<DOC>
[107th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:85610.wais]
PAPERWORK INFLATION--THE GROWING BURDEN ON AMERICA
=======================================================================
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
SECOND SESSION
__________
APRIL 11, 2002
__________
Serial No. 107-173
__________
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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WASHINGTON : 2003
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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
STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland
BOB BARR, Georgia DENNIS J. KUCINICH, Ohio
DAN MILLER, Florida ROD R. BLAGOJEVICH, Illinois
DOUG OSE, California DANNY K. DAVIS, Illinois
RON LEWIS, Kentucky JOHN F. TIERNEY, Massachusetts
JO ANN DAVIS, Virginia JIM TURNER, Texas
TODD RUSSELL PLATTS, Pennsylvania THOMAS H. ALLEN, Maine
DAVE WELDON, Florida JANICE D. SCHAKOWSKY, Illinois
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
ADAM H. PUTNAM, Florida DIANE E. WATSON, California
C.L. ``BUTCH'' OTTER, Idaho STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia ------
JOHN J. DUNCAN, Jr., Tennessee 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
JOHN J. DUNCAN, Jr., Tennessee ROD R. BLAGOJEVICH, Illinois
------ ------
Ex Officio
DAN BURTON, Indiana HENRY A. WAXMAN, California
Dan Skopec, Staff Director
Barbara Kahlow, Deputy Staff Director
Allison Freeman, Clerk
Elizabeth Mundinger, Minority Counsel
C O N T E N T S
----------
Page
Hearing held on April 11, 2002................................... 1
Statement of:
Graham, John D., Administrator, Office of Information and
Regulatory Affairs, Office of Management and Budget;
Charles O. Rossotti, Commissioner, Internal Revenue
Service; and Vic Rezendes, Managing Director, Strategic
Issues, U.S. General Accounting Office..................... 11
Shipman, Thomas Hunt, Deputy Under Secretary, Farm and
Foreign Agricultural Services, U.S. Department of
Agriculture; and Scott Cameron, Deputy Assistant Secretary
for Performance and Management, U.S. Department of the
Interior................................................... 95
Wordsworth, James M., president, J.R.'S Goodtimes, Inc.; and
Kenneth A. Buback, vice president, human resources, Sutter
Health..................................................... 140
Letters, statements, etc., submitted for the record by:
Buback, Kenneth A., vice president, human resources, Sutter
Health, prepared statement of.............................. 159
Cameron, Scott, Deputy Assistant Secretary for Performance
and Management, U.S. Department of the Interior:
Form 7-21 Verify......................................... 130
Information concerning RRA forms......................... 136
Prepared statement of.................................... 109
Graham, John D., Administrator, Office of Information and
Regulatory Affairs, Office of Management and Budget:
Followup questions and responses.........................79, 93
Prepared statement of.................................... 14
Ose, Hon. Doug, a Representative in Congress from the State
of California, prepared statement of....................... 4
Rezendes, Vic, Managing Director, Strategic Issues, U.S.
General Accounting Office, prepared statement of........... 58
Rossotti, Charles O., Commissioner, Internal Revenue Service,
prepared statement of...................................... 37
Shipman, Thomas Hunt, Deputy Under Secretary, Farm and
Foreign Agricultural Services, U.S. Department of
Agriculture:
Followup question and response.........................128, 138
Prepared statement of.................................... 98
Tierney, Hon. John F., a Representative in Congress from the
State of Massachusetts, prepared statement of.............. 178
Wordsworth, James M., president, J.R.'S Goodtimes, Inc.,
prepared statement of...................................... 143
PAPERWORK INFLATION--THE GROWING BURDEN ON AMERICA
----------
THURSDAY, APRIL 11, 2002
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 9:32 a.m., in
room 2247, Rayburn House Office Building, Hon. Doug Ose
(chairman of the subcommittee) presiding.
Present: Representatives Ose, Otter and Duncan.
Staff present: Dan Skopec, staff director; Barbara Kahlow,
deputy staff director; Allison Freeman, clerk; Melica Johnson,
press fellow; Elizabeth Mundinger, minority counsel; Ellen
Rayner, minority chief clerk; and Teresa Coufal, minority staff
assistant.
Mr. Ose. Good morning.
Every year at tax time, this committee holds a hearing to
assess progress since last year and plans for this year to
reduce the paperwork burden on the American people. This week,
as Americans prepare and file their tax returns, they will
again experience, hopefully in a positive vein, firsthand, the
kind of burdensome paperwork and red tape that the Government
imposes.
In last month's regulatory accounting report, the Office of
Management and Budget, OMB from now on, estimated the Federal
paperwork burden at nearly 7.7 billion hours. The Internal
Revenue Service, the IRS from now on, accounts for 83 percent
of the total. Four additional agencies each levy over 140
million hours annually on the public, those agencies being the
Department of Health and Human Services, including Medicare and
Medicaid, the Department of Labor, Securities and Exchange
Commission, the SEC, and the Environmental Protection Agency,
the EPA.
OMB estimated that the price tag for all paperwork imposed
on the public is $230 billion a year. Much of the information
gathered in this paperwork is important, sometimes even
crucial, for the Government to function. However, much is
duplicative and unnecessarily burdensome.
In 1980, Congress passed the Paperwork Reduction Act and
established an Office of Information and Regulatory Affairs
[OIRA], within OMB. By law, OIRA's principal responsibility is
paperwork reduction. It is responsible for guarding the
public's interest in minimizing costly, time consuming, and
intrusive paperwork burdens. In 1995, Congress passed
amendments to the PRA, the Paperwork Reduction Act, and set
government-wide paperwork reduction goals of 10 or 5 percent
per year from fiscal year 1996 to 2001. After annual increases
in paperwork instead of decreases, in 1998 Congress required
OMB to identify specific expected reductions in fiscal years
1999 and 2000. OMB's resulting report proved unacceptable.
As a consequence, in 2000, Congress required OMB to
evaluate major regulatory paperwork and to identify specific
expected reductions in regulatory paperwork for fiscal years
2001 and 2002. Again, OMB's resulting report proved
unacceptable. In response, in September, the subcommittee asked
OMB to again review 15 non-IRS major rules, each imposing over
10 million hours of burden. The Paperwork Reduction Act limits
the time period for OMB paperwork approvals. In fact, OMB is
required to reexamine each of its paperwork approvals,
including regulatory paperwork, at least every 3 years.
I look forward to OMB's status report today. The goal of
the three 1995 to 2000 paperwork acts was to reduce red tape
each year. However, paperwork burdens have increased and not
decreased in each of the last 6 years. Today, the GAO will
report that last year saw the largest 1 year increase in
paperwork since the 1995 law was enacted. Curiously, in
October, OMB reduced from 27 to 15 the number of agencies
required to submit information collection budget submissions
and to be subject to paperwork budget controls. For example,
OMB deleted the Securities and Exchange Commission and the
Federal Trade Commission, both of which levy substantial
burden. Also, OMB stated, ``in the interest of reducing the
administrative burden [on the agencies], we have significantly
reduced from previous years the amount of information we are
requesting.'' I look forward to an explanation of why OMB is
more concerned, apparently, with reducing administrative burden
on the agencies rather than reducing paperwork burden on the
American people.
Under the Paperwork Reduction Act, OMB is the watchdog for
paperwork. However, the evidence points to OMB's continuing
failure to focus on paperwork reduction. OMB has not pushed the
IRS and other Federal agencies to cut existing paperwork.
Traditionally, agencies continue to levy unauthorized paperwork
burdens on the American people and continue not to resolve a
great number of outstanding violations of law, including some
in violation for multiple years. I look forward to the
testimony about OMB's specific disclosures in paperwork
reduction and its efforts to resolve each outstanding violation
of law.
IRS also has a dismal record in paperwork reduction. Today,
GAO will report large increases by IRS in paperwork which is
not statutorily required, i.e., it is discretionary. IRS
Commissioner Rossotti testified before this subcommittee in
April 1999, in April 2000, and in 2001, promising more
initiatives each year, especially for small business taxpayers.
I hope to hear good news from Commissioner Rossotti today on
this subject.
In sum, OMB and IRS are not doing an acceptable job in
paperwork reduction. There is no excuse not to promptly correct
all existing violations of law and to ensure accountability to
Congress and the public. It is time for OMB to disclose its
specific role in paperwork reduction, that is, what does OMB
specifically do. Next year, we expect OMB and IRS to evidence
progress in paperwork reduction.
I want to welcome our witnesses today.
I am happy to recognize the gentleman from Idaho for an
opening statement.
[The prepared statement of Hon. Doug Ose follows:]
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Mr. Otter. Thank you, Mr. Chairman, for your leadership in
holding this hearing. I also want to express my continued
commitment to this subcommittee for their reducing the
paperwork burden generated by the Federal Government and passed
on to the public.
Much has been made about the efforts of many Federal
agencies to work with the Office of Information and Regulatory
Affairs and reporting compliance and the Paperwork Reduction
Act. I am sure we are going to hear from the witnesses today
about the progress that has been made in reducing this burden.
While progress is always positive, many agencies still require
many tedious and unnecessary, mostly unimportant, costly
actions from a public that they exist to serve.
As we begin this hearing, I think it is also beneficial to
reflect on why it is necessary to reduce the Federal Government
paperwork burden passed on the American public. On March 12th,
this subcommittee examined the cost and benefits of Federal
regulations. During that hearing, it was stated that Americans
spent approximately $843 billion in the year 2000 to comply
with the Federal regulations. Especially in this time of
economic recovery, I think it is important that the Federal
Government continue to find ways to reduce the financial burden
of compliance with Federal regulations. Reducing needless
paperwork will certainly aid in this effort.
It is no surprise that many Government agencies are
reporting that advances in technology over the past decade have
contributed significantly to the increased efficiencies in the
reduction of paperwork. However, it is important to remember
that constant evaluation of agency regulations and mandates is
necessary to determine if the new technology has merely allowed
Federal agencies to become more efficient at conducting
unnecessary business, rather than encouraging real change in
regulatory burdens to reduce paperwork.
Again, Mr. Chairman, I appreciate the attention we are
paying to this issue of reducing paperwork and I look forward
to hearing the testimony of the witnesses.
I also am reminded in some of the formal remarks that will
be made today of certain agencies touting the fact they have
made an 80 percent advance. I would ask the folks from the IRS
today, if the taxpayers were equally as efficient in paying
their taxes, would 80 percent be acceptable to you all? For the
EPA, if those folks in the private sector were 60 percent
successful in conducting their business in accordance with EPA
standards, would the EPA accept that? Yet, they want us to
accept those kind of figures, and I think it is time that we
expect of them exactly what they expect of the folks under
their charge in the public sector.
Once again, Mr. Chairman, thank you for your leadership on
this issue and I look forward to hearing from the witnesses.
Mr. Ose. I thank the gentleman and I would recognize my
good friend from Tennessee for the purpose of an opening
statement. Mr. Duncan.
Mr. Duncan. Thank you, Mr. Chairman, and thank you very
much for calling this hearing. This is a very important topic.
First of all, I want to thank Dr. Graham for coming to
visit me a few days ago in response to an earlier related
hearing that we held in this subcommittee. This is my 14th year
in the Congress. My father was here for 23\1/2\ years before
me. I have been following these issues for a long, long time. I
always hear departments and agencies giving lip service to
reducing the paperwork burden, but I was a lawyer and judge
before I came to Congress, and it seems as if this paperwork
burden just grows and grows and grows. Governor Otter just
mentioned an $843 billion estimate on the cost. I have read all
kinds of estimates about the cost of filling out the tax
returns each year.
I remember several years ago seeing some polling and it
said that over 90 percent of the people wanted us to reform the
welfare system. We were fairly successful in accomplishing
major reforms in that regard but the second highest issue in
that same poll said that 85 or more percent of the American
people wanted us to greatly simplify the tax code. Yet I am
very skeptical that we will be able to do that for many, many
reasons. I think there are many in and outside the Congress
that really do not want us to simplify it.
What really concerns me is I read a few months ago that the
IRS Inspector General, in a study of how 16,000 IRS employees
used their government computers, ``found they used half their
on-line time at work to visit sex sites, gamble, trade stocks
and do other non-work related activity,'' according to the
Scripps-Howard News Service. Another Inspector General
investigation found that IRS agents gave taxpayers incorrect or
insufficient advice on their tax questions a whopping 73
percent of the time.
I don't see how we can sit around and accept things like
that. Those reports came not from some IRS enemy but from the
Treasury Department's own Inspector General, as reported on the
front pages of newspapers around the country by the Scripps-
Howard News Service, which is a very respectable news service.
To think that IRS employees spent half their time visiting sex
sites, gambling, trading stocks, and doing other non-work
related activity. And IRS agents give taxpayers incorrect or
insufficient advice on their tax questions a whopping 73
percent of the time--I don't know how they arrived at that
because, most of the time, what I hear from people in Tennessee
is they never can get hold of an IRS agent when they call. They
can't get any advice from them, period.
What I am saying is I am not blaming this on anyone in
particular, but there is a real problem there when we have a
tax code that is so complicated and confusing and convoluted
that even the IRS doesn't understand it and either can't or
won't give out correct advice. Then the American people have to
struggle with paperwork and go out and hire very expensive
accountants and lawyers to do things they should be able to do
on their own.
Thank you very much for calling this hearing. I have these
concerns and I hope the witnesses will refer to some of these
things in their testimony.
Mr. Ose. I thank the gentleman.
I want to welcome our first panel. On our first panel we
have: the Administrator of the Office of Information and
Regulatory Affairs, OMB, Dr. John D. Graham; Charles O.
Rossotti, Commissioner, Internal Revenue Service; and Managing
Director, Strategic Issues, General Accounting Office, Mr. Vic
Rezendes.
Gentlemen, we swear our witnesses at this committee. If you
would all rise and raise your right hand.
[Witnesses sworn.]
Mr. Ose. Let the record show the witnesses answered
affirmatively.
Our typical process is we will go through and have each
witness provide testimony. We have received your written
testimony and have reviewed it. I know you have many comments
to provide and we appreciate that. Dr. Graham, we will go with
you first for 5 minutes.
STATEMENTS OF JOHN D. GRAHAM, ADMINISTRATOR, OFFICE OF
INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND
BUDGET; CHARLES O. ROSSOTTI, COMMISSIONER, INTERNAL REVENUE
SERVICE; AND VIC REZENDES, MANAGING DIRECTOR, STRATEGIC ISSUES,
U.S. GENERAL ACCOUNTING OFFICE
Mr. Graham. I appreciate the opportunity to be here this
morning and I particularly compliment you and the leadership
you have been exercising in trying to bring this paperwork
issue forward to the American people for not only discussion
but progress and resolution.
At OMB today we are releasing our annual report to the
Congress on the Paperwork Reduction Act, with an emphasis on
documentation of burdens of paperwork. I would like to
summarize those findings for you.
One, the paperwork burdens of the Federal Government are
substantial. The number 7.765 billion burden hours is the
summary number nationwide. About 63 percent of that burden is
incurred by businesses; 32 percent by individuals; 5 percent by
State, local, and tribal governments. Of this total burden of
7.75 billion hours, about 80 percent is related to the
activities of the Treasury Department and the tax code is at
the center of much of that burden.
Major finding No. 2, paperwork burdens are increasing,
despite the legislated reduction goals in the Paperwork
Reduction Act. As you know, the Paperwork Reduction Act
established 5 to 10 percent annual reduction goals for most of
the years since 1980. However, these goals have been met only
once, and they were certainly not achieved in fiscal year 2001
where you will hear there were significant increases again.
Third, paperwork requirements, though burdensome, are often
justified by valid programmatic rationales. This is a point you
made, Mr. Chairman, in your opening statement. I would like to
give three examples of these valid programmatic rationales.
OSHA's process safety rules protect workers from toxic,
flammable, and explosive chemicals. EPA's toxic release
inventory provides communities useful information and has
stimulated corporations to reduce pollution. NHTSA's new car
program provides consumers information about the crash
performance of different vehicles. Clearly, efforts need to be
made to ensure all these paperwork requirements underlying
these programs are reasonable, but certainly there are valid
rationales in each of those areas for some type of paperwork
burden.
Fourth, I want to acknowledge that OMB itself is often a
cause of this problem. We have initiated policy initiatives--
which we think are in the public interest--that do, in fact,
sometimes increase the paperwork burden on the American people.
As know you know, roughly 40 million Americans consult
government Web sites regularly for information to help them in
their daily lives or to help them understand how to communicate
with policymakers. However, the quality of this information on
Web sites has been questioned, and Congress has required OMB to
develop guidelines in this area to improve the quality of
information on agency Web sites. In January of this year, we
imposed government-wide guidelines on the quality of this
information. We think that is a useful thing to do. But I must
acknowledge that, in order to comply with that, many agencies
are going to have to gather more information from the public in
the form of surveys to get higher quality information to meet
the burdens of OMB's information quality guidelines.
Fifth point, I would like to emphasize the initiatives I
have taken at OIRA since assuming this role in July of last
year. In October of last year, I sent a bulletin to each of the
executive departments and agencies. Although we asked for less
detail on documentation of paperwork burden, we asked for more
emphasis on specific programmatic initiatives to reduce
paperwork burden. We have received 34 initiatives from these 15
agencies. They are documented in this report, and I look
forward to continuing dialog with the subcommittee and the
agencies on how much progress we can make with these
initiatives.
Second, in November of last year, I sent a memorandum
jointly signed with the General Counsel of OMB to each of the
general counsels and CIOs of the various agencies emphasizing
the importance of full compliance with the Paperwork Reduction
Act and requesting specific plans to curtail or resolve
violations of the Paperwork Reduction Act.
If I could have my colleague, Jeff Hill, put up the second
of our visual aids, I want to make the point that, in fact, we
are making continuing progress in reducing the number of
paperwork violations that were unresolved at the time this
report is presented to the Congress. However, we still have
more work to do, and we will continue to do that.
My final point is that we are modernizing OIRA's
information management system so that we can better understand
what difference we are making in this area of paperwork
reduction and also provide the public access to information
about how we are working. For example, I asked my staff in my
first couple of weeks on the job how many of these paperwork
approvals do we actually modify to make them better. They gave
me the data system which said that we approve 98 percent, we
reject 2 percent. There is no information in the data system on
whether we made any modifications to reduce burden. So the new
variations of our information system in the short run will
provide a public indication of whether modifications were made
and also, starting late next year, we will have public access
to paperwork review information like we now have public access
to regulatory review information.
Thank you very much, Mr. Chairman, and I look forward to
your questions and discussion.
[Note.--The Office of Management and Budget [OMB] report
entitled, ``Managing Information Collection and Dissemination,
Fiscal Year 2002,'' may be found in subcommittee files or
online at the OMB Web site: http://whitehouse.gov/omb/inforeg/
paperwork--policy--report--final.pdf.]
[The prepared statement of Mr. Graham follows:]
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Mr. Ose. Thank you, Dr. Graham.
Our next witness is Commissioner of the IRS, Mr. Charles
Rossotti, for 5 minutes, please.
Mr. Rossotti. Thank you.
I am pleased to come before you again to discuss our
efforts to reduce paperwork and regulatory burden on America's
taxpayers. Since my last appearance, we have been able to
buildup our burden reduction efforts. This chart summarizes the
four categories in which we have been working to reduce burden.
These include: forms redesign, regulatory reductions and relief
of certain regulatory requirements, revision of additional
electronic service, and some management initiatives to continue
this effort over time.
With respect to the forms, we have reduced Schedule D which
is used to record capital gains taxes. We have expanded a very
popular initiative, which is a check box on the Form 1040 and
other forms to allow taxpayers to designate a family or friend
or tax professional to talk directly to the IRS to correct
errors. This is very popular and we have expanded it.
For tax year 2002 we have also cut 11 lines out of the form
used to compute the notorious alternative minimum tax, probably
the least popular part of any of the tax computations. We were
able to at least eliminate some lines on that, and we are
working to redesign the 941 which is one of the most frequently
filed forms by small business.
In the second category, regulatory initiatives, we have
made some very significant progress particularly with respect
to small business, which the chairman mentioned in his opening
remarks. In fact, I want to announce today, that beginning in
tax year 2002, we are going to exempt 2.6 million small
business corporations from the need to file three schedules,
Schedule L and M-1 and M-2. These have to do with the balance
sheet of the corporation and reconciliation of financial
records with tax records. This is a very significant item,
which we believe will save small business taxpayers about 61
million hours per year.
I should note this is also one of the first initiatives
sponsored by our new Office of Taxpayer Burden Reduction in our
Small Business Self-Employed Division, which I mentioned at
last year's hearing. I am very proud of this.
In addition, on the regulatory front for small business, we
again substantially reduced over the past year the number of
small businesses required to use the accrual method of
accounting. They are now allowed to use the cash method. There
are about now 2.84 million taxpayers that can take advantage of
this relief. We did that in two steps, and the second step late
last year. Although it doesn't count in the burden hours,
because it is not specifically a form, it is something that was
very widely acclaimed by the small business community.
Along the same lines, there are two other items, although
not quite as significant. We indefinitely suspended the
requirement for taxpayers to file Schedule F of Form 5500,
which is a pension related form. About 200,000 forms per year
were eliminated by that. We have also significantly simplified
the process for submitting determination letter requests for
about 1 million pension plans.
The third area I want to mention briefly is use of
technology to reduce burden. In September 2001, we launched one
of the more significant initiatives for small and large
business, which will allow these businesses to use the
Electronic Federal Tax Payment System over the Internet to make
all Federal payments. That will also allow them to check their
payment records directly without having to call the IRS, which
is a popular item, as Mr. Duncan mentioned, not having to call
and wait on the phone.
Also on the electronic front, in this filing season we have
now got to the point where over 99 percent of all the 1040
forms can be filed electronically and many taxpayers are doing
this to ease their burden.
I mentioned management initiatives; there are two
significant ones. One is establishing the Office of Taxpayer
Burden Reduction in our Small Business Operating Division.
These are people dedicated year round to finding ways to reduce
the burden of small business. As previously described, we saw
the fruits of their initial labors.
Finally, we are developing a better model to measure
burden.
I do want to note, as Dr. Graham noted in his opening
remarks, sometimes it is in the best interest of taxpayers to
gather a bit of additional information. On this particular day,
I am going from here to the Senate Finance Committee, where
they are holding a hearing about billions of dollars of tax
revenue being lost because large corporations and wealthy
individuals are using layers of partnerships to hide income,
sometimes in off-shore tax havens. I think you have heard about
that subject in the news recently.
I am glad to say we anticipated some of these problems,
because, in 2001, we added some lines to some forms to deal
with detection of blatant cheating as a result of partnerships
and corporations with foreign operations. That accounts for
nearly all the program increases in burden that was noted by
GAO in its testimony.
Finally, I want to make a few comments about some of the
issues related to the tax code itself. All of the Members cited
the tax code in their opening comments. That is really what
drives a lot of the paperwork, almost all of the paperwork. In
addition to the sheer size of the tax code, the volatility of
the tax code is another burden producing cause. Obviously, when
the Congress enacts tax legislation, it often reduces taxes and
provides tax relief, which is a welcome thing for taxpayers.
But there is a bit of tradeoff on the administrative side
because as we change many forms, we often have to add lines,
and in turn, increase the administrative burden. We also must
have time to change our computer programs and the software
taxpayers use. Tax law complexity and the frequency of change
is something we are faced with. There have been numerous tax
bills ever since I have been Commissioner, including over the
last 2 years, and whatever other benefits they have, they do
pose additional burdens, paperwork, and complexity.
Secretary O'Neill has made statements that he views the tax
code as a drag on the economy. He cannot understand why it is
so hard to define a child in the tax code. I have to admit I
have a hard time understanding that myself. Nevertheless, there
are many definitions of a child under the tax code and we must
have forms to accommodate each one of them.
We, at the IRS, will do our best within the limits of what
we can do in the tax code to continue the kind of initiatives,
such as the one we are announcing this morning, of which we are
very proud, to reduce the burden on taxpayers while still
coping with the other side of our problem, which is the tax
code itself and its ever changing nature.
[The prepared statement of Mr. Rossotti follows:]
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Mr. Ose. Thank you, Commissioner.
Our third witness on the first panel is the Managing
Director, Strategic Issues, General Accounting Office, Mr. Vic
Rezendes.
Mr. Rezendes. Thank you.
In brief, Federal paperwork increased by 290 million burden
hours this last fiscal year and, as you mentioned earlier, the
largest 1 year increase since 1995 and 3 billion burden hours
higher than the target Congress set. As you can see from my
first chart, also on page 6 of my testimony, of the majority of
the data collected governmentwide, 94 percent is for regulatory
compliance, less than 5 percent is for application of benefits,
and 1 percent for other purposes.
The second chart, on page 7 of the testimony, shows almost
two-thirds of the estimated paperwork burden was primarily
directed toward businesses, less than a third on individuals,
and 3 percent on State and local governments and tribes. As was
the case in previous years, this record increase in paperwork
burden was largely attributed to IRS, which accounted for about
83 percent of the total, up from 75 percent 6 years ago. In
contrast to previous years, IRS attributed most of the increase
to program changes it initiated, not because of the statutory
requirements imposed on the agency.
Changes in agency estimates did not tell the whole story
and can often be misleading. For example, a 37 million burden
hour decrease in the Department of Transportation's bottom line
paperwork estimate was entirely driven by about a 40 million-
hour program change reduction. However, it was not clear from
the data what specific actions precipitated this change, new
statutes, agency actions, or reinstated and/or expired
collections. OIRA staff told us that the DOT reduction was
caused by an expiration and subsequent paperwork violation of
the agency's driver log duty status information collection.
Therefore, the burden actually imposed on the public by this
collection did not really go down.
This year, we had more difficulty than in the past in
obtaining and reconciling numbers from OIRA. Also, unlike
previous years, OIRA did not collect detailed information on 12
independent agencies about the reasons for the burden changes
and did not report any burden information on those agencies in
its report being released today. Therefore, we do not believe
that document fully satisfies the requirement to keep Congress
fully and currently informed of the major activities under the
act. OIRA did not identify, as it has done in the past, how
much of the program changes reported were caused by new
statutes or agency initiated actions. These changes seem to run
counter to the Administrator's stated goal of increasing
government transparency.
Let me now turn to paperwork violations. During the past 3
years, the number of violations has declined steadily. Because
OIRA limited which agencies needed to report this year, we
could not provide comparable violation data. However, as you
can see from my final chart, also on page 16 of the testimony,
the selected Federal agencies providing information to OMB
identified 402 violations, only slightly fewer than the
previous year, indicating that the overall decline in the
number of violations has stopped. Many of these violations were
new and resolved by the end of the fiscal year. However, about
40 percent of the violations were listed last year. Just three
agencies--Agriculture, HUD, and VA--account for almost 60
percent of the violations and many have been occurring for
years.
For example, at VA, 25 percent of its collections had been
in violation for at least 2 years, 15 for 4 years, and several
in the 8 to 10 year range. OIRA has taken some steps to
encourage agencies to comply and these steps previously
appeared to be paying off. However, because the number of
violations did not decline this year, we believe OIRA can do
more. We estimate these violations constitute a significant
opportunity cost. We estimate the cost at $1.6 billion. We also
recognize the limitation OIRA faces with an ever increasing
workload and limited staff. However, we do not believe the
kinds of actions needed to correct this require a large amount
of additional resources.
Thank you, Mr. Chairman. I would be happy to answer any
questions.
[The prepared statement of Mr. Rezendes follows:]
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Mr. Ose. Thank you.
We will go to questions now. Dr. Graham, what specific
significant paperwork reduction initiatives, defined as being
100,000 hours or more, with at least 100,000 hour decrease due
to agency action have been accomplished since January 20, 2001?
Mr. Graham. I can't respond to the specific question in
terms of the 100,000 hour cutoff but there is issued in the
report today a summary of the major paperwork reduction
initiatives that we requested each of the 15 agencies submit.
There are 34 of those initiatives submitted by the 15 agencies.
In some cases, those initiatives are quite strong and ambitious
and we are encouraged about them. In other cases, there are
initiatives that were submitted to us without any actual
quantification of burden reduction. So we definitely have some
work to do to strengthen the development of initiatives. I
would be happy to give you more detail on the numerical cutoff
point if you wish to have that, sir.
[The information referred to follows:]
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Mr. Ose. It is my understanding from a brief review of the
information collection budget, the HHS Department shows no
initiatives with over a 100,000 hours program decrease; Labor
shows two and we don't know on the SEC because they are not in
the report. At the Environmental Protection Agency, we have
four, one of which includes an adjustment versus a program
decrease. Obviously, I am following it closely. I am also
curious about what is planned for the remainder of this year in
terms of following these four agencies? Do you have any input
on that, any feedback you can give us?
Mr. Graham. Yes, one comment on your reaction with regard
to HHS. There are in the text of the report, several examples
of what we felt were actually promising burden reduction
initiatives coming from HHS, but I think it is fair to say they
do not have the quantification you are looking for. In fairness
to the agencies, it is often not obvious at the time that
burden reduction initiative is proposed how much it will reduce
paperwork burden or if, in fact, it will reduce paperwork
burden. Nonetheless, we feel there are several promising
examples and I would be happy to get you details on the numbers
in the report where they are described.
Mr. Ose. That would be helpful.
I do want to offer a compliment. I happen to think that
your effort at prompt letters, or OIRA's efforts at prompt
letters, in terms of trying to give some before-the-fact
guidance to agencies is an exceptional initiative on your part
to say, ``You need to look at this.'' I think that kind of
management needs to be applauded. I noted on my copy of your
testimony that I was particularly pleased by that, and I wanted
to say such.
I also wanted to compliment you on the effort you made, a
couple of things you fed back to the agencies where you
actually took the structure or the methodology by which they
were collecting their information and said, ``You are not going
to get what you need if you pursue this path, you need to
change it a little differently and go that way.'' I wanted to
compliment you on that. That is one of the reasons we bring
individuals such as yourself to government, so I am grateful
for that.
Mr. Graham. Thank you very much, sir.
Mr. Ose. Mr. Otter for 5 minutes.
Mr. Otter. Mr. Graham, in your testimony you mentioned
agencies that contributed to this year's information collection
budget and you reported 406 violations of the Paperwork
Reduction Act for fiscal year 2001. My copy of that report does
not include any information on the IRS, isn't that right?
Mr. Graham. I think we committed a little blunder in the
first draft we sent out. I think we sent out a revised version
that has the IRS initiatives in it.
Mr. Otter. Did you send it by postal?
Mr. Graham. I think your criticism is well taken, sir.
Mr. Ose. We discovered this yesterday and we have worked
with Dr. Graham's office overnight trying to expedite provision
of an updated report that would include the IRS material. I
apologize for not getting it to your office on that respect.
Mr. Otter. Thank you, Mr. Chairman.
Would the 406 include the IRS violations? The 406 number is
the violation number?
Mr. Graham. I think it probably does, but I have to double
check that.
Mr. Otter. How many of that 406 would be that violation?
Mr. Graham. With the IRS?
Mr. Otter. Yes.
Mr. Graham. I don't have that number off the top of my
head, but I am happy to get it for you.
Mr. Otter. Will we have a chart for this information I
don't have yet that shows by agency?
Mr. Graham. I certainly can get it for you if it is not in
there.
Mr. Otter. I see.
Mr. Rezendes, one of the things it appears we have a
problem with is if an agency doesn't want to respond to the
violation, if an agency doesn't want to respond to the report,
then we end up with no report from that agency. I counted 12 on
this one chart, but they just act like they don't exist. For
some people, the FCC wouldn't be a bad idea, or the FTC, or
some of these agencies that refuse to respond.
We are motivated in Congress, we are motivated in
government many, many times by the agencies that when we do put
this 94 percent of the regulatory burden on two-thirds to
business, one-third to individuals and 3 percent to State and
local governments, when I was Lieutenant Governor of Idaho for
14 years, it wasn't unusual from the various Federal agencies
to receive a letter the State Education Department, the State
Transportation Department, even the State Legislature was going
to be reduced in moneys we normally would receive. Even the
Federal Highway Trust Fund, 1 year we were threatened with the
loss of $14 million if we didn't respond to certain requests
made by Federal agencies. The Federal Highway Trust Fund and
from an executive agency, if there was ever a violation of
separation of power, legislature either you pass this law or we
in the administration are going to withhold this money, but
that is another question.
It always seemed to me that in order to get the business,
individuals, 283 million Americans to respond to the tax code,
there is a penalty if you don't. What is the penalty, what kind
of thing happens to these 12 agencies who refused to respond?
Is anybody going to go to jail?
Mr. Rezendes. Actually, they were not so much refusals as
OIRA relieved them of the burden of responding for this year.
Mr. Otter. I see. I guess that will be a question for Mr.
Graham.
Mr. Graham, why did we relieve them of that responsibility
or is that part of the report I haven't received yet?
Mr. Graham. By the way, my staff gave me a little help on
the Treasury/IRS violation question and it looks like we have
zero unresolved Treasury and IRS violations at the present
time.
On your question about the agencies, predominantly the
agencies we did not request this information from this year are
the so-called independent agencies. This reflects a judgment I
made about where we want to put our office's resources and
emphasis in paperwork reduction. It turns out that if you look
closely at the construction of the Paperwork Reduction Act,
while these independent agencies are covered by the act, the
ultimate authority in the case of a disagreement between my
office and an independent agency is in the hands of the
independent agency. I made a judgment that in terms of
ultimately having the ability to accomplish paperwork
reduction, I would have a better chance at making progress by
focusing my office's resources on the Cabinet-level agencies
and EPA where our office, through its underlying authority from
the President, has a stronger degree of authority. So it was a
priority-setting judgment on the part of my office.
Mr. Otter. I would only mention in closing, and my time is
up, this was not just a Presidential initiative, this was a
congressional initiative. The orders were pretty clear, I would
think. I am not sure that you have the latitude, sir, to excuse
an agency. The idea behind paperwork reduction was to relieve
burden and to find the unnecessary stuff and to eliminate it. I
think if you are going out to only part of the constituency,
and you alone are deciding who reports and who does not, quite
frankly I think that is deficient in your interpretation of the
Paperwork Reduction Act.
Mr. Graham. Congressman, I think it is a fair criticism. I
actually was reading the GAO testimony before the hearing and
looking at their interpretation of the statute in terms of its
requirements on the reporting. It is something I actually asked
my General Counsel Office to look at. If we come to the
determination that legally we are required to do that, we will
not only do it next year, we will find a way to circle back and
pick it up for the previous year.
You asked the question why I did it, I told you why I did
it and that was the rationale, sir.
Mr. Ose. The gentleman from Tennessee.
Mr. Duncan. Thank you.
I would like to first ask Mr. Rezendes and Dr. Graham, the
report that we have from the GAO says this problem now takes up
7.6 billion man hours. Mr. Rezendes, your report says it grew
by 9 percent last year. It seems, as I said in my opening
statement, that no matter how much lip service we pay, this
problem grows and grows and grows. You have estimated that 83
percent of the problem is from the IRS. Does your work at the
GAO stop with this report? Do you have somebody trying to come
up with recommendations for the IRS to try to help them relieve
some of this burden, or work on this problem? Dr. Graham, I
noted in one of the reports that you had one person working on
this. If this is 83 percent of the problem, do you intend to
put more people on this, are you going to make suggestions or
recommendations? Where do we go from here is what I am asking.
Governor Otter gave estimates that this cost us $843
billion last year. It looks like there is room for a lot of
improvement someplace.
Mr. Rezendes. Actually, we don't have much going on other
than just the reporting we are doing here. The real burden and
responsibility rests with OIRA and IRS to reevaluate their
paperwork, and determine whether there are alternative methods.
I know the IRS has some initiatives underway, particularly with
electronic easing of the burden, but it is really up to OIRA
and IRS.
Mr. Graham. I think it is an excellent question. You framed
it in terms of 83 percent of the problem looks like IRS, but
how much effort is put into that at OMB? One of the historical
answers to that question, and I think an interesting one, is
that historically OMB does not review the interpretative rules
that IRS issues in response to the tax code. It is in those
interpretative rules that a lot of the detailed paperwork
requirements ultimately come out.
At the beginning of this administration, there was a
discussion and dialog, frankly above my pay grade, on the
question of whether OMB should reassert some role in reviewing
those types of regulations. I think it is fair to say the issue
was deliberated and it was decided that we would not have OMB
reviewing those interpretative rules.
Basically, when you look at the facts, the legislation and
the tax code itself is outside my office's control. The
interpretative rules are outside our control. I think in the
final analysis IRS has the key role to play. I think you heard
what I thought was some pretty strong testimony today about
efforts at IRS to make progress in this area.
Mr. Duncan. Mr. Rossotti, I always feel that anyone and
everyone should have the desire to improve and get better. I
hope that I am a better Congressman now than I was 5 years ago.
I may not be, but I hope that I am, and I hope if I am here 5
years from now that I am doing a better job then than I am now.
There is always a tendency when criticism comes to fight
the criticism or attack the critic, rather than trying to do
something about the problem. What I am wondering, I am sure
when you saw this report in the Scripps-Howard News Service
that was on the front pages of many papers around the country
about this 49 percent of IRS computer time being used to visit
sex sites, gamble and trade stocks, send jokes and so forth; I
assume you were shocked by that. I also assume that you
probably thought that was wrong. I assume when that other
report came out from the Treasury Inspector General that 73
percent of the advice IRS gives is incorrect or insufficient, I
assume you thought that was wrong. I assume also when we read
in the OMB March 18, 2002 report of 3 weeks ago that gives the
IRS an ``F'' rating on reduction in paperwork, I assume you
think that is wrong.
What I am getting at is even though you may assume those
reports are wrong, do you not think that indicates there is a
problem and that some things need to be done? Did you do
anything in response to that business about the computers being
misused?
Mr. Rossotti. Absolutely, on all those fronts. Let me talk
about all three of them. With respect to the use of the
Internet, let me explain what that report was. It didn't deal
with 10 percent of IRS computer time, it dealt with a sample of
a small subgroup of IRS employees who have access to the
Internet, a very small percentage of IRS employees have access
to the Internet.
Mr. Duncan. Can you understand why somebody in my position
would be upset or shocked by those types of reports?
Mr. Rossotti. Yes, sir. As a matter of fact, with respect
to that Internet issue, even before that report was issued, we
did take a number of steps to monitor its use. We set up a new
policy and we also put in new technology to monitor use of the
Internet by those relatively few employees that have access to
use of it. We then set up a special group to use the technology
to monitor what they were doing. All those things have been
done. Some were in progress before that report was issued.
With respect to the phone service, there was a hearing 2
days ago in the Ways and Means Committee about the filing
season and the service IRS has provided. There was also GAO
testimony at that hearing. I would be glad to send you copies
of it. I have with me two charts that show the trend in
improvement over the last 2 years, which has been very
substantial, in the ability of taxpayers to get through to
telephone assistance, which is the predominant way people get
telephone assistance, as well as in the quality of answers. We
are up about 85 percent or so in the quality and accuracy of
answers during this fiscal year. There is GAO testimony on the
same subject I would be glad to send to you.
I should note that we get about 110 million phone calls a
year on a huge array of topics and it peaks very heavily during
the filing season. So when we talk about getting through on the
phone and getting accurate answers, this is not a simple
problem to deal with. It involves technology, resources,
training, the tax code, and so forth.
I am pleased to report that, and I will be glad to send you
the details of the progress we have made. I know it is not the
subject of this hearing. It is not to say that we are yet at a
level at which we aim to be. Because if we are 85 percent
accurate, we would like to get to 90 or 95 percent accurate. On
your point about improvement, the IRS has lots of room for
improvement in lots of subjects. I think we have made
significant progress in addressing some of those areas.
On the paperwork issue, I am not sure what grade you were
referring to, but I think with respect to paperwork reduction,
over the past year, as you can see from the testimony, we have
taken some significant initiatives, particularly for small
business.
Mr. Duncan. The report that gives you an ``F,'' the source
is the OMB's March 18, 2002 report entitled ``Draft Report to
Congress on the Costs and Benefits of Federal Regulation.'' The
report I read from Scripps-Howard says that analysis of the
computers was an investigation of how more than 16,000
employees used their government computers.
Before my time runs out, let me ask you one last question.
I had two CPAs, one was the State president of the CPAs in
Tennessee, who came to see me a few days ago. I didn't realize
this, but they said the number of people taking the CPA exam
was only about 20 percent of what it was 10 years ago, and they
are having a real decrease or decline in the number of people
who want to be CPAs. They said one reason was the tremendous
workload right at tax time. They said in the Nashville and
Tennessee region, they used to have an understanding the IRS
would not ask for business audits during tax season, that the
business tax audits were done from May to December. They said
now the head of the IRS, and I don't know whether that means
the head of that region or you, has said they didn't care what
was in the past, but they are now demanding these audits be
done right at the height of tax season. Also, some of the new
laws were made retroactive to September 11th on March 9th, and
that this workload has greatly increased. Do you know what I am
talking about?
Mr. Rossotti. Yes, I do and we are sensitive on the issue
of doing audits during tax season. It has been traditional when
working with accountants, who represent taxpayers on audits and
are also preparing returns, to be sensitive to that scheduling
issue. We have certainly not changed our policy. There could
have been someone in a local area that made a statement like
that. I will be glad to look into that.
Mr. Duncan. Would you check into that and see if there has
been a change in the Nashville office?
Mr. Rossotti. I am confident there hasn't been nationally
but there could have been locally. I will get back to you.
I do want to respond to your other question. In the last
year the tax law was changed very substantially a number of
times, which obviously produced benefits for taxpayers. The tax
bill that was passed in 2001 was a major tax bill. I don't have
the data here with me, but it brought numerous changes to
numerous forms for both 2001 and 2002. From an accountant's
point of view, one of the things that really makes it difficult
is when there are changes. That is because people get used to
carrying over their returns; they take last year's return and
do it as much as possible this year. Everyone does that. So
when you have changes, it creates additional work.
There was also a bill passed on March 9th, just last month,
which was retroactive to last year, which again gave a benefit
to taxpayers. However, it involved people who might have an
automobile they are using for business purposes and gave them
some additional benefits for depreciation, but that was March
9th and it applied to last year's return.
Mr. Duncan. I hope you will give some consideration to
maybe giving some relief to these CPAs or giving them a little
more time since that is such a recent thing, March 9th.
Mr. Rossotti. On the issue of the audits, we can control
that. The issue of when the dates are imposed, those are by
statute.
Mr. Duncan. I understand that, but as far as filing some of
the returns and so forth if they have a problem because of
that.
Mr. Rossotti. Anyone can get an extension automatically
until August 15th, and you can do that now with just a phone
call. You don't even have to send in a letter. That is
something you can pick up the phone and dial, automated. We put
that in last year as one of our services.
On the issue of audits, you have a good point. We do
accommodate accountants with that and, if someone is not doing
that, we will be glad to look into it and get back to you.
Mr. Duncan. I went way over my time. I apologize.
Mr. Ose. Thank you, Mr. Duncan.
I do want to clarify on the grades you referenced in your
comments, those grades were applied by me. Those are my grades.
Mr. Duncan. At the bottom of the sheet.
Mr. Ose. That ``F'' at the bottom is mine also.
Mr. Graham. Certainly a more credible source than the draft
report from OMB.
Mr. Ose. I know a couple of our witnesses have time
constraints at 11 a.m., and I want to have one more round.
Mr. Rezendes, in your testimony on page 15, Dr. Graham
referenced the first paragraph earlier about the conclusions
you reached about OIRA's role, OIRA having the statutory
responsibility to review and approve agency collection of
information and to identify all PRA violations. Further on that
same page, you have three suggestions that I think are designed
to try and make this a more efficient process, the objective
being to prevent departments or agencies from effectively
stiffing OIRA's request for information or for changes.
In particular, I want to focus on one and that would be the
third one, place a notice in the Federal Register notifying the
affected public they need not provide the agency with the
information requested in any expired collection. If I
understand correctly, we have any number of forms that have
been previously approved or not approved at all, and those that
in some cases had been previously approved, their approvals
have lapsed, so there is no statutory authority behind
collection of the data on those forms. Am I correct?
Mr. Rezendes. The statutory authority may be there, just
the authorization to continue to collecting the information has
expired.
Mr. Ose. Because the process has not complied with the
statutory requirements?
Mr. Rezendes. Correct.
Mr. Ose. Placing a notice in the Federal Register to that
effect, that a citizen does not have to comply with forms
authorized under approvals that have lapsed, placing that
notice accomplishes what?
Mr. Rezendes. We would endorse this, by the way. The more
transparency, the more public awareness of the extent of
violations out there, the extent of information they don't have
to comply with, the better. Admittedly, not too many average
citizens read the Federal Register, but that is obviously one
avenue to communicate. Another, I would suggest, would be the
OMB Web site, the OIRA Web site. They post the expirations now
on their Web site, but they don't report violations. That may
be one additional piece that could help the public better
understand what they don't need to comply with.
Mr. Ose. This is the part I struggle with. If the
authorization lapses, why would the agency ask for the
information?
Mr. Rezendes. A good question and I don't have the answer
to that. We have looked every year and have testified before
this committee on the outstanding violations and the violations
have gone down significantly from over 800 a few years ago to
about the 400 range now and has sort of plateaued out. What we
see is some agencies continuing to collect information, in some
cases basically part of an application for benefits, so it is
something they feel is interesting, but OIRA feels not
necessarily compelling and needed to perform their operations,
so I guess they reached a loggerhead here.
The question I think you are really asking is how do you
fix this, how do you incentivize or where do you put the
pressure for this to happen? One way I think is to have OIRA
talk to the budget side of OMB and when the agency comes in for
appropriations or asks for additional funds for a program and
they have a violation that is collecting information, there
could be some leveraging going on here.
Let me be clear on the amount of violations. There are 402
violations that we identified. I think you mentioned in your
opening statement that 60 of those violations account for $1.5
billion opportunity costs. It is even more pronounced than
that. Three of those violations, two at Agriculture and one at
VA, account for $1 billion in opportunity costs. So if you are
looking at risk and cost benefit, you could really focus your
resources and the efforts of OIRA and OMB to work with those
agencies to stop those collections.
Mr. Ose. Dr. Graham, what about putting a notice in the
Federal Register to tell the public, if it has lapsed, you
don't have to comply? Put the agencies on notice that the
administration is not going to enforce their regulatory
information collection if they don't have current numbers?
Mr. Graham. I think it is a constructive suggestion, and
seeing the GAO testimony, it reminded me that I had read a more
detailed GAO report maybe a year or two earlier that had more
discussion of these specific recommendations. I have asked our
General Counsel to take a quick peak at whether he sees any
problem with going right to the Federal Register with this type
of information. I will get back to you when I get an answer
from the General Counsel on that subject, but I think it is a
constructive idea.
I would like to offer one qualification to the previous
remarks just made. In the experience we have correcting
paperwork violations, what usually occurs is a resubmittal of
an application--usually a valid resubmittal--and a continuation
of the application. As a consequence, a lot of the opportunity
costs you are hearing in the previous remarks aren't really
saved by resolving the violation. Nonetheless, it is critical
to resolve the violations. We should notify people when there
are information collections out there that do not have an
adequate or appropriate OMB control number.
Mr. Ose. Thank you for the answer. I will tell you that you
would be a welcome guest at my district when I go talk to my
farmers and people who use water from the Bureau about the
various requirements on forms whose numbers or approvals have
lapsed.
The gentleman from Idaho.
Mr. Otter. One of the reasons I think that we have got such
a long history in our Government is because by and large the
citizenry always viewed the Government as trying to make things
equal and trying to lift burdens but, of late, and I don't know
what of late really is, it has been my experience that when the
Government passes a law, they expect the citizenry to obey it.
We are going to pass a law, and you are going to obey it, and
if you don't obey it, this is going to be the penalty for it.
If you are the CEO of a corporation and you purposely
pollute, you misfile your income tax statement, you don't
adhere to the OSHA rules, I can go through the list. For 30
years, I was in the private sector and, for 13 of those, I was
president of the international division of this pretty good-
sized company. We had 87 people on our staff in a company that
had $1.7 million in sales. We supplied french fries to
McDonalds. We had 87 people filling out government forms, and
we knew we had to do that, No. 1, to be a good citizen, and
that was what we wanted.
What caused us trouble and pain back home in our districts
with our citizenry and our companies, the small businesses, and
I am glad to hear your announcement today of 1.2 million small
businesses that are going to be relieved of some of that. That
is a great announcement. You would think the press would have
jumped up and run out but they didn't. Maybe there isn't enough
sex in it, I don't know, but one of the things the citizenry
does look at in Government is we are trying to make things
equal. When they see the government absolving themselves from
the very rules and regulations they force on the citizenry and
businesses, that is what causes us pain.
We will go home and say well, we have 402 violations and I
have to tell a farmer that altered a water flow through his
property without filing a 404 permit to the Army Corps of
Engineers on wetlands and the Environmental Protection Agency
on solids and to all the other agencies, seven of them, U.S.
Fish and Wildlife, the National Marine Fisheries, you know the
alphabet soup we have there, that on his 40 acres, if he didn't
do that, he can lose that 40 acres, he could go to jail, and he
can be fined a lot of money. Then he hears about 402 violations
for which there is no penalty and not only that, who cares.
If we got that kind of response when we asked for OSHA
information, or Food and Drug Administration information, or
Agriculture information, we would think there was a revolution
going on. I think if government has anything, it has integrity.
The integrity of the government should be, we will live by the
same rules that we make the citizens and companies live by and
we are not.
Mr. Rezendes, should there be some penalties other than
just this little gentleman's thing that says, look, you didn't
do too good, you got an ``F'' last year. Look Labor, you got an
``F'' with 186 violations, we are going to reduce your request.
Do you think that is going to get anything?
Mr. Rezendes. I think agencies respond in terms of their
budget and I think there is attention there to the extent you
can get their attention by a reduced budget, it does work. On
the fines and penalties though, I am less sanguine about the
fines, not because I don't think it would work, but more
because we are really talking about implementation of a Federal
statute in the executive branch between Federal agencies and
with OMB, which has the approval and also the ones putting
together the agency's budget. It seems to me there is a
critical mass and enough leverage there if they really wanted
to make this happen, to make it happen without necessarily
going through fines and penalties and then bringing in courts
in terms of interpreting the fines to add yet another piece
because this is all within a very small family, all within the
executive branch and should be fixable.
Mr. Otter. Is that how I should explain it during this
election year?
Mr. Rezendes. It is hard to explain, I understand that.
Mr. Otter. Tell me, because those businesses, and 1,282,000
Idahoans all have to file something somewhere at some time
about something are asking me that question. Why do we have to
do that?
Let me ask one last question. Mr. Rossotti, how many people
at the IRS are working on paperwork reduction?
Mr. Rossotti. We have about 100,000 employees throughout
the country.
Mr. Otter. How many out of that 100,000 who are generating
paperwork?
Mr. Rossotti. We have a Forms and Publications Division. A
lot of the paperwork as it is calculated is related to forms
and publications.
Mr. Otter. How many people are working on reduction?
Mr. Rossotti. There is a specific office we just set up,
the Office of Taxpayer Burden Reduction, which has a senior
person we brought in from the outside with experience in this,
and we are building a staff. Right now we have a staff of about
four individuals, but the Office of Forms and Publications,
which has several hundred people who actually produce the
forms, are the ones actually working on such things as the
Schedule D redesign, and so forth. So they spend their time
redesigning the forms. It is hard to split it between how much
is burden reduction, and how much is burden increase. They have
to respond to the tax law changes, as well as the changes we
initiate.
Mr. Ose. Would the gentleman yield for a minute?
Mr. Otter. The gentleman's time is up but yes.
Mr. Ose. Mr. Rossotti, did I just hear you say you have
100,000 people at the IRS and you have five people working on
burden reduction?
Mr. Rossotti. We have five people in this new office we
just set up. The whole Forms and Publications Office is only a
few hundred people. Most of our people are out in the field,
not in Washington designing forms. They are out in the field
and all around the country.
Mr. Ose. I just wanted to confirm the five number. I thank
the gentleman.
Mr. Otter. I just want to close by thanking you all for
your responses. I also want you to know that I am not
insensitive to your problem. The charges you have are important
to this country but it is awfully difficult, as we have
discussed, to explain to those who are the generators of the
requests, the information and the paperwork that all the
Federal agencies ask for and to the extent we can have more
successes, I see by my calculation we are behind by 35 percent
in reduction. We were supposed to have 10 percent in 1996,
1997, and 1998, no, 5 percent but I think I totaled about 35
percent. We were supposed to have a 10 percent reduction in
years 1996 and 1997 and 5 percent during 1998, 1999, 2000 and
2001. Maybe my calculation isn't right but I thought that was
about 35 percent. It seems to me instead, we have had a
substantial increase.
Mr. Ose. Thank you, Mr. Otter.
Dr. Graham, I have one final question. We asked about the
non-IRS regulatory paperwork requirements over 10 million hours
and there are 15 such regulations. I would like to go through
and followup a conversation or letter you and I had having to
do with these 15 specific non-IRS rules, each of which imposes
over 10 million hours of burden as to the progress in
reexamining them, as to the paperwork required. I don't know if
you are prepared to do that but we will proceed in any case.
First of all, the Department of Labor.
Mr. Graham. I think I might more efficiently address it as
a group. Is that possible, Mr. Chairman?
Mr. Ose. Yes, sir.
Mr. Graham. The first point I would make is I want to thank
you and your staff for clarifying exactly which of the 15 are
the ones you are referring to, because they were taken from the
large list of 300 or more. I appreciate getting the request
down in the range we could realistically evaluate.
We have looked at them in a preliminary way. We think some,
because they are nearing expiration, are going to be reviewed
anyway through the normal process, so those we would put in one
category. There is a second group that are not nearing
expiration but that are of such significant burden. We think
where there is possibility for reduction, some conversation
with the agencies is appropriate. There is a third group that
are so embedded in statute that we are not convinced they are
going to be a very fruitful territory for significant work at
this time. Some of them, though very substantial, also have a
very strong programmatic rationale and hence, we are not
convinced they are good candidates.
When we have a more definitive response in terms of which
of the 15 are in each of these bins, I will try to get that to
you in writing so that you have an exact accounting of where we
are headed on those 15.
Mr. Ose. When do you expect to be able to provide that?
Mr. Graham. Hopefully in a couple of weeks.
Mr. Ose. All right. Then I am not going to go through this
list.
[The information referred to follows:]
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Mr. Ose. Commissioner Rossotti, you have to be at the
Senate at 11 a.m.?
Mr. Rossotti. I am supposed to be, yes, sir.
Mr. Ose. Commissioner, I want to thank you for coming. Dr.
Graham and Mr. Rezendes, we have additional questions we would
like to provide in writing and would appreciate your responses.
We will leave the record open for 10 days for the purpose of
receiving testimony and questions from our friends on the
Democratic side and those on our side who may wish to submit.
I am grateful for you taking the time to come and your
testimony was quite informative. We will see you next time.
I want to welcome our second panel. Joining us today is:
Thomas Hunt Shipman, Deputy Under Secretary, Farm and Foreign
Agricultural Services, Department of Agriculture; Mr. Scott
Cameron, Deputy Assistant Secretary, Performance and
Management, Department of the Interior. Gentlemen, as you heard
earlier, we swear in all our witnesses, so please rise.
[Witnesses sworn.]
Mr. Ose. Let the record show the witnesses answered in the
affirmative.
We have received your written testimony. Our normal process
is we are going to give you 5 minutes to summarize your
testimony. I will add the caveat that another committee on
which I serve is having a series of votes on a markup, and we
may have to temporarily recess and come back and so forth. As
long as you are flexible, we will be making progress.
Mr. Shipman, please proceed for 5 minutes.
STATEMENTS OF THOMAS HUNT SHIPMAN, DEPUTY UNDER SECRETARY, FARM
AND FOREIGN AGRICULTURAL SERVICES, U.S. DEPARTMENT OF
AGRICULTURE; AND SCOTT CAMERON, DEPUTY ASSISTANT SECRETARY FOR
PERFORMANCE AND MANAGEMENT, U.S. DEPARTMENT OF THE INTERIOR
Mr. Shipman. I appreciate the opportunity to appear before
the subcommittee this morning.
The Department of Agriculture delivers programs which daily
affect the lives of millions of Americans, as well as millions
of people around the world. They include food safety, food and
nutrition programs, programs to create jobs and support the
infrastructure of rural America, natural resources and
conservation, research and education, and the programs which
support America's farmers.
USDA is committed to streamlining program delivery while
preserving the fiscal integrity and preventing fraud, waste,
and abuse. USDA uses information collected from the public to
ascertain what services customers require, determine
eligibility for programs and services, monitor compliance with
statutory and regulatory requirements, monitor market
conditions, develop statistics for the agricultural sector,
prepare economic reports, foster research and improvement in
agricultural and rural matters, provide risk management tools,
identify, cure and prevent plant and animal diseases, provide
credit and technical assistance to farmers and rural
communities, and evaluate customer satisfaction.
In fiscal year 2001, USDA reported to OMB that citizens
spent 86.7 million hours filling out USDA forms and fulfilling
recordkeeping requirements. In fiscal year 2002, USDA program
changes being implemented will further reduce the actual
paperwork burden to the public through further implementation
of electronic-based services and program delivery.
USDA has a number of initiatives underway to reduce the
paperwork burden on farmers and rural Americans. The agencies
that deliver programs through USDA service centers, the Farm
Service Agency, the Natural Resources Conservation Service, and
the rural development agencies are currently collaboratively
working to meet the June 2002 Freedom to E-File Act
requirements. This legislation requires USDA to provide
Internet access to all forms for the three county-based
agencies within 180 days of enactment, which was December 18,
2000. By June 20, 2002, USDA is to expand the Internet-based
system to enable producers and other rural citizens to access
and file all forms and selected records and to access USDA
farm-related information as well.
In addition, the act requires that not later than December
1, 2000, the Federal Crop Insurance Corporation and risk
management agencies submit a plan to allow agricultural
producers to use the Internet to obtain all forms and other
information concerning that program.
I am pleased to report that the December 2000 requirements
of the Freedom to E-File Act were met and we are currently on
track to meet the June 2002 requirements as well. When Freedom
to E-File is fully implemented, the service center agencies,
agricultural producer/customers will be able to access and
electronically submit most of the forms needed to participate
in the respective programs and services. Trips to county
offices will be eliminated for those customers who elect to use
the electronic services, and these agencies are still
submitting requests for changes to the impacted customer
collections.
When OMB approves these requests, the burden hour inventory
for each service center agency will undoubtedly be reduced as
travel time to these offices is eliminated and, more
importantly, we will have made a significant step toward
transforming its business processes to be more customer focused
by offering options for citizens to do business when and where
they choose.
For the remainder of 2002 and in subsequent fiscal years,
service center agencies plan to enhance the services offered to
customers by incrementally replacing the forms-based interface
with on-line software applications that incorporate greater
functionality. One of the first examples of this level of
functionality is the Farm Service Agency's electronic Loan
Payment Program or ELDP. This service provides full, on-line
transaction capability where producers of selected crops will
be pre-approved for loan deficiency payments on a specified
quantity and will be able to request their LDPs on-line through
a simple, abbreviated process up to the pre-approved quantity.
In other areas of the Department, the Food Stamp Program,
administered by the Food and Nutrition Service, requires 20
million hours of paperwork effort annually on the part of
States and others who administer or participate in the program.
The Food and Nutrition Service's transition to EBT, electronic
benefits transfer technology, is targeted for complete
implementation in all States by the conclusion of fiscal year
2002. During fiscal year 2001, an additional 250,000 hours of
paperwork burden was eliminated as a result of this initiative.
Additional benefits will accrue in 2002.
FMS plans to review the information collection requirements
associated with the Special Nutrition Program, including school
meals, food distribution programs, and the Special Supplemental
Nutrition Program for Women, Infants and Children, WIC. The
objective of this review is to ensure the type of data,
sources, and frequency are appropriate. In addition to
examining the data collected, the review will closely
scrutinize processes and instruments used to assemble and
finalize the data, which will minimize the possibility for
errors and facilitate timely reporting to Congress and the
public.
Mr. Ose. Mr. Shipman, I notice in your statement you are on
page 5 and you have nine pages. You are a minute over. Could
you summarize, please?
Mr. Shipman. Yes, sir. Much of the rest of my testimony, I
had planned to submit for the record.
Mr. Ose. We will accept that.
[The prepared statement of Mr. Shipman follows:]
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Mr. Ose. Mr. Cameron, you are recognized for 5 minutes.
Mr. Cameron. I would like to thank you for the opportunity
to testify before the committee today. We appreciate your
leadership and the interest on the part of the committee in
general, but also your special interest on behalf of your
constituents and paperwork issues as they relate to the
Interior Department.
At this time, the Department is virtually in full
compliance with the Paperwork Reduction Act. I say
``virtually'' because if the hearing were being held tomorrow,
hopefully, I would be able to say 100 percent. We got our last
package over to OMB yesterday afternoon. Not surprisingly, it
is a Bureau of Reclamation form. Thanks to your leadership,
there are a lot fewer violations now than there were a year or
two ago.
Having said that, we agree with what you, Mr. Duncan, and
others said earlier; 100 percent compliance all the time is our
goal. Happily, the Interior Department ranks relatively low
among executive branch agencies in the level of paperwork
burden. According to the 2001 Information Collection Budget,
Interior ranks 22nd out of 27 agencies. We essentially are
responsible for one-tenth of 1 percent of the paperwork burden
on American society. Our goal, Mr. Otter, is to get that to
zero. I am not sure we will be able to get there, but we
definitely are looking for ways all the time to get that number
down.
I am happy to say, generally speaking, the level of burden
imposed on the public by the Department has been declining
until very recently. It rose in 2000 and 2001. The increase in
hours in 2000 was primarily due to the implementation of new
regulations to bring the Department into compliance with lapsed
collections related to Indian affairs. As I am sure you know,
for a number of years, decades actually, the Interior
Department has had problems in terms of trust management with
Indian tribes. In fact, Secretary Babbitt was held in contempt
of court, I think along with Secretary Rubin, a number of years
ago in this context. The U.S. District Court has been watching
us very closely and giving us liberal amounts of advice on what
we need to do to improve the information so that we can better
fulfill our trust responsibilities and our fiduciary
responsibilities to our tribes.
Doing a better job has essentially meant collecting more
information, probably information we should have been
collecting in the 1950's but weren't for reasons that are lost
in the dimness of time, I am afraid. Roughly a third of the
existing paperwork burden at Interior is Indian affairs
related.
We are taking a number of steps across the board outside
the Indian area, and including the Indian area, to improve our
performance. We are attempting to do one stop shopping for
permitting with the Department of Agriculture's Forest Service.
Our BLM and the Forest Service have a program called Service
First where we are co-locating offices, trying to use the same
form for grazing permitees, for instance, so you don't have to
travel 50 miles to go from the Forest Service Office to a BLM
office and you can use the same form. We are expanding that
across the West.
We are participating in administration-wide e-government
projects, the Quick Silver projects that are being led by OMB
through their Associate Director, Mark Forman, its new IT
Associate Director. A number of these 25 or so projects should
result in a significant paperwork burden reductions for all
your constituents across the board.
My testimony goes on at some length about a number of
these. A couple of highlights would be one-stop business
compliance, where people could get information on laws and
regulations easily. We have computer wizards on-line, computer
expert systems that would ask them questions, provide answers.
Another area would be on-line rulemaking management so the
regulated community or people interested in commenting on
regulations have easier access to what is going on out there in
the regulatory arena rather than having to pay for a
subscription to the Federal Register or wade through a GPO Web
site.
In terms of the Agriculture Department outside the Forest
Service context, since 1983 we have periodically consulted with
USDA to determine if the information it collects could be used
in administering the acreage limitations provisions of the
Reclamation Reform Act of 1982. These discussions are ongoing,
virtually continuous. We have had numerous interactions over
the last 12 months. In fact, I have accompanying me today an
individual from the Bureau of Reclamation, Jim Handlon, who may
be able to provide some more detail when we get into the
questions and answers.
While both USDA and Reclamation collect detailed data from
farmers, data collected by Ag and Reclamation are such that the
information Reclamation needs isn't sufficient for Agriculture
and information Agriculture collects is not sufficient for
Interior. While we may be talking to many of the same people,
we tend to be asking them different questions.
Mr. Ose. Mr. Cameron, Mr. Shipman was advised that he was
already a minute over. You are a minute over. Do you want to
summarize?
Mr. Cameron. Yes, sir. Reclamation has 220,000 customers.
Nationwide, 19,000, less than 10 percent, have to file forms,
and one-third of them can file a one-page form.
Mr. Ose. Thank you for that summary.
[The prepared statement of Mr. Cameron follows:]
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Mr. Ose. I have to go take a vote in a committee. Mr. Otter
can take the chair from that position. I will be right back.
Mr. Otter [assuming Chair]. Thank you.
Mr. Cameron, I also serve on the Resources and Conservation
Committee and Interior falls under that as well as the BIA, and
I want to use your quote, ``a number of problems in handling
the BIA trust.'' That is like saying King Kong is just another
monkey. I don't know what that is going to do to the paperwork
burden at Interior, but I suspect with the reproduction you
already have to have in terms of the lawsuit we have against
the Department of the Interior right now, that is going to
expand it considerably.
Let me ask you both, in terms of the Department of
Agriculture, I receive a form for my ranch from the Department
of Agriculture, which wants to know about my production for
good reasons. Where are we headed in terms of the Nation's food
supply in terms of quantity and quality. I certainly understand
that.
Then I also have a form I have to fill out to the IRS in
order to qualify for farm status. Then I have another form that
I have to fill out for the State Income Tax Department for the
same two purposes. Then I have a form I have to fill out for
the county in order to qualify my property for the farm
exemption or the farm reduction.
Have you worked with States, with other agencies, with the
IRS, and perhaps I should have asked Mr. Rossotti that question
when he was here? Would it be possible to get your heads
together and figure out one form that I fill out for the IRS
that would also apply to the Department of Agriculture in terms
of the statistics and the information you need in order to work
on the demographics, Mr. Shipman?
Mr. Shipman. I think you raise a good point. Unfortunately,
I think you would find the level of detail the IRS requires in
determining farm status doesn't go to the level of detail that
we would utilize in determining payment eligibility for
specific crops and things like that. It is very possible that
we can work with the IRS and other Federal agencies as we
develop more centralized electronic recordkeeping systems so
that we can share that information with them. They can take
what they need from the information we collect. I think that is
a good suggestion, something we will be happy to look into.
Mr. Otter. Mr. Shipman, my tax form I fill out for the IRS,
the taxes on income and deductions, I also file that with the
State saying almost the same information and practically the
same form. It is almost a duplicate. That is because the IRS
and the State have gotten together or the State said we will
accept this information from the IRS figuring your 8 percent
you will owe income tax to the State. I file the same thing to
the State Department of Agriculture. Why isn't that form good
enough for you folks or why won't you work with the Idaho State
Department of Agriculture or in the 50 States and their
Departments of Agriculture in figuring out one form that
satisfies your needs and theirs as well?
Mr. Shipman. Again, your suggestion is well taken. As we
develop these electronic systems where we can share that
information easily with all 50 States which may have 50
different sets of requirements, whereas we have one, we can
work to provide that information collectively to each of the
individual States and meet the information needs they have. It
is a good suggestion and one that we will be happy to take
forth and look into more.
Mr. Otter. Mr. Cameron, practically the same question, but
let me get more specific to your department. For the BLM and
the Department of the Interior, I fill out the requirement in
order to establish an AUM allotment. That AUM allotment I also
have to fill out for the Department of Agriculture. I fill that
out for you and I would just as soon have one form between the
two of you and add a half a page rather than fill out 7 pages
for both of you. Do you understand where I am coming from on
this?
Mr. Cameron. Absolutely and I completely agree with you. As
I mentioned, in the Service First Program that is operational
in 17 locations around the West between BLM and the Forest
Service, we are trying to do just that. As a practical matter,
there is no reason there couldn't be one form. We are trying to
expand Service First nationwide with the BLM and the Forest
Service. It is one of those situations where it works best if a
local manager sees an opportunity to co-locate and starts
cooperating; but at the senior level in Washington, we are sold
on it, we are pushing it, we are promoting it. I know the new
BLM Director, Kathleen Clarke, is very interested in pursuing
it. So we are definitely moving in the direction you would like
to see us go.
I am sure you would like to see us go faster and so would
we. There is one area worth mentioning where we are working
rather closely with local governments or local entities
already. It relates to our paperwork reduction or paperwork
generation effort in the Reclamation area. It is actually our
irrigation districts that are not Federal entities but are
local, semi-governmental entities that use a lot of that
information in terms of knowing how to deliver water to whom.
They may be BOR forms but they end up being mailed to the local
irrigation district and have extensive use by the irrigation
district.
In terms of the broader picture, we have so much room for
improvement inside the Federal Government itself that I think
we are trying to emphasize cleaning up our own act before we
start systematically trying to reduce duplication between
Federal agencies and State agencies.
Philosophically, you are right on target. I know one of the
themes Mark Forman of OMB is pushing all the time in terms of
information we collect from our taxpayers is to simplify and
unify, collect it once, use it many times. There are some
technology issues, some security issues in terms of agencies
being able to grab each other's data, that sort of thing. Those
I am sure will be worked through over time; but the vision is
collect it once, use it a bunch of times, simplify, unify.
Mr. Otter. Thank you. My time is up.
I would say, Mr. Cameron, that I have been the benefactor
of those cooperative efforts. You have a great office now in
Boise. I am not looking for another parking place 50 miles away
by trying to deal with two separate agencies. We would hope you
would give the U.S. Department of Agriculture in the State of
Idaho an opportunity to become your very close neighbor as
well, because when one person goes to town, those are the three
agencies he is going to go to town to see.
Mr. Cameron. By the end of the day, I will have brought to
Kathleen Clarke's attention your interest in having Service
First in Idaho if it isn't there already and we will let you
know the status of that.
Mr. Otter. Thank you.
Mr. Ose [resuming Chair]. Gentlemen, I have to say as it
relates to your two departments, I am not satisfied with your
performance. No doubt you can see that chart over there. I have
given Ag and Interior an ``F'' on their performance under
paperwork reduction. Let me cite an example.
Say Mr. Otter on his AUM paper form has absolutely no
change from last year, there is no box on your forms that says,
``no change from last year,'' signed Butch Otter, send it out.
As far as I can tell on the Bureau of Reclamation forms and
USDA forms, there is no such box on any of those forms that
says ``no change from last year.'' You have to fill out the
whole form again. If there is no change, why not just put a box
there that the farmer or water user can just check and say ``no
change from last year'' and send the form back? Do you know how
much time that would save? Why isn't there a box like that? Mr.
Shipman.
Mr. Shipman. Congressman, I can't speak specifically to why
improvements haven't been made except to note that, in many
cases, the information we are collecting is on a year by year
production basis and it is very unlikely that producers are
going to produce the exact same quantity of products they grew
on a year by year basis. In some cases, I think your suggestion
is a good one, but I would call to your attention that in other
cases, it may not be appropriate.
Mr. Ose. Let us look at Iowa, which I have a passing
familiarity with. They either grow corn or soy beans, grow corn
1 year, soy beans the next. One crop uses a certain mix of
ground nutrient, the other crop puts it back, back and forth,
back and forth. What is so complicated? If you are talking
about yield in terms of updating your base acreage or what have
you, that is one question, but to fill out the whole form year
after year, name, date of birth, address, who do you buy your
equipment from, how many acres you have. What is the point?
Mr. Shipman. Your suggestion is a good one and as you are
well aware, the conferees on the 2002 Farm Bill are meeting as
we speak. We anticipate having a tremendous change in the way
we do much of our business. We are going to be going backward.
Mr. Ose. I do have that question here.
Mr. Shipman. In terms of the information we are going to be
required to collect, potentially, as a part of this
legislation.
Mr. Ose. Is that information requirement embedded in the
House bill or the Senate bill? Do they both require great
amounts of additional information?
Mr. Shipman. No, sir. The mandatory acreage reporting
requirements are included in the House bill.
Mr. Ose. How about the conservation stuff, because you are
going to have a whole raft of new information collection on
that?
Mr. Shipman. Yes, sir. Much of that will depend on whether
or not we have a new conservation program contemplated by the
Senate and whether the conferees decide to approve that or to
put it in as a pilot program or how they decide to dispose of
that.
Mr. Ose. You have an ``F'' now at Ag. If what you say comes
to past, we will go backward from an ``F'' and give you a
``Z''?
Mr. Shipman. My reference to going backward was actually in
terms of the information we will be collecting, in terms of
hours of burden, potentially we will be going up. At the same
time, we have had improvements this year. I noted in my
testimony a 250,000 hour reduction from the Food and Nutrition
Service. The Farm Service Agency has the ELDP program underway
and we have an overall initiative in the Food and Nutrition
Service to review the paperwork burden on participants in their
nutrition program.
We have had improvements this year and we have the
potential for greater improvement next year. Until we have the
final Farm Bill disposition, I am not sure I can give you an
accurate prediction of what the end total will be on that.
Mr. Ose. I do want to point out on page 8 of your written
testimony you have a comment about OMB having reported a total
of 33 violations of the Paperwork Reduction Act for USDA and
the OMB number is 96, not 33. If you would like our source, we
would be happy to provide that.
[The information referred to follows:]
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Mr. Ose. Mr. Cameron, the same question. Why doesn't the
Bureau of Reclamation have a box that says ``no change from
last year?''
Mr. Cameron. That is a very good question, and I think the
answer is we ought to. Clearly even with that sort of single
checkoff, you still need name, address, phone number,
identifying information like that. About a third of our 19,000
customers who actually file forms with us, less than 10 percent
of the universe of our customers, use that one-page form right
now. It is possible we could change it from a one-page form to
a half page form with the box check.
Mr. Ose. It seems to me all you have to do is put a line in
there. It is kind of like a checkoff; check this off, no change
from last year, and it is gone. You still have the same form,
one page, just a line, check.
Mr. Cameron. I don't have a copy of our one-page
verification form with me right now, but will be happy to
provide it to you for the record, but in glancing at it
yesterday, it didn't appear to have too many lines on it. I
think the estimate is it takes 15 minutes to fill out one of
those forms. If it can be made 5 minutes or 3 minutes, I am
with you 100 percent. Let us look for ways to make that happen.
What we are hoping to do at Reclamation is right now you
actually have to physically go to a BOR office or get a form
mailed to you. We are hoping within the next year or so to be
able to have folks download a PDF file so at least you don't
have to drive a half hour to get a form or wait a week for it
to show up in the mail. The next step after that would be to
fill it out on-line. We are hoping eventually to be able to
download last year's form, put in that ``x'' and send it right
back.
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Mr. Ose. I can make a pdf file in about a hour and a half.
I can take this form and convert it to a pdf file in a hour and
a half and put it on the Web site. What is the problem with
doing that? You talk about the travel time in rural areas for a
farmer to come to the office, fill out the forms.
Mr. Cameron. I agree it is crazy, or have it mailed to you,
I agree.
Mr. Ose. Separate and apart from the aggravation of having
to fill the form out accurately. What is the problem?
Mr. Cameron. You have a very good point, and I will commit
to you that we will get back to you with a schedule for getting
these things on-line. There are lots of irrigation districts
scattered around the country and we need some coordination
across the West but we will get back to you with the schedule.
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Mr. Ose. I took note of the comment about the irrigation
districts earlier and for the record, the men and women who run
those irrigation districts, the knowledge about who needs water
and when they need it is embedded in their heads not on some
paperwork. Shifting the onus of why this information is
collected to the irrigation districts, I am not ready to accept
it is they who need it. They have it intuitively; they know
where water needs to be and they know the systems for delivery
and all that without relying on these forms.
Mr. Shipman, I have in my hands Form CCC-21 and Form FSA-
578. The first is a Supplement to Commodity Credit Corporation
Storage Agreements, Declaration of Eligibility to Receive
Storage Payments under a CCC Storage Agreement. The second is a
report of acreage, two different forms. Why do they have the
same OMB approval number, 0560-0004 on the report of acreage
and 0560-0004 on the Commodity Credit Corporation form? I
thought each form had its own independent number.
Mr. Shipman. I believe you are right. Whether or not that
is a typographical error on our part or an oversight in
utilizing the same approval number, I don't know, but we will
be happy to report back to your staff by the end of the day the
answer to that question.
Mr. Ose. I would appreciate that.
My time is up. Mr. Otter.
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Mr. Otter. Mr. Shipman, I was listening to your testimony
and your further response to questions the chairman asked you
relative to your reduction of time. I am not sure I can recall
the exact figure, but it was something like 2,854,710 hours of
burden in the very report he referred to, the report on
acreages. Is that in violation of the law?
Mr. Shipman. Accounting for these violations I think you
would agree is a bit of a dynamic process and as we resolve
others and we have new burdens put on us, it creates new
violations. By our accounting today, we have seven violations
currently unresolved.
Mr. Otter. Then that puts you in excess of the reduction
but the new paperwork burdens that were created?
Mr. Shipman. Yes, sir.
Mr. Otter. I want you to have bragging rights on reduction
but the figures we have don't jive with your formal testimony.
Your formal testimony was there was a reduction. That is not
what these figures are saying. That is not what the OMB is
saying.
Mr. Shipman. The point of our testimony was to highlight
the reductions and not necessarily to point out those
continuing violations or outstanding problems we have, so it
was not an intent to mislead the subcommittee in any way but
more to highlight some of the successes that we have had. Of
the seven outstanding violations by my own research I have done
sitting here this morning, five of those are longstanding,
since 1997 or 1998, so they have long been outstanding.
At the same time, I would point out to you that one of the
biggest of those is our Hazard Analysis Critical Control Point
Meat and Poultry Inspection System reporting requirement. We
face a balancing act between protecting food safety, delivering
farm payments, and ensuring that the 20 or so ad hoc emergency
producer assistance programs that Congress directed us to
administer in the last few years are administered in a timely
fashion, and trying to ensure that we comply with the Paperwork
Reduction requirements as well. We find ourselves between the
proverbial rock and a hard place many times between the
committees of jurisdiction of the Congress. One wants us to
administer these programs timely and effectively and at the
same time, not do so in a burdensome way. I would like to think
that we have struck a pretty good balance in the past and will
continue to strive to do even better.
Mr. Otter. I was looking for the warning that, if I didn't
fill this out and send it back, I was going to go to jail, get
fined, or both and I didn't find it on here.
Interestingly enough, it seems to me you have the genesis
for the cooperation because on your own form it says
``Providing incorrect information may result in prosecution
under criminal and civil fraud statutes, including . . .'' and
then you quote all the titles.
``The information may be furnished to any agency
responsible for enforcing provisions of the act and the IRS,
the Department of Justice, or any other State and Federal law
enforcement agency in response to the Court or Administrative
Tribunal.''
As you have already named your co-Federal agencies this
information is important to, why do we have all these other
forms?
Mr. Shipman. I think that goes to your earlier question.
Mr. Otter. It does indeed. Your requirement for information
is somebody else's burden. Your violation of those laws is
still somebody else's burden. They still suffer the
consequences if it is not done correctly and right.
Mr. Shipman. We have a number of very significant
information technology investments underway at USDA and
proposed in the very near future, which I think will greatly
enhance our ability to share information in forms that are
usable to other State and Federal agencies. I commit to you
that we will do our very best to try and make that as useful a
process as we can.
Mr. Otter. I want to encourage you to keep up the successes
you have in cooperation between agencies and up and down
agencies. I use the new office in Boise, Idaho as an example of
that process. That process has lightened the burden somewhat,
but I think we have a long way to go.
Mr. Ose. We have gotten to the point that I would have
hoped we would and I find we have been called for a vote on the
floor. It is a series of votes. Our plan is to wrap up this
panel, advise you we have a number of questions we are going to
submit to you in writing, and we anticipate your answers.
We will ask the third panel to come forward at this time.
We will attempt to complete the third panel's oral testimony
prior to the 5-minute votes coming up shortly.
Mr. Otter, we need to have you go vote and come back so
that I can go vote on the 5-minutes.
Mr. Shipman, Mr. Cameron, we appreciate your attendance. We
apologize for the disruption in this process, because this is
exactly where I wanted to get this hearing to so I could talk
to the two of you about a number of subjects. We will do it in
writing now. Thank you for coming.
Get the Farm Bill done, Mr. Shipman.
Will the third panel come forward? Welcome to our third
panel, James M. Wordsworth, President, JR's Goodtimes, Inc.,
McLean, Virginia and Kenneth Buback, Vice President, Human
Resources, Sutter Health, Sacramento, California. Welcome. As
you heard earlier, we swear in our witnesses, so please rise.
[Witnesses sworn.]
Mr. Ose. Let the record show the witnesses answered in the
affirmative.
Mr. Wordsworth, we will go to you first, we have received
your testimony and if you could summarize for 5 minutes.
STATEMENTS OF JAMES M. WORDSWORTH, PRESIDENT, J.R.'S GOODTIMES,
INC.; AND KENNETH A. BUBACK, VICE PRESIDENT, HUMAN RESOURCES,
SUTTER HEALTH
Mr. Wordsworth. Good morning.
Thank you for asking me to testify before you today. I
commend your efforts to reduce the paperwork burden on small
employers and for holding this hearing on this important issue.
I will summarize the testimony I have submitted.
I am Jim Wordsworth, president of J.R.'s Goodtimes, Inc.
and the owner of several small businesses. I am here to speak
with you today on behalf of the U.S. Chamber of Commerce. The
Chamber of Commerce is the world's largest business federation,
representing an underlying membership of more than 3 million
businesses and organizations of every size and every industry
sector in every region of the country. Ninety-six percent of
the Chamber's members are small businesses like me with fewer
than 100 employees.
I have been a member of the Chamber since 1990, served on
its Labor Relations and Small Business Councils since 1993, and
was elected to the Board of Directors in June 2001. I grew up
in several different small businesses in North Carolina owned
by my father, mother, grandfather, and uncles. In 1974, I took
my life's savings and a small business loan and opened J.R.'s
Steakhouse in Virginia, a small 130 seat, fine dining
restaurant. That was successful and in 1978, I opened J.R.'s
Stockyards in Tyson's Corner, a 250-seat restaurant. Since that
time, I have done a number of other things. I have several
corporate picnic facilities, a company that builds jails and
modular prisons in Marin and Stafford Counties, and have done
land development in a number of limited partnerships.
Any one of these diverse business endeavors comes with its
own particular set of rules and regulations specific to the
industry. I might add some of these are necessary to protect
public well being. We could not do business without
regulations, requirements, and disclosures that protect at
least the integrity of the transactions of all parties.
The problem with regulations is their cost. Plain and
simple, regulations cost business money, money for lawyers, for
accountants, and for paperwork. Unfortunately, every year,
Federal, State, and local governments pass and promulgate more
legislation, rules, and regulations. Frankly, the sheer number
of legal requirements through which a business must navigate is
dumb-founding.
To illustrate, I submit along with my testimony, an 8\1/2\
x 14 document that lists the name of Federal/State regulations
in 10 point type which restaurant owners in Virginia must
comply with. Please note the list fills both sides of the
document and remember almost each and every one of these laws
requires some form of paperwork.
While I could discuss the paperwork problem for every
aspect of running a business, I will focus my testimony on a
couple of specific things having to do with labor immigration
laws and regulations.
In its reports to Congress on the cost and benefits of
regulations, the OMB reports the Department of Labor
regulations alone imposed over 181 million hours of paperwork
on business annually since 1999. The annual cost to business
for this 181 million hours exceed $5.43 billion with a
disproportionate cost of that being assessed to small
companies. The manager or owner has to fill out the forms.
These costs are strangling business, especially fledgling
companies. It is hard enough for a new business to make it. My
business, the restaurant industry, national statistics say 80
percent of all new restaurants starts will fail in 2 years;
less than 7 of 100 will last 5 more years under the same
financial management.
While I understand some of this paperwork is necessary and
it is a byproduct of DOL's need to collect information, it
appears that much of it really is unnecessary. A good example
is the Fair Labor Standards Act, Regulation 541. This imposes a
complex set of tests to determine who is and is not eligible
for overtime.
The Family and Medical Leave Act in several cases as many
as 17 documents are required to document an employee leave.
Every business owner, operator, and manager would join me
in complaints about OSHA and their recordkeeping requirements,
although we understand the agency recently made significant
improvements to its requirements. It is still a major source of
paperwork burden.
I could go on, but time is limited, so I will present one
final example, sponsoring legal alien employees for permanent
residence. Over the years, we have sponsored many employees,
20-25. The amount of redundant, historic, and irrelevant
paperwork to multiple agencies in this process is incredible.
Phase 1 is a DOL certification with a whole page of
requirements; phase 2 is INS certification; phase 3 is the
application. In my written testimony I have listed all those
requirements.
On a positive note, it is my understanding the current
administration is taking action in regard to regulatory reform.
Thank you for inviting us and for your time and attention. I
would be glad to answer any questions.
[The prepared statement of Mr. Wordsworth follows:]
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Mr. Ose. Thank you.
Mr. Buback, you are recognized for 5 minutes for your
testimony. I will be back, and I have read your testimony.
Mr. Buback. Good morning.
I am Ken Buback and I am here representing the Society for
Human Resource Management, the world's largest association
devoted to human resource management issues and representing
more than 165,000 individual members. I am also vice president
for Human Resources for Sutter Health, a network of not for
profit community-based hospitals and care centers in northern
California. Sutter Health serves more than 100 communities in
the northern part of the State and employs more than 35,000
people.
Before I begin, I would like to recognize my daughter,
Katie Buback, who is present. Katie is a student at St. Mary's
College of California and is currently attending the Washington
semester program at American University.
To illustrate the enormous nature of paperwork challenges
confronting employers, I would like to show you chart A as part
of my testimony, which simply lists the paperwork and
recordkeeping requirements under the 27 statutes with which we
must comply. Those are here to my right.
Today, I intend to illustrate the paperwork and
administrative complexity of just one of these 27 statutes.
This is an example of the interpretative complexities of the
Family and Medical Leave Act. These interpretations are at
times vague and even contradictory. The cumulative impact of
these requirements diverts critical resources away from patient
care and drives up health care costs. A review of FMLA
interpretative problems is especially timely since the OMB is
required by law to review the paperwork requirements before
they expire on June 30 of this year.
Certainly the FMLA has made an important contribution.
However, the spirit of the law is not well served by the
complexities, which leave employers guessing as to how to
comply and leave employees guessing as to what is protected
under the changing legal interpretations.
I would like now to draw your attention to chart B in my
testimony, and I will take you through the chart in a second.
The FMLA was enacted to allow eligible employees up to 12 weeks
of unpaid leave for family and medical leave purposes. The
family leave part of FMLA has not been problematic. However,
the medical leave component of FMLA has been increasingly
complex.
The first obstacle, as we look at the chart, the manager
faces is determining what constitutes a serious health
condition for eligibility purposes. The regulatory definitions
and interpretations are extremely complex and confusing. The
DOL has issued inconsistent and vague opinion letters on this
subject. Looking at the chart top to bottom, the first part of
this is related to determining the eligibility of an
individual. There are 69 regulations covering this process, 25
process steps involved in both charts.
Upon examining the eligibility requirements as stated by
the regulations, a determination needs to be made. There are
very tight notification timeframes required of the employer. We
must also take into consideration State regulations that
interact with the Federal statutes, which also make it
extremely complex.
Upon notifying the individual of their eligibility we then
move to the certification mode at the bottom of page 1. This is
a 15-day timeframe where the interaction of the health care
provider and the employee has to resolve frequently complex
issues in a very short amount of time. Assuming that the
individual is eligible based on medical certification, we move
then to the top of page 2, which begins to look at the tracking
mechanism, determining when a person is eligible and is it a
continuous leave situation or is it intermittent. If it is
intermittent, these are unscheduled, unplanned leaves of
absence for an eligibility period of 480 hours per year taken
by the employee based on health reasons. As you can imagine, in
a health care setting where we have 24-hour, 7-day-a-week
coverage for patient care activities, this is extremely
problematic for us.
Following the tracking of the leave that we see here, we
then assume the leave is fulfilled, the employee's condition is
improved, and they are eligible to return to work. They are
appointed to their previous job or a comparable job in the
organization.
At the bottom in the red, you will see the requirements for
recordkeeping purposes. Each of these 25 transactions require
some sort of recordkeeping or documentation for the record. I
think the notes at the bottom of the page are very noteworthy.
The validity of 11 different FMLA regulations have been
challenged in the courts in 58 different cases. This makes it
very difficult for employers to recognize what are the actual
rules for eligibility and administering this leave process.
Also, the interplay between the ADA, FMLA, Worker's Comp is
probably one of the most difficult areas of employment law for
both managers and HR professionals to manage. The opinion
letters are sometimes conflicting interpretations and confuse
employers and employees alike as to what is eligible and what
is not. Frequently Federal and State regulations overlap and
conflict.
The paperwork challenges confronting employers are
enormous. FMLA is a good law and has become inadvertently too
complex. We hope these administrative processes can be
clarified soon so that the FMLA works as intended. We look
forward to working with you, the OMB, and the Department of
Labor to make FMLA a model of effectiveness rather than a model
of administrative complexity.
I would be happy to answer any questions you might have.
[The prepared statement of Mr. Buback follows:]
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Mr. Otter [assuming Chair]. Thank you, Mr. Buback.
I would ask both of you gentlemen in your respective
industries and your associations within those industries, have
you ever gone to the GAO or OMB and said what they are asking
us for right now is an additional paperwork burden and we think
it is in violation of the Paperwork Reduction Act?
Mr. Buback. We have worked primarily through professional
associations in terms of trying to bring awareness to this
issue. This is the sixth time this particular subject has been
brought before a legislative committee, so we are very
motivated, we are very interested in working with OMB to make
these changes as soon as possible and would be willing to work
with this committee as well.
Mr. Otter. Mr. Wordsworth.
Mr. Wordsworth. Only through monitoring the paperwork
reduction activities of 1995, 1997, 1998, which really didn't
produce anything, but not specifically with OMB on a specific
requirement.
Mr. Otter. The OMB, as you heard earlier, is the one
charged with the responsibility for finding violations by the
Federal agencies for this. I would encourage you that, if you
haven't made that a part of your political operation within the
national organizations you belong to, to certainly go to the
OMB. I hope when you do that, you will do so in a positive way.
Take these forms with you, take this maze you have up here, Mr.
Buback, and, when you go, say here is the information you
really need, here is the kind of form we might suggest you
would use in order to accomplish that need because it is
important information. We are talking about employees' rights,
talking about some demographics that we need in the Nation to
take a look down the road in terms of some of the benefits that
are supplied by the Federal Government.
I would encourage you, if you haven't, to make that a
generous portion of your political effort here in Washington,
DC, because I know coming out of industry myself, for the 30
years I was in the private sector, at one time vice president
of administration of a food company, I had 87 people working
for me just to fill out government forms. When we decided we
couldn't afford to take the government business, we were then
sued by the government because we refused to bid on their bid
requests. I had to hire some more people and fill out some more
forms for that.
I would also ask you to go through a lot of the rest of the
forms and encourage those organizations that you belong to, to
go through those with creative and constructive criticism. Quit
going back to the agencies, that won't work, we know that. We
showed you the violations this morning because there is no
penalty. If you will go to the GAO or to the OMB, I think you
will probably get a much better response. Failing that, I would
go to your Members in Congress, including the two sitting at
this dias, and encourage us to make those same opportunities
available for the GAO and the agencies.
Mr. Ose [resuming Chair]. You have about 2 minutes left to
vote.
Mr. Otter. Did you want to respond?
Mr. Buback. Just a comment that we have and will continue
to work with the OMB and others in this area and we will be
looking forward to the June 30 results in terms of next steps
of engagement there.
Mr. Wordsworth. I also wanted to comment I know the U.S.
Chamber is working on their comments on the OMB 2002 report.
I brought with me--it just came in the mail 2 days ago--
this document. This is a 21-page form from OSHA that has my
name on it and the postmark that has to be filled out on any
accidents or illnesses I had in my business that could possibly
have been job related. It conveniently doesn't fit in any file
cabinet, so I guess it gives it great dignity.
Mr. Ose. Gentlemen, Mr. Otter has gone to catch a vote. He
may be back after that.
I want to go to chart A, Mr. Buback. You cite any number of
statutes in here. Do you know whether or not the regulatory
forms issued under these statutes are current or whether they
have lapsed?
Mr. Buback. Off the top of my head, I couldn't tell you,
given the number there. I would be happy to get back with you
and submit something in writing if you like.
Mr. Ose. I am interested in that. I noticed in your
testimony you had quite a bit of discussion about the Family
and Medical Leave Act and the manner in which it is
implemented, the recordkeeping and what have you. We will
certainly followup on the questions that you have raised.
Mr. Buback. We have continued to submit our concerns to the
OMB. We look forward to the June 30 date related to further
action and further partnership of exploring those issues of
FMLA.
Mr. Ose. I also had an opportunity to meet with one of your
fellow service providers in Sacramento, Kaiser Permanente,
recently. They brought up the subject you have here on page 8
having to do with INS certification for foreign workers, the
primary concern being how do they meet their demand for nurses
in the various care wards and the like. Can you take us through
this briefly, understanding I am going to leave in about 2
minutes?
Mr. Buback. In terms of the nursing shortage and other
critical health care employer shortages in the industry, we are
very concerned about that in terms of having adequate supplies
of health care workers. That has led us to do a number of
different things in terms of working with schools, colleges,
special training programs. Another one of those strategies has
been looking at foreign recruitment. We found our internal
national supply is just not meeting our needs andm therefore,
we do international searches for qualified professionals,
particularly in the nursing profession. It is extremely
complicated, extremely paperwork burdensome, and yet we
struggle with the need of providing 24-hour, 7-day-a-week care
to our patients.
Again, we look forward to working with whatever agencies,
OMB and others, to do what we can to reduce those burdens.
Mr. Ose. There are a bunch of submittals cited in your
testimony, application for alien employment. That is Mr.
Wordsworth's testimony, but the system has to be similar for
you. Are there steps we could take out of that process?
Mr. Buback. Absolutely. I think you saw in my other
illustration that was one example of one statute or regulation.
I think each of these can be streamlined and need to be
reviewed. They are confusing, complex, sometimes contrary to
one another, so there is a lot of opportunity there.
Mr. Ose. Mr. Wordsworth, I appreciate your comments because
it is not only in California but clearly in Virginia too. We
are not talking about unskilled labor in the case of nurses or
people in your industry. We are talking about people who bring
skills to this job we literally cannot meet within this country
today from lack of training or what have you. The choices, as
in Mr. Buback's case, to provide enough nurses, to provide
care, do we shut down wards? In your case or your colleagues in
the Chamber, do I shut down an assembly line and push everyone
out of work for that particular team? That is a very real
issue.
As with the previous panel, I want to apologize, because I
have to go vote. That is what they hired me to do. I do want to
add a couple remarks. Panel 1, I have to say I am very
disappointed in the progress we have made to date on reducing
paperwork burdens. You guys are kind of like exhibit A and B as
to what success we have or haven't had. Besides the dismal
record at OMB, OMB has failed to improve the agency management
of paperwork. We have over 400 violations of the paperwork law
last year by the agencies where they have illegally levied a
burden on the public, and there is no excuse for that. The
statute is clear.
IRS, which accounts for 83 percent of the public's burden,
they are like the poster child for dismal performance in
paperwork reduction. They levied over 200 million additional
hours of burden on the public in this past year.
The second panel, Agriculture and Interior clearly have a
long way to go to properly manage their paperwork burdens they
impose on the public. Those two forms we had, one for the
Commodity Credit Corporation and the other for the report on
acreage, frankly are clear indications of the confusion that
reins there.
We are trying to bring some rationality to this so we are
not collecting the same information on six or seven or eight
different forms. The statute is clear. I don't think either of
you consider yourselves victims, but you are being victimized
by this. Congress is trying to fix it. We will leave the record
open for 10 days and we will be sending the Labor Department a
letter with your testimonies attached asking them to respond
directly. I do appreciate your coming. Thank you for coming.
This hearing is adjourned.
[Whereupon, at 12:14 p.m., the subcommittee was adjourned,
to reconvene at the call of the Chair.]
[The prepared statement of Hon. John F. Tierney and
additional information submitted for the hearing record
follow:]
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