Emphasis is placed primarily on meeting the payroll and receiving a fair return on investment. And, as I mentioned earlier, I suspect that we have not been caught because we are not big and visible.

My second point is suggested above. Specifically, it is that in a small business there is general knowledge about myriads of rules and regulations but to which there is no particular inclination to comply. I understand and accept the principle that ignorance of the law is not a valid defense; but since this is a small, tightly staffed company instead of an interpretative, information-gathering agency, there are a number of rules and regulations to which we do not even address ourselves. And, let me make clear, we will not until we are caught. This posture is not one of disregard for the law; rather it might be described as "catch-as-catch-can," or, "the squeaky wheel gets the oil."

I hope the above points are informative and are of some value to you. I have enjoyed having the opportunity to make these comments, and I will try to answer any questions you may have. Senator NUNN. We will now hear from Mr. Cadenhead.

TESTIMONY OF CURTIS H. CADENHEAD, JR., PARTNER OF
HASKINS & SELLS

Mr. CADENHEAD. My remarks are directed toward the problems of a small business in dealing with the various State and Federal Government regulations and the related reports required thereby and do not cover regulated industries such as public utilities, transportation, banking, and insurance.

The small businessman frequently finds himself in the position of being confronted with numerous regulations and reports of which he may or may not have adequate knowledge. For such a businessman, lack of knowledge of such regulations may place him at an advantageous competitive economic position compared with the businessman who has the proper knowledge. I say this from the standpoint. that the small businessman knowing of these regulations will be faced with retaining either legal counsel, outside accountants, or other consultants to advise him on the required reports and possibly to assist him in their preparation. This, of course, would be at no small cost to the business. Alternatively, the small businessman may attempt to research the regulations and prepare the reports himself, thereby taking the time which he would otherwise spend attempting to make additional sales or obtain additional revenue. In any event, the small businessman for the most part will resent the requirement to prepare reports or to comply with regulations of which he does not understand the purpose or see the benefit to himself and other small businesses.

In those instances, where there has been a proliferation of unnecessary regulations and reports, both State and Federal Governments as well as the businessman pay the cost of compliance inasmuch as these costs are deductible from taxable income thereby reducing taxes otherwise paid to the applicable government.

In many instances, there is duplication because of lack of coordination of reporting requirements among Federal and State agencies

and governments where it appears to be entirely unnecessary. Many of the duplicated reporting requirements relate to taxes. An example of this might be the quarterly payroll reports of earnings and withheld taxes of employees containing the same information for the State as well as the Internal Revenue Service. While it might be a mammoth task, the obvious question is why a common report or bank of information might not be used by both.

Additional confusion is created by States' having different forms and timing considerations. For example, some States require monthly filing and payment of sales taxes, some require quarterly, and some both. Again, it would be a mammoth task, but forms could be made basically similar and filing and payment requirements could be standardized with the frequency of filing minimized.

Compounding the problem for the small businessman is the continual change of forms used for reporting. New reporting requirements are frequently faced by the small businessman which appear to him to be no more than some government agency's or employee's attempt to justify continuation.

One small businessman with whom I discussed these problems recently received for the first time an OSHA form to be filed, although the act has existed for some time, reports have been required annually, and he has been in business during the entire life of the act. Many of the regulations and reporting requirements of course, relate to employees, employment, and personnel. As examples of these, the Georgia Department of Labor requires a quarterly report identifying new employees during the quarter; Bureau of Labor Statistics, Occupational Safety and Health Act requires an annual report identifying injuries on the job, and another annual report calls for statistics on number of employees, et cetera; and the Economic Employment Opportunity Commission requires through the affirmative action program that statistics be maintained to record appropriate information about each applicant or candidate for a position, or resume received, regardless of whether or not the application or resume were solicited by the prospective employer. This documentation alone requires about 5 minutes per candidate.

Another recently enacted law requiring action by businessmen is the Employee Retirement Income Security Act with its numerous reporting forms and deadlines. It is impossible for the small businessman to attempt compliance with this act without assistance from a myriad of consultants. M

One small business which I interviewed, having net worth of $100,000 and monthly sales of $40.000 estimated that its president spends about 2 days a month complying with regulations and their reporting requirements.

In discussing regulation with businessmen, it becomes apparent that the cost of compliance and reporting progressively increases with the size of the business. This is due to some extent to such businesses' gaining more knowledge about the regulations applicable to them as well as the economic reality that agencies supervising compliance with regulation tend to spend more time with those where the benefits to the agency will be the greatest.

Senator NUNN. Thank you very much, Mr. Allen and Mr. Cadenhead. I read your statements, even though I was not here the whole

time and I found them very helpful. I wish we had time for a lot of questions but I am afraid we better do our best to get back on schedule. We appreciate your time underrun. That is very unusual in any kind of governmental hearing.

Mr. LEVITAS. Thank you very much.

Senator NUNN. The next witnesses are Mr. Glenn Dewberry and James W. Howard.

TESTIMONY OF L. GLENN DEWBERRY, JR., PRESIDENT, ATLANTIC STEEL CO., ATLANTA, GA.

Mr. DEWBERRY. With your permission, I will excerpt from my

statement.

Senator NUNN. I appreciate very much your giving it to us.

Mr. DEWBERRY. We are one of the larger employers in Georgia. We have about 1,700 employees and about 1,800 stockholders and we are an independent company, not associated with other companies in the manufacture of steel. I want to say to you that some of the information you have covered is contained in my statement and I will skip over it to conserve time. I will get down to specific examples that can be used by your committee.

Our company has just recently undergone an expansion and relocation, and our first phase which is costing about $30 million, began operation in December. We have installed new environmental control equipment for a cost of over $212 million. We have taken steps to prevent rainwater which comes in contact with the roof of the buildings from running back into the creek as well as all process water from entering the creeks on the property. All runoff and process water is recirculated and if need be is pumped into a dry lake for evaporation. We have done everything that we know to do to meet the environmental control regulations.

We believe we have met all requirements for the new location as well as all requirements at the Atlanta location since we now have a permit to operate in both locations. We think that we have done an outstanding job at each location.

The pollution control equipment we have installed at the new location will cost us at least $400,000 a year to operate. This cost includes the electrical charge as well as other operating and routine repair costs. One of our estimates indicates this figure may run as high as $900,000 per year. None of these dollars add to our productivity; only

our cost.

I have a couple of examples under OSHA I would like to talk about. One of those was just commented on by Mr. Fitzgerald and that is the noise standard, that section 1910.95 states when an employee is subjected to sound exceeding those listed in tables G-16, feasible administrative or engineering controls will be utilized. If such controls fail to reduce sound levels within the level of table G-16, personal protective equipment will be provided and used to reduce sound levels to within the levels of the table.

The word feasible is the problem word that industry is concerned with. We have our opinion and the OSHA people have another. We do not know what feasible means and they certainly don't. We think

whatever action we propose is feasible, right and proper. They disagree so constant haranguing over the word and its meaning.

Another example is the problem with the requirements under the employee retirement income security act of 1974. Among other things, the act provides that a pension plan could elect one of three types of vesting procedures and thereby

Senator NUNN. Let me ask you one question about this word feasible. We have heard this from several witnesses. You are saying. as other witnesses have, that the agencies, mainly OSHA, are not using the word feasible to have anything to do whatsoever with costs. Practically, they are using the word feasible, as I understand it, as a synonym for the word attainable?

Mr. DEWBERRY. I am sure that in some instances, they have used cost. I do not mean to say in every instance they have not but I am sure in a lot of places, where they think it can be done, that they do not care what the costs are.

Now, in relationship to our situation, when we were moving into the Cartersville area, the EPA was cost conscious to some degree. They designated a consulting engineer to work with us. This proved to be helpful, but prior to this they wanted us to spend about $212 million in Atlanta to meet the air standard and we are only going to be there another 4 or 5 years. This is ridiculous. By showing them the schedule we had for relocating they agreed to allow us to operate in Atlanta for a fixed period of time. After that period we must spend money to be in compliance or cease operations.

Senator NUNN. Thank you.

Mr. DEWBERRY. But feasible is a word that I am sure will create argument because people will say they have not considered costs. Looking at the employment retirement income security act of 1974, the act does, to go back to it a moment, among other things, the act provides that a pension plan could elect one of three types of vesting procedures and thereby remain in compliance.

When most companies had selected one of the vesting procedures provided in the act, Internal Revenue Service issued Revenue Procedure 75-49 which, in effect, would have disqualified most pension plans and nothing outside of the act had been done. The problem may not now be a threat but it has not been completely resolved. Senator NUNN. We are having hearings on this subject now, by the Senate Select Committee on Small Business and the Finance Committee jointly. This whole question is being looked at and that does not mean there will be any answer but at least the people's attention has been gained as far as this problem is concerned.

I think similar hearings are going on your side.

Mr. LEVITAS. On this very point you raised.

Mr. DEWBERRY. It is completely frustrating. We do not know what to do.

Mr. LEVITAS. The most significant thing, aside from that particular example, it seems to me, is here it is a clear-cut case, where the Congress elected by the people stated you could select one of three methods of vesting and then the Commissioner of IRS, elected by nobody, has vetoed and rejected the congressional purpose and I think that just highlights precisely one of the things we are talking about.

Senator NUNN. The big thing we are concerned about now, based on present trends, is that the law that passed intended to increase employee protection under pension plans. That was the very purpose of the law.

Unless some changes are made, there are going to be literally hundreds of thousands of employees who were covered under pension plans, who are no longer going to be covered. If we do not do something about that law, it is going to end up jeopardizing employee protection in hundreds of thousands of cases, which is exactly the opposite of what Congress had in mind. It is a serious problem.

Mr. DEWBERRY. If I may move on to one more example, rather hurriedly, OSHA has what they call the log where you are supposed to keep the injury illness record. They say the log is a convenient means for classifying injury and illness cases and for noting the extent and outcome of each. I have a paragraph here to quote, but basically what it amounts to is that the classification they have is limited to recording the number of cases which result in various levels of severity-death, loss work days, restricted work activity, medical treatment, termination, or permanent transfer.

All recordable injuries are entered as "Code 10." Thus, we get a number but no analysis of the type of accident or even the part of the body involved. We are keeping records for someone who thinks they can analyze from this information.

The reliability of injury and illness incidence rates is suspect. The rules provide for an employer to determine what cases are to be recorded. A very vague definition of "first aid cases" complicates meaningful recording.

More than 25 steel company safety directors were asked to evaluate 10 injury reports and determine how many were recordable under OSHA. Responses varied from recording zero to recording all 10 cases. It must be remembered that these safety directors were all experienced safety people who had honest differences in interpretation of the OSHA instructions.

1

The primary use of these safety and health statistics has been to designate industries with poor records for more inspections.

An employer may devote a large number of manhours and be in complete compliance with OSHA recordkeeping requirements and yet not learn a thing which can be applied to the overall goal of OSHA of providing every American with a safe and healthy work environment. Moreover, the recordkeeping requirements can be selfincriminating.

There is another thing which concerns us. We are trying to keep the records on many requirements, when out of the blue we become aware that something has been published in the Federal Register. By the way, your 60,200 pages of the Register for 1975 contained 25,000 separate changes and modifications in that 60,000 pages. I defy any man to read it, and understand it, much less keep up with it. It is impossible-we are probably in violation of a law unknown to us.

I have one more and then I will hush. The problem of complying with Government regulations

Senator NUNN. Maybe that is a new way of dealing with the subject. Maybe you ought to sit back and say you will take the fifth amendment and not fill out the forms.