A bill to amend the Internal Revenue Code of 1986 to treat controlled foreign corporations established in tax havens as domestic corporations.

Mr. President, today my colleague from Maine, Senator Collins and I are very pleased to introduce the National Aquatic Invasive Species Act of 2005. This bill, which reauthorizes the Nonindigenous Aquatic Nuisance Prevention and Control Act, takes a comprehensive approach towards addressing aquatic nuisance species to protect the nation's aquatic ecosystems. Invasive species are not a new problem for this country, but what is so important about this bill is that this is the first real effort to take a comprehensive approach toward the problem of aquatic invasive species. The bill deals with the prevention of introductions, the screening of new aquatic organisms that do come into the country, the rapid response to invasions, and the research to implement the provisions of this bill.

During the development of this country, there were more than people immigrating to this country. More than 6,500 non-indigenous invasive species have been introduced into the United States and have become established, self-sustaining populations. These species--from microorganisms to mollusks, from pathogens to plants, from insects to fish to animals--typically encounter few, if any, natural enemies in their new environments and wreak havoc on native species. Aquatic nuisance species threaten biodiversity nationwide, especially in the Great Lakes.

In fact, the aquatic nuisance species became a major issue for Congress back in the late eighties when the zebra mussel was released into the Great Lakes. The Great Lakes still have zebra mussels, and now, 20 States are fighting to control them. The Great Lakes region spends about $30 million per year to keep water pipes from becoming clogged with zebra mussels.

Zebra mussels were carried over from the Mediterranean to the Great Lakes in the ballast tanks of ships. The leading pathway for aquatic invasive species was and still is maritime commerce. Most invasive species are contained in the water that ships use for

ballast to maintain trim and stability. Aquatic invaders such as the zebra mussel and round goby were introduced into the Great Lakes when ships, often from nations, pulled into port and discharged their ballast water. In addition to ballast water, aquatic invaders can also attach themselves to ships' hulls and anchor chains.

Because of the impact that the zebra mussel had in the Great Lakes, Congress passed legislation in 1990 and 1996 that has reduced, but not eliminated, the threat of new invasions by requiring ballast water management for ships entering the Great Lakes. Today, there is a mandatory ballast water management program in the Great Lakes, and the Coast Guard is in the rule-making process to turn the voluntary ballast water exchange reporting requirement into a mandatory ballast water exchange program for all of our coasts. The current law requires that ships entering the Great Lakes must exchange their ballast water, seal their ballast tanks or use alternative treatment that is ``as effective as ballast water exchange.'' Unfortunately, alternative treatments have not been fully developed and widely tested on ships because the developers of ballast technology do not know what standard they are trying to achieve. This obstacle is serious because ultimately, only on-board ballast water treatment will adequately reduce the threat of new aquatic nuisance species being introduced through ballast water.

Our bill addresses this problem. First, this bill establishes a deadline for the Coast Guard and EPA to establish a standard for ballast water management and requires that the standard reduce the number of plankton in the ballast water by 99 percent or the best performance that technology can provide. This way, technology vendors and the maritime industry know what they should be striving to achieve and when they will be expected to achieve it. After 2011, all ships that enter any U.S. port after operating outside the Exclusive Economic Zone of 200 miles will be required to use a ballast water treatment technology that meets this standard.

I understand that ballast water technologies are being researched, and some are currently being tested on-board ships. The range of technologies include ultraviolet lights, filters, chemicals, deoxygenation, ozone, and several others. Each of these technologies has a different price tag attached to it. It is not my intention to overburden the maritime industry with an expensive requirement to install technology. In fact, the legislation states that the final ballast water technology standard must be based on the best performing technology that is economically achievable. That means that the Coast Guard must consider what technology is available, and if there is no economically achievable technology available to a class of vessels, then the standard will not require ballast technology for that class of vessels, subject to review every three years. I do not believe this will be the case, however, because the approach of this bill creates a clear incentive for treatment vendors to develop affordable equipment for the market.

Technology will always be evolving, and we hope that affordable technology will become available that completely eliminates the risk of new introductions. Therefore, it is important that the Coast Guard regularly review and revise the standard so that it reflects what the best technology currently available is and whether it is economically achievable.

There are other important provisions of the bill that also address prevention. For instance, the bill encourages the Coast Guard to consult with Canada, Mexico, and other countries in developing guidelines to prevent the introduction and spread of aquatic nuisance species. The Aquatic Nuisance Species Task Force is also charged with conducting a pathway analysis to identify other high risk pathways for introduction of nuisance species and implement management strategies to reduce those introductions. And this legislation, for the first time, establishes a process to screen live organisms entering the country for the first time for non-research purposes. Organisms believed to be invasive would be imported based on conditions that prevent them from becoming a nuisance. Such a screening process might have prevented such species as the Snakehead, which has established itself in the Potomac River here in the DC area, from being imported.

The third title of this bill addresses early detection of new invasions and the rapid response to invasions as well as the control of aquatic nuisance species that do establish themselves. If fully funded, this bill will provide a rapid response fund for states to implement emergency strategies when outbreaks occur. The bill requires the Army Corps of Engineers to construct and operate the Chicago Ship and Sanitary Canal project which includes the construction of a second dispersal barrier to keep species like the Asian carp from migrating up the Mississippi through the Canal into the Great Lakes. Equally important, this barrier will prevent the migration of invasive species in the Great Lakes from proceeding into the Mississippi system.

Lastly, the bill authorizes additional research which will identify threats and the tools to address those threats.

Though invasive species threaten the entire Nation's aquatic ecosystem, I am particularly concerned with the damage that invasive species have done to the Great Lakes. There are now roughly 180 invasive species in the Great Lakes, and it is estimated that a new species is introduced every 8 months. Invasive species cause disruptions in the food chain, which is now causing the decline of certain fish. Invasive species are believe to be the cause of a new dead zone in Lake Erie. And invasive species compete with native species for habitat.

This bill addresses the ``NOBOB'' or No Ballast on Board problem which is when ships report having no ballast when they enter the Great Lakes. However, a layer of sediment and small bit of water that cannot be pumped out is still in the ballast tanks. So when water is taken on and then discharged all within the Great Lakes, a new species that was still living in that small bit of sediment and water may be introduced. By requiring technology to be installed, this bill addresses a very serious issue in the Great Lakes.

All in all, the bill would cost between $160 million and $170 million each year. This is a lot of money, but it is a critical investment. As those of us from the Great Lakes know, the economic damage that invasive species can cause is much greater. However, compared to the annual cost of invasive species, the cost of this bill is minimal. Therefore, I urge my colleagues to cosponsor this legislation and work to move the bill swiftly through the Senate.

Mr. President, from Pickerel Pond to Lake Auburn, from Sebago Lake to Bryant Pond, lakes and ponds in Maine are under attack. Aquatic invasive species threaten Maine's drinking water systems, recreation, wildlife habitat, lakefront real estate, and fisheries. Plants, such as Variable Leaf Milfoil, are crowding out native species. Invasive Asian shore crabs are taking over Southern New England's tidal pools and have advanced well into Maine--to the potential detriment of Maine's lobster and clam industries.

I rise today to join Senator Levin in introducing legislation to address this problem. The National Aquatic Invasive Species Act of 2005 would create the most comprehensive nationwide approach to date for combating alien species that invade our shores.

The stakes are high when invasive species are unintentionally introduced into our Nation's waters. They endanger ecosystems, reduce biodiversity, and threaten native species. They disrupt people's lives and livelihoods by lowering property values, impairing commercial fishing and aquaculture, degrading recreational experiences, and damaging public water supplies.

In the 1950s, European Green Crabs swarmed the Maine coast and literally ate the bottom out of Maine's soft-shell clam industry by the 1980s. Many clam diggers were forced to go after other fisheries or find new vocations. In just one decade, this invader reduced the number of clam diggers in Maine from nearly 5,000 in the 1940s to fewer than 1500 in the 1950s. European green crabs currently cost an estimated $44 million a year in damage and control efforts in the United States.

Past invasions forewarn of the long-term consequences to our environment and communities unless we take steps to prevent new invasions. It is too late

to stop European green crabs from taking hold on the East Coast, but we still have the opportunity to prevent many other species from taking hold in Maine and the United States.

Senator Levin and I introduced an earlier version of this legislation in March of 2003. Just a few months earlier, one of North America's most aggressive invasive species hydrilla--was found in Maine for the first time. This stubborn and fast-growing aquatic plant had taken hold in Pickerel Pond in the Town of Limerick, ME, and threatened recreational use for swimmers and boaters. At the time, we warned that unless Congress acted, more and more invasive species would establish a foothold in Maine and across the country.

Unfortunately, Congress failed to act on our legislation and new invasions have continued. In December, for the first time, the Maine Department of Environmental Protection detected Eurasian Milfoil in the State. Maine was the last of the lower 48 States to be free of this stubborn and fast-growing invasive plant that degrades water quality by displacing native plants, fish and other aquatic species. The plant forms stems reaching up to 20 feet high that cause fouling problems for swimmers and boaters. In total, there are 24 documented cases of aquatic invasive species infesting Maine's lakes and ponds.

When considering the impact of these invasive species, it is important to note the tremendous value of our lakes and ponds. While their contribution to our quality of life is priceless, their value to our economy is more measurable. Maine's Great Ponds generate nearly 13 million recreational user days each year, lead to more than $1.2 billion in annual income for Maine residents, and support more than 50,000 jobs.

With so much at stake, Mainers are taking action to stop the spread of invasive species into our State's waters. The State of Maine has made it illegal to sell, posses, cultivate, import or introduce eleven invasive aquatic plants. Boaters participating in the Maine Lake and River Protection Sticker program are providing needed funding to aid efforts to prevent, detect and manage aquatic invasive plants. Volunteers are participating in the Courtesy Boat Inspection program to keep aquatic invasive plants out of Maine lakes. Before launch or after removal, inspectors ask boaters for permission to inspect the boat, trailer or other equipment for plants. More than 300 trained inspectors conducted upwards of 30,000 courtesy boat inspections at 65 lakes in the 2004 boating season.

While I am proud of the actions that Maine and many other States are taking to protect against invasive species, all too often their efforts have not been enough. As with national security, protecting the integrity of our lakes, streams, and coastlines from invading species cannot be accomplished by individual States alone. We need a uniform, nationwide approach to deal effectively with invasive species. The National Aquatic Invasive Species Act of 2005 will help my State and States throughout the Nation detect, prevent and respond to aquatic invasive species.

The National Aquatic Invasive Species Act of 2005 would be the most comprehensive effort ever undertaken to address the threat of invasive species. By authorizing $836 million over 6 years, this legislation would open numerous new fronts in our war against invasive species. The bill directs the Coast Guard to develop regulations that will end the easy cruise of invasive species into U.S. waters through the ballast water of international ships, and would provide the Coast Guard with $6 million per year to develop and implement these regulations.

The bill also would provide $30 million per year for a grant program to assist State efforts to prevent the spread of invasive species. It would provide $12 million per year for the Army Corps of Engineers and Fish and Wildlife Service to contain and control invasive species. Finally, the Levin-Collins bill would authorize $30 million annually for research, education, and outreach.

Mr. President, the most effective means of stopping invading species is to attack them before they attack us. We need an early alert, rapid response system to combat invading species before they have a chance to take hold. For the first time, this bill would establish a national monitoring network to detect newly introduced species, while providing $25 million to the Secretary of the Interior to create a rapid response fund to help States and regions respond quickly once invasive species have been detected. This bill is our best effort at preventing the next wave of invasive species from taking hold and decimating industries and destroying waterways in Maine and throughout the country.

One of the leading pathways for the introduction of aquatic organisms to U.S. waters from abroad is through transoceanic vessels. Commercial vessels fill and release ballast tanks with seawater as a means of stabilization. The ballast water contains live organisms from plankton to adult fish that are transported and released through this pathway. Last week, a Federal judge ruled that the Government can no longer allow ships to dump, without a permit from the Environmental Protection Agency, any ballast water containing nonnative species that could harm local ecosystems. The court case and subsequent decision indicates that there are problems with our existing systems to control ballast water discharge and signals a need to address invasive hitchhikers that travel to our shores aboard ships. Our legislation would establish a framework to prevent the introduction of aquatic invasive species by ships.

The National Aquatic Invasive Species Act of 2005 offers a strong framework to combat aquatic invasive species. I call on my colleagues to help us enact this legislation in order to protect our waters, ecosystems, and industries from destructive invasive species--before it's too late.

Mr. President, today I'm joined by Senator Levin of Michigan in introducing legislation that we believe will help the Internal Revenue Service (IRS) combat offshore tax-haven abuses and ensure that U.S. multinational companies pay the U.S. taxes that they rightfully owe.

Tens of millions of taxpayers will be rushing to file their tax returns in the next few days in order to fulfill their taxpaying responsibility by the April 15 filing deadline. Some tax experts estimate that taxpayers will spend over $100 billion and more than 6 billion hours this year trying to comply with their federal tax obligation. It's no wonder that many Americans are frustrated with the current tax system and would gladly welcome substantive efforts to simplify it.

However, this frustration changes to anger when the taxpayers who pay their taxes on time each year discover that many corporate taxpayers are shirking their tax obligations by actively shifting their profits to foreign tax havens or using other inappropriate tax avoidance techniques. The bill that Senator Levin and I are introducing today is a simple and straightforward way to try to tackle the offshore tax- haven problem.

Specifically, our legislation denies tax benefits, namely tax deferral, to U.S. multinational companies that set up controlled foreign corporations in tax-haven countries by treating those subsidiaries as domestic companies for U.S. income tax purposes. This tracks the same general approach embraced and passed by the Congress in other tax legislation designed to curb the problem of corporate inversions.

We have known for many years that some very profitable U.S. multinational businesses are using offshore tax havens to avoid paying their fair share of U.S. taxes. But Congress has really done very little to stop this hemorrhaging of tax revenues. In fact, recent evidence suggests that the tax-haven problem is getting much worse and may be draining the U.S. Treasury of tens of billions of dollars every year.

The New York Times got it right when it suggested that ``instead of moving headquarters offshore, many companies are simply placing patents on drugs, ownership of corporate logos, techniques for manufacturing processes and other intangible assets in tax havens . . . The companies then charge their subsidiaries in higher-tax locales, including the U.S., for the use of these intellectual properties. This allows the companies to take profits in these havens and pay far less in taxes.''

How pervasive is the tax-haven subsidiary problem? Last year, the Government Accountability Office (GAO), the investigative arm of Congress, issued a report that Senator Levin and I requested that gives some insight to the potential magnitude of this tax avoidance activity. The GAO found that 59 out of the 100 largest publicly-traded federal contractors in 2001--with tens of billions of dollars of federal contracts in 2001--had established hundreds of subsidiaries located in offshore tax havens.

According to the GAO, Exxon-Mobil Corporation, the 21st largest publicly traded federal contractor in 2001, has some 11 tax-haven subsidiaries in the Bahamas. Halliburton Company reportedly has 17 tax- haven subsidiaries, including 13 in the Cayman Islands, a country that has never imposed a corporate income tax, as well as 2 in Liechtenstein and 2 in Panama. And the now infamous Enron Corporation had 1,300 different foreign entities, including some 441 located in the Cayman Islands.

More recently, former Joint Committee on Taxation economist Martin Sullivan released a study that looked at the amount of profits that US. companies are shifting to offshore tax havens. He found that U.S. multinationals had moved hundreds of billions of profits to tax havens for years 1999-2002, the latest years for which IRS data is available.

Although Congress passed legislation, which I supported, that addresses the problem of corporate expatriates that reincorporate overseas, that legislation did nothing to deal with the problem of U.S. companies that are setting up tax-haven subsidiaries to avoid their taxpaying responsibilities in this country.

The legislation that we are introducing builds upon the good work of Senators Grassley and Baucus and other members of the Senate Finance Committee by extending similar tax policy changes to cover the case of U.S. companies and their tax-haven subsidiaries.

Specifically, our legislation would do the following: 1. Treat U.S. controlled foreign subsidiaries that are set up in tax-haven countries as domestic companies for U.S. tax purposes. In other words, we would simply treat these companies as if they never left the United States, which is essentially the case in these tax avoidance motivated transactions.

2. List specific tax-haven countries subject to the new rule (based upon the previous work by the Organization for Economic Cooperation and Development) and give the Secretary of the Treasury the ability to add or remove a foreign country from this list in appropriate cases.

3. Provide an exception where substantially all of a U.S. controlled foreign corporation's income is derived from the active conduct of a trade or business within the listed tax-haven country.

4. Make these proposed changes effective beginning after December 31, 2007. This will give businesses ample time to restructure their tax- haven operations if they so choose.

This legislation will help end the tax benefits for U.S. companies that shift income to offshore tax-haven subsidiaries. For example, any efforts by a U.S. company to move profits to the subsidiary through transfer pricing schemes will not work because the income earned by the subsidiary would still be immediately taxable by the United States. Likewise, any efforts to move otherwise active income earned by a U.S. company in a high-tax foreign country to a tax haven would cause the income to be immediately taxable by the United States. Companies that try to move intangible assets--and the income they produce--to tax havens would be unsuccessful because the income would still be immediately taxable by the United States.

Let me be very clear about one thing. This legislation will not adversely impact U.S. companies with controlled foreign subsidiaries that are located in tax havens and doing legitimate and substantial business. The legislation expressly exempts a U.S.-controlled foreign subsidiary from its tax rule changes when substantially all of its income is derived from the active conduct of a trade or business within a listed tax-haven country.

In 2002, then-IRS Commissioner Charles Rossotti told Congress that ``nothing undermines confidence in the tax system more than the impression that the average honest taxpayer has to pay his or her taxes while more wealthy or unscrupulous taxpayers are allowed to get away with not paying.'' Last week, IRS Commissioner Everson echoed similar sentiments at a Senate Transportation-Treasury Appropriations Subcommittee hearing I attended on the IRS's FY 2006 budget request.

They are absolutely right. It's grossly unfair to ask our Main Street businesses to operate at a competitive disadvantage to large multinational businesses simply because our tax authorities are unable to grapple with the growing offshore tax avoidance problem. It is outrageous that tens of millions of working families who pay their taxes on time every year are shouldering the tax burden of large profitable U.S. multinational companies that use tax-haven subsidiaries.

I hope that Congress will act promptly to enact legislation to curb these tax-haven subsidiary abuses. I urge my colleagues to cosponsor this bill.

Mr. President, today I'm joined by Senator Levin of Michigan in introducing legislation that we believe will help the Internal Revenue Service (IRS) combat offshore tax-haven abuses and ensure that U.S. multinational companies pay the U.S. taxes that they rightfully owe.

Tens of millions of taxpayers will be rushing to file their tax returns in the next few days in order to fulfill their taxpaying responsibility by the April 15 filing deadline. Some tax experts estimate that taxpayers will spend over $100 billion and more than 6 billion hours this year trying to comply with their federal tax obligation. It's no wonder that many Americans are frustrated with the current tax system and would gladly welcome substantive efforts to simplify it.

However, this frustration changes to anger when the taxpayers who pay their taxes on time each year discover that many corporate taxpayers are shirking their tax obligations by actively shifting their profits to foreign tax havens or using other inappropriate tax avoidance techniques. The bill that Senator Levin and I are introducing today is a simple and straightforward way to try to tackle the offshore tax- haven problem.

Specifically, our legislation denies tax benefits, namely tax deferral, to U.S. multinational companies that set up controlled foreign corporations in tax-haven countries by treating those subsidiaries as domestic companies for U.S. income tax purposes. This tracks the same general approach embraced and passed by the Congress in other tax legislation designed to curb the problem of corporate inversions.

We have known for many years that some very profitable U.S. multinational businesses are using offshore tax havens to avoid paying their fair share of U.S. taxes. But Congress has really done very little to stop this hemorrhaging of tax revenues. In fact, recent evidence suggests that the tax-haven problem is getting much worse and may be draining the U.S. Treasury of tens of billions of dollars every year.

The New York Times got it right when it suggested that ``instead of moving headquarters offshore, many companies are simply placing patents on drugs, ownership of corporate logos, techniques for manufacturing processes and other intangible assets in tax havens . . . The companies then charge their subsidiaries in higher-tax locales, including the U.S., for the use of these intellectual properties. This allows the companies to take profits in these havens and pay far less in taxes.''

How pervasive is the tax-haven subsidiary problem? Last year, the Government Accountability Office (GAO), the investigative arm of Congress, issued a report that Senator Levin and I requested that gives some insight to the potential magnitude of this tax avoidance activity. The GAO found that 59 out of the 100 largest publicly-traded federal contractors in 2001--with tens of billions of dollars of federal contracts in 2001--had established hundreds of subsidiaries located in offshore tax havens.

According to the GAO, Exxon-Mobil Corporation, the 21st largest publicly traded federal contractor in 2001, has some 11 tax-haven subsidiaries in the Bahamas. Halliburton Company reportedly has 17 tax- haven subsidiaries, including 13 in the Cayman Islands, a country that has never imposed a corporate income tax, as well as 2 in Liechtenstein and 2 in Panama. And the now infamous Enron Corporation had 1,300 different foreign entities, including some 441 located in the Cayman Islands.

More recently, former Joint Committee on Taxation economist Martin Sullivan released a study that looked at the amount of profits that US. companies are shifting to offshore tax havens. He found that U.S. multinationals had moved hundreds of billions of profits to tax havens for years 1999-2002, the latest years for which IRS data is available.

Although Congress passed legislation, which I supported, that addresses the problem of corporate expatriates that reincorporate overseas, that legislation did nothing to deal with the problem of U.S. companies that are setting up tax-haven subsidiaries to avoid their taxpaying responsibilities in this country.

The legislation that we are introducing builds upon the good work of Senators Grassley and Baucus and other members of the Senate Finance Committee by extending similar tax policy changes to cover the case of U.S. companies and their tax-haven subsidiaries.

Specifically, our legislation would do the following: 1. Treat U.S. controlled foreign subsidiaries that are set up in tax-haven countries as domestic companies for U.S. tax purposes. In other words, we would simply treat these companies as if they never left the United States, which is essentially the case in these tax avoidance motivated transactions.

2. List specific tax-haven countries subject to the new rule (based upon the previous work by the Organization for Economic Cooperation and Development) and give the Secretary of the Treasury the ability to add or remove a foreign country from this list in appropriate cases.

3. Provide an exception where substantially all of a U.S. controlled foreign corporation's income is derived from the active conduct of a trade or business within the listed tax-haven country.

4. Make these proposed changes effective beginning after December 31, 2007. This will give businesses ample time to restructure their tax- haven operations if they so choose.

This legislation will help end the tax benefits for U.S. companies that shift income to offshore tax-haven subsidiaries. For example, any efforts by a U.S. company to move profits to the subsidiary through transfer pricing schemes will not work because the income earned by the subsidiary would still be immediately taxable by the United States. Likewise, any efforts to move otherwise active income earned by a U.S. company in a high-tax foreign country to a tax haven would cause the income to be immediately taxable by the United States. Companies that try to move intangible assets--and the income they produce--to tax havens would be unsuccessful because the income would still be immediately taxable by the United States.

Let me be very clear about one thing. This legislation will not adversely impact U.S. companies with controlled foreign subsidiaries that are located in tax havens and doing legitimate and substantial business. The legislation expressly exempts a U.S.-controlled foreign subsidiary from its tax rule changes when substantially all of its income is derived from the active conduct of a trade or business within a listed tax-haven country.

In 2002, then-IRS Commissioner Charles Rossotti told Congress that ``nothing undermines confidence in the tax system more than the impression that the average honest taxpayer has to pay his or her taxes while more wealthy or unscrupulous taxpayers are allowed to get away with not paying.'' Last week, IRS Commissioner Everson echoed similar sentiments at a Senate Transportation-Treasury Appropriations Subcommittee hearing I attended on the IRS's FY 2006 budget request.

They are absolutely right. It's grossly unfair to ask our Main Street businesses to operate at a competitive disadvantage to large multinational businesses simply because our tax authorities are unable to grapple with the growing offshore tax avoidance problem. It is outrageous that tens of millions of working families who pay their taxes on time every year are shouldering the tax burden of large profitable U.S. multinational companies that use tax-haven subsidiaries.

I hope that Congress will act promptly to enact legislation to curb these tax-haven subsidiary abuses. I urge my colleagues to cosponsor this bill.

Mr. President, as Chair of the Senate Committee on Small Business and Entrepreneurship, regulatory fairness remains one of my top priorities. In 1996, I was pleased to support, along with all of my colleagues, the Small Business Regulatory Enforcement Fairness Act, SBREFA, which made the Regulatory Flexibility Act more effective in curtailing the impact of regulations on small businesses. One of the most important provisions of SBREFA compels agencies to produce compliance assistance materials to help small businesses satisfy the requirements of agency regulations. Unfortunately, over the years, agencies have failed to achieve this requirement. Consequently, small businesses have been forced to figure out on their own how to comply with these regulations. This makes compliance that much more difficult to achieve, and therefore reduces the effectiveness of the regulations.

The Government Accountability Office, GAO, found that agencies have ignored this requirement or failed miserably in their attempts to satisfy it. The GAO also found that SBREFA's language is unclear in some places about what is actually required. That is why today, I am introducing The Small Business Compliance Assistance Enhancement Act of 2005, to close those loopholes, and to make it clear that we were serious when we first told agencies, and that we want them to produce quality compliance assistance materials to help small businesses understand how to deal with regulations.

My bill is drawn directly from the GAO recommendations and is intended only to clarify an already existing requirement--not to add anything new. Similarly, the compliance guides that the agencies will produce will be suggestions about how to satisfy a regulation's requirements, and will not impose further requirements or additional enforcement measures. Nor does this bill, in any way, interfere or undercut agencies' ability to enforce their regulations to the full extent they currently enjoy. Bad actors must be brought to justice, but if the only trigger for compliance is the threat of enforcement, then agencies will never achieve the goals at which their regulations are directed.

The key to helping small businesses comply with these regulations is to provide assistance--showing them what is necessary and how they will be able to tell when they have met their obligations. Too often, small businesses do not maintain the staff, or possess the resources to answer these questions. This is a disadvantage when compared to larger businesses, and reduces the effectiveness of the agency's regulations. The SBA's Office of Advocacy has determined that regulatory compliance costs small businesses with less than 20 employees almost $7,000 per employee, compared to almost $4,500 for companies with more than 500 employees. If an agency can not describe how to comply with its regulation, how can we expect a small business to figure it out? This is the reason the requirement to provide compliance assistance was originally included in SBREFA. That reason is as valid today as it was in 1996.

Specifically, my bill would do the following:

Clarify how a guide shall be designated: Section 212 of SBREFA currently requires that agencies ``designate'' the publications prepared under the section as small entity compliance guides. However, the form in which those designations should occur is not clear. Consistent use of the phrase ``Small Entity Compliance Guide'' in the title could make it easier for small entities to locate the guides that the agencies develop. This would also aid in using on line searches--a technology that was not widely used when SBREFA was passed. Thus, agencies would be directed to publish guides entitled ``Small Entity Compliance Guide.''

Clarify how a guide shall be published: Section 212 currently states agencies ``shall publish'' the guides, but does not indicate where or how they should be published. At least one agency has published the guides as part of the preamble to the subject rule, thereby requiring affected small entities to read the Federal Register to obtain the guides. Agencies would be directed, at a minimum, to make their compliance guides available through their websites in an easily accessible way. In addition, agencies would be directed to forward their compliance guides to known industry contacts such as small businesses or associations with small business members that will be affected by the regulation.

Clarify when a guide shall be published: Section 212 does not indicate when the compliance guides should be published. Therefore, even if an agency is required to produce a compliance guide, it can claim that it has not violated the publishing requirement because there is no clear deadline. Agencies would be instructed to publish the compliance guides simultaneously with, or as soon as possible after, the final rule is published, provided that the guides must be published no later than the effective date of the rule's compliance requirements.

Clarify the term ``compliance requirements'': The term ``compliance requirements'' also needs to be clarified. At a minimum, compliance requirements must identify what small

businesses must do to satisfy the requirements and how they will know that they have met these requirements. This should include a description of the procedures a small business might use to meet the requirements. For example, if, as is the case with many OSHA and EPA regulations, testing is required, the agency should explain how that testing might be conducted. The bill makes clear that the procedural description should be merely suggestive--an agency would not be able to enforce this procedure if a small business was able to satisfy the requirements through a different approach.

It is time we get serious about ensuring that small businesses have the assistance they need to deal with the maze of Federal regulations we expect them to handle on a daily basis. The Small Business Compliance Assistance Enhancement Act of 2005 will make a significant contribution to that effort.

I ask unanimous consent that the text of the bill be printed in the Record.