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Congressional Testimony
June 7, 2000, Wednesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 10347 words
HEADLINE:
TESTIMONY June 07, 2000 WITNESS LIST HOUSE SMALL BUSINESS
REGULATORY CHANGES
BODY:
June 7, 2000 TESTIMONY OF
JOHN T. SPOTILA ADMINISTRATOR OFFICE OF INFORMATION AND REGULATORY AFFAIRS
OFFICE OF MANAGEMENT AND BUDGET before the COMMITTEE ON SMALL BUSINESS US HOUSE
OF REPRESENTATIVES Good morning, Mr. Chairman and members of the Committee.
Thank you for inviting me to appear before you today to discuss next year's
reauthorization of the Paperwork Reduction Act of 1995 (PRA). The Administration
supports the PRA strongly. It has been an important part of our efforts to help
small businesses, and we appreciate your interest in this area. The President
has often emphasized his belief that small business is vital to our economy. In
many ways, it has been the engine driving our economic train. Small business
owners have generated millions of new jobs, leading the way with their energy,
creativity and hard work. We understand the importance of helping them so they
can continue to contribute to our economy and our society in the years ahead. We
share the goal of reducing the burden imposed on them by Federal reporting,
recordkeeping, and regulatory requirements. This is not to say that we believe
they should be altogether free of such requirements. Rather, we need to adopt
common sense measures, promoting the public good while reducing the costs of
compliance wherever possible. This is a subject of particular interest to me.
Prior to my service in Washington, I was a small business owner for many years
in New Jersey and an attorney representing other small businesses. As General
Counsel of the Small Business Administration (SBA) for five years, I led SBAs
efforts to reduce the regulatory and paperwork burden on small businesses.
Having struggled with the impact of regulations and paperwork from both sides of
the fence, I know the importance and the difficulty of meaningful reform. This
task is harder than it looks. It requires action on a daily basis. With the help
of Congress and with valuable input from small business owners, the
Administration has made real progress. We understand, however, that much more
needs to be done and that we can only be successful if we work together in a
constructive way. My testimony today will not only discuss past Administration
efforts along these lines, but also give an update on a promising new
information initiative, our current interagency look at "Collecting Information
in the Information Age. Administration Efforts to Consider Small Business Needs
The President has helped raise the profile of small business in Washington,
naming his SBA Administrator to the Cabinet for the first time in history. He
has been aware from the beginning that federal regulations and paperwork can
seem daunting to small business owners. At his request, agencies have reached
out to small business owners and their representatives and asked them what
changes were needed most. The message came back that small business wants an
early voice in regulatory development, clarity and consistency in regulations,
compliance assistance, and less red tape and paperwork. We have listened to this
message and have followed up on each point, working within the Administration to
implement new policies that respond to small business needs. We have worked to
reduce burden while maximizing the benefit arising from needed regulatory and
information collection requirements. While the job is not finished, these
approaches have proven successful and have made significant contributions to the
American people. The President first outlined his preferred approach to the
regulatory process on September 30, 1993, when he issued Executive Order (E.O..)
No. 12866 on "Regulatory Planning and Review." In this Order, he directed
federal agencies to create a regulatory system that works for, not against, the
American people. Pointing out that good regulations are essential to protecting
the public's health, safety, environment and well- being, he emphasized that
agencies must follow sound regulatory principles, issuing rules only when
necessary and assessing the costs and benefits of available regulatory
alternatives in order to maximize net benefits. He gave the Office of
Information and Regulatory Affairs (-1RA) at OMB specific responsibility to
review all significant federal rules before publication and to oversee
compliance with the Order. Under the able direction of then Administrator Sally
Katzen, OIRA immediately assumed a leadership role in implementing the
President's policy. On March 17, 1994, in coordination with the President's
National Economic Council, OIRA and SBA launched an interagency Small Business
Forum on Regulatory Reform. This Forum engaged the Environmental Protection
Agency (EPA), the Occupational Safety and Health Administration (OSHA), the
Internal Revenue Service (IRS), the Food and Drug Administration (FDA), the
Department of Transportation (DOT), and other agencies in examining the
aggregate impact of federal regulation on five small business industry groups:
chemicals and metals; restaurants; food processing; trucking; and environmental
disposal and recycling services. A separate working group focused on tax-related
issues that affected all of the designated industry sectors. More than 23- small
business representatives and agency employees participated, discussing new ways
for Federal agencies to reduce the regulatory and paperwork burden on small
businesses. After a series of roundtables and symposia involving senior
Administration officials, and work sessions with the small business
representatives, the Forum released a report on July 27, 1994 with some 14-
recommendations. Many of these recommendations were specific to the industries
studied, but others had a broader focus. They supported early involvement by
small business owners in the development of rules, greater use of electronic
dockets, broader use of information technology to disseminate information, and
an emphasis on compliance assistance efforts rather than harsh enforcement. The
participating agencies took these recommendations seriously and began work on
implementing them. In the late fall of 1994, the President asked the Vice
President to lead a series of internal meetings with the agencies to consider
new approaches in the regulatory area. Representatives from SBA participated
throughout this process, drawing on the insights gained in the Forum process to
draw particular attention to the needs of small business owners. On February 21,
1955, the President lent public support to this effort, directing regulatory
agencies to do four key things in the regulatory area: -cut obsolete
regulations; -reward results, not red tape; -create grass roots partnerships;
and -negotiate, rather than dictate. On March 4, 1995, he issued a Presidential
Memorandum, calling on the agencies to conduct a page0by0page, line0by0line
review of all of their existing regulations to determine which might be revised
or eliminated. The agencies responded with an enormous effort, revising or
eliminating thousands of pages of regulations in the ensuing months. On May 22,
1995 the President signed into law the Paperwork Reduction Act of 1995, a
statute he strongly supported. He observed that "the PRA recognizes that the
private sector is the engine of our prosperity, that when we act to protect the
environment or the health of our people, we ought to do it without unnecessary
paperwork, maddening red tape, or irrational rules." The PRA, he noted, "helps
us to conquer a mountain of paperwork that is crushing our people and wasting a
lot of time and resources." He then directed the agencies "to further reduce
these burdens .... to continue to review their regulations, to eliminate the
outdated and streamline the bloated." In June of 1995 the President and the Vice
President welcomed some 1600 delegates to Washington for the White House
Conference on Small Business. Acknowledging the tremendous contributions of
Americas small business owners, the President emphasized again the importance of
reducing paperwork and regulatory burdens on small business: "small business is
the engine that will drive us into the 21st century .... you employ most of the
people, create more than half of what we produce and sell, and create more of
the new jobs, and we need to respond to that." In separate addresses to the
delegates, he and the Vice President highlighted the progress that agencies had
made in responding to small business concerns and expressed strong interest in
hearing from the delegates on their most important concerns. The delegates later
approved 60 policy recommendations and sent them to the President and to
Congressional leaders. Several of these recommendations dealt with regulatory
reform, emphasizing the need for early involvement in the regulatory process and
reaffirming the importance of analyzing the likely impact on small business of
suggested regulatory approaches. The President welcomed the report and asked SBA
to coordinate administration0wide implementation of as many of the
recommendations as possible. Indeed, as SBA's Chief Counsel for Advocacy has
since reported, the Administration and Congress have taken meaningful action on
more than 85% of the recommendations of the 1995 White House Conference, a
significantly higher percentage than preceding Administrations reached for
either of the two previous White House Small Business Conferences in 1980 and
1986. In the regulatory0 area, we have done a great deal to respond to the key
needs identified by the small business community. Regular Development We agree
with the White House Conference delegates that consultation with those most
affected by a rule is vitally important in producing better regulations. In the
past, small businesses have often felt that they were left out of the regulatory
process until it was too late. The Small Business Regulatory and Enforcement
Fairness Act of 1996 (SBREFA), which the President strongly supported, codified
one of the important recommendations made by small business participants in both
the 1994 Small Business Forum and the 1995 White House Conference on Small
Business. SBREFA created special panels, consisting of SBA's Chief Counsel for
Advocacy and officials from OIRA and either EPA or OSHA, that now discuss
regulations under development by EPA and OSHA with small business
representatives from the industries affected. The panels meet at an early stage.
OIRA, the Chief Counsel, and both agencies have worked hard to make the panels a
success. To date, the results have been enormously helpful in improving EPA and
OSHA regulations. Nearly every panel has identified potential changes that have
improved the proposed regulation and benefited small businesses. For example:
EPA's Proposed Rule on Wastewater Pretreatment Standards for Industrial
Laundries. This panel recommended that EPA solicit public comment on a
"no0regulation" alternative to this proposed rule. Comments from small entity
representatives during the panel process and comments on the published proposal
convinced EPA that industry discharges were not significant enough to warrant
national clean water standards industrial laundries. Based on this input, EPA
decided to withdraw its proposal. EPA's Final Rule on Tier 2 Gasoline
Sulfur Standards. EPA adopted almost all of the recommendations made by
this panel. EPA granted small refiners an automatic four0year delay of the final
gasoline standards while providing the possibility of up to a
two0year extension for those small refiners that were still unable to obtain the
necessary financing at the end of the four0year period. During this delay, small
refiners would be required to comply with interim standards that are less
stringent for those refineries with higher levels of sulfur in
their gasoline. EPA's Final Rule on Air Pollution Control from
Recreational Marine Engines. This EPA rule established emissions limits for
recreational marine boats. The final rule included a panel recommendation to
delay implementation for small mariners for five years to allow them to spread
out investments and take advantage of other cost0saving technology. Other
agencies have recognized the benefit in obtaining small business input early in
the regulatory development process. The Health Care Financing Administration
(HCFA) of the Department of Health and Human Services (HHS) instituted new
procedures to seek small business advice on controversial or burdensome
regulations during the earliest stages of rulemaking. HCFA conducted two
day0long training sessions for its employees on SBREFA and the Regulatory
Flexibility Act. HCFA has now submitted draft rules to the Chief Counsel for
Advocacy on a number of occasions for early small business impact review,
including the HIPAA Privacy Rule. Another concern voiced by small businesses
both at the 1994 Forum and the 1995 White House Conference was the need for
judicial review of the Regulatory Flexibility Act (RFA). Enacted in 1980, the
RFA requires Federal regulatory agencies to analyze the impact of their
regulations on small businesses and to consider alternatives that would be
equally effective in achieving public policy goals without unduly burdening
small businesses. For many years, there was no judicial review to ensure agency
compliance with the law. Small business leaders lobbied for judicial review
without success. Early in the Administration, both President Clinton and Vice
President Gore endorsed the concept of allowing a right of judicial review for
any failures to comply with the RFA. With their support, Congress included a
right of Reg Flex judicial review in SBREFA, adding a reaffirmation of the Chief
Counsel for Advocacy's authority to file amicus curiae briefs in any small
business appeals regarding agency actions. This right of judicial review and the
enhanced role of the Chief Counsel for Advocacy has accelerated a cultural
change already underway at regulatory agencies. There is now much more
sensitivity to the importance of regulatory flexibility analysis. According to
agency records and data received from SBAs Office of Advocacy, changes made to
regulations as a result of SBREFA panels 0and compliance with the RFA reduced
regulatory costs by almost $5.3 billion during fiscal year 1999. Regulatory
Enforcement Regulatory enforcement was a significant concern at both the 1994
Forum and the 1995 White House Conference. Many small business owners expressed
concern that a Federal agency would fine them heavily for inadvertent paperwork
or regulatory violations. In response to this concern, the President and Vice
President set out to change the culture of regulatory enforcement from an
adversarial approach to one that emphasizes working closely with the regulated
community. They emphasized the benefits of partnership, encouraging agencies to
reward well0 intended efforts to reach outcome0based goals, such as safer
workplaces or cleaner air, while reserving traditional enforcement for the worst
actors. On April 21, 1995, President Clinton directed Federal agencies, where
appropriate, to waive fines for first violations of regulations by small
businesses, if the violation was inadvertent and the violation could be
corrected within a reasonable period of time. SBREFA later codified the
President's directive. EPA, OSHA and other Federal agencies have now implemented
various waiver policies and are operating under them today. For example, each
year since 1996, a greater number of businesses have used EPAs self0audit
procedures to find, disclose, and fix environmental problems on their own. For
those that self0disclose, EPA has announced that it will waive or reduce
potential enforcement penalties, as long as the company was not involved in
criminal behavior. EPA reports that, in 1999,990 self0disclosures were conducted
by 260 companies, including 700 disclosures under a new program that offers
proactive compliance assistance to industry sectors that have special needs. EPA
also has a small business consultation program aimed specifically at small
businesses. EPA commits that, if a small business requests an envirom0nental
consultation, EPA will not impose penalties for any violations found during the
inspection. EPA recently expanded the circumstances under which small businesses
can report and correct disclosures under this policy. It recognizes that
compliance assistance can help improve envirom0nental performance, and
encourages such requests as a practical step towards reaching an important goal.
SBREFA also established a new small business Ombudsman at SBA, with Regulatory
Fairness Boards in ten regions across the country. Small business owners now
have a new place to turn if they feel an agency has acted unfairly during an
enforcement action. Each year, the Ombudsman and the Boards hold hearings around
the country so small business owners may present their stories in person. The
Ombudsman then files an annual report with Congress. A review of these Ombudsman
reports suggests that a fundamental change has taken place in the way most
agencies relate to small businesses. According to the latest report, the
Ombudsman in FY 1999 received only five complaints each against OSHA and EPA. We
note also that many regulatory agencies, including EPA, OSHA, and the IRS, have
now established their own small business ombudsman or liaison. Small business
owners thus have the option of contacting someone in each of these agencies
whose job it is to help resolve small business problems and concerns. This is a
major improvement in an area of tremendous importance to small business owners.
.2liance Assistance and Partnerships The President asked agencies to focus on
results, not red tape, and to partner with the regulated community. These
principles are interrelated. We have learned that agencies achieve better
results when they work in partnership with regulated businesses, particularly
small businesses. OSHA has seen the value of increasing compliance assistance to
fulfill its mission, rather than relying exclusively on enforcement. In its May
1995 Reinvention Report, OSHA committed that it would rely on creative
partnerships with employers, common sense rulemaking, and expanded outreach,
rather than a "gotcha' approach to enforcement. By partnering with management
and labor, OSHA has since improved workplace safety for the vast majority of
employers who want to do the right thing. This has freed the agency to target
enforcement resources where they are most needed. OSHA7s local partnerships
emphasizing compliance assistance involve more than 4,500 worksites with nearly
llO,000 workers. Firms in these partnerships have dramatically improved their
safety performance. For example, the Steel Erectors Safety Association of
Colorado and OSHA entered into a cooperative agreement involving 38 steel
erector contractors. Workingtogether,theydesigneda"100%fallprotection"program.
In Colorado, Project HOMESAFE, a partnership between OSHA and the National
Association of Homebuilders, delivers safety training to residential
construction firms in the greater Denver area. A partnership between the Kansas
Independent Oil and Gas Association and OSHAs Wichita office reduced fatalities
from as ' many as five per year to zero. Working with OSHA and the New Jersey
State Police, the State of New Jersey identified and fixed 2,559 hazards that
posed risks to highway construction workers at more than 185 construction sites.
The agency's premier partnership, its Voluntary Protection Program (VPP), now
includes more than 600 worksites, including small businesses for the first time.
VPP sites serve as models, and some have volunteered to mentor other small
businesses that want to develop effective safety and health programs. VPP
worksites experience injury and lost workday case rates on average 50% below
industry rates for their respective injuries. Indeed, a New Jersey small
business that recently received its Star designation in the program reports
injury and illness rates 80% and 86% below industry averages. OSHA has found
that forming partnerships with the regulated community often allows it to
address priority issues without resorting to new regulations. After working with
stakeholders to consider how best to address 1 8 priority workplace hazards, it
concluded that at least IO of them could be addressed without resorting to
regulatory action. For example, OSHA worked with the National Institute for
Occupational Safety and Health and the Asphalt Paving Manufacturer's Association
to redesign asphalt paving machines so that the machine operator would no longer
be exposed to asphalt fames. OSHAs consultation program, which operates totally
separate from enforcement, is available to small businesses in most parts of the
country. An OSHA consultant will inspect a business site at an owner's request
and provide a confidential safety and health assessment. With additional funds
in 1999 and this year, OSHA has added 44 new compliance assistance officers in
its area offices. These specialists serve as the point of contact for employers
and employees looking for information on workplace safety and health or seeking
specific training. The Presidents budget for 2001 includes funding to place one
of these specialists in every OSHA area office to give every business a local
OSHA official to call for help. OSHA7s emphasis on compliance assistance appears
to be working. According to the Bureau of Labor Statistics, injuries and
illnesses in the workplace have declined from 8.4 for every 100 workers to 7.1
per 100 workers between 1994 and 1997, a decline of 15%. EPA also is using
voluntary partnership approaches as part of its efforts to encourage compliance
and prevention to address environmental problems. Working together with business
land industry, EPA is finding that strong economic performance and strong
environmental performance often go hand in hand. In all, EPA has more than 20
national, voluntary partnerships, and many EPA regions have their own programs.
Some programs focus on making .changes that can improve envirom0nental
performance across an entire business sector. The printed wiring board industry,
for example, joined EPAs Design for the Environment Program to find ways their
members could operate in a more efficient, environmentally sound manner. The
industry has cut its annual use of formaldehyde by 240,000 pounds, its water use
by 400 million gallons, and its energy use by 15 billion BTUs. More than 7,000
organizations now participate in EPAs voluntary partnership programs. In 1998,
according to EPA, participants conserved 1.8 billion gallons of clean water,
eliminated 7.8 million tons of solid waste, prevented air pollution equivalent
to taking 13 million cars off the road, and saved an estimated $3.3 billion. EPA
is reaching out to provide compliance assistance to those small businesses that
need it most. In 1996, its regional office in Atlanta reached out to
electroplating businesses and dry cleaners to help them meet new national
emissions standards for hazardous air pollutants. The environmental performance
of the businesses improved dramatically. Georgia recently reported an 81 percent
compliance rate for chrome electroplaters. In 1997, Virginia, Maryland, the
District of Columbia, and the Korean Dry Cleaners Association of Greater
Washington formed a partnership to reduce emissions of perchloroethylene from
area dry cleaners. The partners set up a mentoring program in which experienced
dry cleaners, trained by EPA and state environmental offices, helped less
knowledgeable dry cleaners better understand and comply with envirom0nentat
requirements. Because they understand what they have to do and how to do it,
envirom0nental performance is estimated to be 20 percent better than that of
other dry cleaners in the area. EPA is now working with states, tribes, industry
and envirom0nental interest groups to develop a performance track partnership
program that, like OSHAs VPP Program, will use incentives to encourage and
reward strong environmental performance. The IRS has organized a Small
Business/Self Employed Operating Division dedicated to providing end0to0end
service to small businesses and the self0employed. It should be operational in
October and will help small businesses better understand taxes and reduce their
compliance burden. Electronic Assistance Agencies are also taking advantage of
the Internet and information technology to bring compliance assistance to small
businesses. -OSHAs Expert Advisor is an interactive "intelligent" tool that
helps a business owner or manager identify if and how OSHA rules apply to the
business. In partership with industry organizations, environmental groups,
universities, and other government agencies, EPA has opened ten compliance
assistance centers on the Internet serving specific audiences. Eight serve
business sectors that include many small businesses such as auto and service
repair, printing, metal finishing, paints and coatings, and the transportation
sector. The others serve local governments and federal agencies. The centers are
tailored to serve small businesses, providing users with round0the0clock access
to compliance assistance. The Department of Labor has developed a Laws Advisors
to provide regulatory compliance information individually tailored to specific
audiences. This interactive program mirrors the interaction an individual might
have with a human expert when asking questions about a particular regulation.
Agencies have created separate home pages, like DOL's Regulatory Compliance
Assistance Home Page, to help small businesses comply with rules, regulations,
and laws enforced by the agency. The IRS also is trying to make filing returns
and paying taxes easier for small businesses. For example, monthly tax deposits
are one of the most frequent transactions required of small businesses. The IRS
is encouraging the use of its electronic tax deposit system, called EFTPS, to
make the process faster, easier and paperless. It is now the preferred choice
for over two and one0half million businesses. Streamlining Small business owners
have asked us to eliminate obsolete, duplicative, and unintelligible
regulations. As part of the Administration's regulatory reinvention effort, the
President directed agencies in 1995 to conduct a page0by0page, line0by0line
review of their existing regulations to find those that were redundant, unduly
burdensome, obsolete, or in need of revision. The agencies have made and are
continuing to make significant progress toward that goal. During my time at SBA,
I personally led an effort to eliminate or streamline 100 percent of its
regulations. With the support of a talented and dedicated group of career
personnel, the vast majority of whom were located in SBA offices outside of
Washington, we reduced the number of pages of SBA's regulations by 55 percent,
converting all of the remainder to plain language. This was an unprecedented
result. We deleted redundant or obsolete provisions and streamlined the rest,
emphasizing clarity and ease of use. We retained regulations needed to
distribute financial and technical assistance to small businesses, making them
easier to read and understand so that small businesses and SBAs lending partners
could more easily understand and comply with SBA requirements. Nor did we stop
at regulations. We proceeded to review, update and streamline nearly all of SBAs
standard operating procedures, eliminating seventeen thousand pages (more than
two0thirds) and converting the rest to plain language. We developed a standard
authorization form for SBA's lenders, replacing 69 different versions, and then
created new plain0language closing forms. In all of these efforts, career
employees were the key to our success. They demonstrated enormous energy and
creativity and showed that dramatic progress was possible when everyone works
together. Similar streamlining efforts continue at other agencies. DOT's Federal
Motor Carrier Safety Administration (FMCSA) plans to complete a zero0based
review of its motor carrier regulations later this year that would eliminate or
combine many regulatory requirements and information collections while
streamlining the rest. According to FMCSA's estimates, this initiative could
achieve up to a 90 percent paperwork burden reduction when it is completed. The
Office of Solid Waste at EPA has reviewed all of its reporting and record
keeping requirements under the Resource Conservation and Recovery Act (RCRA). It
intends to propose a rulemaking this year that will lengthen periods between
facility self0inspections, defer to OSHA standards for personnel training,
streamline land disposal restrictions paperwork, and reduce the data collected
by RCRA's biennial report. As proposed, the burden reduction could be 3,300,000
hours, which when added to previous reductions, would be a 40% reduction from
the program's FY 1995 baseline. In its March 1995 Regulatory Reinvention Report,
EPA committed to work with key industries, beginning with the chemical industry,
to streamline federal air compliance requirements. After years of enormous
effort on the part of EPA and industry, and a steep learning curve, EPA is about
to publish a final rule consolidating and simplifying 16 different air0emission
rules for the synthetic organic chemical industry into one consolidated federal
air rule. The lessons learned in the process were the subject of a roundtable in
OMB's current information initiative. Pensions were an important issue among
small business representatives at the White House Conference. Delegates felt
strongly that it was too complicated and expensive for many of them to start a
pension plan. They wanted a simple, tax0advantaged way to help their employees
save for retirement. They also felt that ERISA Form 5500, the annual report
filed by pension plans, was overly burdensome. The President responded
immediately, announcing his support for such changes at the White House
Conference itself In its June 1995 Reinvention Report, the Pension Benefit
Guarantee Corporation (PBGC) committed to offer simplified pension plans for
small businesses, and to streamline and provide for electronic filing of Form
5500. After hearings by this Committee and with the support of the
Administration, Congress then passed the Small Business Job Protection Act which
created simple small business pension plans as well as other pension plan
improvements recommended by the White House Conference such as 401K plan
improvements (like non0discrimination safe harbors) and repeal of Family
Aggregation Rules. Form 5500 used to be filed on paper with the IRS which
processed it like a tax return even though it was only an information report.
Beginning with 1999 plan year filings next month, Form 5500 now will be filed
with the Department of Labor's Pension Welfare Benefit Administration (PWBA).
Reporting employers will have the option to file electronically using EFAST, an
interactive "intelligent" filing program. This software reduces the time needed
to complete the report and improves accuracy. PWBA estimates plan administrators
will save 560,000 burden hours and $16,35 1,000 annually when the system is
fully implemented. In addition, PWBA, the IRS, and PBGC have conducted an
extensive review of Form 5500 and have agreed to eliminate unnecessary data
elements and simplify many that remain. PWBA estimates the streamlining alone
will save pension plans an additional $40,540,000 annually. EPA, OSHA, and the
IRS have been the focus of much of this testimony because the changes underway
in these agencies affect so many small businesses. But other agencies also have
followed through on commitments to address regulatory and paperwork burdens made
known to them by small businesses through the Administration's regulatory
reinvention initiative. One such agency is the Food and Drug Administration
(FDA). FDA has completed all 14 of the commitments in its April 1995 Drug and
Medical Device Reinvention Report. The reforms expedited product review and
eliminated unnecessary requirements that may once have been appropriate but are
not now necessary to public health. FDA estimates that these reforms have saved
the drug and device industry hundreds of millions of dollars each year. Plain
English The use of plain English, particularly in guidance materials to help
small businesses understand their regulatory obligations, was a recommendation
of both the 1994 Forum and the 1995 White House Conference on Small Business. At
the direction of the President and with strong support from the Vice President,
agencies increasingly have been using plain language in their drafting of new
regulations and supporting guidance. On June 1, 1998, the President sent a
memorandum to Federal agencies on "Plain Language in Government Writing." He
stated that the goal of this initiative was to "to make the Government more
responsive, accessible, and understandable in its communications with the
public." The memorandum called on agencies to use plain language in documents
that explain how to obtain benefits and services or how to comply with Federal
requirements, as well as in proposed and final regulations. The memorandum
recommended further that agencies consider rewriting existing regulations in
plain language. We have found that plain language writing leads to substantively
better rules. To write clearly, one must think clearly, identifying and
answering all relevant questions. When proposed rules are clear, the public can
more readily understand them and suggest ways in which they might be improved
further. We have seen excellent examples of clear writing from agencies like EPA
and OSHA. For example, OSHA has renamed its Means of Egress standard "Exit
Routes" The Vice President has commended several agencies for their plain
language regulations. One of the most recent examples involved the Office of
Drug and Alcohol Policy and Compliance at the Department of Transportation,
which has done excellent work in its proposed revision of DOT's department0wide
alcohol and. drug testing procedures. Some agencies report that when they
carefully draft regulations and required regulatory guidance using plain
language, regulated businesses understand what they have to do and there is
little or no need for any additional guidance. The Bureau of Land Management
believes that it needs to provide less guidance when it uses plain language. For
example, it has, not seen a need to issue any additional guidance for two recent
plain language regulations, on Geothermal 'Resources and Solid Leasable
Minerals. Interagency Initiative on "Collecting Information in the Information
Age" The Federal Government collects and uses information so that it can better
serve the public. Agencies can only deliver services to individuals and
businesses if they know who they are, what they need, and what they want. Better
information can help agencies make better decisions about how well the
government is working, whether new services are needed, and whether existing
programs are still necessary. Indeed, the government's provision of information
to its citizens can be an important service in its own right. In the Information
Age, the public needs timely, accurate information. Investors need quick and
easy access to public filings at the SEC. Residents want to know if they have
exposure to pollutants in their community. Taxpayers expect quick responses from
the IRS and fast income tax refunds. Although agencies are working hard to
minimize collection burdens, success in burden reduction is often overcome by
new information collections that are required by new statutory and program
responsibilities. Most of the information needs of the Federal Government arise
from statutes passed by Congress. Some requirements reflect agency decisions on
what information they need to implement programs. The Taxpayer Relief Act of
1997 (TRA) and the Tax and Trade Relief Extension Act of 1998, for example, made
numerous changes to the Internal Revenue Code. These and other legislation
required the IRS to add and revise reporting requirements that increased
paperwork burden for taxpayers by approximately 150 million hours in FY 1999.
These changes included the new Form 8863, Education Credits, which is used by
taxpayers to calculate the education, HOPE, and Lifetime Learning Credits
created by the TRA. Similarly, the Balanced Budget Act of 1997 created the
Medicare+Choice (M+C) Program. This required the Department of Health and Human
Services to develop M+C Program requirements, which added a new reporting burden
of almost 1.3 million hours in FY 1997. While we have achieved a number of
successes, we understand that more must be done to alleviate small business
burden. As part of our continuing efforts, OMB has joined with other agencies
this spring in launching a new initiative designed to look at how we might
improve the quality and usefulness of the information the Federal Government
collects while reducing the burden involved in supplying that information.
Together we are working with small business representatives and other interested
parties to identify problems and develop workable and constructive solutions. We
are genuinely hopeful that this information initiative will lead to tangible
improvements. We are examining best practices and listening carefully to the
ideas and suggestions of our private sector participants. We have already held I
I roundtables and have scheduled others. These roundtables have enabled us to
hear from a wide variety of sources, including, in some sessions, Congressional
staffers, on how best to incorporate information technology and process changes
to improve agency information collections. As an example, the IRS has had three
full0day roundtables, two of which addressed issues of particular concern to
small businesses. One examined tax burdens on the self0 employed. This
discussion identified different elements of burden and addressed what IRS might
do to address each element, including the potential use of electronic technology
to decrease the time and costs incurred by the self0employed in preparing and
filing their Federal income tax returns. Another session discussed the burden
faced by small businesses and the self0 employed in preparing and filing their
Federal employment tax returns. This roundtable covered efforts to streamline
the process and the use of information technology to make it easier and faster
to submit returns. OSHA held a roundtable to discuss the certification records
it requires from employers and whether eliminating those records would reduce
unnecessary paperwork without diminishing employee protection. Surprisingly for
some, the dialogue focused more on suggestions from participants to eliminate
obsolete underlying provisions than on the certifications themselves. The
Department of Agriculture also hosted a roundtable to discuss its Service Center
Initiative. This is an effort by USDA's county0based agencies (Farm Service
Agency, Natural Resources Conservation Service, and Rural Development) to
provide one0stop service for farm programs and farm credit, conservation
programs, and rural loans and grants. Participants discussed the myriad
challenges and difficulties encountered by USDA in its initiative. The problems
faced by many agencies trying to integrate information systems and share
information across programs and agencies, and with the states, will be the
subject of an information technology roundtable on July 7. This will give senior
Federal officials the opportunity to discuss with private sector professionals
some of the key issues which agencies must address in bringing regulatory
programs and information collection into the Information Age. We know that
agencies must change business processes, streamline legacy systems, develop
technical standards, protect privacy and security, and adopt new ways of
interacting with customers. We welcome constructive ideas from others outside
government on how we might best accomplish these goals. We will then present the
results of the roundtable discussions and our recommendations at a future forum
and in a final report on this information initiative. Closing In closing, we
strongly support the goal of easing regulatory compliance costs and the
paperwork burden on small business owners. The key to doing so is to find a way
to reduce burden while still meeting the needs of the American people. We are
open to considering new approaches for addressing the concerns of small business
owners.. We look forward to working with the Committee and others in the
Congress in a cooperative effort to achieve meaningful progress in this area.
Thank you.
LOAD-DATE: June 12, 2000, Monday
