Regulatory Matters Industry Groups Compile Regulatory Hit List for Administration Technology & Information Policy Questions Surround Handling of FirstGov Congressional Compliance with Accessibility Statutes Federal Budget Negotiations on Economic Stimulus Package Stalled Again Appropriations: Light at the End of the Tunnel Social Security Commission to Vote on Recommendations Nonprofit Sector Santorum-Lieberman Draft: Progress On Faith Based Initiative Bill Administration Pushes Reg Implementation Of Charitable Choice Nonprofit Issues in Michigan Review of Comments on FEC Internet Campaigning Rules Election Activity To Be Examined By New IRS Compliance Council SIDE BAR: Budget: Unemployed Workers Rally In DC Nonprof Sector: Candidate Contributions to Charities Announcements: OMB Watch Employment Opportunities Industry Groups Compile Regulatory Hit List for Administration Barbara Kahlow, a Republican congressional aide for Rep. Doug Ose (R-CA), chair of the House Subcommittee on Regulatory Affairs, recently convened key lobbyists to identify and rank regulations with associated paperwork that business groups find overly burdensome, as reported in "http://www.washingtonpost.com/wp-dyn/articles/A52194-2001Dec3.html">this Washington Post article. According to Kahlow, this happened at the request of John Graham, administrator of the Office of Management and Budget's Office of Information and Regulatory Affairs (OIRA). The "/node/317">target list, obtained by OMB Watch and provided here, includes 57 of the most paperwork-intensive rules, most addressing health, safety, and environmental protections. Under the Paperwork Reduction Act (PRA), OIRA is responsible for reviewing agency information collections, which often serve as the foundation for monitoring compliance and enforcing regulation. Approval by OIRA of such collections of information is only given for up to three years under the PRA. Once approval is about to expire, agencies must seek a renewal of their information collection requests from OIRA. This renewal process is what the target list deals with. Potentially OIRA could disapprove or revise an information collection request, leaving the regulation unenforceable, even if that regulation has been on the books for years. Of the list of 57, 2 information collection requests have already expired and 7 will be expiring in the next 6 months -- including 3 that will expire at the end of this year. The meeting between Kahlow and industry groups was held behind closed doors. A business lobbyist first leaked the information to the Washington Post, and OMB Watch later obtained a copy of the list of 57, which we have now posted with expiration dates for each information collection request. OIRA has also provided OMB Watch with a copy of the original list of information collection requests that OIRA sent to Barbara Kahlow, which was then whittled down to the current list of 57 that have associated paperwork requiring 1 million or more "burden hours." This original list was separated into two documents -- one excluding IRS and one of IRS only. OMB Watch, along with a coalition of other organizations, recently HREF="/regs/2001/grahamltr.html">sent a letter to Sen. Joseph Lieberman (D-CT), who chairs the Senate Governmental Affairs Committee, asking that he exercise oversight in this matter. In the House, such oversight is not likely to take place given that Kahlow's boss chairs the relevant oversight subcommittee. Back to Top Questions Surround Handling of FirstGov FirstGov.gov -- the government's first attempt to coordinate electronic information across federal agencies for public use -- has recently experienced a significant increase in the number of users. As a result of the demand for information since September 11, the FirstGov site received 7 million hits during the month of September, up from an average of 1 million hits per month since its inception. This surge in popularity comes on the heels of recent press allegations that FirstGov's development has been fraught with government mismanagement, abuse of taxpayer money, possible competitive advantage, and questions of ownership. The FirstGov tale began with a "donation" to the government. In June 2000, Dr. Eric Brewer, co-founder and chief scientist at Inktomi Corp., set up a nonprofit organization, known as Fed-Search, to construct and maintain a government-wide search engine for the federal government, free of charge. This donation, however, was never meant to be permanent; rather it was to serve as a catalyst, which, with the creation of FirstGov, it has proven to be. In 2003, Fed-Search is scheduled to dissolve, leaving open the question of who will carry on the work of FirstGov's search engine. In June 2001, the General Services Administration (GSA), which oversees FirstGov, asked for advice on how to proceed with the contracting of a new provider for the search engine. From outside appearances, Inktomi would seem to be at a competitive advantage to receive such a contract as a result of the Fed-Search donation. Fed-Search, with money personally donated by Brewer, contracted with Inktomi, Brewer's company, to do the programming that powers FirstGov's search engine -- programming that is proprietary and not owned by the government. If the government were to contract with another vendor, the programming that currently powers the FirstGov search engine would have to be scrapped. An August article in Government Computer News pointed to this, reporting that "a new search engine vendor would have to start from scratch." However, David Binetti, who heads Fed-Search, disputes this characterization. He told OMB Watch that Fed-Search has committed to handing over equipment and an instruction manual on how to build the database necessary to power the search engine (minus the Inktomi programming) to whoever wins the contract. With such a road map, he estimated a new search engine could be built in a matter of weeks. All of this leaves a number of questions up in the air as GSA moves to resolve the issue of the FirstGov search engine. Will anything be lost in the (possible) transition from one search engine to another? How did a donation that began with good intentions end up with someone other than the government owning the index of government information? Could Eric Brewer, as co-founder of Inktomi, end up profiting from his own donation? Did the donation, deliberately or not, have strings attached? Will GSA be compelled to contract with Inktomi based on cost, since Inktomi has already set up, and is currently running, the search engine? More information on the FirstGov transition is available on OMB Watch's Information Policy page. Back to Top Congressional Compliance with Accessibility Statutes The effort to bring Congress in line with federal agencies with respect to information access by persons with disabilities took a small step with the release on November 13 of an interim report on the applicability of Section 508 by the Office of Compliance. This is the entity established under the 1995 Congressional Accountability Act (CAA) to monitor federal law with respect to accessibility issues in employment, public services, and places of public accommodation. It reports to Congress twice a year on the applicability of accessibility provisions to legislative operations. It is also authorized to issue interim reports on the status or interpretation of accessibility-related matters. text.htm">The Rehabilitation Act of 1973 was the first major federal law to include explicit civil rights provisions for people with disabilities. When the Rehabilitation Act was re-authorized in 1986, Section 508 was added to ensure civil rights protections geared towards technology access for people with disabilities. While it made agency compliance with accessibility standards only voluntary, it initiated the process through which federal Executive Branch agencies would eventually be mandated to ensure employee and public access to their data and information systems. The Rehabilitation Act's 1998 reauthorization guaranteed additional protections under Section 508, which took effect June 21, 2001 and required federal Executive Branch agencies to make their electronic data and information systems and related acquisitions accessible to persons with disabilities, including employees and members of the general public -- except when such compliance poses an undue burden upon agency and department operations. If there are demonstrable instances where the standards pose an undue burden on agency operations, information may be presented in an alternate manner considered to be a reasonable accommodation for effective communication, including interpreters, transcripts, audio recordings, and screen readers, among other means. The federal legislative branch, however, operates under a voluntary compliance and enforcement system, coordinated by the Office of Compliance. The CAA requires employing offices under the legislative branch -- including Congress, individual member offices, committees, and support offices, as well as the Government Printing Office (GPO), GAO, and Library of Congress (LOC) -- to follow the ADA in order to facilitate both public and employee access to legislative information. The federal legislative branch and its offices, however, are not required to follow Section 508 guidelines. Therefore, the more stringent accessibility standards and practices mandated by Congress for federal agencies are currently voluntary for Congress itself. While the Office of Compliance has the authority to enforce and review ADA compliance on a case-by-case basis, and to educate Congress on Section 508 provisions, it cannot proactively make policy recommendations on ADA compliance with respect to electronic information systems, nor can it mandate that electronic legislative information meet accepted accessibility and design standards. The OOC report, however, comes out in favor of applying the stronger Section 508 requirements on employee and public access to information through CAA, such that the legislative branch and its extension offices (including GAO, GPO, LOC) can better strengthen and coordinate accessibility compliance and enforcement. The November Office of Compliance report follows a 1998 report regarding ADA compliance, which gave particular emphasis to efforts made by Congress to utilize electronic information technology in order to meet ADA compliance, including the THOMAS legislative information system and websites of individual House and Senate members. Further explanation of terminology and enforcement is contained in the complete version of this story. Back to Top Negotiations on Economic Stimulus Package Stalled Again The big news early last week was that Congressional leaders had settled on who would be part of the House-Senate conference on the economic stimulus bill and the procedure and rules they would use, and that they were finally on the way to discussions about the actual content of the bill. The three Republicans (Sen. Charles Grassley (IA) and Reps. Bill Thomas (CA) and John Dingell (MI)) and three Democrats (Sens. Max Baucus (MT) and John Rockefeller, IV (WV) and Rep. Charles Rangel (NY)) were even predicting a complete stimulus package would be ready by December 14. By Friday of last week, however, the news was very different. On Friday, conference chair and House Ways and Means Committee chair Bill Thomas (R-CA) returned to California, thus halting negotiations until later this week, at the earliest. At a press conference on Friday, Senate Democrats charged that Thomas' departure was a deliberate attempt to prevent progress on the stimulus bill, but House and Senate Republicans place the blame squarely on the shoulders of Senate Majority Leader Tom Daschle (D-SD). They argued that Daschle's demand that any deal worked out in the stimulus conference be approved by two-thirds of Senate Democrats is unreasonable and has created insurmountable obstacles to finalizing a stimulus package. Bickering across the political divide continued as the Bureau of Labor Statistics (BLS) released its summary of the unemployment data for November last Friday. The BLS report shows that there were 419,000 additional unemployed workers in the month of November, bringing the nation's unemployment rate to 5.7% -- the highest it's been since August 1995. In November, the number of people unemployed for at least 27 weeks increased by 280,000 and now totals 1.2 million -- this is almost double the number since July of this year. Economic stimulus proposals that include 13 additional weeks of unemployment benefits aim to provide some additional support to the unemployed while also acting to immediately infuse money into the economy via the spending of the low- and middle-income jobless, who are the most likely to spend. While the debate on the economic stimulus package, if and when it resumes, may include different provisions, two recent reports from the Joint Committee on Taxation (JCT) compare the provisions and costs of the House-passed and the Senate Finance Committee-passed versions of the economic stimulus bill. At this point, it is unclear whether it will be possible for Congress to come to an agreement on an economic stimulus package. OMB Watch has compiled a resource page including analyses of the various proposals and contact information for your Congressional members and the President. For a quick summary of the Republican plan and an explanation of why maybe it would be better not to have any stimulus package, see the December 9 New York Times editorial, "A Stimulus Not Worth Passing" (free registration is required to view this article). A rally for increased support for unemployed workers will be held on December 12 in Washington, DC -- information is available in the Sidebar of this issue. Back to Top Appropriations: Light at the End of the Tunnel Congress and the President finalized three more appropriations bills since the last Watcher update: Agriculture (P.L. 107-66), Commerce-Justice-State (P.L. 107-77), and VA-HUD (P.L. 107-73). With a total of 8 appropriations acts passed, Congress still has 5 more to complete and passed a sixth CR on December 5 to continue funding until December 15. The remaining appropriations bills include 2 bills that have been readied for the President's signature and 3 bills currently in conference:

• Transportation: The Senate passed the conference report on December 4 and it is expected to be signed by the President.
• District of Columbia: The House and Senate passed the conference report on December 6 and 7, respectively, over the objections of some on local funding issues, according to usbudget.com.
• Labor-HHS-Education and Foreign Operations: Both bills are still being negotiated in conference
• Defense: After working out an agreement between Senate Appropriations Chair Robert Byrd (D-WV) and the White House, the Senate passed the 2002 Defense appropriations bill late on Friday, December 7. The day before, the White House Office of Management and Budget (OMB) issued its Statement of Administration Policy (SAP) warning that the President would veto the defense bill if it contained Byrd's amendment adding $15 billion in spending for "homeland security." The bill passed on Friday instead includes just the $317 billion in 2002 defense spending and the remaining $20 billion in emergency spending approved in September for defense ($2 billion), homeland security ($8.5 billion) and the rebuilding of NY, PA, and VA after the September 11 attacks ($9.5 billion). The bill has now been sent to conference to be reconciled with the House-passed bill.

Back to Top Social Security Commission to Vote on Recommendations On December 3, President Bush’s Social Security Commission released not one proposal, but three preliminary outlines. Since all of the members supported partial privatization of the Social Security system from the get-go (a criterion for being on the commission), it is not surprising that all three of the plans include some form of taking revenue from Social Security funds to create individual accounts. They all propose benefit cuts to pay for privatization. It seems unlikely, in light of the recession and increasing hesitation about entrusting one’s retirement to the vagaries of the stock market, that there will be enough support for privatization of Social Security any time soon. Nevertheless, the commissioners will vote on the final version of these plans on December 11, and the plans will be presented to the President and Congress for further action. Social Security privatization is also one of the President’s priorities. For a short summary of the three plans, see the Campaign for America's Future. On Tuesday December 11, critics of President Bush's Commission to privatize Social Security will hold a 1:45 PM press conference (following the Commission's press conference). Speakers -- including Rep. Robert Matsui (D-CA), ranking member of the House Social Security Subcommittee -- will respond to the release of the Commission's report by highlighting that it demonstrates that it is impossible to achieve President Bush's privatization goals without major cuts in guaranteed benefits and other unpopular and painful changes to Social Security. The press conference will be held in the Green Room of the Park Hyatt Washington Hotel in Washington, DC. For more information, contact Tasha Spindler at Campaign for America's Future at (202) 955-5665 Back to Top Santorum-Lieberman Draft: Progress On Faith Based Initiative Bill For months Sens. Rick Santorum (R-PA) and Joe Lieberman (D-CT) have indicated a willingness to work out a compromise with the White House on the President's proposed Faith Based Initiative. The issue stalled after the House passed its version (H.R. 7) last summer. H.R. 7 included a variety of controversial provisions around federal grants to faith-based organizations and very little in the way of tax incentives for charitable giving. (See the OMB Watch summary and analysis of H.R. 7.) It now appears that Santorum, Lieberman and the White House are close to an agreement on a compromise that provides for:

1. tax incentives for giving
2. equal treatment of nongovernmental organizations that apply for federal grants
3. fast track processing by the IRS of applications for 501(c)(3) status by small organizations applying for federal funds, and
4. funding for six new programs.

Santorum and Lieberman have not introduced a bill yet, although partial drafts have been circulated. If the battle over the economic stimulus package is resolved soon, bill drafters will be able to determine the size of the charitable giving incentive package. The incentives are expected to include the charitable deduction for contributions by nonitemizers, deduction for charitable gifts from IRA rollovers, an increase in the ceiling on corporate charitable deductions, incentives for donations of food inventory, reduction of excise taxes on private foundations from 2% to 1% and Individual Development Accounts. Rather than extend "charitable choice" as included in welfare reform and the Community Services Block Grant Program, the Santorum-Lieberman draft compromise prohibits discrimination against nongovernmental organizations (NGOs) applying for federal funds on the basis of:

• Prior grant experience
• Religious criteria for membership on board of directors
• Presence of religious symbols and art or religious references in the organization's name
• Mission statements that contain religious language.

According to Lieberman staff, the bill is not intended to allow houses of worship to apply for federal grants. However, the language in the draft bill is unclear on this point. These provisions would apply to all federally funded social service programs except for programs under the Elementary and Secondary Education Act (ESEA). The draft bill also directs the Treasury Department to adopt procedures for expedited consideration of Form 1023 applications for recognition of charitable status and waiver of user fees for small social service organizations. Several new programs are included in the draft compromise package, including four Compassion Capital Funds, mentors for children of prisoners and group homes for unwed mothers. Read OMB Watch's full summary of the draft compromise. Back to Top Administration Pushes Regulatory Implementation Of Charitable Choice "It is not Congress, but these overly restrictive Agency rules that are repressive, restrictive... [They] unnecessarily and improperly limit the participation of faith-based organizations." This statement, taken from the August White House report on barriers faith-based and community organizations face in applying for federal grants, appeared to lay the groundwork for regulatory, rather than legislative, changes to achieve the "charitable choice" component of the President's faith-based agenda. Now a new program in the Department of Justice's Office of Juvenile Justice and Delinquency Prevention (OJJDP) would create "Community Capacity Centers," nonprofits that provide support for community and faith-based groups in areas with high juvenile crime rates. The program details offered in the Federal Register are vague, but OJJDP Acting Director Terence Donahue provided further details last week in a presentation to the OJJDP Coordinating Council. OJJDP is proposing $10 million a year for the Community Capacity Center program. Grants of about $250,000 each would fund 3-4 coordinators that would draw on members of local organizations to help with programs and provide them with support. Churches, mosques and synagogues were specifically cited as potential participants. The proposed program raises two concerns:

1. the potential for participating youth to be involuntarily subjected to religious proselytizing, and
2. direct federal subsidies to houses of worship.

OMB Watch filed comments on the proposal explaining these concerns, stating "We hope that the final rules for the program will be much more specific about what Centers for Continuous Capacity can do to involve all organizations in a community without subsidizing religious activity or proselytizing participating youth. With adequate safeguards these Centers could be a real asset for communities with high levels of juvenile crime." The full text of the OMB Watch comments is available online. Read OMB Watch's analysis of the August White House report. Back to Top Nonprofit Issues in Michigan Charitable Choice A bill that would allow the Michigan Family Independence Agency (FIA) to fund religious organizations or convert social welfare programs to vouchers has passed in the Children & Family Services committee by a 5-2 vote. The bill (H.B. 5316), which was outlined in the last issue of the OMB Watcher, would extend problematic provisions of federal welfare reform into every program funded through FIA, and could also result in the dismantling of programs in favor of vouchers. It is unknown when and if the bill will come to the House floor for a vote. Ballot Initiatives The Michigan Nonprofit Association reports that the Michigan Senate passed a bill (S.B. 759) that prohibits Michigan nonprofits from using any resources that are "from a public body or a person acting on behalf of a public body" for advocacy around a state ballot initiative. The bill also prohibits charities from endorsing or opposing a candidate, which is already forbidden by IRS regulations. The bill specifically states, "A nonprofit corporation that receives money from a public body or a person acting on behalf of a public body as membership fees or dues shall not use the money or investment income derived from the money to influence the outcome of an election" held in Michigan. Because the definition of "membership fees" or "dues" is not specified in the bill, money from government employee-giving programs could be covered. If it becomes law, this bill will likely force charities to segregate any money that come from a "public source" and keep overly burdensome accounting records to assure that these funds are not used in any ballot initiatives, which may serve to dissuade charities from participating in ballot campaigns that are directly related to their mission. Back to Top Review of Comments on FEC Internet Campaigning Rules In late September the Federal Election Commission (FEC) announced three new proposed rules regarding use of the Internet in federal campaigns. The announcement was the result of the FEC's 1999 Notice of Inquiry on a wide range of issues relating to Internet-based election activity by individuals, corporations, nonprofits and labor organizations. The proposed rules are largely in response to the more than 1,300 public comments received in the 1999 inquiry. Most commenters emphasized the low cost of the Internet and its potential for leveling the political playing field. In the proposed new rules the Commission has chosen to both limit the scope of regulation and encourage continued development of the Internet as a low-cost, widely available communications tool. The deadline for comments on the new rules was December 3, 2001. OMB Watch submitted comments stating that the clarification provided by the proposed rules would avoid the chilling effect on constitutionally protected speech that could result from uncertainty and confusion about the activities of volunteers, how hyperlinks are treated and how organizational endorsements can be posted. Our comments also noted that, by limiting the scope of the proposed rules to these three well-defined areas, the Commission is allowing for continued development of Internet-based activities in the election process. The new rules would cover the following areas:

• Volunteers: Proposed 11 CFR 117.1 The rules will not regulate volunteers that use their personal computer and Internet access for federal campaign activity, even if this activity is coordinated with a candidate or party. In other words, using a home computer to help federal candidates would not be a regulated campaign contribution or expenditure.
• Hyperlinks: Proposed 11 CFR 117.2 Under this proposed rule links to candidate and party websites from the sites of corporations, nonprofits and labor unions will not be considered campaign contributions if:
  1. the link or surrounding text does not contain "vote-for-" or "vote-against-" type language (express advocacy) and
  2. the link is placed at no charge or only a nominal amount is charged.
• Endorsement Press Releases: Proposed 11 CFR 117.3 Current regulations limit corporate and nonprofit communications for or against candidates to their members and executive personnel and their families. However, the rules have allowed these organizations to announce candidate endorsements to the press. The proposed rule would allow posting press releases about candidate endorsements on the public portion of a group's web site if they are posted on the same basis as other press releases and limited to an announcement of the endorsement and the reasons for it.

The OMB Watch comments encouraged the Commission to approve the proposed rules, and "to take no further additional action on use of the Internet in campaigns through the next election cycle. The Internet is still an evolving medium that is only just beginning to find a place in campaigns and elections." Read the full text of the OMB Watch comments. Back to Top Election Activity Among Issues To Be Examined By New IRS Exempt Organization Compliance Council In FY 2002 the Internal Revenue Service (IRS) plans to increase its presence in the exempt community, with an emphasis on outreach and education, according to Rosie Johnson, IRS Director of Exempt Organization (EO) Examinations. Speaking at a recent gathering of the American Bar Association Section on Taxation, Johnson said 6 of 35 EO segments will be studied for compliance, and issues needing further study will be identified. In its workplan for FY 2002 social service organizations, affiliates of religious congregations and political action committees (PACs) were listed among the first to be reviewed. Initial issues to be addressed include fundraising expenses and failure to make disclosure filings by PACs. Audits will be centralized in the national office and conducted by a team, including a revenue agent, attorney and EO specialist. The goal is to make audits go more quickly for "overzealous agents." In a presentation on structures for organizations involved in elections, IRS attorney Judith Kindell told the District of Columbia Bar Association that political action committees that try to avoid disclosure laws by forming as social welfare organizations could face heavy penalties. PACs, exempt under Section 527 of the Internal Revenue Code, are defined as groups whose electioneering makes up more than half of their overall activity. Social welfare organizations, on the other hand, are exempt under Section 501(c)(4) and must limit their electioneering to less than half of their activities. Disclosure laws limit the information social welfare organizations must file to separate segregated funds created specifically for electioneering. Kindell noted that there is no concrete formula used by the IRS to determine what is more or less than half of an organizations' activities. Instead, a "facts and circumstances" test is used. The IRS determines which category a group belongs in, and recently denied social welfare status to a group it determined was heavily involved in electioneering activity. These kind of determinations can have a huge impact, since the penalties for a PAC failing to disclose information can be as much as 105% of the money spent on electioneering. The disclosure requirements are a result of a 2000 campaign finance law meant to provide the public with information on soft money "stealth" PACs. For more information on 527 disclosure see the July 3, 2000 issue of the Watcher. Back to Top Notes and Sidebars DC Rally for Stimulus Package Support of Unemployed Workers On Wednesday, December 12 at noon more than 300 unemployed workers with the Philadelphia Unemployment Project, Hotel Employees and Restaurant Employees Union, Steelworkers Union, IUE, the Tenants and Workers Support Committee (Alexandria, VA) and other organizations will rally at the East Front of the Senate to demand a stimulus package that provides relief for the thousands of workers who have lost their jobs since March -- not more tax breaks for large corporations. For more information, contact John Dodds, Philadelphia Unemployment Project (215) 557-0822. The National Campaign for Jobs and Income Support and the others organizing this effort invite you to attend the rally to show support for the unemployed and their families by attending the rally on December 12. FL Ban on Candidate Contributions to Charities Unconstitutional A federal court in Florida has ruled that the state campaign finance law barring candidate contributions to charities is unconstitutional in that it violates protections for free speech and association. The state Attorney General's office has said they will not appeal. See Florida Right to Life, Inc. v. Lamar, 11th Circuit, No 00-14140, opinion November 28, 2001. OMB Watch is Hiring OMB Watch is now hiring for the following 2 positions: * Senior Policy Analyst: Environmental Information Policy * Staff Assistant/Web Writer Complete job description and application information is available through the links above. For further information, e-mail ombwatch@ombwatch.org