<DOC>
[107th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:79868.wais]
PAPERWORK INFLATION--PAST FAILURES AND FUTURE PLANS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON ENERGY POLICY, NATURAL
RESOURCES AND REGULATORY AFFAIRS
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
APRIL 24, 2001
__________
Serial No. 107-68
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpo.gov/congress/house
http://www.house.gov/reform
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________________________________________________________________________
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COMMITTEE ON GOVERNMENT REFORM
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California PATSY T. MINK, Hawaii
JOHN L. MICA, Florida CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia ELEANOR HOLMES NORTON, Washington,
MARK E. SOUDER, Indiana DC
JOE SCARBOROUGH, Florida ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio
BOB BARR, Georgia ROD R. BLAGOJEVICH, Illinois
DAN MILLER, Florida DANNY K. DAVIS, Illinois
DOUG OSE, California JOHN F. TIERNEY, Massachusetts
RON LEWIS, Kentucky JIM TURNER, Texas
JO ANN DAVIS, Virginia THOMAS H. ALLEN, Maine
TODD RUSSELL PLATTS, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
DAVE WELDON, Florida WM. LACY CLAY, Missouri
CHRIS CANNON, Utah ------ ------
ADAM H. PUTNAM, Florida ------ ------
C.L. ``BUTCH'' OTTER, Idaho ------
EDWARD L. SCHROCK, Virginia BERNARD SANDERS, Vermont
------ ------ (Independent)
Kevin Binger, Staff Director
Daniel R. Moll, Deputy Staff Director
James C. Wilson, Chief Counsel
Robert A. Briggs, Chief Clerk
Phil Schiliro, Minority Staff Director
Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs
DOUG OSE, California, Chairman
C.L. ``BUTCH'' OTTER, Idaho JOHN F. TIERNEY, Massachusetts
CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
STEVEN C. LaTOURETTE, Ohio PATSY T. MINK, Hawaii
CHRIS CANNON, Utah DENNIS J. KUCINICH, Ohio
------ ------ ROD R. BLAGOJEVICH, Illinois
------ ------
Ex Officio
DAN BURTON, Indiana HENRY A. WAXMAN, California
Dan Skopec, Staff Director
Barbara F. Kahlow, Deputy Staff Director
Regina McAllister, Clerk
Elizabeth Mundinger, Minority Counsel
C O N T E N T S
----------
Page
Hearing held on April 24, 2001................................... 1
Statement of:
LaGrande, Ken, vice president, Sun Valley Rice, Colusa, CA;
James M. Knott, president and CEO, Riverdale Mills Corp.,
Northbridge, MA; John Nicholson, owner, Company Flowers,
Arlington, VA; and John L. Bobis, director of regulatory
affairs, Aerojet, Rancho Murieta, CA....................... 75
Rossotti, Charles O., Commissioner, Internal Revenue Service;
J. Christopher Mihm, Governmentwide Management Issues
Director, General Accounting Office; and Austin Smythe,
Executive Associate Director, Office of Management and
Budget..................................................... 6
Letters, statements, etc., submitted for the record by:
Bobis, John L., director of regulatory affairs, Aerojet,
Rancho Murieta, CA, prepared statement of.................. 104
Knott, James M., president and CEO, Riverdale Mills Corp.,
Northbridge, MA, prepared statement of..................... 84
LaGrande, Ken, vice president, Sun Valley Rice, Colusa, CA,
prepared statement of...................................... 78
Mihm, Christopher, Governmentwide Management Issues Director,
General Accounting Office, prepared statement of........... 25
Nicholson, John, owner, Company Flowers, Arlington, VA,
prepared statement of...................................... 95
O'Keefe, Sean, Deputy Director, Office of Management and
Budget, prepared statement of.............................. 44
Ose, Hon. Doug, a Representative in Congress from the State
of California, prepared statement of....................... 3
Rossotti, Charles O., Commissioner, Internal Revenue Service:
Information concerning alternative minimum tax........... 62
Information concerning labels............................ 64
Prepared statement of.................................... 9
Smythe, Austin, Executive Associate Director, Office of
Management and Budget:
Information concerning complying with procedural
guidelines............................................. 57
Information concerning expired collection requests....... 55
Information concerning the Paperwork Reduction Act....... 50
PAPERWORK INFLATION--PAST FAILURES AND FUTURE PLANS
----------
TUESDAY, APRIL 24, 2001
House of Representatives,
Subcommittee on Energy Policy, Natural Resources
and Regulatory Affairs,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:03 a.m., in
room 2154, Rayburn House Office Building, Hon. Doug Ose
(chairman of the subcommittee) presiding.
Present: Representatives Ose, Otter, and Shays.
Staff present: Dan Skopec, staff director; Barbara Kahlow,
deputy staff director; Jonathan Tolman, professional staff
member; Regina McAllister, clerk; Elizabeth Mundinger, minority
counsel; and Jean Gosa, minority assistant clerk.
Mr. Ose. I will now call this meeting of the Government
Reform Subcommittee on Energy Policy, Natural Resources and
Regulatory Affairs to order.
Every year during tax season, this subcommittee turns its
attention to paperwork, as does the rest of the country. Last
week, as people all over the country prepared to file their tax
returns, they again saw firsthand the kind of paperwork and red
tape the government imposes on the public. The Office of
Management and Budget estimates the Federal paperwork at nearly
7.6 billion hours. That means it would take 3.6 million people,
working 40 hours a week, 52 weeks of the year to simply fill
out all the forms the Federal Government requires each year.
The price tag for all that paperwork, according to OMB, is $190
billion per year.
Now, much of the information that is gathered from this
paperwork is important, sometimes even crucial, for the
government to function. However, much is duplicative and
unnecessary. In 1995, Congress passed amendments to the
Paperwork Reduction Act [PRA]. The goal of the act was to
reduce red tape each year. These annual reductions in
paperwork, however, have not been achieved. Instead, paperwork
burdens have increased in each of the last 5 years.
Under the PRA, the Office of Management and Budget is
supposed to be the watchdog on paperwork. In the last
administration, OMB failed to push the IRS and other Federal
agencies to cut existing paperwork. Even worse, according to
the GAO--and I apologize for all these acronyms--according to
the General Accounting Office, OMB included some paperwork
adjustments as paperwork reduction accomplishments. The point
of the Paperwork Reduction Act is to reduce the actual burden
on the American public, not to simply make it look like the
burden has gone down through accounting gimmicks.
As it relates to OMB's actions, instead of a watchdog it
seems like we have a lapdog. Although many Federal agencies
impose paperwork burdens, the IRS imposes by far the most,
accounting for 82 percent of all paperwork. The IRS has had a
dismal record during the last 8 years, showing few paperwork
reduction initiatives and virtually no accomplishments.
According to OMB data, the burden imposed by the IRS last year
rose by nearly 250 million hours.
IRS Commissioner Rossotti testified before this
subcommittee in April 1999 and April 2000, promising more
initiatives this year. We do look forward to his testimony
today.
In addition to increasing burdens by the IRS, numerous
other Federal agencies promulgated major regulations that
increased the paperwork burden on the American public. Some of
these regulations were finalized in the waning hours of the
Clinton administration. For example, on the very last day of
the previous administration, the Department of Labor finalized
a rule changing occupational injury and illness reporting
requirements. This rule added over 1 million paperwork hours.
Two days prior to that, the EPA lowered the reporting threshold
for lead under its toxic release inventory program, increasing
paperwork by 9 million hours. And, late last December, the
three principal procurement agencies changed their rules on
contract responsibility, increasing paperwork by over one-half
million hours.
In the 1999 and 2000 hearings, administration witnesses
testified that much of the paperwork burden was not able to be
reduced because it was statutorily required; that is, not
discretionary. As a result, discretionary paperwork requires
special review by OMB. On January 19, 2001, the Department of
Labor issued a final rule entitled Occupational Injury and
Illness Recordkeeping and Reporting Requirements. It added over
1 million discretionary paperwork hours. It added requirements
for reporting injuries and illnesses that have no, or
insufficient, relationships to the workplace, including those
occurring in home work offices.
In addition, this rule removed protections for the privacy
of individual employees by requiring disclosure of the names of
employees and their injuries. Much of the new paperwork has no
practical utility, since Department of Labor is precluded from
regulating home offices.
These are but a few examples of the new discretionary
paperwork. Such burdens should necessitate close scrutiny by
OMB before they are imposed on the public. Federal agencies
must be forced to find less burdensome ways to collect their
information. Reducing government red tape and paperwork is not
a partisan issue. With the technology available today, there is
no reason why the burden on the American public cannot be
decreased.
I am going to recognize Mr. Otter now for purposes of an
opening statement.
[The prepared statement of Hon. Doug Ose follows:]
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Mr. Otter. Thank you, Mr. Chairman. I really do not have an
opening statement, but I did notice that throughout your
opening statement one of the areas that we have neglected in
paying some attention to is the suffering that States and State
governments and State agencies go through in reporting to
Federal agencies as well. That has always been one of the areas
I have been the most concerned about, along with business and
industry, having been a graduate of both. So I look forward to
our panel and their statements and their responses to some of
our questions.
Thank you, Mr. Chairman.
Mr. Ose. Thank you, Congressman Otter. If and when other
members show up, we will enter their statements in the record.
This committee requires all testimony to be under oath, and so
I will swear in our witnesses now.
[Witnesses sworn.]
Mr. Ose. Let the record show the witnesses all answered in
the affirmative.
Mr. Ose. On our first panel today we are joined by three
individuals: We have Commissioner Charles Rossotti from the
Internal Revenue Service; J. Christopher Mihm, Governmentwide
Management Issues Director from the General Accounting Office;
and Mr. Austin Smythe, Executive Associate Director, Office of
Management and Budget.
Gentlemen, we have a lot of questions. I am going to hold
you to the 5-minute rule, so, Mr. Rossotti, you are first for 5
minutes with an opening statement.
STATEMENTS OF CHARLES O. ROSSOTTI, COMMISSIONER, INTERNAL
REVENUE SERVICE; J. CHRISTOPHER MIHM, GOVERNMENTWIDE MANAGEMENT
ISSUES DIRECTOR, GENERAL ACCOUNTING OFFICE; AND AUSTIN SMYTHE,
EXECUTIVE ASSOCIATE DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
Mr. Rossotti. Thank you, Mr. Chairman.
Mr. Chairman and Mr. Otter, I am pleased to report on the
Internal Revenue Service's efforts and initiatives to reduce
the paperwork and administrative burdens faced by America's
taxpayers.
Through a dual approach of both short-term and longer-term
improvements, we are working to provide taxpayers both
immediate and longer far-reaching burden relief. Our short-term
efforts include reducing the number of taxpayers required to
file specific forms, simplifying or eliminating forms and
notices altogether, and making it easier through electronic
means to file and pay. So let me provide some examples of this
approach.
Through our efforts, millions of taxpayers are no longer
required to file the 54-line Schedule D, Capital Gains and
Losses. They can now use the short and simpler form, which
greatly reduces their burden in this area. And, by next filing
season, only 650,000 taxpayers will have to use the long form.
Last year, I announced the IRS had increased the threshold
from $500 to $1,000 for required tax deposits. That change
meant that about one-third of the Nation's 6.2 million small
business employers would not have to deposit employment taxes.
This year, to go even further in this area, we have raised the
threshold yet again from $1,000 to $2,499 in quarterly
employment taxes. This affects the payment requirements for
about 1 million small businesses. Through this effort, we are
estimating now that 78 percent of small businesses can be
relieved of the burden of making as many as 12 deposits
annually. This is the most frequent transaction small
businesses have with the IRS.
Further, with respect to small business, in April 2000, the
IRS and the Treasury Department issued a revenue procedure that
permits qualifying small business taxpayers, with average
annual gross receipts of $1 million or less to use the cash
method of accounting. The new procedure has tremendous impact
on lessening the recordkeeping and tax-cutting burden for small
businesses. We estimate now that the overwhelming majority of
small business taxpayers who otherwise would have been required
to use the accrual method are now allowed to use the much
simpler and easier to understand cash method.
Another area reflecting individual taxpayers, due to an
agreement between the IRS and the Postal Service, as well as
some internal systems improvements, taxpayers who move after
filing their tax returns will now have their addresses
automatically updated, even if they don't notify us. We
estimate that this initiative will substantially reduce about 5
million pieces of undelivered mail we get back each year.
Again, in terms of saving trips to the post office, we are
estimating that 100 million taxpayers will be downloading forms
this year from our Web site, saving them trips to the post
office. I mentioned that another fruitful area is providing
electronic options, including the Internet to conduct
transactions with the IRS rather than the more time-consuming
process of filling out and mailing in forms, letters and
payments. We, this year and next year, are eliminating the
paper signature requirement for e-filing and are adding more
schedules to our 1040 programs. So next year, 99.1 percent of
all taxpayers will be able to file electronically with no
paper. And, for the first time ever, even taxpayers who need an
extension this season can do so with just a simple phone call,
no paper.
Still another area we are testing are electronic tax
payment systems. So for those small businesses that do have to
make tax deposits, they will be able to do that again over the
Internet with no paper.
I think these are significant short-term steps, but there
is obviously more work to be done. And, through our long-term
modernization efforts, we are working through our business
systems improvements and our work with customer groups in
figuring out how to reduce burden for all types of taxpayers
beyond what we have so far accomplished. As a matter of fact,
we recently completed our strategic plan that was approved by
the IRS Oversight Board, and one of the key strategies in that
plan, in fact, is reducing taxpayer burden. This can be done in
a variety of ways, such as the ones I have mentioned, which
includes not only redesigning of forms but most especially
eliminating them completely, using electronic approaches where
possible, and even where filings are required reducing the
amount of errors that exist in these forms and filings so that
they will not have further burdens after they file.
While we continue to focus aggressively on reducing burdens
both in the short term and long term, I do want to note for the
committee that our efforts at paperwork and burden reduction
are limited by the requirements of the tax code and its
inherent complexity. We are issuing a report, as required by
law, we issued one last year and will be issuing another one
this year, on key sources of complexity in the tax code, and
that will identify some areas that we believe are fruitful for
simplification.
In addition, we have a whole new model that we are
developing on how to measure burdens which we think will be
helpful in identifying future areas.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Rossotti follows:]
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Mr. Ose. Thank you, Mr. Rossotti. Next will be Director
Mihm from the GAO. Mr. Mihm for 5 minutes.
Mr. Mihm. It is a pleasure and honor to be here today, and,
Mr. Chairman, I will take your guidance and just hit the
highlights.
Obviously, Federal data information collection is one of
the ways that will help Federal agencies carry out their
missions. Notwithstanding the importance of information to
Federal efforts, however, under the Paperwork Reduction Act,
Federal agencies are required to minimize the burden that they
impose upon the public. In this regard, the Paperwork Reduction
Act set ambitious goals to help minimize the burden.
As shown in figure 1 on page 4 of my written statement, and
on the screens in front of you, these goals are far from being
met. As you can see, if we had reduced Federal paperwork at the
schedule anticipated in the Paperwork Reduction Act, the
current level would be about 4.9 billion burden-hours per year.
However, we have not met that goal and are now up to 7.4
billion burden-hours per year.
As you mentioned in your opening statement, Mr. Ose, the
increase over the last year is largely attributable to the IRS.
In fact, for the rest of the government, they actually
decreased its burden estimate by about 70 million burden-hours
during the last fiscal year.
As you also mentioned, Mr. Ose, the IRS accounted for the
lion's share of the governmentwide burden estimate. In fact,
about 95 percent of the Department of the Treasury's estimated
burden increase during fiscal year 2000 was attributable to two
IRS forms, the 1040 and the 1040A, and the accompanying
schedules with those forms.
Therefore, although all agencies must ensure that their
information collections impose the least amount of burden
possible, it is clear the key to controlling Federal paperwork
governmentwide lies in understanding and controlling the
increases at the Internal Revenue Service. As Commissioner
Rossotti detailed, IRS has a large number of initiatives under
way to help reduce the taxpayers' burden, and many of these
initiatives appear to be quite favorable.
In terms of other Federal agencies, on table 1 of my
prepared statement, it is actually on pages 6 and 7, the
situation is far more mixed. Some were successful in reducing
their paperwork burden estimates, while others increased their
estimates. Also, and that is a point I would underscore, some
of the reported reductions in agencies' estimates were not
attributable to specific agency actions to reduce those
burdens. Rather, they were, for example, reestimates, in this
case obviously reduced estimates, of the burden associated with
the particular data collection. In other cases the reported
reduction was the result of actions outside of the agency, such
as a reduction in the number of individuals applying for a
particular benefit.
In regards to violations of the Paperwork Reduction Act,
another topic you asked us to cover, the agencies identified
for OMB a total of 487 violations of the act during fiscal year
2000. Now, this is a significant reduction over the 710
violations that they identified during fiscal year 1999, and in
that sense that is good news. However, even though the number
of violations went down, we do not think there is cause for
celebration when there are still 487 violations of the
Paperwork Reduction Act over a 1-year period. Some of these
violations have been going on for years and they collectively
represent substantial opportunity costs, as detailed in my
prepared statement.
OMB has taken some steps to encourage agencies to comply
with the Paperwork Reduction Act, and those steps appear to be
paying off in terms of the fewer reported violations. For
example, OMB has added information about recently expired
approvals to its Internet homepage. This allows the potential
respondents to be informed about those data collection efforts
that may be in violation.
Nonetheless, as we have said for the last 2 years, we
believe that OMB can do more to ensure that agencies are not
conducting information collections without proper clearance.
For example, OMB could better identify information collections
for which authorizations are about to expire, contact the
collecting agency to see if the collection is still needed and,
if so, work with that agency to get collection reauthorized
promptly.
In cases where data collections are found to be in
violation, OMB could take any of a number of actions, which we
have outlined, such as placing a notice in the Federal Register
notifying the public it does not need to provide the agency
with information requested in the expired collection.
In summary, Mr. Chairman and Mr. Otter, the need for
agencies to collect information to accomplish their missions
and protect and enhance the well-being of the American people
does not need to be inconsistent with the Paperwork Reduction
Act's requirements that all data collections be authorized. In
fact, we believe the more clearly agencies can demonstrate the
value of those collections, the easier it should be for them to
obtain OMB approval and public support.
This concludes my statement. I am happy to respond to any
questions you may have.
[The prepared statement of Mr. Mihm follows:]
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Mr. Ose. Thank you, Mr. Mihm. Our third witness on the
first panel is Mr. Austin Smythe, who is the Executive
Associate Director for the Office of Management and Budget,
recognized for 5 minutes.
Mr. Smythe. Mr. Chairman, Sean O'Keefe was originally
scheduled to testify. He cannot be here because he has been
asked to meet with the President.
Our past practice is that only Senate-confirmed officials
appear. I am not a Senate-confirmed official, I am a political
appointee in the Bush administration, but the Director and the
Deputy Director wanted to be responsive to the subcommittee's
need to hear from OMB, so they asked me to appear on OMB's
behalf.
Mr. Ose. We welcome you.
Mr. Smythe. Thank you. We still have four more Senate-
confirmed positions at OMB to fill. Two of those in this area
that are particularly important are John Graham, the OIRA
Administrator. We hope to get him confirmed in the Senate
shortly. The other is the Deputy Director for Management. The
President has not nominated anyone yet for that position, but
we hope to find an individual for that spot and to get that
slot filled.
While we are a bit shorthanded now, we hope to have a
quality team in place to meet all of OMB's responsibilities,
including a vigorous effort to minimize the paperwork burden. I
am not an expert on the Paperwork Reduction Act, but I have had
a chance to study up on it and I just want to sort of provide
an overview today.
I would start by saying we very much applaud the objectives
of the act, and that is to minimize the paperwork burden on the
public and to maximize the usefulness of data that is
collected. Actual experience with paperwork reduction shows
that both Republican and Democratic administrations have
struggled on trying to meet the paperwork reduction goals
called for in the Paperwork Reduction Act.
If you look at the overall experience of the past 2
decades, the Congress has set a reduction of 5 to 10 percent in
paperwork. If you look at that total period, it works out to be
an 85 percent reduction between 1981 and 2001. We estimate that
the total annual burden of Federal information collections
actually went up by over 50 percent during this period.
In our minds, unless Congress and the administration are
willing to make some dramatic changes to the laws and
administrative procedures that generate a lot of these
requirements, these goals are going to be very difficult, if
not impossible, to achieve. But, we feel that we should reduce
the paperwork burden in a responsible manner, form by form,
regulatory requirement by regulatory requirement. However,
making blanket reductions under these requirements that we
currently face does not make sense to us at this stage.
Since 1981, looking at past experience, Americans answering
Federal questionnaires went up by roughly 24 percent, national
economic activity tripled, Federal agencies issued nearly
100,000 regulations, and Congress enacted over 5,000 laws.
Based on statutory direction given by Congress, Federal
agencies provide the American people with an array of
protections and services, from health and safety to collecting
taxes necessary to finance all these activities. To carry out
these and other responsibilities, the Federal Government
collects information, lots of information, from grant
applications to tax forms, from medical reports to monitoring
job opportunities for foreign nationals.
Whenever Congress enacts new legislation, it frequently
expands upon this burden. I could go through a number of
statutes. I will not do that, but Gramm-Leach-Bliley expanded
on this burden, the Taxpayer Relief Act expanded on this
burden, and so forth.
In addition to passing laws increasing the level of
paperwork burden, Congress also imposes its own reporting
requirements on the Federal agencies. Last year's omnibus
appropriations bill included requirements for 75 reports to
Congress. It had 25 separate provisions calling for information
to be collected from the public. Even when Congress seeks to
eliminate reporting requirements, there is a tendency to
restore certain reports. Congress should be applauded that in
1995 it passed a statute calling for the elimination of a
number of reports. But, since then, Congress has reimposed over
250 of those reports.
The Federal agencies and OMB can do a lot more in reducing
the paperwork burden and recordkeeping requirements. The
Paperwork Reduction Act requires agency CIOs to certify the
need for information collection and the burden it imposes. OMB
must review information collection activities to assure that
CIOs are meeting their responsibilities. But the Bush
administration and OMB and OIRA cannot solve this problem
alone. Congress must be part of the solution.
In the case of budget legislation, I am familiar with the
budget process, the law requires an assessment of the budget
cost of legislation. Something Congress may want to consider is
to assess more thoroughly the paperwork burdens for legislation
as it is enacted. We ought to minimize reports that agencies
must send to Congress, and I think we ought to work together to
identify and correct provisions of existing laws and proposals
in new legislation to correct burdensome paperwork
requirements.
While I am not an expert on the Paperwork Reduction Act, I
urge that we work together to assure the Federal Government
minimizes the burden on the public as it collects needed
information. Thank you very much, Mr. Chairman.
[The prepared statement of Mr. O'Keefe, as delivered by Mr.
Smythe follows:]
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Mr. Ose. Thank you, Mr. Smythe. I thank the witnesses for
the brevity of their remarks. We will go to questions now on
this first panel. I will start. I see Mr. Shays has joined us.
He will be back.
I want to ask Mr. Smythe, at OMB, as it relates to the
Paperwork Reduction Act, does the administration support or not
support the Paperwork Reduction Act?
Mr. Smythe. It supports the Paperwork Reduction Act.
Mr. Ose. So there are requirements within that act for OMB
to look at, if you will, requests for discretionary
information; the difference between statutory and
discretionary? OMB is required to look at agency requests for
discretionary information. Am I correct on that?
Mr. Smythe. That's correct.
Mr. Ose. In terms of submittals, is OMB receiving any such
submittals that you are aware of, and what is OMB doing with
those submittals?
Mr. Smythe. I would have to go back and get back to you on
the specifics of that. I have only had a chance to review it
generally.
I think one of the problems we face is that we get requests
on a piecemeal basis. We don't look at an entire program. We
get a form or a reporting requirement that we are asked to
approve and it puts us in a situation where we could reject on
a piecemeal fashion some of these discretionary requests. On
the other hand, it may make sense for us to sort of step back
and look at the overall requirement to try to see how this fits
into the overall demands.
But I want to stress, I think if there has not been a
strenuous effort on paperwork reduction, we want to do more. We
want to scale back on these reports where they are not
necessary. We need to get the agencies more involved. The
statute calls for the agencies to be more involved. We want to
get them more involved in reducing these burdens instead of
landing them at OMB. They ought to start in their houses in
reducing this. But, Mr. Chairman, we want to work with you all
to address this problem.
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[GRAPHIC] [TIFF OMITTED] T9868.040
Mr. Ose. In terms of the different agencies, like
Agriculture or Defense, or HHS, or any of that, and I actually
read Mr. O'Keefe's prepared testimony, but I didn't see any
specific suggestions. I saw some generalities that Congress is
passing laws that require reporting of information, but how
about some specifics in terms of how we go about reducing
paperwork within some of these agencies?
Mr. Smythe. I think it is a bit premature for us to try to
get into those specifics. I think we are not equipped at this
stage. I think we need to get the OIRA Administrator confirmed
and get him involved in this process. I do not want to make it
sound like we are trying to shirk our duties here. We are not
trying to do that. We have been a little busy. We have been in
office now for 3 months. There are a lot of things on our desks
we are trying to deal with.
So what I would like to suggest is that we get back to you
with some proposals in terms of areas where we can make some
improvements.
[Note.--The information referred to was not provided.]
Mr. Ose. Actually, Mr. Smythe, I am on your side here. I
want to be clear about that. But there are some issues here
that trouble me, and one is that we were supposed to have the
2001 ICB, the information collection budget and we did not get
that. When can we expect that?
Mr. Smythe. Well, I think we have two reports in the works.
We did not want to just simply take what we had, put a cover on
it, and send it up to Congress. We have tried to take a look at
those things.
My recollection is there is a regulatory budget that's
normally required to be submitted with the President's budget
and it usually comes up with the President's budget. My
understanding is that should have been sent to the Federal
Register, or should shortly be submitted to the Federal
Register for comment.
The separate report you talked about, the ICB, is still
under OMB review. I cannot give you an exact date, but we are
going to deliver that report to the Congress.
Mr. Ose. There is a report due on July 1st from OMB
regarding the extent to which the PRA has reduced burden. It is
supposed to evaluate the extent by which the PRA has reduced
the burden imposed by each major rule with more than 10 million
hours of paperwork burden, and it is supposed to identify
specific expected reductions in fiscal year 2001 and fiscal
year 2002.
Is that report that is supposed to be here by July 1 going
to be here by July 1?
Mr. Smythe. Yes.
Mr. Ose. I want to recognize Mr. Otter for 5 minutes.
Mr. Otter. Thank you, Mr. Chairman. I am going to begin
with Mr. Rossotti, if I might. And this is sort of a three-
phase question, so bear with me, if you will, Commissioner.
Does the Internet application of your reporting
responsibilities actually reduce the amount of paperwork that
is required, and paperwork here let us say is synonymous with
time spent in front of the machine clicking on various options;
and are the forms the same, will they appear the same on the
screen for the computer; and, finally, is the only difference
really that I have got to put a stamp on it and go to the
mailbox instead of clicking on send?
Mr. Rossotti. Let me try to explain a little bit because
there is more than one way to do this.
In terms of the Internet, the Web site that the IRS has
right now, the thing that you can do that is most directly
related to forms is simply get the forms. That is just
downloading a form, and we had 100 million of those. So the
time that is saved with that has nothing to do with filling out
the form, it has to do with getting the form.
That is not an insignificant point, because people often
find they need a certain schedule or a certain form that they
did not have, and you hear stories about I had to go to the
post office to try to find that or write in. So the time saved
on just that one kind of thing is simply getting a form. It
does not change the form.
The other big part, though, the actual preparation of, say,
the 1040 form is done in today's world primarily by taxpayers
either buying software from private vendors that prepare their,
say their 1040 form and then filing it with us, or signing onto
a private sector Web site that provides this service. That is
not software that is provided by the IRS. In fact, the IRS is
precluded from being in that business based on provisions that
have been attached to various appropriation bills and through
the Restructuring Act. So the role of the IRS is to work with
the private software industry to provide those various products
that allow taxpayers to prepare their software on their home
computers through the Internet.
This is a rapidly growing part of the population, where we
are estimating that about 13 million to 15 million taxpayers
this year actually did their returns that way, at home, through
that software.
Mr. Otter. Do you have an estimate of the time saved?
Mr. Rossotti. Well, we do not have the estimate for the
time saved yet.
Mr. Otter. How many did you have last year?
Mr. Rossotti. What's that?
Mr. Otter. How many did you have last year?
Mr. Rossotti. I do not have the numbers that we had. We had
about a 35 percent increase this year in the number that were
filed. There are some people that prepare them and then send
them in by paper, so there is another variety of options there.
But I think the reason this is growing so fast is that it
makes the whole process easier for the taxpayer. Whether it
actually saves time is something we are getting measurements
on. And it may be that it does not actually save the amount of
time that it takes to do the whole process in terms of
preparing it, but what it does----
Mr. Otter. You have hit on the essence of my question,
because I know before I can click on go there is probably an
awful lot of paperwork that I do not have on the computer
screen. But eventually what I am clicking to you is the answers
that may have taken hours and hours and hours to ascertain.
I do not want to beg the question, but on the other hand,
it seems to me that simply shifting the venue by which I use,
in order to send the master copy to the IRS, if ultimately the
paperwork reduction has not been achieved according to the
request of the PRA, then we really have not, I think as has
been testified to by both Mr. Smythe and Mr. Mihm, we really
have not achieved the goal of the PRA. So subsequently we are
still filling out paperwork and we are not plowing the fields.
We are not doing the work.
Mr. Rossotti. There is no question that the requirements to
provide the information are the driving factor, whether you do
it through a computer or you do it through paper, although
there are some significant benefits in terms of use of the
computer. But I do not disagree with your point.
The underlying driver is the need to collect the
information, and the use of the computer has certain benefits
in terms of doing that. But the underlying requirement is the
requirement that is imposed by the statutes and then as
interpreted by us through these different forms.
Mr. Otter. Thank you, sir. Mr. Smythe and Mr. Mihm, I will
ask you both this question because I am running out of time. It
seems to me that rather than within the bureaucracies you both
operate within, you only 90 days, and I do not know how long
you have been here.
Mr. Mihm. Substantially more than 90 days.
Mr. Otter. All right, substantially more than 90 days.
Other than operating within those agencies themselves, and
perhaps going through a certain amount of bureaucratic incest
in the process of trying to reach goals for the PRA, have you
ever sought to go out into the marketplace itself and say,
geez, here you, small businesses, like the small independent
business group, where is the burden? You tell us. Here is the
mission; here is what we need to know for OSHA, for EPA, for
IRS, for the whole alphabetic group. Here is what we need to
know. Now, why do you folks not sit down together and design a
simple form that will do that?
Have you ever done that with farmers, with small business
groups, with anybody that has these reporting responsibilities?
And if not, why not?
Mr. Mihm. I can go first. Do you want to?
Mr. Smythe. Well, I have not done it in the 90 days I have
been there. The President has an Interagency Working Group on
federalism and feels very strongly about working with States
and localities. In my mind, that would be one area we might
want to look at, to try to find out how they might view some of
these burdens and get their feedback there.
Again, I would want to defer to the OIRA Administrator,
when we get somebody confirmed in that spot, to really pursue
that, but I think it is an excellent suggestion.
Mr. Mihm. At the request of Congress, we have attempted to
look at the cumulative burden that is put on businesses and
local governments, this is in a study a number of years ago,
and found, as I think Mr. Smythe was alluding to in his opening
statement, that a lot of these burdens are just put on, as you
put it, sir, by individual agency incest; each agency is
putting on its own burdens unaware of how that may interact or
how that may be duplicative of other burdens imposed by
agencies.
We did not go, and we were not asked to go to the next step
to see concretely what sort of opportunities were there to
start with business and then work back into the Federal
regulatory process.
Mr. Otter. Thank you.
Mr. Ose. Mr. Mihm, on page 13 of your written testimony,
you have an example of violations that would probably fall in
the egregious category. Six of USDA's collections have been in
violation for over 2 years of OMB approval, four have been in
violation for 3 years. The Department of the Interior indicated
that four of their collections have been in violation for more
than 5 years, but no action has been taken to correct.
I want to make sure I understand what you are driving at
there. As I understand your point, the agency has put out a
request or a form to provide certain information. It has not
gone to OMB and had the procedural sign-off accordingly.
Mr. Mihm. Yes, sir. Most typically these are where they had
gotten an initial authorization, and OMB under the Paperwork
Reduction Act can give a 3-year authorization for data
collection. That authorization has expired and then the agency
has not returned to OMB for this extended period of time.
What makes this particularly troublesome from our
perspective is that the vast majority of cases where there is a
violation it is for a relatively short term, weeks or even a
few months. These types of cases that go on for years and years
are ones that need to be attacked, or looked at rather.
Mr. Ose. Mr. Smythe, what about that? If OMB does not track
the expired collection requests, how do we know when they have
expired and how do we know when they're applicable? My point
being is that before asking our citizens for something that we
can't procedurally ask for, it seems to me like we are creating
a culture of almost disrespect.
I am just trying to strike at that. If we are asking for
something, we at least ought to have the procedural ``I's''
dotted and the procedural ``T's'' crossed.
Mr. Smythe. I am not aware of the specifics on the
Agriculture example or the Department of the Interior example.
What we can do is look into it for you, Mr. Chairman, and find
out what the past experience has been and get back to you in
terms of how we would propose to address it. But I just can't
speak to the individual cases that GAO has just referred to.
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[GRAPHIC] [TIFF OMITTED] T9868.041
Mr. Ose. Well, again on Mr. Mihm's testimony, on page 12,
there is a table that shows the 487 reported violations that he
referenced, and I imagine we could get an item-by-item list
from GAO and perhaps we could send you a letter and ask you for
a response.
I just have a hard time understanding when we set up the
law that says we will have these procedural hurdles met before
we put this burden on our citizenry, why it is that we aren't
complying with the procedural guidelines.
Mr. Smythe. Well, we will review it and get back to you,
Mr. Chairman.
[The information referred to follows:]
[GRAPHIC] [TIFF OMITTED] T9868.042
Mr. Ose. All right. I appreciate that.
In terms of OMB's actual latitude in dealing with this, do
you have any sense of what options exist for you? I mean,
obviously, you can put something in abeyance, you can reject
it, you can approve it, you can take it under advisement. As it
relates to these 487, in general what options exist at OMB for
dealing with this?
Mr. Smythe. Again, I am not going to try to get into each
of the agencies' violations and how we respond to this
particular matter. I think in general the President has a great
desire for better management of Federal agencies. If we have a
situation where agencies are not complying with the law, that
is something we want to change, and we are going to look into
that.
I would go back to the beginning of my testimony, that we
need to get the DDM confirmed. He's a key official on the issue
of chief information officers. The OIRA Administrator, in terms
of the day-to-day activities, will be a key official. But, I
can make the statement if there are these violations, we want
to address them.
Mr. Ose. I do recall the first time I met Mr. Daniels, I
had the opportunity to ask them who is your OIRA person, and at
that time Graham had not been identified. I guess that was 45
days ago. So I know your comments earlier that you had not been
Senate confirmed, perhaps we have found some of the impediment
here.
I do want to go back to Mr. Rossotti. Mr. Otter was talking
about the preparatory paperwork before you click through on
your submittal. One of the issues that comes to mind in that
regard has to do with the alternative minimum tax. I'd be
curious what the IRS is doing or considering relative to easing
the paperwork burden of that particular calculation.
Mr. Rossotti. Well, first let me just say that the
alternative minimum tax is a significant complex portion of the
tax code, and it is going to get a lot worse if it continues in
place because more people will be affected by the alternative
minimum tax. And, of course, there frankly is limited--we are
looking at this, but there is relatively limited flexibility
that we have to simplify this by redesigning forms. I mean,
unfortunately, the complexity is largely built into the
statutory requirements.
I will give you some numbers, though, because I think you
are pointing in a direction where if you want to really talk
about increasing burdens, this could be measured. In tax year
1997, which was filed in 1998, we have very complete
statistics, and we had about 618,000 taxpayers who filed Form
6251, which was the particular form for the alternative mimimum
tax. But what is interesting is about seven times that many
that actually paid, about seven times that many taxpayers had
to fill out the form to calculate whether they needed to pay.
So you have almost a worst case here, seven times as many
people have to go through this exercise in order to find out if
they have to pay.
But, what is I think more alarming is that our estimates
are that this number is going up over 1 million during the past
year, actual payers, not the ones that calculate, and it could
go up to, in 5 years, as high as 6 million that would actually
be paying. If you multiply that by how many would have to be
completing the form, you could be talking about tens of
millions of taxpayers that would have to be completing this
item.
So, I think in terms of burden and the issues of going
through the process of calculating your tax forms, this is
definitely a significant item. I am not going to say there's
nothing the IRS can do about it. We are certainly looking at
it. But, frankly, up until now we have not found any highly
fruitful area to simplify just the forms process. You get back
to the underlying statute.
I will say that in the complexity report that the IRS is
required to produce each year for the Congress, this is one
area that we are going to be reporting on in more detail. This
report will be coming out with the support of the Treasury
Department in the next couple of months, and it will lay out
even more some additional data in this area.
Mr. Ose. My time has expired. I will come back to this
question on the second round. Mr. Otter.
Mr. Otter. Thank you very much, Mr. Chairman. Mr. Rossotti,
in the first round I asked the GAO and OMB if they had gone to
the victims, so to speak, and said here is our mission, this is
what we need to achieve. Has the IRS done that?
Mr. Rossotti. As a matter of fact, we not only have, we do
it every year.
Mr. Otter. Which groups have you gone to?
Mr. Rossotti. I have a list of nine groups here we go to on
a regular basis. Most of these are practitioner groups that
represent business, like the National Association of Enrolled
Agents, the National Farm Income Tax Extension Committee. These
are committees who are representatives of people that generally
are involved in tax preparation services. We also had a special
conference last year in conjunction with OMB with small
business representatives.
We meet with these groups on a regular basis and go over
specific items with them for the very purpose that you are
talking about. We also vet all of our draft forms, our new
forms, by sending them to these groups, posting them on our Web
site, getting comments back and so forth.
So, we have a regular process we use to try to solicit
comments from interested groups that are involved with tax
paying.
Mr. Otter. Let me ask this question in a different way. I
do not mean to cut you off, but I think I already got the gist
of your answer. I am not interested in going to the accountants
and saying, how much more work do you want or how much of the
work you now do for me do you want me to cut out. What I am
interested in doing is going directly to the farmer. Now, if he
has an intermediary that converts what he's done into your
language, I am not interested in getting a response from that
person, because it would seem to me it would be in their best
interest to keep those rules and regulations coming.
I want to know if you have actually gone to the payor and
said to the farmer, how much of this stuff is really necessary
in order to arrive at the information that I need to assess the
level of taxes that your government has sought to inflict on
you? To the small businessperson. To the large businessperson.
Mr. Rossotti. We have to work with their representatives in
some form. We have no way of going--except through the Web
site, where we do get individual comments from taxpayers, but
generally speaking we work through various associations and
industry groups. They are not all accountants. There are
various industry groups. For example, this Farm Income
Extension Committee is a group of people that are, I think,
based out of the University of Oklahoma that involve various
farmers, actually. In fact, I spoke to one of them in Oklahoma
last week.
Last year we did have this open house where we invited not
only these practitioners groups, but also people from different
small business associations to participate. So, I think we have
tried as best we can. We are actually going to be doing more of
this. We have beefed up our partnership outreach, as we call
it, to actually go out to talk to particular small business
groups.
I will say to you, though, that some of these
practitioners, especially people like the enrolled agents that
represent a lot of small business groups, if you were to meet
with them, they're very vocal about trying to reduce the
complexity of the forms that they file. They take the position
of trying to represent their clients, I think.
Mr. Otter. The nine groups which you met with last year,
what was the total reduction they came up with, and did you
affect that?
Mr. Rossotti. I think the No. 1 thing they recommended we
work on was the capital gains form. We have had 3 years where
we have done some improvements to the capital gains forms.
Mr. Otter. How much have you reduced it? What are the
actual hours?
Mr. Rossotti. I can tell you that.
Mr. Otter. Sheets of paper.
Mr. Rossotti. I can give you that in a second here. We have
reduced capital gains. We have done three things. The first
thing we did was to eliminate the need for people with mutual
funds to fill out the capital gains form and put it directly on
the 1040. That was 23 million hours reduced for 6 million
taxpayers. In the 2001 filing season, we did the same thing for
1040A filers. That's about 2.2 million hours. In the next
season what we are doing is, actually for the remaining people
who still have to fill out Schedule D, we are reducing it from
54 lines to 40 lines, which we estimate is going to save about
6 million hours and means that basically only about 650 filers
will have to fill out the full form.
So that is one, that was viewed as the No. 1 problem area
or complaint area, so we focused on that one.
Mr. Otter. Mr. Mihm, 31 million hours, Mr. Rossotti said
that they have reduced. Do you agree with that?
Mr. Mihm. Well, we have not looked exactly at what the IRS
has done in terms of Schedule D. I would note, though, that
overall for IRS that was a sizable increase last year. So
notwithstanding any reductions in streamlining and real ones
they took on for the Schedule D that we all benefited from,
overall there was a 180 million or so hour increase in regards
to IRS.
Mr. Ose. Mr. Rossotti, I want to go back on the AMT issue.
If we have a million people now who actually have to file that
form and you are expecting it, I think your testimony was
possibly seven times that many in the near future.
Mr. Rossotti. Up to six times, yes.
Mr. Ose. OK, 6 million people. Does the Service have any
sense of the amount of time required in preparing that form per
person?
Mr. Rossotti. I do not have that with me this morning, but
that is a number I could get for you and get back to you on. We
just need to take these numbers--I just did not have it
available this morning, but we could make that estimate for
you.
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[GRAPHIC] [TIFF OMITTED] T9868.043
Mr. Ose. What generically is it? Is it an hour, or is it 5
hours? Do you have any recollection?
Mr. Rossotti. I don't have a personal recollection. I might
have some staff that can give me that during the hearing.
Mr. Ose. If you will provide that, that will be very
helpful.
Second item, on the actual forms, and I am looking at this
on a comparative basis, between someone who files a paper-based
return versus someone who files an electronic return. When you
file an electronic return, I presume you fill in your basic
personal data once, whereas on a paper return, depending on
what forms you have to use, you end up inserting your name and
the personal data over and over and over.
I am curious whether or not the Service has looked at, for
instance, when I receive my personal form every year in the
mail, it has the little peel-on, stick-on label, but the
interior is not filled out. It does not have any of the
personal information. Is it possible when you send, for
instance, to Doug Ose in Sacramento, his return, to take that
basic information and embed it in the forms?
Mr. Rossotti. I don't know. I could find out. I could check
into that and get back to you. That is a thought.
Mr. Ose. I mean, to put your name and address and Social
Security number over and over and over.
Mr. Rossotti. Just, really, your Social Security number and
your name is generally enough to repeat the address. But the
question is could we put the name and Social Security number,
which are really the two pieces of identifying information that
you need, and I do not know the answer to that. But it's an
interesting thought, and I'd like to be able to investigate
that and get back to you.
[The information referred to follows:]
[GRAPHIC] [TIFF OMITTED] T9868.044
Mr. Ose. It would seem to me that, based on prior-year
returns, at whatever point you can get the current data from a
final basis, the Service technologically ought to be able to
embed in the new returns being mailed out for a future
submittal of that base data.
Mr. Rossotti. Let me look into that for the attachments and
see if that is a possibility.
[Note.--The information referred to was not provided.]
Mr. Ose. I would appreciate that. The other question I have
relates to the incentives that IRS uses in its Senior Executive
Service in terms of identifying paperwork reduction as a
measurable performance standard.
Does the current SES performance standard include paperwork
reduction thresholds or objectives? If it does, is there a way
to improve them or increase their importance, what have you?
Mr. Rossotti. What we have been moving to, and I think
there is a possibility of going in that direction, because what
we have been doing is with our new reorganization of the IRS we
have identified, for both individual taxpayers and small
business taxpayers, which is where most of the paperwork
problem is, and not just the paperwork, but the overall burden
of complying with the tax system, individuals within those
units that are responsible for the taxpayer education,
communication, basically the forms and everything that has to
do with the filing and prefiling area. I think what we have
done with those people is basically make them the accountable
executives, if you will, for trying to make the whole process
of complying with the tax system easier.
That includes more than just the paperwork, but it does
include all the burden that is involved with applying the
system. So, I think it would be possible to take your concept
and embed that as part of the goals and objectives for those
particular executives.
Mr. Ose. I do not know quite the structure it would take,
but I certainly understand the cause and effect of making a
specific performance standard be a reduction of paperwork
burden.
Mr. Rossotti. Yes. I would only want to make sure that it
was considered broadly enough, because as we know, the current
methodology for strictly dealing with forms is a bit limited.
But let me take that concept under advisement. I think there is
a good concept there.
Mr. Ose. I am tempted to ask you what the manager's
performance standards are, but I really don't want to put that
in the public domain, because then we will have the internal
code completely gamed, but I would appreciate your review of
that. And I want to make sure that I understand that--is that a
commitment on your part to look at it?
Mr. Rossotti. Yes, I will.
Mr. Ose. I like to use that word, ``commitment.''
Mr. Rossotti. Well, actually, we call them commitments
internally. So I will. As long as we can interpret it broadly
enough, I think it is a good concept.
Mr. Ose. All right. Mr. Smythe, if I might, one of my
favorite--I say that somewhat facetiously. Not entirely, but
somewhat. One of my most interesting agencies in my district is
the Bureau of Reclamation, and we are going to hear testimony
from one of my constituents later today about, if you will, the
statutory versus the discretionary information requests.
I would commend to you his testimony for review. Because
having represented this district now for more than one term,
actually more than 3 days, if you are the member from the Third
District of California it takes you 3 days to get a clear
understanding of this, the overwhelming requests for
information absolutely unrelated to bureau operation or need is
ridiculous. It is Mr. LeGrande's testimony.
I just think OMB needs to look at this stuff. These
requests for information are imposing a huge burden on my
farmers. We would all be far better off if they were out in the
field working than in the office filing paperwork for which
there is no statutorily approved basis for the collection of
the information therein.
So I just offer that to you for your evening reading, if
you will.
Mr. Smythe. I will review it.
Mr. Ose. Mr. Otter, for 5 minutes.
Mr. Otter. Thank you, Mr. Chairman.
Mr. Mihm, is Congress part of the--I'm the new kid on the
block here. I'm 90 days, too, Mr. Smythe, 90-day wonders. Are
we part of the problem?
Mr. Mihm. Well, it depends on how you define ``problem.''
Clearly there are statutes that Congress passes, and many of
these--or more recent ones are detailed in Mr. Smythe's
testimony, which entail in their implementation additional
paperwork burdens put on the American people. The question in
each case, though, has to be a careful balancing as to, is that
additional burden that's placed on the people worth the value
that we're getting from that information. So, in that sense,
Congress is the source of a lot of this paperwork burden.
It's also agency actions, though, that are also the source.
I would underscore what Mr. Smythe said. There's plenty in the
sense of blame to go around, or I guess in a more positive way,
there's a lot that all of us can do to attack the paperwork
problem.
Mr. Otter. Let me ask both the General Accounting Office
and the Office of Management and Budget. At the same time,
then, how do we red-flag this? How do we say--you see, because
we can't have it both ways, really. I mean, if we think the
risk--the labor that has to go through is worth the benefit
that we're going to receive so that we can, ``plan the
economy,'' make adjustments for the future where we need to in
order to be the leaders--provide the leadership that we're
supposed to for this country, how do we red-flag that?
Do we say, look, we want this great, marvelous idea. How
many hours is that going to take for each citizen to comply
with this? How do we red-flag this? Give me an idea.
Mr. Smythe. I think there are two ways. One is I think we
ought to look at existing law and existing programs, an
inventory of what's going on. I know the President has made--in
working on the budget, one of our priorities was to eliminate
duplication in Federal programs. Well, if there's duplication
in paperwork, that's an area we ought to look at, make sure
people aren't producing the same report to a multitude of
agencies.
So I would--the one thing would be to look at existing
programs and what's going on. The other would be to review--to
review legislation that comes along. My impression is
legislation is developed--is it's developed without a sense of
what's going on in other programs. Committees tend to have a
fairly narrow jurisdiction when you look at the entire
government as an enterprise, and there ought to be a better
assessment of what the burden is going to be on--when you add
it to everything else the government is doing.
Mr. Otter. Have you thought, Mr. Smythe, about----
Mr. Ose. Will the gentleman yield?
Mr. Otter. The gentleman yields.
Mr. Ose. Mr. Smythe, your comment about having the
government look at duplicative requests for information, isn't
that within OMB's jurisdiction right now, and if it is, why--I
mean, just do it.
Mr. Smythe. We plan on looking at those things. We've
started on that in terms of--I'm more familiar initially with
what we did with the budget. One of the areas we did when we
went through the budget is try to identify cases of duplicative
programs.
Mr. Ose. Have you found any?
Mr. Smythe. Yes, we found some, and we've tried to
consolidate--in education we tried to consolidate a number of
programs. We've proposed that in the President's budget. We've
looked in other areas where you have programs trying to address
the same problem. We found cases where more than one program
does the same thing. We looked at the one that didn't work as
well. There's a drug treatment program for public housing that
we felt didn't work as well, that the government had other
efforts going on, and we should steer resources to where
programs work better.
Mr. Ose. How about on the--you're talking about actually
the program and the implementation. Have those investigative
efforts extended to the paperwork side of any program?
Mr. Smythe. I think that's an area where we need to do some
more work on.
Mr. Ose. I thank the gentleman for yielding.
Mr. Otter. Thank you, Mr. Chairman. Getting back to that
question, has either OMB or GAO ever thought about putting a
solicitor general for paperwork reduction in these agencies?
Mr. Mihm. I guess in--from our perspective, that would be
the responsibility of the chief information officer, which was
established under previous legislation. In fact, what made that
decision wise, in our view, is it brings together
responsibilities for paperwork reduction and technology. And,
in response to your earlier question about how we red-flag
these things, that would be--one of the points that I would
make is that when we look at Federal technology programs, we
find that the transformational aspects of technology are not
being nearly as exploited as they could. I mean, the jargon
here is e-government. We need to do a much better job at the
Federal and at all levels of government in using technology not
just to do things differently and a little bit faster, but to
fundamentally do things in a completely different way.
If you saw the chart earlier, sir, that's where we will
begin to have a hope of beginning to close that gap between
goals and where we actually are. Other than that, we really--
using current procedures, we may be able to get some
incremental improvements, but we're not going to be able to
fundamentally close the gap.
Mr. Otter. Let me just ask all three of you in general,
this question, and it would have to do with the people who are
filling out these forms. Do you make an appreciable assessment
of what is the original information given, and that's worth so
many hours, and then the secondary information that's asked
for, and that's worth so many hours? And perhaps the IRS is
best suited to answer that question, and I hate--I don't want
to pick on any one person here, but I'm familiar with phase 1,
phase 2 and phase 3.
When the information originally comes in, they say, no, we
need more information than that. So another form goes back out
saying--or the same form saying, no. You didn't sufficiently
answer this information. The initial information that comes in,
it seems to me, is probably required. It is probably something
in the mission which Congress gave you, whether it's to gather
the information or collect taxes or submit to the rules and
regulations by an agency. But if the form is sufficiently
nondescriptive in the information that it wants, then
simplification would help us. Then, it seems to me, by the
amount of secondary information that's asked for, we should be
able to assess to ourselves, geez, our form maybe isn't asking
the right information in the first place. So do we break this
information down phase 1, phase 2, phase 3?
Mr. Rossotti. Well, just speaking for the IRS, I mean,
essentially for any given tax filing, we--our goal, and it's, I
think, achieved in almost all cases, is that if the particular
form--take the 1040 form, with the schedules that are
required--is completed accurately, there will be no followup
requirement. The only time there would be a followup
requirement would be if there was an audit initiated in which
the IRS had a reason to question a particular item, and then
there might be, for example, additional documentation submitted
to substantiate, say, a particular item on a return, a
particular deduction or a particular dependent that might be
claimed and so forth. And those are a very small percentage of
the returns that are filed. I mean, most of them are just
accepted as filed. So at least----
Mr. Otter. Is that the occasion, believe everybody else, or
is that just because you suspect one or two?
Mr. Rossotti. Well, I think it's basically--it's a question
of--well, first of all, I think most people actually do file,
quite accurately. Fortunately in this country, it's remarkable,
but people do the best job that they can. We do send out a lot
of notices to people for potential small errors, like, their
Social Security number might not match, and then we, send them
a notice back, and then if they have a problem, they correct
it. That we could do with computers, but in terms of audits,
it's a fairly small percentage. One of the problems is it's
basically limited by resources and the number of audits that
have been going down over the past 10 years, but even when it
was higher, it was still a relatively small percentage.
Mr. Otter. Mr. Smythe, in your case, do you think it's a
good idea for your agency to break this down between phase 1
and phase 2; then we'll understand the clarity of the initial
request for information?
Mr. Smythe. The only comment I would make is my
understanding is that OIRA is put into a situation where it
never has a chance to look back and look at the whole thing.
It's asked to approve this form or this report, sort of in
isolation. I think what you're getting at is maybe a sense of
staging these things, get a better idea where we want to end
up.
Mr. Otter. Well, I'm concerned. But I'm really concerned,
because, for instance, in the little State of Idaho, we get
roughly 6 percent of our entire budget in education comes
through the Department of Education on the Federal level, and
yet the head of our education system in the State of Idaho,
which is an elected position, superintendent of public
instruction, tells me it accounts for 67 percent of her
paperwork at the State level. So we get 67 percent of the
money. We get to a point finally where we say, we can't afford
to take the money. We can't afford to take the money. Of
course, then we don't have all the rules and regulations that I
guess we'd have to put up with.
But, my question still comes back to, there's got to be
something wrong, and it's got to be pretty obvious that there's
something wrong when you have those kind of differences between
the actual benefit received and the reporting that's necessary
to receive the benefit.
Mr. Smythe. Well, I think the President's budget, attempts
to address the issue you raise. You can't just come in and
change the reporting requirements if you don't change the
programs. In the education area we have a number of categorical
grants that generate a lot of this. The President has proposed
to consolidate a number of those programs to loosen up some of
the strings. Those strings end up generating a great deal of
reporting requirements on localities, and I think the whole
thrust of his education proposal is to give the States more
latitude, to demand some accountability, and to demand some
results. I would hope that in terms of implementing it, we can
also reduce that 67 percent burden that you mentioned. It seems
to me that goes hand in hand.
Mr. Otter. In pursuit of the objectives of this committee,
it would really be a help to this committee if a lot more
expression of the consolidation of these--and I'd like to see
that, Mr. Smythe, I really would. We're going to consolidate
these five agencies, and it's going to require a 31-million-
hour reduction in paperwork. I think that would be very
beneficial, not only to the work of this committee and its
intent in this meeting today and your being here today, but I
think it would also be a benefit to the American people and
whoever has to fill out these papers.
What concerns me as much as filling out these papers is
think how many people we've got to have to read them. That's
what's really scary.
Thank you, Mr. Chairman.
Mr. Ose. Thank you, Congressman Otter.
Mr. Mihm, I want to explore something with you. Your
statement on page 7 talks about program changes versus
adjustments in terms of the calculation on the paperwork
burden.
Mr. Mihm. Yes, sir.
Mr. Ose. I think I understand. I just want to hear from you
the difference between program changes and/or adjustments.
Mr. Mihm. The program changes are those changes that result
in a different estimate of burden that are the result of direct
government action, and so it would be things that--we would
break it out by three categories; for example, new statutes,
reinstatement of expired authorizations or agency actions that
lead to streamlining.
Adjustments are generally those things that are outside--
are still changes in the estimated burden, but those things
that are outside the control of the agency. In some cases, it
can be just a reestimate, and often downward--I shouldn't say
often--downward or upward of what the original burden is, in
which case there's no change to the people that are filling out
the forms. It's just the government is getting a better idea of
what that burden was.
Or it could be just--an adjustment--another example of an
adjustment would be more or fewer beneficiaries applying for a
benefit, filling out forms, and that then would influence the
total burden hours.
Mr. Ose. Let me just explore something in table 1, then,
with you.
Mr. Mihm. Yes, sir.
Mr. Ose. Let me find one that offers interest. On the
transportation line item, there's an adjustment of 50 million
hours and a total change of 22 million hours; a downward
adjustment in the burden of 50 million hours and total change
of 22 million hours.
Mr. Mihm. Yes, sir.
Mr. Ose. Which indicates to me that somehow or another, the
formulation--or the algorithm that generated the number in the
first place, the basic structure was changed. How do you get to
an adjustment of 50 million hours downward, but a total change
of only 22 million?
Mr. Mihm. Well, this is the--in the case of IRS--I'm sorry,
in the case of DOT, you're exactly on the right issue there, is
that DOT's estimated burden would have increased by more than
28 million hours due to the reinstated collections, without the
more than 50 million hours in adjustments downward. And so, I
mean, this is--and the precise nature of those adjustments is
something that at least to us was--we're working off of the--
the collection budget that has come in from the agencies that
OMB will be rolling up from their budget that we could get
behind, but I don't have that readily available for me right
now.
But, the point there is--or at least the point that we use
in breaking this out for the table is to show it's important to
get behind each individual agency's claimed reductions or
increases to better understand the sources of those.
In some cases it can just be an agency action. In other
cases it can just be merely the agency recalculating or
reestimating an existing burden that's already felt by the
people and saying, hey, we now have a better handle on what
that burden actually is.
I should state, sir--and this gets back, if I may, just to
Mr. Otter's question right before it turned. You were asking
about the different phases. Mr. Otter, it wasn't until last
year as a result of the bipartisan urging of this subcommittee
over several years that this type of breakout was even
available. Before then it was all rolled up as to changes, and
we didn't have a handle--or the collective ``we'' didn't have a
handle on whether or not these changes were due to adjustments
or program changes or new statutes. That's something that this
subcommittee had to work--on a bipartisan basis, had to work
with OMB over a couple of years in order to get them to make
that change.
Last year was the first year, and we're happy to see that
they're obviously continuing it this year. So we're quite a
ways from the three-phased approach that you were talking
about.
Mr. Ose. On your Defense line item, you have a total change
of 18 million hours.
Mr. Mihm. Yes, sir.
Mr. Ose. Now, how do you--I guess my question is, where
does the intersection between OMB's analysis and, say, DOD come
in terms of calculating those hours? Maybe that's a question
for Mr. Smythe.
Mr. Mihm. Well, I can take the first shot at it. I mean,
all of the information that we have here is information that we
received from OIRA over at OMB. These are from the individual
agency submissions that go into OMB, and then OMB, therefore,
rolls up into this summary document that becomes the
executive--the Federal Government's information collection
budget.
The important thing to note here, sir, is that obviously
you're dealing with a huge executive branch. OMB only has 20,
22 people, I think, in the entire OIRA office that are taking a
look at this stuff. In fact, there's one--if I understand
correctly, person responsible for IRS on a part-time basis, and
even accounting for the normal heroic abilities of our
colleagues over at OMB, that does seem like a substantial
workload. So there is two--the point I'm making is that there
isn't an awful lot of opportunity for OMB to step back and
really get in a very serious way behind these numbers. They'd
really have to pick targets of opportunity and prioritize where
they want to get behind the numbers.
Mr. Ose. Mr. Mihm, you beat me to my question.
Mr. Mihm. Sorry, sir.
Mr. Ose. That's OK. Pleased to see somebody ahead of me.
Mr. Smythe, that brings me to my basic question, is that if
we have most of the change in the burden of hours for paperwork
placed--or coming or originating from one agency, Mr. Mihm
cited a part--or a half-time--full-time equivalent of a half a
position being committed to IRS review of paperwork, why
wouldn't we take some of our resources that we might be
spending somewhere where there's little, if any, expected or
actual change in paperwork burden and shifting it over where
we're getting a whole bunch of change in paperwork burden?
Mr. Smythe. I'd like to defer to the OIRA Administrator on
that. I think you raise a good point, but that's something for
John Graham if he gets confirmed, that's something that he
needs to look at and figure out how he best wants to deploy the
people under him to address his responsibilities.
We've not made any changes yet. What we have is the
structure and the way people are deployed or the way they were
deployed when we arrived.
Mr. Ose. You understand my point, though.
Mr. Smythe. Yes, sir.
Mr. Ose. Put your resources where you can get the big bang
for the buck, so to speak?
Mr. Smythe. Yes, sir.
Mr. Ose. It's your understanding that OMB has no current
plans to change staffing in terms of the 22 or 25 people on
staff right now as to whether they're going to be focusing, as
they have historically, or refocused to where the problems seem
to be?
Mr. Smythe. I think it's something that's going to involve,
first of all, getting the various positions filled, getting the
OIRA Administrator confirmed. I think it would be inappropriate
for us to start moving around people within OIRA before he's
confirmed. The DDM is another issue. In all of this, the
Director needs to make an assessment of where resources can be
best deployed for OMB's mission.
Mr. Ose. I think that's the basic thrust of my question
here, so I appreciate your recognizing that.
I want to come back to Mr. Rossotti. In your opening
remarks, you talked about the strategic plan, having identified
key strategies, one of which was reducing taxpayer burden. I
can't help but think that whether we're talking about the AMT
filings that are on--at present a million, projected to go to 6
million, or small business tax submittals, or have you--I can't
help but think asking the senior managers--or requiring the
senior managers to factor into their performance evaluations
some means of paperwork reduction to a greater degree than we
have, whether it's in a narrow sense or a broader sense, as you
suggested, I can't help but think that redounds to the benefit
of every taxpayer who's otherwise got this burden.
Mr. Rossotti. I would agree with that.
Mr. Ose. My tax return was this big this year, and I'm
just--I find that an amazing consequence, and I'd really love
to reduce it.
I understand your point about Congress changing the law
every 6 months. I think it's valid. I would commend it to every
single Member of Congress. I mean, we have to have some
stability here. Stability will lead to simplicity, but somehow
or another we've got to get the managers recognizing it's in
their best interest, not only in the taxpayers' best interest,
but in the managers' best interest, to work toward reducing the
paperwork burden.
Mr. Rossotti. Well, I agree with that. That's why we've
identified it as one of our key strategies. We now have with
our new structure, some people positioned to exercise
responsibility on that. I do have to point out that the IRS
does not have much of a role with respect to the tax code.
Mr. Ose. That I understand. I understand that. I'm not
quibbling over that. I mean, I'll take that responsibility as a
Member of Congress.
Mr. Rossotti. We do what we can to point out things like
the alternative minimum tax, the capital gains. They're very
consistent in terms of complexity, but in the end all we can do
is point them out. We can't change the world.
Mr. Ose. I understand, and I don't quibble over that. Mr.
Otter, I don't have anything else.
Mr. Otter. I just have a couple of questions, if I might,
Mr. Chairman.
No. 1, Mr. Rossotti, have you held field hearings on this,
gone out and had people come in and testify as to the
complexity and perhaps some simplification efforts?
Mr. Rossotti. We don't actually have hearings, but we have
meetings.
Mr. Otter. Do you have the power? Do you have the authority
to have hearings?
Mr. Rossotti. You know, I've never thought--I don't know. I
mean, we can certainly hold open meetings. I mean, I don't know
whether they would be considered hearings, but we do have
meetings, and we have a variety of adviser groups that meet
with us regularly on these kinds of things.
Mr. Otter. Let me put it a little bit differently. If you
had the authority, would you have hearings and I happen to
believe that you do have the authority.
Mr. Rossotti. Yeah.
Mr. Otter. Don't you think that kind of input would be
useful? And if you find out that you do have the authority to
have hearings, would you hold them?
Mr. Rossotti. Well, I guess the--I don't know what exactly
the difference is between hearings and meetings. I mean, we do
have a lot of meetings with different kinds of groups, and we
intend to have more of them, and they focus on topics like
this. And, we had a whole series of them last year in
conjunction with OMB, specifically with self-employed and small
business taxpayers. So I'm not sure whether there's something
specific about a hearing that's different than a meeting, but
we do have a great number of those. And, actually, we--part of
our strategy is to hold more of them, to get more input,
especially on the small business side, because actually a lot
of the--a lot of the burden actually that is some of the more
significant is actually on small businesses.
Mr. Otter. Well, as a matter of fact, you and I probably
could have had a cup of coffee this morning and exchanged all
the information that we have right here, but the fact that it
is a public forum, the fact that you are on record, the fact
that there is an expectation at the end of the hearing that
something is going to happen, sometimes good, sometimes bad, I
think that when the IRS would go out and hold a hearing, or any
government agency would go out and hold a hearing, it sends a
very clear and precise message to the public who submit all
this information to you that we do care, and how can we lessen
your burden. I think that's important, not only from the
political aspects, but as you said so clearly earlier, it's
amazing to you how much information people voluntarily give to
the Internal Revenue Service. I've never quite felt that mine
was voluntarily, because I suspected there was going to be an
action taken if I didn't. So I hardly consider that
voluntarily.
Let me commend a name in Idaho to you. The name is Dewey
Hammond. Dewey Hammond happens to be the head of the Idaho Tax
Commission. Mr. Hammond, I charged him when I was Lieutenant
Governor with responsibility--I became familiar, after working
for a large manufacturing company for 30 years, with a form
that was 14 pages long and said, Dewey, I'd like you to see
what you can do in order to reduce this down. He now has a 1\1/
2\-page form that four agencies of the State use. I recognize
the tax sensitivity, the number sensitivity and that sort of
thing, but the general information that's given on that is now
used by four agencies. It took him 2 years to do it. But he
took that and he reduced it down to 15 percent--less than 15
percent of what it was.
Mr. Rossotti. We'll get in touch with him.
Mr. Otter. And I think that sort of action is really
important.
Mr. Mihm, I would wonder if under the PRA, the Paper
Reduction Act, did Congress put themselves on notice as well?
Mr. Mihm. Not--in a statutory sense, I don't think so, sir,
that Congress usually exempts itself from those types of
requirements. Clearly, the language surrounding the act in the
floor debate, without being intimately familiar with it, I'm
sure that there was a recognition, as we have expressed here
today, that it's joint responsibilities if we want to attack
the paperwork problem. It's not all on the agencies. It's not
all OMB, and it's not all Congress. There's plenty of work for
everyone to do.
Mr. Otter. I understand that, but a few years ago we
decided we were going to walk the walk. Well, Congress then
decided it was going to walk the walk and talk the talk, and so
we subjected ourselves, I thought, to all of those other
burdens and responsibilities that we put on the agencies and
business and the general public. So we now have all the ADA
requirements, all the OSHA requirements, all the affirmative
action requirements, all the other rules and regulations that
we force on the IRS and the OMB and the GAO and all the
businesses and industries.
I would like to know how to do that. I would like to know
how we could submit to Congress and say to them, look, if
you're going to insist on this--we should add an assessment,
for instance, in the last tax bill that we passed in the House.
The $1.6 trillion, we should add an assessment and say, how
much paperwork is this going to add to the burden and then
decide for ourselves--well, take a look in that mirror and say
to ourselves, do we really want to do this, or do we want to
simplify it in the process as well?
Mr. Mihm. I agree--or rather, sir, I think that's the point
that Mr. Smythe was making in his opening statement, is that
there needs to be more of a consideration in the part where
we're considering legislation upfront on what's going to be the
end-stream paperwork burden that's associated with this.
Mr. Otter. Mr. Smythe, this fellow is going to seem like
the second coming to us for all the expectation that you've
given me this morning on what he's going to do to the paperwork
in government. Thank you.
Mr. Ose. Thank you, Mr. Otter.
I do want to--I want to end on somewhat of a positive note,
recognizing--not meaning to lessen the importance of all we've
talked about, but, Mr. Rossotti, I do want to compliment the
Service on the change they've made for qualifying small
business corporations in terms of allowing them to go to a cash
method as opposed to previously requiring an accrual method. I
think that's a marvelous step forward, and small business in
America appreciates that. That's a great first building block,
if you catch the drift of my comments.
Mr. Rossotti. Thank you.
Mr. Ose Mr. Mihm, I appreciate what GAO does in terms of
analyzing these things for the benefit of Congress and the
agencies throughout the Federal Government.
And, Mr. Smythe, I have to applaud your courage in coming
here today. It's impressive.
I do think we have some work to do. I want you to
understand that this committee is ready, willing and able to
work with OMB, with Mr. Daniels, yourself, Mr. O'Keefe, the
fellow who's coming on at OIRA to try and bring these things to
a head and make some progress on this. I just think that's
something that you're interested in. I know we are, and I look
forward to doing it. So I want to thank you all for coming
today. We have work to do. We need to get on with it.
Mr. Smythe. Thank you, Mr. Chairman.
Mr. Mihm. Thank you, Mr. Chairman.
Mr. Rossotti. Thank you, Mr. Chairman.
Mr. Ose. I want to call the second panel up at this point.
That would be Mr. LaGrande, Mr. Knott, Mr. Nicholson and Mr.
Bobis--excuse me, Dr. Bobis.
OK. Before we start, I want to make sure we've got--it's
Mr. LaGrande, Mr. Knott, Mr. Nicholson, and is it Dr. Bobis,
Bobis or Bobis?
Mr. Bobis. B-O-B-I----
Mr. Ose. Bobis, long O. Right?
Mr. Bobis. Yes.
Mr. Ose. Gentlemen, we do swear in our witnesses here. If
you'll rise.
[Witnesses sworn.]
Mr. Ose. Let the record show the witnesses answered in the
affirmative.
Mr. Otter and I have already provided our opening
statements. We're going to provide each of you with 5 minutes
for your opening statements. We have a heavy hammer here on the
clock, so please be brief.
We're going to first go to Mr. Ken LaGrande, who's the vice
president of Sun Valley Rice in Colusa, CA. Mr. LaGrande,
you're recognized for 5 minutes.
STATEMENTS OF KEN LaGRANDE, VICE PRESIDENT, SUN VALLEY RICE,
COLUSA, CA; JAMES M. KNOTT, PRESIDENT AND CEO, RIVERDALE MILLS
CORP., NORTHBRIDGE, MA; JOHN NICHOLSON, OWNER, COMPANY FLOWERS,
ARLINGTON, VA; AND JOHN L. BOBIS, DIRECTOR OF REGULATORY
AFFAIRS, AEROJET, RANCHO MURIETA, CA
Mr. LaGrande. Chairman Ose and members of the subcommittee,
thank you for the opportunity to testify on behalf of my fellow
farmers on the Paperwork Reduction Act and the nearly
unbearable burden that paperwork and recordkeeping requirements
place on us. My name is Ken LaGrande, and I farm about 900
acres of rice in Colusa County, CA. When I came home to begin
farming with my father several years ago, I quickly discovered
that knowing about cropping patterns, fertilizer rates, and
seed germination were neither more important nor time-consuming
than having a desk and an adding machine and a full supply of
U.S. Government forms.
My days were spent managing operations on the ranch; my
evenings, weekends and, literally, my rainy days were spent at
the computer and at the filing cabinet. I had to buy a copy
machine and a second filing cabinet. Almost immediately I was
forced to hire a professional accountant to prepare my taxes,
as I couldn't afford to take the chance of inadvertently
missing some calculation and, thus, invoking the wrath and the
penalties of the Internal Revenue Service.
The forms that I file with the IRS each year have a little
box on them that indicates, pursuant to the Paperwork Reduction
Act, the estimated average time of preparation. I added these
little boxes up the other day, and I discovered with no great
surprise, that the IRS estimates that I spend 542 hours and 38
minutes each year on their behalf.
So I hired a part-time bookkeeper. I burdened my bookkeeper
with OSHA compliance regulations, Federal payroll tax
reporting, bookkeeping and tax preparation, filing,
recordkeeping, W-2s, I-9s, 1099s, the Employer's Annual Tax
Return for Agricultural Employees, the Employer's Annual
Federal Unemployment Tax Return, forms for the U.S. Department
of Agriculture, the Commodity Credit Corporation, the Farm
Services Agency, Reclamation Reform Act reporting for the
Bureau of Reclamation and the like.
After we think we're in compliance with all of the Federal
mandates, we start in with the State and then the county. It
was not long before 2 days a week--the 2 days a week that I
employ my bookkeeper became insufficient, and so I was forced
to hire a second part-time employee to deal with the overflow,
and I had to rent a self-storage unit in town to store the
dozens and dozens of boxes of records that I'm required to keep
by Federal law in physical form, and I have on hand for years
on end.
Each spring I find myself at the local office of the FSA
completing new and yet usually unchanged versions of exactly
the same paperwork that I completed the year before. Especially
problematic is that there is no published handbook or set of
rules or regulations available to producers with respect to FSA
rules.
In terms of redundant bureaucratic paperwork, however, the
worst of them seems to be when we arrived for our appointments
at the water district. The U.S. Bureau of Reclamation requires
that each farmer submit paperwork under the Reclamation Reform
Act as part of his or her water application. These forms fly in
the face of the notion of paperwork reduction and seem to serve
the sole purpose of ensuring the continued employment of
Federal employees.
This debacle has been compounded tenfold, however, by the
promulgation just this year of a new set of rules that require
farm operators to file reporting forms. Farm operators are not
farmers. They're independent contractors that we hire to
perform certain tasks on our farms, such as crop dusters, truck
haulers or custom harvesters. Why the Bureau of Reclamation has
any need to know who is applying my fertilizer or who is
hauling my harvested rice to the elevator is beyond my
comprehension. It seems to be an invasion of privacy, and it is
as yet unjustified by Bureau staff.
So far as I know, the Bureau has provided no information or
instructions to any of these potential operators, and they have
not amended the instructions on the farmers' forms to indicate
the existence of the new rules. So unless you retain the
services of an attorney to follow unpublicized rule changes,
you must depend on word of mouth at the coffee shop to continue
to be able to receive Federal water.
More galling is this: Anyone I hire as a contractor must
ensure his or her own compliance with the Bureau's river of
regulatory muck, and I am required to police their compliance.
Mr. Chairman, farmers across our Nation fight costs every
day, and we are faced with the specter of having to hire
professional accountants, consultants and attorneys to ensure
our compliance with Federal regulations and paperwork
requirements. The cost of farmers to comply is enormous, both
in time and real dollars.
In light of depressed markets, low commodity prices and an
overall increased cost of doing business, an excellent manner
by which Congress could provide immediate assistance to our
Nation's farmers would be to reduce the paperwork burden and
simplify the compliance requirements imposed upon them. This
assistance would add little or no cost to the Federal budget, I
would imagine.
Mr. Chairman and members of the committee, I urge you to
provide critical relief to your farmers. We are drowning under
the sea of paperwork promulgated by the Federal Government.
I'd be happy to answer any of your questions. Thank you.
Mr. Ose. Thank you, Mr. LaGrande.
[The prepared statement of Mr. LaGrande follows:]
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Mr. Ose. Now I recognize Mr. James Knott, who's president
and chief executive officer of Riverdale Mills Corp. in
Northbridge, MA. You're recognized for 5 minutes.
Mr. Knott. Good morning, Mr. Chairman, and good morning,
Mr. Otter.
I started my first business in 1956 immediately after
getting out of the Army, and I have been familiar with OSHA
since 1970 when they came into being. I bought its book, which
was the Federal Register, and it was about the size of a city
of Boston white pages. Now it's many, many times thicker.
The business that I started in 1956 was in an abandoned
mill building, and, because there were no employees except
myself in the very beginning, I had to do every single job in
that business, and I did the same thing again in 1978 when I
started my second career out in Northbridge, MA.
What I do in that business is I make a plastic-coated
welded wire mesh that was originally intended to be used for
lobster traps in the New England fishery. Today, that product
is used for many, many other things, and we're shipping it all
over the world.
This business of OSHA reaching out beyond the occupational
area, which I consider to be the four walls of the factory, and
becoming interested in pain that people might bring to work, to
me, is an overreaching of its authority. OSHA really shouldn't
be going out that far.
The first--or the second business, rather, that I started,
as I said, we make the wire for lobster traps, but it's also
going all over the world. The building was a 20,000-square-foot
building. Today it's 265,000 square feet, and we've set up a
program to achieve zero accidents in the business. We have a
safety committee, consisting of about 30 people, and those 30
people rotate regularly. Thirty people is approximately 25
percent of the total employment. They meet, and they come up
with suggestions for making things safer, and we have no budget
limitations on what it takes to make things safer in that
business because people are the base of the business.
In the first quarter of this year, we had a zero accident
rate with one minor exception. We're members of the National
Association of Manufacturers that I joined about 3 years ago,
and I'm now serving on its board of directors, and I never
realized before I met them how important they are to this
manufacturing business in the United States of America. We
spend--last year we spent about $41,000 working on OSHA
problems, and we, as I say, have the committee that works on
this all the time.
One of the interesting things in talking about
overburdening not only with respect to paperwork, but also with
time spent dealing with agencies such as OSHA, was an event
that took place 1 day in 1996. We had a flood at the Riverdale
Mill, which is on the Blackstone River, and a hole had opened
up in the street. One of my maintenance men, who's been with me
for many years, had put a ladder down into the hole, and he
stepped down a few rungs to measure the hole to see what it
would take to fill it.
Well, there were some OSHA people there that day on an
entirely unrelated matter, and one of them happened to walk out
into the street. And he said to the man, ``get out of that
trench.'' Well, my maintenance man, who is a year older than I
am and has had a lot of experience, said, ``this isn't a
trench.'' ``This is a hole, and I'm going to fill it.'' So the
OSHA man said, ``get out of that trench right now.''
Well, my maintenance man felt that there wasn't any sense
in talking to him, so he did his calculations and left. I got a
thing in the mail a few weeks later, and what it said was that
I had endangered a man's life by putting him into a trench and
that I should pay a fine. Well, a trench does not have a poured
concrete wall, and it's more than 5 feet deep, and this was
neither of those things. So I called the OSHA office. I went
through the procedure, and the procedure, of course, is to call
a local office. I told them I wanted to appeal, and the fellow
who I spoke to, said, look, this is going to cost you a lot of
time and money. I can cut the fine in half. I said, well, the
time and money isn't what bothers me. What bothers me is that
you have people out here like this damaging the economy of the
United States. They're taking a lot of my time, and I just want
this sort of thing exposed. So he said, very well. I'll see you
in court.
Well, next call I got was from an OSHA attorney in Boston.
I had filed my appeal, which was about a half an inch thick,
and he said, Mr. Knott, I've read your appeal, and I can
understand where you're coming from. Look, I can cut the fine
in half again. I said, that's not what I'm interested in. What
I'm interested in is exposing these people. I'd like to get
this young man up on a stand in front of the media and let him
explain why he thinks a hole is a trench and why I should pay
fines for it. Well, the attorney said, I'll see you in court.
The next thing I got was a letter in the mail, and the
letter was from the court. What it said was the joint motion to
dismiss has been granted. I called my attorney. I said, what is
this business about a joint motion? He said, well, that's what
they said the--that's what they told the court. And, I said, I
don't want this case to be dismissed.
My attorney said, Jim, there's nothing we can do. The judge
has made his ruling.
So that's been some of my other experiences with OSHA,
and----
Mr. Ose. Mr. Knott, we'll enter your statement in the
record, but you're over your 5 minutes.
Mr. Knott. Oh, I'm sorry.
Mr. Ose. That's OK. I appreciated the story. I wanted to
get to the end of it before I cut you off. But we'll enter your
statement in the record. I need to go on to Mr. Nicholson at
this point.
[The prepared statement of Mr. Knott follows:]
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Mr. Ose. Mr. Nicholson for 5 minutes joins us. I appreciate
your taking the time. Mr. Nicholson is the owner of a company
called Company Flowers in Arlington, VA. You're recognized for
5 minutes.
Mr. Nicholson. I'm honored to appear before you today to
talk about some of the problems posed to small business by the
Internal Revenue Service. My wife and I operate a small flower
shop in Arlington, VA, sometimes described as the ``best 'lil'
flower shop in all of Washington.'' I can't afford national
promotions--I need advertising--so thank you!
I have joined the Government Relations Committees of NFIB
and the FTD because I feel strongly that we should try to do
something about some of the problems, not just complain about
them. So, I am pleased to appear before you today as a
representative of both organizations.
Let me--in an effort to cut down on the amount of time
here, let me turn to page 2 and point out that there are really
three things I'd like to suggest that we focus on. Let's one,
simplify the tax code; two, make it as equitable as possible
across the board; and, three, perhaps give taxpayers a method
to right the balance so that the IRS auditors don't always have
the upper hand.
First, we need to simplify the code, but simplicity will
have a cost. Those who are engaged in arcane or unusual
endeavors may very well lose their special, if perhaps valid
arguments. Simplicity will encourage most of us to abide by the
law, because then we'll understand it. Right now I cannot grasp
what the tax code wants from me, other than money. I must hire
an expert, a CPA or a tax lawyer. Other than fear of arrest, I
have no incentive to abide by the code, because I don't
understand it.
Some of my equals know better how to work the tax code than
I do. Equality of treatment under the code doesn't seem to be
taking place, and while, comparisons are difficult because of
direct concerns about privacy, nonetheless there are enough
anecdotal instances to certainly raise strong suspicion that
only the clever get rewarded. And, of course, those who are
wealthy have both the reason and the wherewithal to hire the
experts to improve their position under the code. That is
hardly fair, but maybe life is not supposed to be fair.
Those first two solutions, the request for a simplification
and for an equitable treatment, are really going to require
legislation, and that's at your doorstep more than at the
agency's.
The third idea that I'm suggesting is that there might be a
way to improve the administration. Several years ago when I was
audited, I approached the IRS with much fear and trembling, for
I didn't know what to expect. I found an auditor who was each
time concerned mostly with finding enough additional revenue to
check off the box labeled ``get more money for his or her
work.''
There ought to be a well-recognized way to reassure the
average taxpayer that upon audit, there is a method by which to
balance the discussion. Fortunately, I've been able to hire a
CPA who would accompany me today, but for small business owners
who cannot afford or do not want to hire a CPA or a tax lawyer,
perhaps there could be some sort of a preliminary step
undertaken with an advocate, maybe a retired auditor, someone
who can be available to help the taxpayer before they meet with
the auditor. Why must the average Joe or Josephine be made to
feel helpless when sitting across the table from a skilled,
knowledgable IRS auditor? What we need is a conference before
meeting the auditor and an ``assemble of records'' session so
that the conference with the IRS auditor can be expedited, as
well as more balanced.
In sum, it's clear to me, and I hope to you, that we need
to simplify our tax code, and we need to make it more
equitable. We cannot do just that by patchwork. We have to
resume the national debate over a major revision of the entire
tax concept such as a flat tax and the other ideas. The debate
seems to have gone off the front pages. I'd like to see it
return, because I think that the time is now for change while
we have a White House dominated by concern for reducing the tax
burden. So that's one of our major compelling reasons to revise
the code. Let's get to it. Thank you.
Mr. Ose. Thank you, Mr. Nicholson.
[The prepared statement of Mr. Nicholson follows:]
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Mr. Ose. Finally, our fourth witness on this panel is Dr.
John Bobis, who's the director of regulatory affairs for
Aerojet, from Rancho Murieta, CA. Welcome. You're recognized
for 5 minutes.
Mr. Bobis. Good morning, Mr. Chairman, Honorable
subcommittee members. I am employed by Aerojet General Corp.,
which is wholly owned by GenCorp. I am the director of
regulatory affairs, among other things, and I am delighted to
have the opportunity to testify in front of you today. Due to
the short time that I had to prepare for this hearing, I am
only going to attack--or, rather, address one governmental
agency. That's the Occupational Safety and Health
Administration [OSHA].
I am not here to talk about--I am not going to, rather,
talk about the general duty clause that OSHA uses in the
enforcement toward--specifically in areas where appropriate
occupational safety and health regulations have not been
promulgated. Also, I am not going to talk about OSHA's
egregious penalty assessment policy, nor am I going to discuss
OSHA's multiemployer citation policy. All of these are not only
unreasonably burdensome and costly, but, in my opinion, may
even be unconstitutional.
My company manufactures rockets, and we are heavily
regulated by all the regulatory agencies that you can think of.
Focusing on OSHA, its authority is granted by the Occupational
Safety and Health Act of 1970. The act, in itself, intended by
Congress was to assure safe and healthy working conditions for
working men and women. The act itself does not state that
Congress intended OSHA and its enforcement mechanism to be used
as a revenue-generating scheme.
Now I'm going to focus on two particular interests at hand.
One is about paperwork burden and the other being the
recordkeeping requirements imposed on businesses by many of the
regulations promulgated by OSHA. The regulatory burden that
OSHA standards impose upon the regulated community can be
attributed largely to OSHA's rulemaking process. Since the
enactment of the act, Federal OSHA has undertaken the concept
of adopting general standards and vertical standards for
certain industries, such as construction, agriculture, what
have you.
The general industry safety standards contain hazard-
specific requirements, and they do not apply to construction,
agriculture or other exempted industries unless they are
reprinted specifically for that industry. Adoption of vertical
standards results in an absolute standard duplication or the
use of the general duty clause. The duplication causes
potential conflicts and misunderstandings and an increased
compliance burden upon the regulated industry. Many of these
regulations have numerous recordkeeping requirements.
Other areas of concern in the general industry standard
promulgation pertains to occupational health standards. OSHA
over the years has promulgated 22 substance-specific standards.
The practice of adopting substance-specific standards is an
enormous duplication of the voluminous, almost identical
requirements. Many of the requirements deal with definitions,
exposure monitoring, recordkeeping, what have you. All of these
could be simplified by developing one standard or a generic set
of regulations with appropriate, charts and references.
As long as I have this opportunity to address you, I would
also like to address another important area of the rulemaking
process that directly affects the quality of the standards OSHA
adopts. This process is called negotiated rulemaking, or the
advisory committee consensus approach, that has been used in
California successfully for decades. In fact, this process has
been so successful in California that none of the safety
standards have ever been challenged in court. This method
permits labor, management, technical experts and other
interested parties to deliberate in an informal forum and agree
upon a consensus performance standard. The result of this
process is having industry and labor, the regulated community,
writing its own regulations, improving the quality and intent
of the regulations and thereby enhancing compliance. Once a
consensus standard has been developed, then it is ready for the
agency to go through the normal rulemaking process, pursuant to
the procedures of the Administrative Procedure Act.
Now, I want to spend a little time on the recordkeeping
requirement of Federal OSHA. It has not been an unusual
occurrence during the last couple of decades to read the
morning headline news that a company has been cited by OSHA and
received well-publicized egregious penalties amounting to
millions of dollars. A closer look at these alleged violations
disclosed that the employers were accused of improper
recordkeeping practices particularly involving ergonomic-
related issues, such as cumulative trauma disorders, muscular
skeletal disorders, what have you.
As you may recall, Congress in its wisdom recently voided
the new ergonomic regulations promulgated in the last hour by
the previous administration. This may be, however, a double-
edged sword, because, in the absence of specific regulations,
OSHA will continue to enforce the provision of the so-called
general duty clause to cite employers in situations where
standards have not been promulgated. Each alleged violation of
the general duty clause carries a maximum fine, and under the
egregious penalty policy, the penalties are assessed on a
violation-by-violation basis, which can result in enormous
fines.
The obvious question one can raise with respect to
assessment of these large fines due to recordkeeping violations
is how the requirements and associated fines enhance work
safety. In my opinion, recordkeeping requirements and their
associated fines for improper recordkeeping provide nothing
more than a revenue-generating means for the agency. It has
absolutely no effect on the quality or the safety in the
workplace. Its sole purpose is to provide means for the agency
to get the data for the alleged purpose of establishing trends
and allocating resources.
About 27 years ago, I was the first technical person that
Cal OSHA Standards Board hired in 1974 at the beginning of the
Cal OSHA program. I was intimately involved in the standard
development process for many years before moving to the private
sector. Based on my knowledge and experience, I think a change
at the Federal level is way overdue. The health regulation
recordkeeping requirements are especially a maze. I feel very
sorry for small employers. I urge OSHA and all of the agencies
to make every effort to simplify.
My written comments contain suggested remedial solutions
for OSHA, and that concludes my testimony. I will be happy to
answer any questions you may have.
Mr. Ose. Thank you, Dr. Bobis.
[The prepared statement of Mr. Bobis follows:]
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Mr. Ose. I'm going to recognize Congressman Otter for 5
minutes.
Mr. Otter. Thank you very much, Mr. Chairman. And I thank
the panel for being here.
I have shared, in one form or another, most of your horror
stories. I worked for a food processing, fertilizer processing
and large cattle feeding operation for 30 years before I
retired in 1993, and I went through all those from 1971 on with
OSHA and many of the others. And, so I can see now that, since
my retirement, nothing has gotten better.
So, I am particularly interested. Mr. LaGrande, have you
ever broken down your cost of regulation per acre? Water is
going to be probably in your area, $120 an acre; fertilizer,
$80; plowing, $14. What is--have you ever broken it down? You
farm, 900 acres, as I understand.
Mr. LaGrande. I do.
Mr. Otter. If you were to put a cost per acre on that,
could you give me a swag or some kind of an idea?
Mr. LaGrande. I would say it's probably in the neighborhood
of approaching $20 an acre.
Mr. Otter. So $20 an acre, which would be $18,000----
Mr. LaGrande. Yes.
Mr. Otter [continuing]. Wouldn't that be right?
Mr. LaGrande. Yes.
Mr. Otter. That would be $18,000 a year?
Mr. LaGrande. Yes.
Mr. Otter. Would you say that would be the same for all
folks in the California area? Are you in the San Joaquin
Valley?
Mr. LaGrande. I'm in the Sacramento Valley.
Mr. Otter. I see.
Mr. LaGrande. I would guess that would be an average. I'm
guessing that is my cost of compliance with all the
recordkeeping types of paperwork, and I would say I'm fairly
average in that respect.
Mr. Otter. Do you belong to any--in fact, I think you did
say in your testimony, and I apologize, sir, that you did
belong to a couple of national organizations, farm
organizations?
Mr. LaGrande. Yes. That's right. The Farm Bureau.
Mr. Otter. The National Farm Bureau--is that one of them?
Mr. LaGrande. Yes, sir.
Mr. Otter. I apologize. I don't know if you were here
earlier when we had----
Mr. LaGrande. I was.
Mr. Otter [continuing]. The IRS, the OMB and the GAO. But
during the inquiries to that panel, they were asked if they
would hold--or had held field hearings to get the input from
the victim--or from the folks that were required to fill out
all this information and everything. Do you think that the Farm
Bureau would be interested in providing information to those
folks?
Mr. LaGrande. I would suppose that they would be very
interested in testifying before such a hearing.
Mr. Otter. Now, there was just three agencies, as I recall,
that most of your testimony spoke to. How many other agencies--
how many total agencies, in one way or another, require a
report or demand information or input from your 900 acres?
Mr. LaGrande. Well, I would suppose on the Federal level,
there are probably 8 to 12, and then you have to start in with
the State, and you probably have as many there.
Mr. Otter. And is it true that the State reports are
different than the Federal reports?
Mr. LaGrande. Oh, absolutely.
Mr. Otter. Is it a different language?
Mr. LaGrande. Absolutely.
Mr. Otter. I see.
Mr. Knott, I'm interested in a couple of things in your
situation with OSHA. Do you have any idea what the cost, your
legal costs, your costs involved in administrative time and
that sort of thing with OSHA, which was eventually, I guess,
dismissed?
Mr. Knott. Well, actually, they requested that it be
dismissed, but I had another interesting one recently involving
a young man who fractured three fingers by putting them up
against some rolls, and the penalty for that was $4,500. What
had happened was the inspector from the OSHA said that his arm
had gone between the rolls up to the elbow. Well, interestingly
enough, the space between the rolls was 15/16ths of an inch. So
had his arm gone in there, it would have been 18 inches wide.
And when we asked the inspector under oath during depositions
how she knew, she said, I saw it right after the accident.
Well, she apparently didn't notice it was 18 inches wide. So
the--as I say, the fine was $4,500, and the----
Mr. Ose. Did you pay that?
Mr. Knott. No, I probably spent $45,000, not paying $4,500.
The OSHA prosecuting attorney said to me, ``Mr. Knott, why
do you let a minuscule little thing like this bother you? Just
pay the fine.'' I said, ``I don't want to do that. I can't live
with these people inventing and making up noncompliant systems
and saying things happened when they didn't happen. I want to
take this thing to court.'' He said, ``Well, I'll tell you,
it's going to cost you a lot of time and money.''
And, he made good on his word. He deposed 10 people. We
went to trial for 2 days, and he took 10 people up there
sitting in the courtroom for 2 days. So, as I say, probably
around $45,000. But I don't think it's right to let these
things get away.
We had another experience with OSHA in a place called the
Whiten Community Center, which is a community center in this
town I live in, and they were remodeling the place. The
building was built in 1923. OSHA came in and fined them $9,000
for having receptacles in the wall without three-pronged
receptacles. Well, in 1923, they didn't have three-pronged
receptacles. It was $9,000.
And they had another interesting one. They fined $750 for
having an IBM typewriter without a three-pronged plug. There's
never been an IBM typewriter with a three-prong plug. Some of
the directors of the community center went up to Springfield
and made an arrangement with OSHA without my knowledge, I
didn't know this was even going on, and OSHA cut the fine in
half. It was only $4,500. And the director said, ``Well, we
don't have any money,'' so OSHA let them pay it for over three
payments of $1,500.
When I learned about this, I said, ``Why in the world did
you pay that fine? You don't have to have three-pronged plugs.
You are not required to have three-hole receptacles any more
than I have to have a catalytic converter on my Model A. Why
did you do that?'' They said, ``Well, we knew if we didn't,
they'd come back and do it to us again.''
Mr. Otter. Mr. Chairman--excuse me, Mr. Knott--I realize my
time is up. It's too bad perhaps OSHA isn't as grounded as they
would like all our electricity to be, no matter when it was
invented.
Thank you very much, Mr. Knott.
Are we going to have another round?
Mr. Ose. Yes.
Mr. Otter. Thank you, Mr. Chairman.
Thank you, Mr. Knott.
Mr. Ose. Thank you, Congressman Otter.
Dr. Bobis, I want to turn first to you. Mr. LaGrande, Mr.
Knott, Mr. Nicholson are business owners, and they do not have
nearly the experience that you have, I presume, from the
procedural side of the regulatory world.
I read your written statement carefully. One of the things
that jumps off the pages is the many of the rules that are
promulgated, particularly with respect to OSHA, have not been
through the Administrative Procedure Act. I'm curious, from the
concept of certainty versus uncertainty or enforceability
versus lack thereof, if something hasn't been through the
Administrative Procedure Act, in other words it has not been
lawfully promulgated, what are the consequences to businesses?
For instance, Aerojet, in this case, in terms of an agency
coming out and attempting to enforce such regulatory rulings?
Mr. Bobis. A good example, of course, are the two major
ones I mentioned. One is the egregious penalty citation policy.
Basically what that does, if you have an ungrounded plug, for
example, and it is a $4,000 fine and you have 10 of those, it
automatically becomes a $40,000 fine. You just multiply it by
the number of instances, which is ludicrous, as far as I'm
concerned.
The egregious penalty policy has not gone through the
Administrative Procedure Act as far as a rulemaking is
concerned. It is strictly nothing more than a policy.
Mr. Ose. Before you leave that, there is an issue of
significant rules versus nonsignificant rules versus guidance
documents.
Mr. Bobis. Yes.
Mr. Ose. Is the egregious penalty a guidance document?
Mr. Bobis. It is a guidance document for OSHA to assess
their penalties.
Mr. Ose. So it has not been through the formal rulemaking
process?
Mr. Bobis. Absolutely not.
Mr. Ose. And the reason that we require a formal rulemaking
process--and I'm trying to think back to my civics class--is
that, without a formal rulemaking process those who might be
affected in the future prospectively by a rule are not given
any opportunity to comment on the rule itself. In effect, it
becomes almost a star chamber proceeding, if you will.
Mr. Bobis. Basically--simply put, we were denied due
process.
Mr. Ose. You are far more eloquent than I am on that. So
these guidance documents have no basis in procedural
applicability because they have no basis in law.
Mr. Bobis. That's right.
Another example, of course, is a multi-employee work site
citation policy, that's very, very bothersome to me especially.
On a daily basis, we have hundreds of contractors or
subcontractors at our facility. Basically what it does, it puts
us on notice that a subcontractor, or the sub of a sub, if they
make a mistake, we can be held responsible and liable and co-
cited for unsafe acts that they may perform. This particular
policy also has not gone through the Administrative Procedure
Act.
But, let me tell you the real horror story of what happened
in California. Labor filed a CASP, which is a Complaint Against
State Plan, and Federal OSHA made a determination that the
State program, the State plan, was not at least as effective as
the Federal program. Therefore, it was deficient, and it was
forced to adopt a particular policy. In California, however,
you cannot enforce a policy unless you go through the
Administrative Procedure Act.
So, the enforcement agency, which is the Division of
Occupational Safety and Health, in fact held a public hearing
and adopted the regulations effecting a policy, regardless of
my testimony against it, indicating that in fact it is not a
standard pursuant to the provision of section 6 of the act and
it should not be construed to be considered as such. My
comments were absolutely disregarded, and the regulation went
into effect.
Now, in 2000, the legislature in California, basically what
it did was it revised the labor code and by operation of law
they adopted into the statutes the regulations that CAL OSHA
adopted, because it was already law, and they didn't have to
take any testimony on it. So now it's in the statutes.
Mr. Ose. My time is about to expire.
Mr. Otter for 5 minutes. Thank you, Mr. Bobis.
Mr. Otter. Yes, thank you, Mr. Chairman.
Mr. Bobis, is it?
Mr. Bobis. Yes.
Mr. Otter. Mr. Bobis, you heard Mr. Knott's testimony on
the OSHA regulation and the process that he went through. Have
you gone through that process of taking an OSHA fine through
the court system?
Mr. Bobis. Yes, we have. We have been quite successful, and
for a very simple reason. We have a very complex manufacturing
facility. We deal with explosives, and when OSHA people show
up, they don't know anything about explosives, so they usually
cite the wrong section and we usually go and fight them and win
every one of them.
Mr. Otter. Too bad French fries weren't that difficult. I
want you to take us through the process. The first level is,
you're cited by a field agent; is that right?
Mr. Bobis. Yes.
Mr. Otter. Somebody cites you and says you did this wrong.
Mr. Bobis. Yes.
Mr. Otter. Then, what's the first level of appeal?
Mr. Bobis. First level of appeal is usually to call up the
district manager and appeal the citation, basically have an
informal conference with them. All you are doing is asking a
supervisor to overrule one of his lieutenants, and basically
that's a waste of money; a waste of effort.
Mr. Otter. Is this a judicial proceeding?
Mr. Bobis. Yes. It's an informal proceeding. It's not a
judicial proceeding.
Mr. Otter. What is the next level?
Mr. Bobis. The next level is you formally appeal within 15
working days.
Mr. Otter. To whom?
Mr. Bobis. To the CAL OSHA appeals board, which is an
independent agency.
Mr. Otter. All right. So now let's go to the third level.
And, they say, no, you're still guilty. What is the third
level?
Mr. Bobis. The third level, they have a telephone
conference with an assigned administrative law judge.
Mr. Otter. Who appoints the administrative law judge?
Mr. Bobis. The appeals board.
Mr. Otter. OSHA.
Mr. Bobis. Yes.
Mr. Otter. OK.
Mr. Bobis. Then, if you don't settle that, you actually go
through a formal hearing and another administrative law judge
presides over that.
Mr. Otter. Who appoints that administrative law judge?
Mr. Bobis. Same appeals board.
Mr. Otter. OK, so we have four strata here so far, and
we're not out of OSHA yet.
Mr. Bobis. Oh, no, you're not yet.
Mr. Otter. OK, keep going.
Mr. Bobis. Then, of course, you'll want to get legal
counsel to assist you throughout the process, and you can go
through the--just like the gentleman said, you can take
depositions of the compliance officers, and then you try to
impeach them and whatever, and eventually you present your case
and hope to win it.
Mr. Otter. OK. How many hearings and administrative rulings
and appeals do you go through before you finally get out of
OSHA and into the criminal or civil proceedings of the judicial
system?
Mr. Bobis. If the appeal is granted, then the proceeding
stops.
Mr. Otter. But let's----
Mr. Bobis. Or they may not stop, however, because the
enforcement agency----
Mr. Otter. Let's say this is one rule that they understood.
Mr. Bobis. OK.
Mr. Otter. What I want to know is how many appeals and how
much time and how many legal fees and how much testimony is
given before you finally get to an independent party that isn't
hired by OSHA?
Mr. Bobis. That would be the Superior Court.
Mr. Otter. What level is that? How many times have you gone
through the hearings and the processes and appeals and
everything?
Mr. Bobis. That would be--the next step after the
administrative law judge's decision would be appealed to the
CAL OSHA appeals board, and then you go to Superior Court.
Mr. Otter. So it is no different than EPA?
Mr. Bobis. Oh, no.
Mr. Otter. Or Army Corps of Engineers?
Mr. Bobis. Oh, no.
Mr. Otter. Or IRS?
Mr. Bobis. No.
Mr. Otter. Or almost any other government agency?
Mr. Bobis. No.
Mr. Otter. King George III never had it so good, did he?
Mr. Bobis. That's right.
Mr. Otter. That's what I thought. Seems to me we resisted
that once before.
OK. Let's say when you get to the Superior Court and you
finally won--let's say you won. You were found innocent. The
rule that was permitted or the rules that were cited were
wrong. What happens to that agent that brought that charge
against you?
Mr. Bobis. In California, we do have some recovery. We can
recover up to $5,000 in damages and legal fees.
Mr. Otter. Seven levels.
Mr. Bobis. Yes.
Mr. Otter. Seven levels, and if Mr. Knott's even close,
$45,000 for two levels before he finally got his remedy. So if
we go to seven levels, that's a pretty expensive $5,000; isn't
it?
Mr. Bobis. Yes. I think the gentleman is on the light side,
on the conservative side when we talk about legal fees.
Mr. Otter. If you were writing the law--let's say you went
from Aerojet, or you ran for Congress.
Mr. Ose. Someone else's district, Dr. Bobis.
Mr. Otter. If you ran for Congress, would you be interested
in a law which actually pursued--allowed you, as a private
individual, to pursue civil penalties against a government
agent that brought wrong charges against you?
Mr. Bobis. Oh, absolutely. Absolutely. Not only that, I
would be very much in favor of also issuing citations to
employees who willfully disregard company laws and rules.
Mr. Otter. Or overstepped their boundaries?
Mr. Bobis. Absolutely.
Mr. Otter. Or exceeded their authority?
Mr. Bobis. You bet.
Mr. Otter. You see, I'm reminded that if you, as the
compliance officer for Aerojet, disobeyed any of those rules,
and you told somebody, no, don't do that; don't do that safety
thing; no, don't hire that person because I don't like them;
for whatever reason, so you went against affirmative action,
any of those Federal laws, that you personally could be held
criminally and civilly liable, isn't that right?
Mr. Bobis. That's right.
Mr. Otter. Don't you think it would be fair if the
regulators operated under the same rules and regulations and
constraints, constraining themselves to the rule of law?
Mr. Bobis. You bet. Equal protection under the law.
Mr. Otter. So you would introduce that law?
Mr. Bobis. I would have done it yesterday.
Mr. Otter. Thank you, Mr. Chairman. I appreciate your
patience.
Mr. Ose. Thank you, Mr. Otter.
I want to go back to something. Dr. Bobis, you are a wealth
of information. Don't worry, I have questions for the other
three, but I want to make sure I get through with Dr. Bobis.
The vertical standard concept. I'm not quite sure I
understand that. Could you just take us through that one more
time?
Mr. Bobis. Oh, very simply, Federal OSHA has exempted some
special interest groups, such as agriculture, such as
construction, such as telecommunications, and basically only
one set of regulations apply in that industry. But, that's
really a misnomer because what happens, for example, if you dig
a trench on a farm, even though there are no trenching
regulations and if there's an injury, they are going to come in
and cite you under the general duty clause, and it carries an
automatic $70,000 fine for every one of those.
So, what we have here is we basically have no regulation,
written regulation. It is kind of like driving on the freeway
and there are no speed limits posted, but they pull you over to
the side and issue you a ticket for violating the speed limit
which has not been posted. That is what is wrong with that.
Now, on the other hand, if they elect to adopt, for
example, lead, there's regulations for lead in the general
industry, and there's identical regulation in construction.
Absolutely duplicated. There's no reason for that.
Mr. Ose. Now your point is that these unposted mileage
markers, or whatever, these have been issued actually not in
compliance with the Administrative Procedure Act. They are
guidance documents.
Mr. Bobis. That's right.
Mr. Ose. Now, it's my understanding--and I want to be sure
I'm clear on it. It is my understanding that case law is that
guidance documents are unenforceable, is that correct?
Mr. Bobis. The State law?
Mr. Ose. No, Federal guidance documents are unenforceable.
Mr. Bobis. They should be unenforceable.
Mr. Ose. Again, getting back to the due process issue.
Mr. Bobis. That's right.
Mr. Ose. All right. Thank you, Dr. Bobis. I am very
appreciative of your input.
Mr. Bobis. Thank you for inviting me.
Mr. Ose. I want to go on to a couple other questions I
have.
Mr. Knott, in your written testimony you cite the example
of OSHA's attempt to enter our homes in terms of an employee
working at home. Now, it's my understanding that--and I can't
remember what it was, he was secretary of something or other--
this guy Charles Jeffress, he's the Administrator of OSHA, now
he stated very specifically in front of a Senate committee that
OSHA will not hold employers liable for work activities in
employee home offices. That was about a year and 3 months ago.
Now, the question I have is that the new rule that has been
promulgated by OSHA, in effect, says that OSHA can go into
people's homes to analyze in-home injuries. I'm trying to
understand, when was the rule put through the Administrative
Procedure Act that allows that?
Mr. Knott. That allows them not to go into homes?
Mr. Ose. No, that allows OSHA to go into homes.
Mr. Knott. Well, they can't do it now. They can't go into
homes now. But an employee can bring something from home to the
business. If he has been hurt at home and he comes in to work
and that hurt is aggravated, then it becomes reportable and
documentable as a business-related injury. This is the problem.
They have reached out far beyond the workplace.
Mr. Ose. I think the phrase you used was ``the reporting
trigger has been greatly expanded.''
Mr. Knott. Exactly.
Mr. Ose. Now, what is the basis under which OSHA has
expanded that recording trigger?
Mr. Knott. What is the basis?
Mr. Ose. Yes.
Mr. Knott. Merely expansion of their empire. They are
looking for more business.
Mr. Ose. Is there a statutory underpinning to their
expansion of the recording trigger?
Mr. Knott. Of the recording--yes, that was the ergonomics
thing. Ergonomics, of course, was defeated.
Mr. Ose. We defeated that.
Mr. Knott. Right, but the reporting paperwork burden
remains in place, and that, too, needs to be erased.
Mr. Ose. Well, I'm suffering from confusion. Either I'm
confused or you're confused. If there is no rule, how can you
have a reporting trigger?
Mr. Knott. Oh no, they do have that rule. If there's a
problem with the employee at home and that problem creates a
problem for him or her at work, then it must be reported.
Mr. Ose. But I'm not aware of any statutory basis for
OSHA's requirement to report.
Mr. Knott. No, OSHA doesn't report. We have to report.
Mr. Ose. For OSHA to require that employers report that
situation, what is the statutory basis by which OSHA puts that
burden on you to report that?
Mr. Knott. That was what was left over from the ergonomics
statute. That reporting requirement was part of that.
Mr. Ose. Well, this is where I got confused. Because Mr.
Jeffress' comment last January was very clear----
Mr. Knott. Yes.
Mr. Ose [continuing]. That OSHA would not be holding
employers liable for work activities in the employees' home
offices. So there's a logical disconnection here. Because, if
OSHA's authority does not extend to the home office, and the
injury does not occur onsite at the business, how can the
business be held accountable for the injury?
Mr. Knott. Because they say that it was aggravated by the
business. In other words, if the person was hurt at home, say
he slid into third base and hurt his leg and now he's got to
walk around the plant, the plant is aggravating a problem that
happened outside. So, therefore, it has to be reported, and the
employer becomes responsible.
Mr. Ose. Even though the action causing the injury did not
occur----
Mr. Knott. Exactly.
Mr. Ose [continuing]. Under your control?
Mr. Knott. Exactly.
Mr. Ose. So what's the purpose of that?
Mr. Knott. I can't tell you. I don't know. It's just, as I
said earlier----
Mr. Ose. You can't tell me or you don't know? That's two
different answers.
Mr. Knott. Both. As I said earlier, to me it is merely an
expansion of the OSHA empire, the reach beyond the workplace to
have some more paperwork.
Mr. Ose. Well, it seems to me that OSHA has clearly--I'm
going to put this in the record--OSHA Directive CPL 2-0.125--
home-based work sites, published February 25, 2000,
stipulates--OSHA stipulates, the OSHA act, the Occupational
Safety and Health Act, neither applies to an employee's house
nor to a home office. The provisions in the final rule that
require the recordation of injuries and illnesses occurring in
an employee's home office where an employer has no control over
the office's layout or the equipment used exceed OSHA's
statutory authority. I'm trying to get the connection between
that particular stipulation and this rule that--it just seems
like they are going this way.
Mr. Knott. Well, it certainly does, but that is what OSHA
is still hanging on to, is that if someone has a problem at
home or outside of the workplace and that problem is aggravated
by work in the workplace, then it becomes the responsibility of
the employer. You're perfectly correct in saying it is
illogical, but it exists.
Mr. Ose. Is that the standard used by any State workers'
compensation plan?
Mr. Knott. No, it is not, not in any State that I know, at
least.
Mr. Ose. I'm not aware--I think that's something we ought
to followup in California in terms of--I mean, Massachusetts
doesn't have it, California doesn't. We don't know if
California has it. But, again, what is the basis for the
recording trigger is what I'm trying to get at and what are the
related requirements at the State level. What I hear you saying
is Massachusetts recognizes that this is not something the
workers' compensation would compensate for.
Mr. Knott. Correct. Massachusetts Department of Labor will,
if you request, perform an OSHA inspection on your facility. I
requested the Commonwealth of Massachusetts Department of Labor
to do that, and they spent several days going through the
place. I'm always looking for suggestions and ideas.
When the OSHA inspector came in to do a wall-to-wall, as he
said, I said, well, we just had one from the Commonwealth of
Massachusetts, would you like to see that? He said, ``They
don't know what they're doing.''
Mr. Ose. My time is way over. I apologize.
Mr. Otter, for 5 minutes.
Mr. Otter. Mr. Chairman, I apologize to not only you but
also the panel, because I think this could go on a long time
and we could find out a great deal more, but I have a 12:30
p.m. appointment that I am going to have to get to.
But I don't want to leave Mr. Nicholson out. I think he
deserves an opportunity to respond. Does Virginia have an
OSHA--a State correspondent to OSHA?
Mr. Nicholson. Yes, sir.
Mr. Otter. Do you think they care any less about the
accident and health rate in the workplace than, say, does the
Federal OSHA?
Mr. Nicholson. I don't think so. I think they do a fine
job.
Mr. Otter. In your estimation, is the Federal Government
any more qualified than your State OSHA to guide the
responsibilities of employment to less accidents and better
health?
Mr. Nicholson. It is my belief that most of the Federal
OSHA enforcement is left to the Virginia group because the
State is so effective in what they're doing.
Mr. Otter. Do you find that when you are dealing with the
State you are kind of dealing with a neighbor and when you are
dealing with the Federal OSHA you are dealing with an
enforcement policeman?
Mr. Nicholson. Absolutely. I think the Federal personnel
have a quite different perspective. They don't understand that
there are local conditions that can have a significance.
Mr. Otter. How many bouquets do you sell a year?
Mr. Nicholson. Gee, I've never counted the number of
bouquets.
Mr. Otter. Well, I like to be able to always reflect on
these things, so that I can tell the next girlfriend that I
give a bouquet to, or my mother, that $2 of this bouquet is
government regulation. That what I wanted to get down to,
because I want to know what it costs you in your business to
comply with the reporting responsibilities, whether it's the
IRS, OSHA, or anybody else, probably USDA, because you are
dealing with live flowers in some cases.
Mr. Nicholson. Actually, we are a significantly small
business, so we are exempt from Federal regulation on purpose.
Mr. Otter. I see. In other words, hoof and mouth is only
for the big guys?
Mr. Nicholson. That's right. But, we figure I pay probably
$100 a week for outside contractors, CPA, and bookkeeping and
that kind of thing; and then I also have about 10 to 15 hours
per week of my time devoted to a whole series of bookkeeping
stuff. Although, as I pointed out, in order to do a good job in
managing my business, I ought to be doing most of that
bookkeeping already anyway.
Mr. Otter. I see.
Well, Mr. Chairman, members of the panel, as I began, I
apologize once again for having to rush, but I would like each
of you to consider whenever you express in terms of government
reporting and government regulation, to do it in unit cost
terms. Because I found out--and I sold McDonald's a lot of
French fries; and when people started complaining about $1.35
for an order of French fries, I said I just want you to know
that 38 cents of that is government regulation.
We care about our customers, because we know the first time
we sell them a French fry is not where we make the profit. It
is when they come back and buy it again and again and again.
So, we really care about them--where the government would have
you think that we don't care about them.
I would hope that, no matter what your product is, no
matter how many acres you have, no matter how many pieces of
netting you sell for crab traps, that if you could express that
in a per-unit cost and when your customers come in you could
say, you know, I'm sorry it could be a lot cheaper, the only
thing is it is your government cost.
Not only that, but the national organizations that you
belong to, have them break it down to per-unit cost, and pretty
soon we are getting somewhere with the real cost of government,
the hidden costs, the hidden taxes that we have.
Thank you, Mr. Chairman.
Mr. Ose. Thank you.
Mr. Otter, I want to tell you, if it's 38 cents per $1.35
of French fires, over the spring break I think I spent $217 on
government regulation for French fries. They were good, though.
Mr. Otter. Would the gentleman yield? I would just have you
know that I one time figured out how many taxes and regulations
there were on two all-beef patties, special sauce, onions,
lettuce, pickles, cheese on a sesame seed bun, and it's $2.54.
Mr. Ose. Wow.
I need to ask a couple other questions. I want to thank Mr.
Otter for coming.
This hearing is about paperwork, and every time we get back
to what is the required paperwork under the results from these
statutory, discretionary or guidance document requests. Dr.
Bobis, on the guidance document requests, things that are not
binding, relative to your overall expense for paperwork, how
much do you think you are spending? Twenty percent? Fifty
percent?
Mr. Bobis. It's very difficult to quantify, and I--just a
wild guess, between 10 and 20 percent.
Mr. Ose. For guidance document compliance?
Mr. Bobis. Yes.
Mr. Ose. Mr. Nicholson, you said you were exempted from
most of the provisions. Any feedback here?
Mr. Nicholson. Well, I don't know exactly what you mean by
feedback. It certainly has crossed my mind that the expansion
and growth of our business might reach a level where I'm not
sure I want to grow much longer because I'll go beyond all the
limits, the thresholds. As a result, I am sort of looking at if
I can continue to expand and use the same number of employees,
I might continue, but I'm not sure I want to hire a bunch of
additional people. Because right then and there I'm off into a
whole different realm than I am as a mom and pop.
Mr. Ose. As a mom and pop, how much do you think you spend
in complying with IRS reporting requirements each year?
Mr. Nicholson. Well, I've got probably $100 a week, as I
say, for outside bookkeeping-type, combination CPA and the
bookkeeper and that sort of thing. I'd say for Federal income
tax purposes, probably more than half of that is used to
compile the Federal income tax, the 940's and all the rest of
the Federal reporting.
Mr. Ose. So you are somewhere around $5,000 to $7,000 a
year in your business?
Mr. Nicholson. Yes.
Mr. Ose. Mr. Knott, on the requirement to comply with what
appears to be a reporting requirement that has not followed the
Administrative Procedure Act, that being the home-based
occupational and safety health issue, and I'm characterizing
this in my words, how much do you spend or expect to spend
complying with that requirement?
Mr. Knott. My human relations manager estimates that it's
going to take about 25 percent of an assistant's time, which is
about, say, $10,000.
Mr. Ose. OK. And you have about 125 employees?
Mr. Knott. Yes. I estimate that I spend about 80 percent of
my time dealing with OSHA, the EPA and the FAA. Having started
the business with my own two hands and worked out in the plant,
that's quite a switch, to spend 80 percent of my time dealing
with bureaucracies.
Mr. Ose. You bring me back to one of the points. I was
reading your written statement last night, and I just want to--
if I can find it--you have a comment in here that I thought was
particularly telling. Here it is, on page 4. This is your
statement, which I thought was very, very good. ``People who
make things in America have to divert their attention from
productivity and quality goals to deal with bureaucracies,
inspectors, complainants, lawyers and courts, a diversion with
which people who make things in America have had to deal with
time and again.''
And your point, if I understand the prefacing comments in
your testimony, is that you are a producer; you make things.
You are not interested in the paperwork. It is not your reason
for being. Your reason for being is that you want to produce
something, to create jobs and revenue and all the different
things that result.
Mr. Knott. Make those profits to send those tax dollars
down to Washington.
Mr. Ose. I understand. I almost slipped there and said the
same thing. But my point is, you are a producer; you're not a
consumer here.
Mr. Knott. That's right.
Mr. Ose. I don't understand why we are promulgating upon
you guidance documents ad infinitum, or ad nauseam, which takes
you away from your productive time. That's the thing that just
strikes me here. So I want to thank you for coming. I
appreciate that.
Mr. LaGrande, I want to go through your testimony somewhat
at length, so if the other witnesses will be patient. I am
particularly interested in the impact on agricultural
production from Bureau of Reclamation efforts to collect this,
that or the other piece of information, which your testimony
indicates--I think your phrase was ``finds no basis in law,''
on page 3.
One of your suggestions is that when your operating
entities file on a new year or annual basis, if you could have
a spot on the forms that you file that says ``no change from
previous year,'' that would save you an enormous amount of time
and effort. You've got 900 acres. How many of those 900 acres
from year to year change in terms of operator or operating
entity or crop or water use?
Mr. LaGrande. None of them.
Mr. Ose. Zero.
Mr. LaGrande. Yes, that's correct.
Mr. Ose. So, in effect, you could take almost a Xerox of a
previous year's filing, in terms of the basic data. You would
have to change the date, of course, but----
Mr. LaGrande. You could, but the forms they provide you
have on the top of them the year. So this is a form for 2000,
and you can't turn in the 2001 form. You can't turn this in in
place of the 2001 form, although the form hasn't changed nor
has any of the information or the data that I'm going to fill
in.
Mr. Ose. Are you able to file that information
electronically with the Bureau?
Mr. LaGrande. No.
Mr. Ose. They cannot take it electronically or they will
not take it electronically?
Mr. LaGrande. I'm not sure if they cannot, but they will
not.
Mr. Ose. All right. So maybe one of the things we need to
do legislatively is at least discuss with the Interior
Department and the Bureau of Reclamation, if the circumstances
of any one person's water use have not changed from year to
year, for what purpose are we requiring a whole new set of
documents? We should put that little line item in there.
Mr. LaGrande. I think that would be appreciated.
Mr. Ose. If that option were available to you on that
particular form, how much time would it save you?
Mr. LaGrande. Oh, it would save hours. I don't have a good
sense of how many hours, but probably 20 to 25 hours in the
spring each year.
Mr. Ose. And, that's on your 900 acres?
Mr. LaGrande. Yes, something like that.
Mr. Ose. In my district, and I'm just talking about rice,
there are 550,000 acres of rice grown in my district. So, if
all 900 acres of yours is rice, that's 1/600th of the total, so
it would be 600 times whatever time you would be saving, and
then we could just replicate that for every programmed crop
throughout the State.
Mr. LaGrande. That's right.
Mr. Ose. Just by putting a box that says ``no change from
previous year.''
Mr. LaGrande. For those that have no changes.
Mr. Ose. I understand.
Mr. LaGrande. Absolutely.
Mr. Ose. As far as the information that the Bureau requests
for who your fertilizer applicator is, who hauls your product
to market, who drives your rice, who provides natural gas to
dry your rice, who works in your field with your custom
harvester, what possible purpose could the Bureau have for
asking for that information?
Mr. LaGrande. Well, it seems to find its origins in efforts
that were made under the Clinton Interior Department to placate
a few environmentalists, namely the NRDC, who really tried to
stretch the rules as they applied to the word lease.
When the Reclamation Reform Act was originally considered
by Congress in the early 1980's, they wanted to limit the size
of farms that could be the recipient of Federal water. So the
basis on which that limitation was derived was on ownership.
Because everyone could clearly agree on who owned the land, and
then you had the case of lease, and that was not quite so
clear, but there are relatively clear definitions available. So
the one they decided on is someone who has an economic interest
in the crop. If you have control of the property and you have
an economic interest in the crop, you are a lessor.
But, then there were objections raised by environmental
organizations that, hey, there are a few organizations that try
to get around that by leasing out their property and then, in
fact, they're farming different people's entities and acreage
for them and charging a fee for that, and so we should go after
them.
Well, that died out in the late 1980's. They made those
arguments to Congress, Congress overruled that, and so 12 years
later the Bureau of Reclamation put forth rules chasing down
that lead as a result of a settlement that the Department of
the Interior made with the NRDC under the Department of
Justice. And one of the terms of the settlement was that they
would put forth rules that would cause farmers to identify
their farm operators and notify the Bureau of Reclamation as to
the identity of their farm operators.
Mr. Ose. Are those rules being promulgated now?
Mr. LaGrande. Yes, this year.
Mr. Ose. They have been issued?
Mr. LaGrande. Yes, but not publicized. None of us have
received any notification.
Mr. Ose. Have they been through the Administrative
Procedure Act?
Mr. LaGrande. I have no idea.
Mr. Ose. I think that's something we will inquire about.
Now, the Reclamation Reporting Act has not changed since
1987.
Mr. LaGrande. That's correct.
Mr. Ose. If I understand correctly, the Reclamation
Reporting Act does not require the reporting of all these
people who work for a farmer.
Mr. LaGrande. That's correct. It's also public information.
So someone who, say, is a crop duster and wants to go and,
under a Freedom of Information Act request, look at who their
competitor's customers are, they can do that. So suddenly there
are confidential customer lists, and information such as that
is public information.
Mr. Ose. Now, one of the things, if I might expand this a
little bit from, say, the Bureau. I want to go over to the Farm
Service Agency. The FSA each year meets with the growers in an
area, collects data as they relate to program crops and the
like, your base acres, all the stuff. Do the reports at FSA
allow a farmer to check a box that says he or she is just going
to do what they did last year?
Mr. LaGrande. Yes.
Mr. Ose. They do?
Mr. LaGrande. The FSA's process is quite a bit more
streamlined. They don't actually----
Mr. Ose. Wait. Wait a minute. So one agency says that--the
agency at the top of the food chain, so to speak, the FSA, says
you can check off a box that says no change from last year, but
an agency lower down on the food chain doesn't?
Mr. LaGrande. Correct.
Mr. Ose. Why?
Mr. LaGrande. I don't know.
Mr. Ose. Actually, why not?
Mr. LaGrande. That's a good question, and it is a source of
frustration for all of us.
Mr. Ose. So on a comparative basis you can turn in your
forms to FSA literally with the flick of a wrist. Whereas over
here at Bureau, where you are using what they provide as an
input to which you report to FSA, it requires a rather onerous
drill, if you will?
Mr. LaGrande. That's right.
Mr. Ose. Is the information you're reporting to the Bureau
any different than the information you're reporting to the FSA?
Excuse me, is the information being required to be reported to
the Bureau different from the information you're required to
report to the FSA?
Mr. LaGrande. Slightly, particularly under these new rules.
The FSA doesn't require any information about who your
providers are of any services and that sort of thing. The FSA
does require--they both have in common the requirement that you
have to indicate the land, identify the land that you are
farming and identify whether you own that land or you lease
that land. They both require that, and they both require
evidence of the lease. So the majority of the information is
common.
Mr. Ose. Duplicative in nature.
Mr. LaGrande. Correct.
Mr. Ose. Why? I mean, I understand why it's duplicative. I
don't understand why it's being asked for twice. I don't
understand that.
Mr. LaGrande. I would imagine that the Farm Service Agency
and the Bureau of Reclamation staffs have not found a way to
get together and utilize a common form.
Mr. Ose. But, again, it gets back to your point under the
Reclamation Act this information is not required anyway, from
the Bureau of Reclamation standpoint.
Mr. LaGrande. That's right.
Mr. Ose. So the differences between FSA's form and the
Bureau's form boils down to that which the Bureau requests is
not being authorized to collect under law?
Mr. LaGrande. In substance, I would say that's the
difference. The forms are, of course, set up differently, and
you get to a little bit different arrangement of the data.
Mr. Ose. How many boxes per year of paperwork do you end up
having to accumulate for this stuff?
Mr. LaGrande. You can accumulate more boxes than for which
you have storage capability in your office very quickly.
Mr. Ose. So you end up renting a mini-storage unit to put
your paperwork in.
Mr. LaGrande. Yes.
Mr. Ose. And, then you have to hold it for 7 years?
Mr. LaGrande. Some of it 3, some of it 5, some of it 7,
some of it indefinitely.
Mr. Ose. Have you ever had anybody come back and look at
your paperwork?
Mr. LaGrande. Never.
Mr. Ose. Your family has been farming out there for how
long?
Mr. LaGrande. I'm the fifth generation.
Mr. Ose. So, what, 1875? Early 1900's?
Mr. LaGrande. That's right, late 1800's, early 1900's.
Mr. Ose. And, no one has ever been in your storage unit to
look at your files? No one from the Bureau?
Mr. LaGrande. Not in mine.
Mr. Ose. I want to thank the witnesses for coming. You have
given us significant input in terms of the paperwork burdens
that you bear. I am particularly concerned about the manner in
which information is requested for which there is no statutory
authority to ask for in the first place; and it clearly ranges
from corporate America, where Dr. Bobis works, to where Mr.
Nicholson, Mr. Knott, and Mr. LaGrande work. It is across all
industries and in all States and, clearly, in virtually every
possible nook or cranny where such information might exist.
It is all-encompassing and, clearly, some of the
information is statutory. To the extent that it's statutory
information, I don't think any of us object to its collection.
But when it's discretionary, and there is no clear
understanding or reason or basis for the collection, I have to
admit to some confusion as to why we burden our people with
that.
I want to thank our witnesses for coming today. I
appreciate it. This committee will be following up on these
items, and your testimony today has been very helpful.
We are adjourned.
[Whereupon, at 12:48 p.m., the subcommittee was adjourned.]
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