The "Small Business Paperwork Reduction Act" (S. 1378) is a bill that starts from a flawed premise, namely that enforcement of public protections should be relaxed for small business, which often has a more difficult time complying with regulations than big business. The truth, however, is that it matters little to the public whether toxic emissions, for instance, are coming from a small business or a big business. The health consequences are the same either way. It is also important to keep in mind what constitutes a small business under current law: for instance, a general contractor with as much as $17 million in annual revenue, a chemical company with as many as 1,000 employees, or a petroleum refinery with as many as 1,500 employees. These examples are not what most people think of as small business. Nonetheless, there is often a difference in the ability of a small business and a big business to understand and comply with regulations. For instance, most big businesses can easily pay for technical assistance, as well as teams of lawyers to offer advice on compliance, whereas many small businesses do not have similar resources. But rather than relaxing enforcement of public protections — as S. 1378 implies — the emphasis should instead be on compliance assistance for small business, so that public protections are preserved, and enhanced with greater compliance, while burden is reduced. There are already a number of programs at the Small Business Administration and the agencies that are designed to help small businesses better comply with federal regulation. These programs should be examined carefully to see if they're working properly, and, if need be, strengthened. But this requires aggressive oversight by Congress — which unfortunately has been commonly neglected — and not necessarily new legislation. In fact, judging from current law and practice, there seems to be little need for S. 1378. The Small Business Regulatory Enforcement Fairness Act (SBREFA) — not to mention many underlying statutes that address burden on small business — already lays out a framework for issuing civil fines, directing agencies to "establish a policy or program ... to provide for the reduction, and under appropriate circumstances for the waiver of civil penalties for violations of a statutory or regulatory requirement by a small entity." Under policies developed in accordance with SBREFA, agencies almost never sanction first-time violators of paperwork requirements (and almost never did even before its enactment). But by attempting to codify current practice, S. 1378 would do little except create new problems. Specifically, S. 1378 would put law-abiding businesses at a competitive disadvantage. The bill prohibits federal agencies from fining small businesses for first-time violations of paperwork requirements as long as the company complies within six months after being notified of the violation (with certain exceptions). As stated above, agencies almost always waive fines for first-time violators anyway. But under H.R. 1378, federal agencies would not have the flexibility to take steps against willful violators. And in fact, the bill could encourage more violations since small businesses would know they could avoid certain reporting requirements — without fear of fine — until they are caught for the first time. Even worse, it is unclear what constitutes a first-time violator. Under the current language, it appears a business could be found to be a "first-time violator" on many separate occasions. For example, a business caught for the first time violating one requirement, and then later is caught violating another separate requirement, could claim status as a first-time violator — and immunity from sanction — for the second violation as well. Moreover, it is important to point out that S. 1378 does not reduce or eliminate any paperwork requirements at all; it merely grants immunity to violators of the law. This would put businesses that comply with paperwork requirements at a clear disadvantage and send a troubling signal that the government does not take its laws seriously. In doing so, S. 1378 would impair enforcement of federal standards, since paperwork is the basis for monitoring compliance with the law and enforcing public protections. For example:

• When the House was considering its version of the Small Business Paperwork Reduction Act (H.R. 391) last year, Sarah Brady wrote members to point out that the waiver provision would weaken inspections of gun dealers under the Brady Act, which would in turn lead to an increase in weapons sales to criminals.
• Firefighters rely on businesses to report on hazardous chemicals under the Emergency Planning and Community Right-to-Know Act, so that they can respond to a possible chemical fire safely and effectively. A guarantee of immunity could lead to less disclosure of hazardous chemicals, putting firefighters at risk. The International Association of Firefighters and other firefighter organizations oppose the bill.
• The Drug Enforcement Administration relies on written reports from pharmaceutical companies to ensure that controlled substances are not diverted illegally. S. 1378 would make it easier for those engaged in illegal activity to avoid detection without fear of fine.
• Under the Employee Retirement Income Security Act (ERISA), pension administrators must file an annual report on the details of their pension fund. If an administrator was mishandling funds, under S. 1378, he or she could just neglect to submit the annual report, covering up the misdeed with full knowledge that no fine could be levied for not submitting the report.
• EPA relies on self-monitoring and reporting under the Clean Water Act and the Safe Drinking Water Act, so that it can head off any potential danger to our water supply. Without reliable reporting, water quality cannot be assured; EPA cannot possibly be expected to inspect all of our 200,000 public water systems itself.

Everything else from worker health to nursing home care to food safety is affected. And in all cases, a six-month delay in reporting, as allowed by the bill, would greatly upset data analysis and understanding of compliance with laws and regulations. In considering the examples above, it is important to remember that reporting requirements are often designed to give agencies knowledge of compliance before any harm occurs, allowing time to take preventive steps. The bill's exceptions that allow for fines of first-time violators do not take this into account. For example, an agency may sanction first-time violators if "the failure to impose a civil fine would impede or interfere with the detection of criminal activity." However, in discussing how this would undermine its efforts to detect drug trafficking and money laundering, the Justice Department has pointed out that "the failure to provide information ... is what interferes with the detection of criminal activity," and that "it may be difficult for an agency to determine that the failure to impose penalties ‘would' in a given case interfere with detection of criminal activity." The bill also allows fines if "the agency determines that the violation presents a danger to public health or safety." But here again, it would be difficult for the agency to know whether there is a danger to health or safety if it doesn't get the appropriate information to make that determination in the first place. In the case of a chemical plant, for instance, the collection of information is essential to protect workers and the surrounding area, and to plan a proper response should an accident occur. It is of little value for a company to file emergency response information 24 hours after a chemical explosion. Since the bill's original incarnation in the House, there has been a proliferation of exceptions, which should be indicative of a fundamental flaw in the approach. In fact, by including such exceptions, the bill's proponents are implicitly recognizing that the threat of a fine can be an important deterrent to violations of law and that the agency — at least in certain circumstances — should have some flexibility to make judgements based on the facts of a particular case. With this understanding, it's hard to see why the waiver provision hasn't been struck entirely. In addition, this provision would have damaging effects beyond federal enforcement. S. 1378 contains sweeping preemption of state and local enforcement practices that would also prohibit subnational governments from issuing fines for first-time violations. This is a rather odd position for the Governmental Affairs Committee to take considering it recently reported federalism legislation (S. 1214) to the floor that is designed to curtail federal preemption of state and local laws. Besides the issue of automatically waiving fines, S. 1378 would create new bureaucracy where it is not needed. The Paperwork Reduction Act created a senior information officer in every agency to oversee paperwork and information resources management activities, but S. 1378 would establish another senior official to look at paperwork, except in this case, the focus would be exclusively on small business. This is duplicative and unnecessary. Of course, it is possible that the agency could simply designate its current senior information officer as the small business liaison for paperwork, but since that's the way it works now, what would be the point of the provision? What is really needed, as stated above, is a hard look at how to facilitate compliance with federal laws without weakening enforcement. Then perhaps some sort of legislative remedy would be in order. But S. 1378 puts the cart before the horse, and seeks to solve a problem — the fining of first-time violators — that simply doesn't exist. In doing so, it would only damage the enforcement of important public protections.