about that. Because I know you had a hearing back in April, I believe, where a small business member, a woman business owner just talked about her experiences in terms of getting on the GSA schedule. She did business with the Ohio government. Now, the State governments are requiring that in many cases they also get on the GSA schedule. And, she walked through the hundreds and hundreds of pages that she had to go through, the time, the expense just to read that thing and do it accurately. I just don't think doing business with the Federal Government should be that burdensome and difficult. I just, I think there's a lot of room for modernization and streamlining over there. I think it has just a lot of potential in terms of specific regulations. I guess we can go back into our files for members and stuff that we have sent over to Congress and to the OMB and to other agencies and provide you with that type of information. And, I'd be more than happy to--we want to work with on you this because it's important to our membership. Mr. Schrock. Mr. Schrock has no further questions, but we haven't resolved this yet. Mr. Schrock. I am sitting here figuring out how many drop- ins I'm going to do in the next couple of weeks, and I think I'm going to do that, you know. You look here, you talk about GSA. They're MIA, they're missing in action. No number. I mean it just makes no sense. And, you know, what I'd like to do is go to the IRS and have the security guard say: You don't have an appointment; you can't get in. God forbid if they do. But, I mean, we need to--that would show me what the average citizen, the average business person, that is the problem they're having. They can't get in either, front door or on the phone. And, I think, if we do that a couple of times and the word gets around, that character from Virginia is dropping in and asking some tough questions, they might get their act together and try to do something. I mean nothing else has worked. Why not? Ms. Kerrigan. I just don't see why the--a single list, whether that's in a hard copy catalog---- Mr. Schrock. Why is that so hard? Ms. Kerrigan [continuing]. Or a portal cannot be developed that lets businesses know their checklists of regulations that apply to them and then the compliance assistance that can be available. That has to be done. I mean, current businesses want that. There's 3 to 4 million new businesses that startup every year that are looking for that type of information. If we want to create a culture of compliance, we've got to provide businesses with the tools to comply. Mr. Schrock. I look at this list. Actually, it's in color here, the one over there, I wonder how they got these names and these numbers? Did OMB send out a letter to each agency and say, send me the name and the number if somebody--so they said, let's just throw this guy to the wolves and here's a number? Or, did OMB talk to a living breathing being and say, yes, this is the person and here they are? Ms. Kerrigan. Congressman, in that process, I really think the OMB has to be more deliberate, in terms of working with the agencies, of who that point of contact is. It has to be consistent across agencies. I think if you are going to make this work, if small businesses are going to get consistent regulatory information from the agencies, and I'll say it again. That the CIO Office, I think would be a great place to house this because of their information collection responsibilities. The only thing that they have to be aware of and that they have to sort of build in to how they run that operation is the whole concept of public burden that we are doing this for a purpose. As opposed to information, just information management. Mr. Schrock. The OMB has just got to be dogged and determined and very aggressive, and they're just not doing that. You know, it's incumbent on people like Mr. Ose and me to do that, and we simply have to do it. We simply can't keep having hearings and hearings and hearings and have nothing done. Somebody's feet need to be held to the fire because if we don't, then they need to be replaced. Ms. Kerrigan. In looking at that list, as I said, the consistency, I'm concerned that it's the OSDBU, the Office of Small and Disadvantaged Business Utilization, in one office where they largely deal with procurement issues and contract issues, and then in others it's the CIO. It's very haphazardly done. So, as I said, there has to be some structure to that, some thought behind it, if you're going to make this whole thing work. Mr. Schrock. It is OSDBU at HUD? Ms. Kerrigan. OK. All right. Mr. Schrock. Thank you. Mr. Ose. Mr. Langer. Mr. Langer. Yes, sir. Mr. Ose. Do you have any suggestions where OMB might look for significant opportunities for paperwork reduction? Mr. Langer. Well, I can't answer that question any better than Karen Kerrigan just did. I mean the fact is with IRS, again, accounting for 80 percent of the paperwork burden, that's really where we need to go. You know, I think having two full-time equivalents there is a good first step. It's something that we have talked about in our shop for quite some time about finding a way to get around OMB's reluctance to take a deep look at how to improve things over at the IRS. Again, ditto on the GSA Schedule issue. I handled the contracting panel at NFIB's small business summit last year, and that was the single issue that our members brought to me, the onerous burden they face every time they have to do paperwork to figure out if they can just do business with the Federal Government itself. In terms of specific regulatory schemes, I can only stress that looking at paperwork issues, at places like the EPA, those regulations that deal entirely with the filling out of paper, things having to do not only with the Toxics Release inventory but examining duplicative and conflicting regulatory schemes within the Clean Water Act and the Safe Drinking Water Act and things like that. And again, it's not one single reg that does it. It really is the combined regulatory state. But the biggest offender of that is the IRS to say the least. Mr. Ose. Let me just followup. This form that we just walked through from the EPA, which hasn't been approved by anybody, it's just kind of out there, it's not been legally approved? Mr. Langer. Yes. Mr. Ose. Now, if you all don't fill it out, what happens? Mr. Langer. I think that, if you don't fill it out, from what I understand from my conversations with the EPA, they will not settle a case with you. They will not settle your Superfund claim payments. Mr. Ose. So they break the law by putting out a form that hasn't been approved. And, I'm not saying the forms not good. I'm just saying it hasn't been approved; that the law requires it to be approved before it goes out. They break the law, send the form out, put a burden on the taxpayer or consumer or the business or the individual or the mother-in-law or whatever, according to the form, and then, if you don't fill it out, you're given, you know, chapter and verse, they say, sorry. Mr. Langer. Yes. ``We're not going to settle with you,'' and then I assume that they proceed with an enforcement action at that point. I'm not sure. I'm not an environmental lawyer, I'm not a Superfund lawyer. So it's an offhand guess. If I could just touch on something that Chairman Schrock mentioned, which is the issue of business compliance and gateways. A lot of what OMB has talked about is this Business Compliance One- Stop, which is a project whose idea I do support. I've sat in some meetings on it and have been pleased with the concept, and more to the point, pleased with the personnel from the various agencies who are participating in the effort who really understand that there's a huge burden out there for small businesses. I watched as a woman from the Department of Transportation, a career civil servant, stood up and asked, ``why is there this burden?'' I mean it was an inappropriate forum in which to raise that question, but I pulled her aside afterwards and said, ``thank you, somebody in the government understands this.'' The most major concern that I have, is the time line. Waiting 5 years for it is too long. And, my big fear is that, once we get it into place, that it will become mandatory. The fact is, yes, right now, we have 80 percent of businesses, small businesses that are on the Web, that are using computers all the time. But, there will always be small businesses that are not on the computer and that don't have time to go down to the library to use the computer or won't know how to use it period. So, we have to stay away from mandating using electronic filing. We have to give businesses the opportunity to do it themselves, to have a choice in the matter. I do think, in the interim, that somebody at OMB or wherever has to start coming up with a central repository of the regulatory burden enumerating exactly what is required of the business. We can't wait 5 years for that. Mr. Ose. Mr. Schrock. Mr. Schrock. I asked Dr. Graham a question, and I'm not sure I got the answer to it. I asked him when agencies are creating regulations or all this paperwork and these forms, do they bring small businesses in from various sectors to look at this stuff, and I don't know what he said. My guess is I don't know because they probably don't do it. Mr. Langer. They do to an extent. Some of them do some of the time. You know, I'd like to point to the new Acting Administrator of the EPA, Marianne L. Horinko, who has been very good at engaging in outreach to both, frankly, both environmental groups and the regulated community on issues. The fact is that the best agency for advocating within the Federal Government has been the Office of Advocacy at SBA. NFIB itself has a research foundation, and we run econometric models on the cost of regulations. We have a hard time figuring out all the inputs for it, but in a lot of cases, like with the increased postal rates last year, we are able to spit out a final cost to small business. I think we're the only business group which has that sort of capability. Chief Counsel Sullivan's gone on the record in terms of talking about how he's put various regional advocates in--using them to put the regulated, community- specific members of the regulated community in touch with regulatory agencies. So, for example, on the Off-Road Diesel Rule, Chief Counsel Sullivan's office put a farmer in touch with the EPA and the farmer point blank told them that unless there--I guess it was a John Deere engineer who told them that, unless they changed the actual hood configuration of a tractor, they couldn't fit the clean air equipment that was necessary on there. And, the fact is, nobody from EPA even thought about what could go under the hood of a tractor engine. But, Chief Counsel Sullivan is, as someone else has mentioned, he is dogged, he is ravenous. If we have another Chief Counsel who wasn't so ravenous of getting small businesses involved, then these sorts of things wouldn't happen. Mr. Schrock. What was the bottom line for the Deere thing? Mr. Langer. I believe that they're working together to try to get the regulation changed, so that they could fit it under the engine. I think that was very helpful to both parties in the end. There needs to be more of that. Mr. Schrock. Simply things like that. Mr. Langer. Absolutely. And, that's just it, picking up the phone and calling. I have done the advocating myself because I enter into a lot of discussions with different groups. I just lectured at the Council on Excellence in Government about how we can create a better compliance-assistance climate. I gave a similar speech to the EPA Small Business Summit. The fact is, career civil servants are not small business owners, and small business owners are not career civil servants. They have two very different mindsets out there. Frankly, you're right, the people in the government don't understand how things are done. I've had ideas about how to put them in the mindset and don't want to take up the committee's time with that. I'd be happy to talk to you at length at some other point. But, I've got ideas on how we can sort of bridge that gap by putting them in the shoes of small businesses. It's been suggested for instance that maybe you send out a career civil servant to shadow a small business. But, as far as I'm concerned, a bureaucrat showing up at a small business saying, ``I'm the Federal Government and I'm here to help,'' you know the small business owner's going to look at them, and say thanks, but no thanks. But, there are other ways to do it without that sort of intrusiveness, and you sort of give them the ideas as to what a small business owner goes through, figuring out a single point of contact, where to go for regulatory information, how to comply with a reg. Ms. Kerrigan. Congressman Schrock, if I can just quickly add to that. I think, even in Dr. Graham's report, he noted that really not enough outreach is being done to the small business community. I think he spoke in terms of reviewing these forms. I know this stuff comes up on the Federal Register, and we don't even know when it comes up to comment on it. At that point, when you comment on it, it's sort of too late because the process has already taken place. So, I think there needs to be more outreach to the small business community and small businesses. It's funny I was reading the transcript of the small business meeting that the Office of Advocacy had convened in terms of paperwork leading up to the Task Force Reduction Report. I forgot who it was that was speaking, but she had said she went to this meeting convened by the IRS because they were reviewing equipment depreciation schedules for farmers. And, it was, she said, it was very interesting. Whe learned a lot about equipment depreciation for farmers. She said, there were accountants in that room. There were bureaucrats in that room. But, guess who wasn't in that room? Farmers. So you know, truly, if you're going to make a difference, small businesses want to be, have to be a part of the process, and I would argue they want to be part of the solution. Mr. Schrock. Outreach needs to be a required part of every agency's regulatory branch, their department because how can they possibly know how things are going to impact like the Deere situation. That's a great example. How would they ever know? Ms. Kerrigan. I agree. Mr. Schrock. I really appreciate you all coming here and I've had an opportunity to meet with you all before, and I appreciate what you do. Sometimes you probably feel like you're whistling in the wind. Sometimes I feel like we don't listen well enough. What folks like Doug Ose and Ed Schrock need to do is put people's feet to the fire, and, if we have to, I hate to embarrass people, but sometimes that's the only way to get their attention and do sometimes outrageous things to get their attention like, you know, if I walked up to the door of an agency. Somehow we've got to get this thing moving because it's like grabbing air. What part of it do you grab to make a difference? I understand Dr. Graham's frustrations. He took over an agency that's just a big mess. But, somehow he's got to put, he's got to get in there. He's got to get on the phone himself and call the Secretary of the various agencies and say, I'm sick and tired of waiting for your department to give me a name. And, if the Secretary gets that message, he's not going to like it because he's going to be angry at his own people, not Dr. Graham, about why aren't you responding to this guy. Maybe it takes a little more one-on-one-type relationships to make that happen. To send letters or emails or memos, people ignore those. I do. You know, and I mean, we have just got to get our hands around this now, and you all have got to keep pounding on people like Doug and me just to make sure we get this job done. It's not easy. I'm impatient. I'm old. I'm not going to be here a long time, and I want to see some of this done before I leave here because, if we don't do it now, when? We can talk and study. Whenever people don't know the answer to something, good point; we'll study it. That's a cop-out for I don't have a clue. We've got to change that. So, I appreciate what you do and that you have been here. Please be in touch with us because we want to help solve this thing. Ms. Kerrigan. Well, thank you. I would only add that you can ignore memos, but when something is the law, you know, you can't ignore that. I mean, what if it was a small business person sitting here in front of you or in front of an IRS committee or talking to an EPA enforcement person saying maybe I'll get back to you. I don't know when I'll get back, maybe 6 months I'll be able to do that. Mr. Schrock. They'd nail them. Ms. Kerrigan. It would be unacceptable. Mr. Schrock. Yes, it would be unacceptable. Ms. Kerrigan. So, I just think that it is the law, and certainly we appreciate your help and your tenacity in reminding these folks that it is the law and you're serious about it, because it really it is going to be, I think, the only thing that's going to advance the ball is if you stay involved and engaged. So thank you, and thank you, Chairman Ose. Mr. Schrock. Thank you for being here. Mr. Ose. Thank you, Mr. Schrock. I want to thank our witnesses for appearing today. This is highly educational, highly illustrative of the challenges that small business across this country faces. We heard first from Chairman Manzullo, and we heard from Dr. Graham. You folks have kind of put the icing on the cake. What's clear from everybody's testimony is that we have not been successful at implementing this law. There simply is not any way we can say we've been successful in implementing a single point of contact in accordance with this law, this law, did I say it was a law? It's a law that has been passed by the legislative branch and signed by the executive branch. It is not subject to debate. It is a law. Now, in that regard, one of the things I always like to do is measure things, measure levels of success or lack of success and the like. And, I learned this from Chairman Horn when he was here. He had one of the more creative things that he did. He actually, as we all experienced in K through 12 and maybe in college, he provided the agencies with grades. So we have set down over the last couple of days, having received the testimony from folks and the like, and we have thought about what kind of grades, so if the clerk would flip the card over. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T0867.063 Mr. Ose. We haven't been very pleased. We believe that the agencies by and large with the degree of missing points of contact or the lack of contact points, we think that the agencies and departments have earned a D on that. As it relates to compliance assistance resources for each agency, that is someone calls in and says, I need your help with this, given the feedback we have had and the testimony you have all entered, we've been so impressed by that we've decided to give those folks a D also. In terms of the Task Force Report, that was due on or before June 28, in terms of its responsiveness to the congressional intent of the legislation in the first place, we're wholly unsatisfied and I've given that an F. And, in terms of the reduction in paperwork hours for small business across this country, in fact, we have had no reduction in paperwork hours for small business across this country. We have failed, and failure means an F. So, if you look at those, you've got a D, a D, an F, and an F. Now, I once tried to explain to my dad that an F was a one- legged A, and that didn't fly. At the bottom there, you've got an overall grade. That one-legged A at the bottom of that chart over there isn't flying very well with me anymore than my explanation to my old man was. So far on this legislation, on the implementation of this law, we've got an F. Our challenge before us is to fix that. As I said earlier, I have a lot of interns. We're going to put them to work. I thank the witnesses for their testimony. I thank the chairman from the Small Business Subcommittee on Regulation and the like for joining us today. I look forward to continuing the examination of these issues in the near future. This hearing is adjourned. 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