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Follow-up 11/24/10 letter to The Honorable Olympia J. Snowe

November 24, 2010

The Honorable Olympia J. Snowe
Ranking Member
U.S. Senate Committee on Small Business
and Entrepreneurship
428A Russell Senate Office Building
Washington, DC 20510

Dear Ranking Member Snowe:

Thank you again for the opportunity to testify before the Senate Committee on Small Business and Entrepreneurship on reducing the regulatory and administrative burdens on America’s small businesses. The cost of regulation is a critical issue for small business and the Office of Advocacy is working hard to ensure agencies consider the regulatory burdens on small business when they propose and implement new rules.

Advocacy has a multi-faceted approach to working with agencies on new rules that potentially burden small business. This approach often includes using confidential interagency communications, public comment letters and roundtables to be an effective advocate for small business. Much of Advocacy’s influence comes from its role as keeper of the Regulatory Flexibility Act (RFA). The RFA gives small entities a voice in the rulemaking process. For all rules that are expected to have a significant economic impact on a substantial number of small entities, federal agencies are required by the RFA to assess the impact of the proposed rule on small business and to consider less burdensome alternatives.

Advocacy works closely with agencies to ensure they are following the RFA and considering a proposed rule’s impact on small businesses early in the process. Since being sworn in as Chief Counsel, Advocacy has worked with numerous agencies through the confidential interagency process on proposed or potential regulations. I have also held eleven roundtables on a wide variety of proposed rules and issues and written fourteen public comment letters on proposed rules.

Per Senator Landrieu’s request at the hearing, I am attaching a list of each of the roundtables Advocacy has held since I was sworn in August 23rd with a brief description of each. I am also attaching a list and brief description of the public comment letters I have signed. Lastly, I am including follow up to Senator Landrieu’s inquiry regarding the $600 amount that triggers the Form 1099 reporting requirement.

Thank you again for your leadership on small business issues and for your support of Advocacy. I look forward to working with you to reduce the burden of regulation on small business.

Sincerely,

/s/

Winslow Sargeant, Ph.D.
Chief Counsel for Advocacy

Attachments

Advocacy Roundtables hosted by Chief Counsel Winslow Sargeant

Subject: Regular labor safety roundtable on occupational safety and health issues
Agency: OSHA and MSHA
Date: November 19, 2010
Summary: The agenda included a presentation by representatives of the Solicitor of Labor’s office and OSHA on OSHA’s proposed interpretation of provisions for feasible administrative or engineering controls of occupational noise (OSHA’s noise standard for general industry and construction). Other agenda items included an overview of the Small Business Regulatory Enforcement Fairness Act (SBREFA) process, OSHA’s upcoming SBREFA panel on injury and illness prevention programs (“I2P2”), a small business perspective on the impact of the recent elections on future regulations, and a general discussion of pending OSHA and MSHA regulatory initiatives.

Subject: Roundtable on the Dodd-Frank Wall Street Reform and Consumer Protection Act and the SBREFA panel process
Agency: Consumer Financial Protection Bureau (CFPB)
Date: November 18, 2010
Summary: The roundtable consisted of two panel discussions. The first panel was on the Consumer Financial Protection Bureau (CFPB) and consisted of representatives from the Department of Treasury/CFPB Implementation Team, the Department of Housing and Urban Development, the Federal Reserve, the Federal Trade Commission, and the Federal Deposit Insurance Corporation. Since the new agency will be required to comply with the SBREFA panel process, the second panel focused on the SBREFA panel process and included representatives from the Office of Advocacy, the Environmental Protection Agency, and a small entity representative.

Subject: Roundtable on a variety of pension plan-related issues impacting small businesses
Agency: Department of Treasury
Date: November 17, 2010
Summary: Advocacy is following up with the Department of Treasury regarding one issue, “interim plan amendments,” that is impacting small businesses. Interim amendments are the annual amendments that the IRS requires to keep a pension plan compliant with changing laws and rules. At the roundtable, a small business stakeholder presented data to show that the number of changes in laws and rules has necessitated plan administrators to produce an increasing number of expensive interim plan amendments over the last decade. Advocacy is following up with Treasury officials for ways to reduce the burdens associated with interim plan amendments.

Subject: Roundtable on H-2B Program
Agency: Department of Labor
Date: October 20, 2010
Summary: The small business roundtable was on the Department of Labor’s proposed rule, Wage Methodology for the Temporary Non-Agricultural Employment in the H-2B Program; Advocacy submitted a public comment letter based on concerns raised at this roundtable. DOL is proposing to change the methodology for calculating the prevailing wage for the H-2B visa program; the agency estimates that this proposed rule will result in hourly wage increases ranging from $1.37 to $10.61 per hour for H-2B workers. The roundtable was attended by DOL staff and small businesses stakeholders from the construction, hotel, landscape, construction, crab processing, amusement park and food processing industries.

Subject: Regular environmental roundtable
Agency: EPA
Date: October 15, 2010
Summary: Advocacy hosted its regular roundtable on a variety of environmental regulatory issues. It included a presentation on a proposed rule to control air pollution from industrial boilers, and a report on the status of the science review of the particulate matter air quality standard. There was also a presentation on the EPA’s proposed requirements for utilities that generate coal ash from combustion.

Subject: Tax roundtable on the issue of “worker classification”
Agency: Department of Treasury
Date: October 13, 2010
Summary: Small business representatives discussed potential changes in the law requiring business owners to classify workers as “employees” rather than “contractors” and how these changes would burden small businesses.

Subject: Roundtable on small business broadband issues
Agency: Federal Communications Commission (FCC)
Date: October 5, 2010
Summary: In response to an FCC request for comments on the “Business Broadband Marketplace,” Advocacy hosted a roundtable with individuals representing small to medium broadband providers who use a variety of technologies to provide quality broadband services at competitive prices. No matter the broadband transmission technology used, all participants expressed concerns regarding barriers to greater market participation for their firms. In public comments filed on October 15, Advocacy urged the FCC to address these concerns.

Subject: Regular labor safety roundtable on occupational safey and health issues
Agency: OSHA and MSHA
Date: September 24, 2010
Summary: The agenda included a presentation on safety and compliance issues in the wind energy industry, as well as updates on the pending Miner Safety and Health Act of 2010 (HR 5663), OSHA’s proposed rule on consultation agreements, OSHA’s new criteria for its Alliance program, and OSHA’s final cranes and derricks in construction rule.

Subject: Roundtable on Form 1099 reporting requirement
Agency: Department of Treasury
Date: September 22, 2010
Summary: Advocacy hosted a roundtable to hear from small business owners and their representatives regarding how they anticipated the expanded Form 1099 reporting requirements will impact them, and what alternatives they would suggest to minimize the impact of the expanded requirement. Small business roundtable participants suggested no alternative, short of legislative action, that would minimize the impact of the expanded Form 1099 reporting requirements.

Subject: Regular environmental roundtable
Agency: EPA
Date: September 17, 2010
Summary: Advocacy hosted its regular roundtable on a variety of environmental regulatory issues. EPA made a presentation regarding a proposed rule that would require chemical manufacturers to report their annual chemicals that are manufactured or imported (Inventory Update Rule). In addition, an industry representative described the status of EPA science review of the ozone national air quality standard.

Subject: Regular transportation safety roundtable
Agency: Department of Transportation
Date: September 15, 2010
Summary: The agenda included an overview of DOT’s current Regulatory Agenda, as well as presentations on FMCSA’s “SafeStat” and “CSM 2010” programs (including a discussion of some small business concerns about data quality, profiling, and vicarious liability) and NHTSA’s proposed seat belts on motorcoaches rule. The discussion of “SafeStat” and “CSM 2010” was followed up by a meeting of industry representatives with FMCSA staff to discuss their concerns.

Advocacy Public Comment Letters by Chief Counsel Winslow Sargeant

(comment letters may be viewed in full at www.sba.gov/advo/laws/comments)

Subject: Drilling regulations on the Outer Continental Shelf
Agency: Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE)
Date: November 22, 2010
Summary: Advocacy filed public comments with the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) regarding its interim final rule establishing certain drilling regulations relating to well controls on the Outer Continental Shelf.

Subject: Proposed rule on coal ash from electric utilities
Agency: EPA
Date: November 18, 2010
Summary: Advocacy filed public comments with the Environmental Protection Agency (EPA) on its proposed rule on coal ash from electric utilities. Although EPA has certified that this proposed action would not have a significant economic impact on a substantial number of small entities, Advocacy is concerned that the certification lacks a sufficient factual basis.

Subject: Proposed rule impacting recreational vessels
Agency: Department of Labor
Date: November 17, 2010
Summary: Advocacy filed a comment letter with the Department of Labor regarding its proposed rule, Regulations Implementing the Longshore and Harbor Workers’ Compensation Act: Recreational Vessels.

Subject: Proposed rule on Atlantic Bluefin Tuna as Threatened or Endangered
Agency: National Oceanic and Atmospheric Administration (NOAA)
Date: November 16, 2010
Summary: Advocacy filed public comments with the National Oceanic and Atmospheric Administration (NOAA) in response to the 90-Day Finding on a Petition to List Atlantic Bluefin Tuna as Threatened or Endangered under the Endangered Species Act.

Subject: Proposed rule regarding On-Site Consultation
Agency: OSHA
Date: November 2, 2010
Summary: Advocacy submitted comments to OSHA on OSHA’s Proposed Consultation Agreements: Proposed Changes to Consultation Procedures (“On-Site Consultation”) Rule [75 Fed. Reg. 54064 (September 3, 2010)].

Subject: Exposure draft issued on proposed accounting rule
Agency: Financial Accounting Standards Board (FASB)
Date: October 29, 2010
Summary: Advocacy filed a comment letter in response to an Exposure Draft issued by the Financial Accounting Standards Board (FASB), which proposed an Accounting Standards Update of Topic 605, File Reference No. 1820-100. Advocacy is concerned that the Exposure Draft would have negative consequences for small businesses.

Subject: Proposed rule on H-2B Program
Agency: Department of Labor
Date: October 27, 2010
Summary: Advocacy filed a comment letter with the Department of Labor regarding its proposed rule, Wage Methodology for the Temporary Non-Agricultural Employment in the H-2B Program.

Subject: Public Notice on Broadband Business Marketplace
Agency: FCC
Date: October 15, 2010
Summary: Advocacy filed public comments with FCC regarding its public notice and request for comments on the Broadband Business Marketplace. Advocacy urged the commission to examine how the specific challenges competitive broadband providers face in the market affect the availability of quality, affordable broadband access for small business consumers.

Subject: Energy efficiency testing procedures for walk-in coolers and freezers
Agency: Department of Energy
Date: October 12, 2010
Summary: Advocacy filed public comments with the Department of Energy regarding its proposed energy efficiency testing procedures for walk-in coolers and freezers.

Subject: Home Health Prospective Payment System Update for 2011
Agency: Centers for Medicare and Medicaid Services (CMS)
Date: October 4, 2010
Summary: Advocacy filed comments with CMS (as an addition to the September 14 th comments) providing the agency with its Regulatory Flexibility Act (RFA) suggestions and industry concerns about the potential economic impacts associated with finalizing the Home Health Prospective Payment System Update for 2011.

Subject: Home Health Prospective Payment System Update for 2011
Agency: Centers for Medicare and Medicaid Services (CMS)
Date: September 14, 2010
Summary: Advocacy filed comments with CMS providing the agency with its Regulatory Flexibility Act suggestions and industry concerns about the potential economic impacts associated with finalizing the Home Health Prospective Payment System Update for 2011.

Subject: HIPPA rule
Agency: Department of Health and Human Services (HHS)
Date: September 9, 2010
Summary: Advocacy filed comments with HHS providing the agency with its Regulatory Flexibility Act suggestions and industry concerns about the potential economic impacts associated with finalizing the Modifications to the Health Insurance Portability and Accountability Act of 1996 (HIPAA) rule.

Subject: Proposed rule on gainful employment
Agency: Department of Education
Date: September 8, 2010
Summary: Advocacy filed a letter with the U.S. Department of Education’s Office of Postsecondary Education on the proposed rulemaking entitled, “Program Integrity: Gainful Employment.”

Subject: Proposed rule on boilers
Agency: EPA
Date: August 23, 2010
Summary: Advocacy filed a comment letter with EPA discussing small entity concerns with two rulemakings, “National Emission Standards for Hazardous Air Pollutants for Major and Area Sources: Industrial, Commercial, and Institutional Boilers,” 75 Fed. Reg. 32,006 and 75 Fed. Reg. 31,896 (June 4, 2010). EPA conducted a Small Business Advocacy Review (SBAR) Panel for the boilers rules in 2009.

Follow-up Regarding $600 Threshold for Form 1099

The $600 threshold for the Form 1099 reporting requirement, as referenced in the hearing, has remained constant since its implementation in 1954. In contrast, most other dollar amounts specified in the internal revenue code are indexed for inflation or have been legislatively increased over time. As a result, the reporting requirements have captured more and more transactions each year as the buying power of $600 decreases. While it certainly seems like it would have made sense to raise the $600 threshold over the years, Advocacy is unaware of reports or recommendations to increase the $600 threshold amount.

It is important to note, however, that prior to the health care reform bill’s enactment, the scope of the Form 1099 reporting requirement was very limited and therefore not overly burdensome to most small businesses. Under the old law, businesses were only required to submit Forms 1099 to report payments in excess of $600 for rent, interest, dividends, and non-employee services when these payments were made to entities other than corporations. Section 9006 of the Patient Protection and Affordable Care Act greatly expanded the scope of the Form 1099 reporting requirement to include payments to corporations and payments for goods. Small businesses are of course very concerned about this expansion of the scope of the Form 1099 reporting requirement to goods and corporations, and the burdens that this expanded reporting requirement will impose. As I said at the hearing, I strongly support complete repeal of the expanded Form 1099 reporting requirement.