possible. I have enjoyed the opportunity to work with Mr. Tierney and with the staff of the subcommittee. We have had ongoing discussions as to ways in which the bill can be improved.

Since the beginning of our bipartisan work on this bill, my efforts have focused on two goals. First, to help small business comply with paperwork requirements so that small business owners can devote more time to creating jobs for our people. Second, to make sure that the health and safety of the public, the integrity of environmental laws and consumer protection laws are protected. Those could actually be in reverse order, but they are both simultaneously true, that we want to help small business while at the same time not compromising health and safety.

I commend the chairman for agreeing to hold this hearing with Federal agencies, and also commend my colleague, Mr. Tierney, for his work on the issue. From the outset, we knew that the bill would go through improvements as we gained more and more information. I made that clear in every public and private statement about this bill. In fact, every time that we have consulted with the agencies about the impact of this bill, we have made changes which have improved the legislation. In turn, after hearing from some small business owners last week, we have come up with more improvements in the bill that are consistent with our goals. This has been a bipartisan process and I appreciate you, Mr. Chairman, for your flexibility and your commitment.

We now have the benefit of the experience of a wide range of executive agencies, including U.S. Department of Justice. All of these agencies to one extent or another, have implemented programs to help small businesses comply with the paperwork requirements. At the same time, all of them are required to enforce a number of statutes. Often times, the ability of the agencies to protect the public interest depends on the information they collect through paperwork documents. Based on the testimony we will hear today, after having reviewed the testimony, I can say that it's clear that one provision of the current draft of the bill, the compliance assistance provision, would in fact have the unintended consequence of making it more difficult to protect the health and safety of the public of workers, of consumers, and of those who are protected by law enforcement officials.

Mr. Chairman, that of course has not been our intent. It was not my intent in cosponsoring this legislation. I know it was not your intent. I am sensitive as to how this particular provision might interfere with crime fighting efforts. It is through information collected that law enforcement officials can detect drug trafficking and money laundering. In turn the DEA relies on written reports to ensure that controlled substances are not diverted illegally. These are very serious responsibilities. I am sure that Congress will not want to do anything to interfere with the ability of the Department of Justice to carry out its responsibilities. The Justice Department testimony reflects this concern, and I believe we must seek a modification in the current language in this bill.

In its current drafts, staff analysis of the bill indicates that it would grant automatic probation of first time offenders when they fail to comply with the law and create a safe harbor for some businesses to violate the law. It's the feeling of some that it might even

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lead to investors being jeopardized, and would inhibit the ability of local communities to keep track of dangerous chemicals stored in industrial facilities. So in effect, according to the staff analysis, this provision could have the effect of rewarding the bad guys. I don't think that 99.9 percent of America's law abiding small businesses would support these unintended consequences.

So, Mr. Chairman, I believe that it will be necessary to change these provisions in the bill and that the bill be modified. We need to encourage agencies to continue to help small businesses comply with their paperwork requirements. At the same time, we must ensure that agencies have the tools they need to enforce many important statutes. I remain committed to the bipartisan process of reaching our mutual goals. I welcome our witnesses here today. I believe that despite the divergence that we may have right now on certain provisions of this bill, that after we hear the testimony and incorporate some of the concerns of the agency, I think that we will have a way to reach a concurrence that would be of benefit to the millions of small businesses who are looking for some relief from this Congress.

So again, I want to let the chairman know how grateful I am for his dedication to this process, to his reaching out to small business, his reaching out to the agencies here. Together I believe that in this process we still have the opportunity to get to a successful conclusion. I want to thank the Chair and thank the ranking member, Mr. Tierney and all the Members here. Thank you.

Mr. MCINTOSH. Thank you, Mr. Kucinich. Thank you again for your help on this bill.

Do any other Members have opening statements?
Mr. Waxman.

Mr. WAXMAN. Thank you very much, Mr. Chairman. First of all, I want to commend you for holding this hearing. I have been in Congress for 24 years. I believe that the essence of good legislation is giving everyone a chance to give us their views. It is important to provide that forum even if witnesses have statements with which we disagree, because sometimes they can shed light on aspects of legislation that are unintended problems and ought to be corrected. Even if we don't agree with them after they say what they have to say, it's just basically fair to give everybody a chance to come forward and give their point of view on a subject matter before us. So I appreciate that we are hearing from witnesses from the administration, and that we are doing it at a time when Members can be here. I am impressed with the number of Members that are here today. I don't think it would have been possible_if_the meeting was scheduled at 5 on a Friday or even 3 on a Friday, when the Congress was out of session.

Second, I want to commend you, Mr. Chairman and Mr. Kucinich, for what you are trying to accomplish, because it seems to me what you are trying to accomplish is something that will be helpful to small businessmen. Small business people ought not to be subjected to penalties if they are acting in good faith, if they didn't understand the situation, and they are not in any way really culpable.

But what we don't want to do in trying to help small businesses is to have unintended consequences that we're now hearing are

quite foreseeable. That is, to keep from important agencies the ability to deal with such matters as giving consumers warnings about negative side effects of drugs because we didn't require the first time offender to make that information available, or warnings to emergency personnel on how to handle hazardous materials, disclosing to tenants that there's a lead-based paint in an apartment, disclosing to investors about the stability of a company. I was impressed, just glancing at the written statement from the Department of Justice, that this legislation could hurt law enforcement in trying to track drug money laundering or making sure that we are really enforcing our immigration laws by making sure that employers disclose that information.

There are a number of these items. I think Mr. Kucinich has a common sense approach to dealing with these concerns in an amendment that I understand he is going to be offering. If we are saying that we should reduce or eliminate civil penalties for firsttime violators, we have to take certain things into account: the nature and seriousness of the violation, the good faith effort to comply with the law and rectify the violation, the small business's prior compliance history, whether the violation allowed the small business to obtain an economic advantage over its competitors, and other relevant factors. It just seems to me to make a lot of sense to try to avoid the problems that we may well find if we have a one size fits all approach which says that there's no way in the world that a civil penalty can be imposed for a first violation.

So I hope we can work together in a bipartisan fashion to craft legislation that accomplishes the goals that you and Mr. Kucinich have set out. I appreciate that we are going to have this hearing today. I look forward, if it's possible, for us to be together on a bipartisan basis to support legislation which I think could go all the way and get the President's signature.

Mr. MCINTOSH. Thank you very much, Mr. Waxman. If there are no other opening statements, let us now turn to our witnesses. I would call forward our panel. Ms. Emily Sheketoff, I hope I am pronouncing that correctly, the Deputy Assistant Secretary, Occupational Safety and Health Administration; Mr. Joseph Onek, Principal Deputy Associate Attorney General, Department of Justice; Mr. Brian Lane, Director of the Division of Corporate Finance, the Securities and Exchange Commission; and Mr. Neil Eisner, Assistant General Counsel for Regulation and Enforcement at the Department of Transportation. I thank you for joining us today.

It is the policy of the full committee to ask us to swear in all of our witnesses, regardless of who they may be. So I would ask each of you to please rise.

[Witnesses sworn in.]

Mr. MCINTOSH. Let the record show that each of the witnesses answered in the affirmative.

Let's go through and what I would like to do is ask each of you—let me ask unanimous consent that the written statements they have prepared be put into the record-and ask each of you to summarize or pull from that salient points that you have. I am not sure who is operating the clock here, but we'll ask you to try to keep it to 5 minutes, but if you need extra time, we're not going to be too stringent.

Why don't we start with Ms. Sheketoff. Welcome, and thank you. STATEMENTS OF EMILY SHEKETOFF, DEPUTY ASSISTANT SECRETARY, OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION; JOSEPH ONEK, PRINCIPAL DEPUTY ASSOCIATE ATTORNEY GENERAL, DEPARTMENT OF JUSTICE; BRIAN J. LANE, DIRECTOR OF THE DIVISION OF CORPORATE FINANCE, SECURITIES AND EXCHANGE COMMISSION; AND NEIL EISNER, ASSISTANT GENERAL COUNSEL FOR REGULATION AND ENFORCEMENT, DEPARTMENT OF TRANSPORTATION

Ms. SHEKETOFF. Thank you. Mr. Chairman, members of the subcommittee, thank you very much for this opportunity to testify before you today. OSHA joins in the subcommittee's desire to reduce unnecessary paperwork. Today, the new OSHA concentrates more on preventing illnesses and injuries, and less on simply enforcing rules. As part of that effort, OSHA has significantly reduced its focus on mechanical paperwork violations. For example, in the past, OSHA cited employers who failed to display a required safety poster in their workplaces. Today, if employers fail to have the poster, our compliance officers give them one.

OSHA reduced its paperwork citations by 75 percent from 1992 through 1997. As a percentage of all OSHA violations, paperwork citations have fallen from 29 percent to 10 percent. OSHA is continuing to focus on real improvements in the health and safety of working people, rather than on the number of inspections, citations or penalties. However, it is critically important for any legislation Congress enacts on this subject to distinguish between traditional paperwork requirements and the information collection requirements and standards that directly impact worker safety and health.

SBPRA uses the collection of information definition from the PRA. Consequently, it affects standards that most people would not view as mere paperwork. I will try to use this testimony to illustrate these issues for the subcommittee.

SBPRA prohibits agencies from imposing fines for first time violations by a small business for information collection requirements, where the violations have not caused actual serious harm to the public health or safety, as long as the small business corrects the deficiency within 6 months. The bill provides an exception where the violation could imminently and substantially endanger public health or safety.

OSHA understands the desire to treat businesses that make good faith efforts at compliance differently from those that do not. In fact, OSHA's current policies already make such a distinction. OSHA already provides significant penalty reductions based on employer size, good faith, and history of violation. With the smallest employers eligible for the largest reductions. Our penalty reduction system is required both by the Occupational Safety and Health Act and the Small Business Regulatory Enforcement Act, and follows the President's directive of April 1995. As part of that system, where paperwork violations do not materially affect workplace health or safety, OSHA has directed its field compliance officers not to issue citations. Consequently, the proposal in SBPRA is duplica

tive and unnecessary. Moreover, eliminating the potential for any penalties for first time violations removes the incentive for employers to voluntarily comply without intervention. This is particularly important where requirements have a true health and safety impact.

The bill attempts to guard against risks to safety and health by allowing employers 24 hours to correct violations that have an imminent or substantial danger to public health or safety. In such instances, the bill allows the agency to impose the fine immediately if it informs Congress. While we acknowledge the author's desire to protect safety and health risks, the bill fails to protect workers from very real dangers. Therefore, we strongly oppose this provision.

The bill should not hinder in any way an agency's ability to act immediately to eliminate an imminent or potential danger to health or safety of workers and the public. Furthermore, the definition of public health or safety within SBPRA is not clear, as the bill provides no context to determine what public health or safety means. We suggest that the language of section 2(b)(i)(1)(B) be amended to allow the agency to impose penalties not only when it believes the violation has caused actual serious harm to the public health and safety, but also when the violation appears likely to cause serious harm.

As drafted, section 2(b)(i)(1)(B) could place workers at risk of serious accident or injury. Many important collection of information requirements exist that significantly and directly protect workers from serious injury and illness. However, those requirements might not reach the bill's imminent and substantial danger threshold. For example, OSHA's worker right to know program in its hazard communications standard requires a certain amount of paperwork to ensure that the program is effective. If a worker is unaware that a hazardous chemical substance is present in the workplace, he or she may be at serious risk of illness or death. At the same time, this risk, while serious, may not be so great as to constitute an imminent and substantial danger to the public health or safety. Enforcement of OSHA standards concerning written lockout/tagout programs, analysis of hazard processes at chemical plants, hearing conservation and toxic exposure monitoring records, all of which have a direct and significant impact on employee safety and health would also be rendered ineffectual in most instances in this section of SBPRA.

There are countless examples of workers being killed or injured when employers failed to adhere to basic information sharing requirements. In one instance, an explosion ripped through a Phillips 66 company complex in Houston, TX, killing 23 people, in part because a small contractor failed to obtain the necessary permits to ensure that proper safety precautions were observed during maintenance operations. After this tragic incident, Congress directed OSHA to require all businesses using large quantities of potentially volatile chemicals to implement written procedures, minimizing the potential for catastrophic explosions, fires, or other events which can seriously harm workers and people living nearby. Under the resulting process safety management standard, written process hazard analysis and procedures covered as paperwork under the