[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]




           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.
    [The information referred to follows:]

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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.
    [The information referred to follows:]
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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.
    [The information referred to follows:]

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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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