[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
  THE PAPERWORK REDUCTION ACT AT 25: OPPORTUNITIES TO STRENGTHEN AND 
                            IMPROVE THE LAW

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON REGULATORY AFFAIRS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 8, 2006

                               __________

                           Serial No. 109-171

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform


                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
29-707                      WASHINGTON : 2006
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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
JON C. PORTER, Nevada                C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas                BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia        ELEANOR HOLMES NORTON, District of 
PATRICK T. McHENRY, North Carolina       Columbia
CHARLES W. DENT, Pennsylvania                    ------
VIRGINIA FOXX, North Carolina        BERNARD SANDERS, Vermont 
JEAN SCMIDT, Ohio                        (Independent)
------ ------

                      David Marin, Staff Director
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

                   Subcommittee on Regulatory Affairs

                 CANDICE S. MILLER, Michigan, Chairman
GINNY BROWN-WAITE, Florida           STEPHEN F. LYNCH, Massachusetts
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
LYNN A. WESTMORELAND, Georgia

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                       Ed Schrock, Staff Director
                Rosario Palmieri, Deputy Staff Director
               Kristina Husar, Professional Staff Member
                         Benjamin Chance, Clerk
                     Krista Boyd, Minority Counsel


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on March 8, 2006....................................     1
Statement of:
    Kovacs, William L., vice president, Environment, Technology, 
      and Regulatory Affairs, U.S. Chamber of Commerce; Andrew M. 
      Langer, manager, regulatory policy, National Federation of 
      Independent Business; Linda D. Koontz, Director, 
      Information Management Issues, U.S. Government 
      Accountability Office; and J. Robert Shull, director of 
      regulatory policy, OMB Watch...............................    38
        Koontz, Linda D..........................................    67
        Kovacs, William L........................................    38
        Langer, Andrew M.........................................    51
        Shull, J. Robert.........................................   104
    Miller, James, chairman, Board of Governors, U.S. Postal 
      Service; and Sally Katzen, visiting professor, George Mason 
      University Law School......................................    14
        Katzen, Sally............................................    20
        Miller, James............................................    14
Letters, statements, etc., submitted for the record by:
    Davis, Hon. Tom, a Representative in Congress from the State 
      of Virginia, prepared statement of.........................   130
    Katzen, Sally, visiting professor, George Mason University 
      Law School, prepared statement of..........................    24
    Koontz, Linda D., Director, Information Management Issues, 
      U.S. Government Accountability Office, prepared statement 
      of.........................................................    69
    Kovacs, William L., vice president, Environment, Technology, 
      and Regulatory Affairs, U.S. Chamber of Commerce, prepared 
      statement of...............................................    40
    Langer, Andrew M., manager, regulatory policy, National 
      Federation of Independent Business, prepared statement of..    54
    Lynch, Hon. Stephen F., a Representative in Congress from the 
      State of Massachusetts, prepared statement of..............    10
    Miller, Hon. Candice S., a Representative in Congress from 
      the State of Michigan, prepared statement of...............     4
    Miller, James, chairman, Board of Governors, U.S. Postal 
      Service, prepared statement of.............................    17
    Shull, J. Robert, director of regulatory policy, OMB Watch, 
      prepared statement of......................................   106


  THE PAPERWORK REDUCTION ACT AT 25: OPPORTUNITIES TO STRENGTHEN AND 
                            IMPROVE THE LAW

                              ----------                              


                        WEDNESDAY, MARCH 8, 2006

                  House of Representatives,
                Subcommittee on Regulatory Affairs,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:06 p.m., in 
room 2154, Rayburn House Office Building, Hon. Candice Miller 
(chairman of the subcommittee) presiding.
    Present: Representatives Miller and Lynch.
    Staff present: Ed Schrock, staff director; Rosario 
Palmieri, deputy staff director; Kristina Husar, professional 
staff member; Joe Santiago, GAO detailee; Benjamin Chance, 
clerk; Krista Boyd, minority counsel, Jean Gosa, minority 
assistant clerk.
    Mrs. Miller of Michigan. Good afternoon. I would like to 
call the hearing to order here, to begin.
    On March 7, 1995, the U.S. House of Representatives passed 
the Paperwork Reduction Act of 1995 by a vote of 423 to 0--
which is remarkable, I believe. But here we are, 11 years and 1 
day later, reviewing what we have accomplished since then and 
since the PRA passed originally just over 25 years ago.
    Although we have established a very strong system and 
eliminated hundreds of millions of hours of unnecessary 
paperwork, we have added billions of hours of paperwork burden 
even faster. Since its passage in 1980, we have increased total 
governmentwide burden by over 400 percent to more than 8 
billion hours today. If future Members of Congress were to look 
back and say that our actions today increased the burden 
another 400 percent in another 25 years, to over 30 billion 
hours, then I would say, unfortunately, that we have failed.
    In a time of increasing global competitiveness, the United 
States must be the best place in the entire world to do 
business. Part of being the best place in the world to do 
business means that we have to quench the Federal Government's 
appetite for unnecessary information. And no one can say with a 
straight face that every single form or every question or every 
recordkeeping requirement of the Government is absolutely 
necessary.
    So we have set out as a Congress many times to put the 
right structure in place to create incentives, to reduce 
burden, and the disincentives to increase burden. But even now 
we do not seem to have the right formula yet.
    In 1995 we established a set of certification requirements 
to force agencies to do the tough work of justifying their 
information collections. These requirements would force 
agencies to prove that they were avoiding duplication of 
information, reducing burden on the public and small entities, 
writing their forms in plain English, and that the information 
that they were collecting was really necessary to their 
programs. The GAO has conducted a comprehensive study of agency 
certifications and found them wanting. Agencies were missing or 
provided partial support for 65 percent of the collections in 
GAO's sample. Most agencies are not fulfilling their 
requirements for public consultation as well.
    The watchdog for these agencies is the office we created in 
1980 within the Office of Management and Budget, known as the 
Office of Information and Regulatory Affairs [OIRA]. This 
agency reviews each of these collections and can approve its 
use for up to 3 years. The Office has also had the 
responsibility of coordinating percentage reduction targets 
between agencies and reporting annually to the Congress on 
progress toward burden reduction.
    As we have demanded more and more of OIRA, we have given it 
fewer resources. As the size and scope of Government has 
increased, OIRA has shrunk. It would be a different story if we 
had achieved our burden reduction goals while reducing OIRA's 
resources, but that is not the case. At the same time that 
OIRA's budget decreased, the budgets devoted to writing, 
administering, and enforcing regulations went from $11 billion 
in 1980 to $44 billion today. And while OIRA's staff has 
declined from 90 down to 50 employees, the staff dedicated to 
writing, administrating, and enforcing regulations has 
increased from 146,000 in 1980 to over 242,000 today.
    I think the staff has put a chart up so you can follow what 
we are saying with all these numbers. You look at the line 
there.
    Part of the work that we must do in our review of the PRA 
is reauthorizing appropriations for OIRA which expired in 2001. 
We want to make sure that they have the resources that they 
need to do the job that Congress has an expectation of them to 
do. And OIRA's other functions, including regulatory review, 
are as critical as ever. Burden imposed by regulation is every 
bit as costly and serious as burden imposed by paperwork. In 
fact, they are often two sides of the same coin. New 
regulations impose new paperwork requirements.
    The specific burden reduction targets of the 1995 PRA were 
not accomplished. That act required a target for reducing 
governmentwide burden by 40 percent between 1996 and 2001. If 
that would have been achieved, total burden would have measured 
4.6 billion hours in 2001 rather than 7.5 billion hours--again, 
I think the staff has put up an additional chart so that you 
can have a visual of some of the numbers that we are talking 
about here as well--and we wouldn't be on our way to more than 
9 billion hours during the next year.
    We have a very, very big challenge ahead of us. Chairman 
Davis and I are in the process of writing legislation to 
improve the PRA and our Government's efforts at burden 
reduction. And that is why I am so glad today that we have such 
excellent witnesses to testify before our committee. We are 
certainly looking forward to your testimony and your counsel on 
how we can amend the law to reduce unnecessary Government 
burdens and improve our Nation's competitiveness.
    [The prepared statement of Hon. Candice S. Miller follows:]

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    Mrs. Miller of Michigan. And just at the right moment, my 
ranking member, Representative Lynch, has arrived and we 
appreciate his attendance here. He has just been a remarkable 
member of our committee. I would like to recognize him for his 
opening statement.
    Mr. Lynch. Thank you, Chairwoman. I appreciate your kind 
remarks. I am happy to support the efforts of the committee to 
reauthorize and improve the Paperwork Reduction Act and the 
ultimate goal of making Government paperwork less complex and 
more efficient.
    It is beyond argument that the promise of democracy and the 
fullness of individual rights and the ideals of equal 
protection and access to Government under the law can never be 
attained if the communications we seek to carry out the work of 
Government are drafted in such a way that their meaning and 
their object remain a complete mystery after being read. The 
Tax Code, which is the bane of many of us here on this 
committee, which applies to every single working soul in 
America regardless of their education, is today written in a 
style and language that is not unlike the technical 
specifications for the space shuttle. It is no surprise that 
the IRS accounts for about 80 percent of the Government's 
paperwork burden.
    Many other Government forms that are central to the basic 
rights of our citizens, by their sheer volume and complexity 
place too big a burden on the citizens trying to complete them. 
I think the Commission to Government by Alfred E. Smith, the 
Governor of New York, said it best when they said that 
Democracy does not merely mean periodic elections; it also 
means that Government must be accountable to people between 
elections. And in order to hold their Government to account, 
the people must have a Government that they can understand. 
When Americans are required by their Government to fill out 
forms, they should be able to do it without spending 
unnecessary hours and difficulty trying to understand and 
complete these forms.
    We will hear a lot today about the paperwork burden, the 
estimates of how many hours Americans are spending every year 
filling out various forms. OMB estimates that the current 
paperwork burden is almost 10.5 billion hours. OMB also says 
that the number may be somewhat inflated because of adjustments 
being made to some IRS forms, but even that being said, the 
paperwork burden is significantly higher than just 6 years ago. 
In fiscal year 2000, the paperwork burden was 7.4 billion 
hours. I can see the impact alone of the Patriot Act on so many 
of our industries in compliance with various forms has probably 
contributed greatly to that.
    However, it is misleading to only talk about the burdens of 
information collection. Information for a variety of purposes 
and many information collections do provide agencies and the 
public with extremely valuable information. Just a few 
examples: The FDA requiring drug manufacturers to list warnings 
and other safety information on prescription drug labels. The 
Bureau of Customs and Border Protection requires ships to 
provide cargo manifests and other information 24 hours before 
loading, and we are all familiar with the security concerns in 
our ports. It is based on that information that Customs can 
refuse to allow high-risk cargo into the United States. Another 
area as well, Mine Safety and Health Administration 
requirements hold mine operators to the requirement that they 
keep records of miners' exposures to toxic chemicals, and 
miners then have the right to get copies of that information.
    It is the role of Government to balance the power of 
commercial interests against the public's right to have access 
to that information. In many cases, when industry has a few 
employers that are overwhelming in size and power that it is 
only the role of Government that can actually intervene on 
behalf of our citizens. It is our role of Government to provide 
that balance.
    Unfortunately, burden reduction is sometimes used to 
rationalize efforts to weaken public health and safety 
protections. One recent example of this is EPA's proposed 
changes to the Toxic Release Inventory Program. Last September, 
EPA proposed a rule that would allow thousands of facilities to 
avoid disclosing details about the toxic chemicals that they 
are releasing into the environment, information that is relied 
upon greatly by local communities. The EPA rationale for this 
proposal was that it would reduce the time industry has to 
spend filling out toxic release forms. But EPA's own analysis 
found that the proposed rule would only save facilities an 
average of 20 hours per year and, in monetary terms, about 
$2.50 per day. Yet under EPA's proposal, as much as 10 percent 
of those communities that currently had a facility reporting 
under the Toxics Release Inventory could lose all the data 
about local toxic chemical releases.
    So agencies need to find a way to reduce the burden of 
filling out paperwork, but the key is to find ways to make 
reporting easier and less time consuming without sacrificing 
the quality and the nature of some of the information that is 
actually collected and made public. One good example is a 
recent effort by the IRS to make some of its tax forms easier 
to understand so that the forms will take less time to 
complete. As any taxpayer knows, there is a lot more we should 
do to simplify the process of filing taxes.
    In the end, I look forward to working with Chairman Miller 
and Chairman Davis on reauthorizing the Paperwork Reduction 
Act. I believe we can work together on a bipartisan basis for 
legislation that makes improvements on the Paperwork Reduction 
Act without controversial provisions aimed at slowing down or 
weakening the regulatory process, that part of the process that 
does serve the public interest.
    We have some very distinguished witnesses joining us today. 
I want to thank you, and I look forward to hearing your 
thoughts.
    [The prepared statement of Hon. Stephen F. Lynch follows:]

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    Mrs. Miller of Michigan. Thank you very much.
    Now, because Government Reform is an oversight committee, 
it is a practice of the committee to swear in all of our 
witnesses. So if you will rise and raise your right hands.
    [Witnesses sworn.]
    Mrs. Miller of Michigan. Thank you very much.
    Our first witness today is certainly no stranger to Capitol 
Hill. Dr. Jim Miller is an expert on various public policy 
issues, including Federal and State regulatory programs, 
industrial organization, antitrust and intellectual property, 
and the effects of various laws and regulations on the overall 
economy. During the Reagan administration, Dr. Miller served in 
numerous capacities, including the Administrator for 
Information and Regulatory Affairs at OMB, a member of the 
National Security Council, and a Director of the Office of 
Management and Budget.
    Dr. Miller is often seen on television and appears in 
newspaper articles, where he comments on public issues. He is a 
distinguished fellow of the Center for Study of Public Choice 
at George Mason University, a distinguished fellow of the 
Mercatus Center at George Mason University, and a senior fellow 
of the Hoover Institution at Stanford University.
    He and his wife Demaris live away from the hustle and 
bustle of Washington, out in--how do you pronounce that? 
Rappahannock County? Rappahannock County, VA. And as you just 
mentioned before we began our hearing, not only do you have a 
very good last name, but your daughter-in-law's name is 
Candice.
    Mr. Miller. Absolutely.
    Mrs. Miller of Michigan. That is amazing. I have only met 
one other Candice Miller in my entire life, so that is just an 
interesting fact. Dr. Miller, welcome so much. We are 
interested in your testimony. You do have the floor, sir.

STATEMENTS OF JAMES MILLER, CHAIRMAN, BOARD OF GOVERNORS, U.S. 
 POSTAL SERVICE; AND SALLY KATZEN, VISITING PROFESSOR, GEORGE 
                  MASON UNIVERSITY LAW SCHOOL

                   STATEMENT OF JAMES MILLER

    Mr. Miller. Thank you, Madam Chairman, and Congressman 
Lynch. It is a pleasure to be here. Thank you for inviting me. 
It is an honor to be here with Sally Katzen.
    As you pointed out, I was head of OIRA at one point. In 
fact, I was the very first administrator of OIRA. I was the 
first Oiranian, as we called ourselves. And it is a memory that 
I relish.
    I think enacting the PRA, the Paperwork Reduction Act, was 
one of the best things Congress has done. It is very important 
that you did this and that you continue to support it. And the 
reasons are that what is at stake is so large, as Congressman 
Lynch was pointing out. The paperwork burden is so large. And, 
chairman, you were pointing out there is so much in terms of 
resources that are allocated by ordinary Americans to this 
effort.
    Also, the regulatory burden, the effects of regulatory 
activity, both positive and negative, is so large, the effects 
are so large, the impact is so large, that it is just really 
important that you have an institutional way of dealing with 
this.
    Let me just give you a couple of figures I checked out. The 
regulatory burden, according to Mark Crain, who is a professor 
of economics, is like $1.113 billion. That is over $1 trillion 
a year. The Tax Foundation has concluded that the Internal 
Revenue Code imposes paperwork costs equal to something like 
$256 billion a year. Now, I know that there are people that 
would contest those, some have higher numbers, some lower 
numbers; but the numbers are staggering when you think about 
them.
    Overall, I think successive administrations have done a 
good job of employing the act. If you just look at the OIRA Web 
page, I think you will be impressed by the variety and the 
depth, the breadth of scope of activities and the depth of 
activities that they have engaged in. I think the work of OIRA 
and other Federal agencies in the paperwork and the regulatory 
spheres should be governed by three principles.
    The first is have sufficient information to know what you 
are doing. Too often, Government agencies promulgate regulation 
and promulgate paperwork reductions without knowing what they 
are doing. Too often, people just sound the alarm and say stop, 
it doesn't make any sense without knowing what the information 
is. So first, have requisite information.
    Second, you ought to apply the principle of cost-
effectiveness. This is very commonsensical kinds of advice. 
That is to say, for any given cost of a regulation or a 
paperwork requirement, you ought to achieve the maximum 
benefits from that. Or alternatively, the flip side, you ought 
to, for any given level of benefits, you ought to find a way to 
achieve those benefits at the lowest cost. That is the second 
principle.
    The third principle is a little more difficult to employ in 
that it sort of envisions a schedule. You think of the 
stringency of a paperwork requirement or of a regulatory 
requirement going from least stringent to most stringent. You 
want to think of the benefits. Of course, the extra benefits 
decline as the extra costs increase. But you want to secure 
that level of stringency where the difference between the 
benefits and the costs are greatest: the net benefits. You want 
to maximize net benefits.
    Now, those three principles were articulated by OIRA and by 
President Reagan in the 1980's and they have been followed 
pretty well since then. But as, Congressman Lynch, you pointed 
out, 80 percent of the paperwork burden is from the IRS. And as 
you pointed out, Madam Chairman, in your letter of invitation, 
those numbers have gone up, and you just said those numbers 
have gone up--why? The burden has gone up. Why?
    Well, is it the fault of OIRA? I don't think that is 
probable. Is it the fault of IRS? IRS has done a lot to try to 
secure a lower burden, simplification and things. I think the 
real fault is that Congress and the President continue to enact 
tax simplifications that end up making the Tax Code longer--the 
shelf that houses the Tax Code longer and longer. And so, it 
means that the cost of filling out all the forms and complying 
with the requirements of the Tax Code are greater.
    The one thing that you could do--I am not suggesting it is 
easy--but if you were to pass a flat tax, boy, would that 
reduce the amount of paperwork burden. I mean, it would cut it 
enormously.
    Failing that, you might think of having people file with 
the IRS every other year instead of every year. I once 
suggested that to an IRS commissioner. I thought he was going 
to fall out of his chair. But if you think about it, when you 
file, it is really a settling up, isn't it? You pay your income 
tax and, you know, but you just settle up once a year. That is 
what filing is. And maybe file every other year and it would 
reduce--it wouldn't cut it in half, but it would reduce the 
paperwork burden. And there are simple rules. You know, if you 
were born in an odd-number year, you file in an odd-number 
year. Even-number, file in an even-number year. Of course, with 
joint returns, you would have to have some rule about whose 
birthday applied there.
    Similarly with the regulatory area, a lot of the problem of 
regulatory burden is because of mandates. Sometimes Congress 
passes a law that says the agency has to promulgate a 
regulation a certain way no matter what the cost. Well, I mean, 
that is kind of nonsensical. They ought to be able to make some 
adjustments, some judgments about the minute benefits at some 
point and the enormous cost in others. I think this is 
something that you really should look into.
    Now, if you will permit me just a level of abstraction 
here. Your committee and your sister committee over in the 
Senate are really the only committees that are focused directly 
on trying to limit the paperwork burden and the regulatory 
burden. You are limiting. Most other committees are engaged in 
activities that increase the paperwork burden and increase the 
regulatory burden. And so you are at a big disadvantage. How do 
you provide some institutional arrangement where the Congress, 
as a whole has to make those kinds of tradeoffs?
    My suggestion--it is not original with me, but I think it 
is a very good one--is to have a regulatory budget; that is so 
Members of Congress think of the regulation in total. Do you 
realize that the total burden of regulation and paperwork is 
about twice, over twice all discretionary spending? And it is 
approaching half of the total Federal financial budget.
    Now, again, this is an enormous resource cost. And I am 
suggesting that Congress and the President impose, through 
regulatory activity and paperwork activity--and it is one I 
don't think Congress has the institutional equipment to really 
come to grips with. And so if you had a regulatory budget, if 
you had the President every year propose, along with a 
financial budget, which I used to help put together as OMB 
Director, a regulatory budget. So then the Congress and the 
committees would have to deal with priorities and deal with the 
excesses, and reduce excesses but make sure that they were 
doing the right thing in promulgating and making sure the 
agencies carried out the regulations that made sense and the 
paperwork that made sense.
    I think that a regulatory budget wouldn't solve everything, 
just like reconciliation doesn't solve everything on the budget 
side, but I think it would go a long way toward improving the 
regulatory performance of the Federal Government.
    Thank you, Ma'am.
    [The prepared statement of Mr. Miller follows:]

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    Mrs. Miller of Michigan. Thank you very much.
    Our next witness this afternoon is Sally Katzen. Ms. Katzen 
served during the administration of Bill Clinton as a Deputy 
Director for Management in the Office of Management and Budget 
and as Deputy Assistant to the President for Economic Policy, 
and Deputy Director of the National Economic Council, and as 
Administrator of the Office of Information and Regulatory 
Affairs in the Office of Management and Budget. In addition, 
she served in the Carter administration as General Counsel and 
then Deputy Director for Program Policy of the Council of Wage 
and Price Stability in the Executive Office of the President.
    Before joining the Clinton administration, she was a 
partner in the Washington, DC, law firm of Wilmer Cutler & 
Pickering, where she specialized in regulatory and legislative 
matters. She was elected in 1988 as Chair of the Section of 
Administrative Law and Regulatory Practice of the American Bar 
Association, and she served as a public member and vice 
chairman of the adjunct professor at Georgetown Law Center. In 
1990 she was elected president of the Women's Legal Defense 
Fund.
    We certainly--oh, you also taught at the University of 
Michigan Law School. I can't pass that without going on about 
that. I happened to be in Ohio yesterday and there was a lot of 
talk about the Buckeyes and Go Blue.
    So we certainly welcome you, Ms. Katzen. We welcome you to 
the committee and look forward to your testimony.

                   STATEMENT OF SALLY KATZEN

    Ms. Katzen. I greatly appreciate your invitation for me to 
testify today, although having to follow Jim Miller is sort of 
a tough act to come behind. But in any event, I have provided 
written testimony which I would ask be included in the record. 
That testimony endorses the reauthorization of the PRA and it 
reflects a number of very specific suggestions for 
strengthening the act that I hope will be useful to you all.
    I would like to use the few minutes available to me for the 
oral presentation to focus on what I think the goals of the PRA 
should be. I think that it is more complicated than what might 
appear at first glance.
    Chairman Miller, you, and the invitation to testify, and 
Mr. Miller, have all talked about reducing the burden. We are 
told that the total burden imposed by Government information 
requests is in the order of 9 billion hours. That is a big 
number. I will not dispute that. There is, therefore, a natural 
impulse to want to do something, whatever it would take to 
reduce it. But I think that there are several intermediate 
steps that we have to go through.
    First, I am concerned that references to total burden hours 
is somewhat misleading. That is because I believe that not all 
of the 8 billion hours or 9 billion hours are the same. Mr. 
Miller mentioned the IRS and the fact that it alone accounts 
for over 80 percent of the total burden hours. Now, that number 
is affected by the number of people Mr. Lynch mentioned who 
have to fill out the 1040 or the 1040-EZ. But the large IRS 
burden numbers are also a factor of the complexity of the Tax 
Code and the very complicated and often quite detailed forms 
that most sophisticated corporations, with their legions of 
accountants and lawyers, fill out to obtain special--as in 
favorable--tax treatments, which Congress has decided is wholly 
appropriate, in fact desirable.
    Consider the form for accelerated depreciation, or the one 
for oil and gas depletion allowances. Now, surely those who 
spend the hours filling out those forms have made a 
calculation, however informal, that the burden of doing the 
paperwork is outweighed, often greatly outweighed, by the 
benefit of obtaining the resulting large, often very large, tax 
advantage.
    Now, assuming for present purposes that dramatically 
revising the Tax Code is not within the jurisdiction of this 
subcommittee, and therefore passing for the moment Mr. Miller's 
endorsement of flat tax. It is within the scope of the 
jurisdiction of this committee to consider whether the total 
burden hours makes sense in light of the fact that individuals 
struggling with a 1040-EZ to pay their taxes is not the same 
thing as the hours spent by trained lawyers and accountants on 
the multitude of complicated forms enabling their clients to 
reduce their taxes.
    So should we really keep emphasizing total burden hours? 
Consider also that the burden hours attributable to the IRS are 
of a wholly different sort than the burden hours represented 
by, for example, filling out a form for a small business loan, 
or for a student loan, or to obtain veterans benefits, or 
Social Security disability payments. All of which are also 
included in this total number that people keep talking about. 
The IRS forms are the basis for a liability. The ones I have 
just mentioned are the basis for an applicant to receive a 
benefit--which, again, Congress in its infinite wisdom has 
decided is a good thing.
    I am not saying the latter forms should not be as 
streamlined and simplified as possible so that the burden is 
kept to a minimum without sacrificing information essential to 
programmatic accountability. After all, we want some confidence 
that only those eligible for a program are receiving payments 
and that the agency has sufficient information to monitor and 
evaluate whether the program is achieving its objectives.
    The point I am making is that calling the paperwork 
necessary for a benefits program, calling that a burden and 
counting those hours required to fill out those forms to obtain 
the benefits as part of the total burden hours, masks the 
qualitative difference between these forms and those sponsored 
by the IRS.
    There are other types of burden hours included in the total 
that are very different, even from the ones I just identified, 
and those are called ``third-party disclosures'' requirements: 
Employers must post information announcing the presence of a 
toxic chemical in the workplace; that is included. 
Pharmaceutical companies must supply package inserts as to the 
implications of a drug; that is included. And my favorite is 
the nutrition labeling for food. I can hardly get down an aisle 
in a grocery store without running into some consumer standing 
there with two packages, looking at the back of them and 
comparing, and then tossing one of them into his cart. This is 
information the American people want and use, and it enhances 
their health and perhaps even their safety.
    Now, this leads me to the second point that I want to make, 
and that is, that burden is one side of the equation, but it is 
not, and should not be the only consideration.
    The 1995 act reflects another purpose, and that is to 
enable ``the greatest possible public benefit . . . and 
maximize the utility of information . . . collected . . . by . 
. . the Government. That is designed to improve the quality of 
the information that the Federal agencies need for rational 
decisionmaking.''
    Regrettably, this side of the equation has gotten 
relatively short shrift in the discussions about the PRA. Yet, 
the benefit or utility side is not a new ingredient. Both the 
legislative and the executive branch have recognized that 
Federal agencies need information for informed decisionmaking. 
Mr. Miller's first point was that before taking action, 
policymakers should have adequate information. Where do they 
get it?
    Actually, political leaders from both political parties--
this is not a partisan issue--have recognized that information 
is a valuable, indeed essential assets, and this is true not 
only for the public sector but for the private sector as well. 
It is significant that a lot of the information collected by 
the Government is, in fact, disseminated to the public, either 
in its raw state or with some processing.
    Consider, for example, weather information, census data--
stripped of its personal identifiers--and economic indicators. 
This information is highly valued and sought after by industry 
and the academy so that they can work this information and then 
ultimately use it to enhance our safety, to decide on marketing 
strategies and to make investment decisions. When we clamp down 
on information, we are the losers.
    Now, I also want to agree with Mr. Miller's observation 
that, while you are here considering reducing the burden, there 
are committees in both Houses of Congress thinking about 
increasing it. They are doing it for a reason, though. It is 
not just foolhardy. There is a concern about preventing fraud 
in Government programs. There is a concern about enabling 
informed choices, as Mr. Lynch mentioned, to enhance national 
security. That was the basis of the Patriot Act, which imposed 
an enormous burden if you are thinking in terms of only that 
side of the equation. Presumably, Congress felt it would 
produce an enormous benefit at the same time. As I say, this 
should not be a surprise, because we are, after all, in an 
information age.
    Because the benefit side does not get the same attention 
that the burden side has gotten, we are sending a message both 
to the agencies and to OMB that they will satisfy congressional 
concerns only if they shut down new surveys, if they close off 
new inquiries and if they cut back new requests for 
information. And I am aware of a significant amount of 
anecdotal information that says agencies have given up. They 
don't even send to OMB those information collection requests 
unless statutorily mandated, and that is why the numbers are 
going up, because they are statutorily mandated. That is what 
the OMB reports have shown year after year. New congressional 
mandates have outpaced whatever efforts the agencies have made 
to cut back, but they don't send these needed inquiries through 
because they feel that the burden reduction side pressure is so 
great.
    If this is, in fact, accurate--and I would encourage some 
empirical research to decide if it is or not--then I think it 
is a most unfortunate development. And your committee would do 
well to help right the balance.
    I would like to pick up on some of the things that Mr. 
Lynch said. Without oversimplifying, all the key words begin 
with ``B'': We talk burden. We should also talk benefit. And we 
should talk balance. And I think that will bring us a long way 
philosophically to achieving what we need.
    Again, I have specific suggestions in my testimony and 
would be pleased to answer any questions you might have on that 
or any other subject.
    [The prepared statement of Ms. Katzen follows:]

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    Mrs. Miller of Michigan. All right. Thank you so much. We 
appreciate that. I certainly agree with you, Ms. Katzen. We do 
have to look at, as you said, the three Bs, cost/benefit 
analysis, and sometimes it is difficult to make that kind of 
analysis strictly monetarily. As you mentioned, some of the 
food labeling and these kinds of things, we really do need to 
look at it all.
    You know, it is interesting because we have had a number of 
hearings in this committee talking about the onerous burden of 
Government regulations, and both of you, I think, referenced 
cost of the burden. We have had testimony from the Small 
Business Association saying that they have done some studies 
that indicate that particularly in small businesses, the cost 
of compliance with all of these forms and all kinds of 
regulations and other kinds of burdens that are put on them 
could be interpolated to $7,000 or $8,000 an employee. We have 
had former Governor Engler from the great State of Michigan, 
testify--he, of course, now serves as the executive director of 
the National Association of Manufacturers--talking about their 
analyses which seem to indicate the structural costs of 
American-made goods to be 22, 23 points higher than any of our 
foreign competitors, principally due to burden and governmental 
regulations and what have you. So there are so many things that 
we have done in our society and as a Nation that are so 
important to protect the health, safety, and welfare of our 
citizens, and yet we do have to look at what is reasonable, I 
think, as well.
    It is interesting, though, as both of you have talked, that 
you can't hardly talk about this issue without, obviously, 
looking at the IRS. As you mentioned, it is about 80 percent of 
all the burden. And it is an unfortunate reality when you see 
Members of Congress coming saying, ``We are here from the 
Government. We are here to help you.'' And every time we think 
about tax reform--and I no longer am going to use those terms, 
``reform''--perhaps tax simplification is the way that we would 
focus on the kinds of things we may be able to do to assist. 
When you hear numbers, you know, over, I think, $225 billion 
last year annually just for the American citizens to comply 
with the tax forms, something needs to be looked at there.
    I would ask my first question to Dr. Miller, you 
mentioned--I was taking some notes here--what I thought was 
interesting, a regulatory budget within the--and if you could 
expand on that a bit, are you suggesting that there would be a 
line item within the particular agencies and within the 
committees? Or how would that be structured?
    Mr. Miller. I would see a regulatory budget being put 
together by the President, which had an overall amount and 
would have the amounts by agency, and even perhaps by program, 
that they could impose on the American people, things coming 
up. I would, as I mentioned in my written statement, which I 
hope that you will accept for the record----
    Mrs. Miller of Michigan. Without objection.
    Mr. Miller. Thank you. I suggested that you treat existing 
regulations much as you treat entitlement programs, the 
financial ones. That is, the agencies continue to have those 
regulations, but new regulations would be analogous to 
discretionary spending that you would have to appropriate every 
year. So Congress would have to appropriate. You could also 
review existing--just like Ways and Means and Finance reviews 
existing entitlement programs, you could review existing 
regulatory and paperwork requirements.
    Madam Chairman, I would like to just comment on Ms. 
Katzen's observations. I agree that there are certainly 
important, legitimate uses of paperwork. I wouldn't take that 
back for a moment. I think that those are--many and varied 
paperwork requirements out there are very justified. There is 
no question that there is very important information. Just to 
touch base on the example she started off with, accountants and 
lawyers and firms applying for special dispensations, etc., she 
is making my point. My point is you need to simplify the Tax 
Code. You need a flat tax. You should not have all this. Those 
are real resources. If those lawyers and accountants were not 
doing that, they could be doing something useful. Right? And 
they are doing that instead of something useful because the Tax 
Code is established the way it is.
    So if you simplified the Tax Code, if you had a flat tax, I 
think you would increase productivity a lot because you would 
have people doing productive things rather than those things 
today that are pushing notes around.
    Mrs. Miller of Michigan. You know, to followup a little bit 
on that, because this is a fascinating discussion, the concept 
of a flat tax, I think it may be too much of a huge change to 
go to that initially, but perhaps--and there has been some 
debate in Congress about whether you would actually offer an 
option to people either to do it the way we have always done it 
or do a flat tax and see how it would go. But there have been 
quite a few articles about that. I know we have had a lot of 
debate.
    Mr. Miller. Yes. Madam Chairman, I think that is an 
excellent idea. It was one of my most important things when I 
campaigned and lost for the U.S. Senate, saying that people 
should have an option. They could file under the existing Tax 
Code if they want, or file under a new flat tax if they want. 
And if you gave people the option, I suspect most people would 
elect to file under the flat tax because it would be, in 
effect, so much easier.
    I was invited to be on a TV show 2 days ago, and I had to 
say no. You know why? Because I was working to put together all 
this stuff for the tax--my personal income tax and my wife's 
personal income tax. I mean, it is a big burden.
    Mrs. Miller of Michigan. It absolutely is.
    One other question on that, not to keep getting off the 
subject, but this is a fascinating area, I think. Do you have 
any opinion on the President's commission on tax 
simplification, not tax reform, tax simplification? You know, 
everybody thought that would be of great benefit and that we 
were all very anxious to see what kinds of recommendations they 
would come forward with to get away from some of this burden, 
and immediately, when they started saying they were going to do 
away with the mortgage deductions and those kinds of things, 
off we all went.
    Mr. Miller. Right, right. Well, Madam Chairman, I am kind 
of reluctant to criticize it. I know some people who are on the 
Commission, some very, very smart people that I think work very 
hard. They probably, from the word go, realized or took to 
heart the point you made, that going to a flat tax might be too 
radical, so they tried to do something to simplify the Tax Code 
and make it more efficient without going that far. So it is 
kind of a halfway measure, in that sense, and it is very 
important who thought what--I do not endorse either of their 
two alternatives that they came up with.
    Mrs. Miller of Michigan. I might ask a question of both of 
you, I suppose. I had the staff put up these graphs earlier 
about OIRA, since we have two experts here on that agency. When 
you were there--this is something we have heard, I have heard, 
since I have had this chairmanship, over and over and over 
again about the inadequate resources that OIRA has. When you 
were there, did they have adequate resources? Has this been 
sort of a common element there? Do you have any comment on 
where all of that is going, what you think it might need today 
to be able to do the job that we have asked them to do?
    Ms. Katzen. I think that OIRA has a lot of 
responsibilities, as does OMB, and they are physically and 
psychologically closer to the President than any of the other 
agencies, and they act as a watchdog, is I think the word you 
used, for the work of the Federal Government. And I don't think 
you could ever have too many resources there.
    The idea is to use the resources that you have in the most 
efficient and effective way. One of the suggestions that I 
included in my written testimony was that, rather than 
reviewing all paperwork requests, the Congress authorize OMB to 
review only those that are significant so that they can focus 
their attention on the ICRs, the information collection 
requests, that are the most important and significant.
    You cited the fact that the Reagan administration, I 
believe had something like 90. I think when I was there, we had 
50, and in the most recent past, the Administrator has 
increased it by another 5 or 6.
    Another body or two would undoubtedly help, but another 
body or two is not going to make a huge amount of difference. I 
think thinking about what it is you are trying to achieve and 
focusing the limited resources that you have would be better 
emphasis on the right syllable, as they say.
    I would, if I could, use this opportunity to make two 
points about the previous conversation, the colloquy that you 
had with Mr. Miller. The first is that these many tax 
complications--the oil and gas depletion amounts, the 
accelerated depreciation forms, which I used, as examples--
industry doesn't resist them. As far as I know, they are up 
here asking for them. They want them. They want them so that 
their lawyers and accountants can spend their time on those 
things, and it would be--as you said, once you start getting 
rid of a mortgage deduction, which affects a lot of people, or 
even a special interest, if I could use that term, tax 
provision, you are going to find that people, corporations, 
businesses, including sometimes small businesses that take 
advantage of accelerated depreciation, for example, will be 
very concerned because they want those complications.
    The second point has to do with the regulatory budget. It 
sounds good, but--and it is a big ``but''--analysis is only as 
good as the data is a truism in this field. You have a 
regulatory budget. You put down a certain cost. Where is the 
information for that? The cost that everybody is talking about 
of the huge amount of $1 trillion in regulatory expenses, those 
are calculated under the basis of ex ante, estimates of what 
the cost will be if the regulation comes into effect. In fact, 
most of the empirical work shows that once the regulation is 
issued, American ingenuity kicks in, and it takes less cost.
    Now, I am not saying that the cost is trivial. I am not 
saying that it is not seriously consequential. But while he 
cites $1.1 trillion, there are lots of other figures which are 
in the $30 and $40 billion range rather than trillion dollar 
range.
    The disparity reflects the fact that the data is not that 
good. We do not have a really firm handle. That being the case, 
a regulatory budget based on that kind of data would be, I 
think, problematic.
    Mrs. Miller of Michigan. OK. Thank you very much.
    I recognize Representative Lynch.
    Mr. Lynch. Thank you very much. And just to followup on 
that point, it is difficult. It sounds great about, you know, 
cost/benefit analysis on any one of these proposals, but when 
you get down to measuring that--and I know that Dr. Miller 
mentioned Professor Crain. But when we have tried to replicate 
his numbers to basically get what he got and go through the 
process that he implemented, it has been very difficult getting 
information from him in terms of allowing us, on this committee 
to basically parse out his whole process in arriving at this 
mass of numbers. So a lot of that is still very much in debate.
    And, again, on a lot of this information that we get, it is 
totally the cost side. There is no calculation made for lives 
saved or accidents prevented or, you know, contamination to our 
environment or, you know, even in the nuclear regulatory 
sphere, the worst-case scenarios that could develop in the 
absence of some of these regulations.
    So I am not so much sold on the idea that there is a 
quantifiable amount that we could point to and say we are going 
to save this and get rid of regulation. I do agree that there 
is a whole lot out there that is completely useless, and we 
need to figure out how to get rid of it, and that we ought to 
try to work on those parts of the regulatory framework in this 
country that could be eliminated with, I think, a bipartisan 
and fairly unanimous consensus. I think there is a lot that we 
agree on.
    The other thing that I would like to see tapped into is 
some of the agencies themselves, if we could somehow 
incentivize cleaning up the regulatory framework that is out 
there--and these, you know, folks at the IRS know better than 
anyone the redundancy that is there, the complexity that is 
there, to no purpose, and things that we could actually get 
some of the folks in the agency to say--you know, somehow 
incentivize it, to have them reporting to us how they best can 
clean up their own shop, how we could reduce the regulatory 
burden for people who worked through those agencies. And I 
think we can do a lot to reduce the burden without ever--well, 
eventually we have to get to some of the issues that are 
contentious, but I think there is a whole lot of work that can 
be done right off the bat, right from the get-go, just to 
eliminate the regulatory burden without putting any of the 
controversial stuff in play. I think it is just so burdensome 
out there and so complex, and some of it has just built over, 
you know, as a matter of time and from one administration to 
another. There seem to be layers and layers of bureaucracy and 
complexity that, you know, have built up like a residue over 
our entire economy.
    What I would like to do is just ask you both, what do you 
think the best way of getting at the agencies to help us make 
the reporting easier, but retaining the quality of the data and 
the value of information that we are getting through these 
ICRs? And you mentioned, Ms. Katzen, about the fact that we 
have a lot that we are doing on, let's call them, 
insignificant--ICRs that are not really going to give us the 
bang for their buck in terms of the number of people or the 
number of requests or the number of--the degree of scope for 
these different information collection requests. How do we 
approach that issue within the wider question, which is, how do 
we get the agencies to help?
    Ms. Katzen. One suggestion that I make in the written 
testimony that I would like to emphasize is that currently OMB 
approval last 3 years, so at the end of a current information 
collection request, the agency comes back in and it says they 
would like to extend it for another 3 years, and there is a 
little rubber stamp that says ``Granted,'' and then they come 
back 3 years later.
    What I suggest is building on a phrase that is in the act 
now that says the agency shall show how it is useful. You 
incentivize the agencies by saying: We are going to take that 
seriously. You make a showing, a compelling showing, that it is 
used and useful. And we will give you not a 3-year extension 
but a 5-year extension or a 7-year extension or a 10-year 
extension.
    It then is to their benefit to make the showing and, by the 
way, knowing that this will happen, maybe they should be 
focusing on how they are using the information that they are 
getting.
    It also would have the salutary effect of reducing or 
streamlining OMB's processes so, again, the routine ones that 
are being used and useful would not clutter up and take the 
time from the others. I think that is one way of doing it.
    Another way of doing it is pure anecdotal, and that is, one 
moment when I was Administrator of OIRA, a staff member 
complained about a particular form, that it was 
incomprehensible and that it just--you could not follow it. And 
so almost--I am not sure why I did this, I picked up the phone 
and I called the person who had certified this. And I said, ``I 
do not understand Question 17 here. What are you getting at or 
why are you getting at it?'' And there was silence at the other 
end of the phone as the person scurried to figure out, what 
form is she talking about?
    I then said, ``I tell you what. Let me fax this over to 
you. You have estimated this will take 20 minutes to fill out. 
Let me fax it to you and then call me in 20 minutes and tell me 
how you are doing.''
    I did get a call within 20 minutes to withdraw the form.
    Now, that is just one incident, but I think if you can 
reach the people who are responsible at the agencies, that is 
where--it does not have to all be at OMB. It should start with 
the culture at the agencies. And one of the other suggestions I 
make--I am sorry I seem to be running on, but one of the other 
suggestions I make is that we vested this in the CIO's office 
in the 1995 act, that they should be the internal agency 
watchdog, because we wanted an office that was dispassionate, 
not attached to the programmatic office, so that they could 
say, ``Hey, why do you really need that?'' And have the stature 
and the clout within the agency to be able to say that.
    CIOs have had a mixed--and I think GAO has said CIOs have 
had mixed results. Some of them have taken the job seriously. 
Some of them are more interested in the technology side. Some 
of them are more interested in other aspects. And I think that 
one ought to consider giving the agencies some flexibility from 
an internal office that would really do the job right and have, 
if you want, OMB approve their other kinds of operations.
    Those kinds of ways to get to the agency would, I think, be 
very beneficial.
    Mr. Lynch. Yes. Well, I agree with your first and last 
assessments that creating that incentive, giving them a waiver 
from the 3-year review, if they can show that, you know, a 
given regulation is necessary and is rock solid and, you know, 
there is general consensus that it is necessary and it serves a 
valuable purpose. I also think the idea of having that--and I 
do not know if you call it a task force or whatever it is, if 
you want to take it out of the CIO's office and give it to a 
task force that is going to say, ``You know what, we are going 
to help ourselves.'' We are going to jettison these regs that 
are just absolutely slowing productivity or just, you know, 
stopping us from doing our job.
    Those are two great ideas. I don't think there is much cost 
in that either, in going through that process. One is merely, 
as I say, incentivizing through the process, and the other is 
really an organizational function, just shifting it and giving 
it to somebody who will actually do the job.
    Thank you for your testimony.
    Mrs. Miller of Michigan. Thank you. Before we move on to 
the next panel, Dr. Miller, when I had asked the question 
previously about whether or not you thought there were adequate 
resources in OIRA when you were there, Ms. Katzen answered but 
you did not. Could you for the record tell me what your 
thoughts were on that?
    Mr. Miller. Well, I thought we did. I thought we did. 
Again, the role of OIRA is not to do all the analysis but to 
review the analysis. Just like an editor of a major law journal 
or an economics journal or statistical journal is not supposed 
to perform all the analysis themselves, but to basically review 
the analysis presented to them and decide which is worth 
publishing.
    The high number at the beginning of the Reagan 
administration is a reflection of the fact that, if I am not 
mistaken, there was a statistical group that came over from 
Commerce that was attached to OIRA and then was later moved, I 
think to Labor or back to Commerce. So that 90 figure is 
somewhat inflated. They were not really doing this OIRA kind of 
thing, so that moved.
    You know, as Ms. Katzen was saying, they could certainly 
use a few more people there, but I don't think there is a 
tremendous shortage of personnel at OIRA. But I would like to 
respond on the question of incentives, if I might, that Mr. 
Lynch, Congressman Lynch raised.
    Mrs. Miller of Michigan. Certainly.
    Mr. Miller. If you had a regulatory budget, even without a 
regulatory budget, if you allow the agency to zero sum, that is 
to say, you tell the agency you have a burden of such and such 
on such and such, but you would like to issue a new regulation, 
new paperwork burden, if you can reduce the paperwork burden, 
the regulatory burden in this area, you can increase it here. 
And so allow them to prioritize--just like agencies when they 
come to OMB with their budgets during the budget season, you 
know, they have to justify these things, and they tradeoff. You 
know, they say, well, the President has agreed you can increase 
your budget 0.1 percent, or something like that. Well, they 
have to have priorities and they make those kinds of judgments. 
So I think that would be helpful.
    On the question of Mark Crain, I must admit to a little 
favoritism here because Mark is not only--he is the Simon 
professor of economics at Lafayette College. He is a former 
colleague of mine at George Mason University. He is a former 
student of mine when I taught economics at Texas A&M. And if 
Ms. Boyd could give him a call--I talked to him 2 days ago--I 
am sure that he would be more than happy to respond, and his 
telephone number is 610-330-5315. He would be more than happy 
to respond to any question you might have. I am, of course, 
looking at the paper he did, I guess for the Small Business 
administration.
    Mrs. Miller of Michigan. OK. Well, I certainly want to 
thank you on behalf of the entire committee very, very much for 
coming. We certainly appreciate it, and we will ask you to move 
aside for the next panel.
    Mr. Miller. Thank you.
    Ms. Katzen. Thank you.
    Mrs. Miller of Michigan. Thank you both so very, very much.
    [Witnesses sworn.]
    Mrs. Miller of Michigan. Thank you very much. We are going 
to probably be called for votes here. It could be in 10 
minutes, it could be in 20 minutes, at which time we will be 
voting for quite a long time. So I would like to start with the 
panel and see if we cannot get all the testimony on before that 
happens, and I would ask you to sort of keep an eye on the 
timers that you have before you and try to adhere to our 5-
minute rule, if you could, in this circumstance.
    Our next witness is Mr. William Kovacs, who is the vice 
president of Environment, Technology, and Regulatory Affairs 
for the U.S. Chamber of Commerce. Mr. Kovacs is the primary 
officer responsible for developing the Chamber's policy on 
environment, energy, natural resources, agriculture and food 
safety, regulatory and technology issues, and we are certainly 
glad to have you join the committee today, Mr. Kovacs. We look 
forward to your testimony, sir.

 STATEMENTS OF WILLIAM L. KOVACS, VICE PRESIDENT, ENVIRONMENT, 
 TECHNOLOGY, AND REGULATORY AFFAIRS, U.S. CHAMBER OF COMMERCE; 
    ANDREW M. LANGER, MANAGER, REGULATORY POLICY, NATIONAL 
FEDERATION OF INDEPENDENT BUSINESS; LINDA D. KOONTZ, DIRECTOR, 
 INFORMATION MANAGEMENT ISSUES, U.S. GOVERNMENT ACCOUNTABILITY 
OFFICE; AND J. ROBERT SHULL, DIRECTOR OF REGULATORY POLICY, OMB 
                             WATCH

                  STATEMENT OF WILLIAM KOVACS

    Mr. Kovacs. Thank you, Madam Chairman, Congressman Lynch, 
and the committee for inviting the Chamber to testify here 
today. I am going to submit my testimony for the record and 
just summarize some of the key points.
    As we all know and we have heard, the Paperwork Reduction 
Act is more than about reduction. It is really about the 
reduction of paperwork, the collection of necessary paperwork, 
and it is also about the use and dissemination of good quality 
data, which is something that really is the highlight of what 
the Chamber has been focusing on.
    When we talk about paperwork reduction, this has really 
been a burden and a challenge that the Congress and OMB have 
had to deal with. It started with the Federal Reports Act, and 
since then, Congress and OMB have seen the Paperwork Reduction 
Act in 1980, 1986, 1995. We have seen the Data Quality Act, 
which was an amendment to the Paperwork Reduction Act. We have 
seen Data Access. We have seen a number of regulatory reform 
efforts out of OMB, which is both peer review, risk assessment, 
good guidance, as well as Executive orders. Just to followup on 
a question that Congressman Lynch asked, we have also seen 
efforts by Congress to really get the agencies to do exactly 
what you ask: identify those regulations that are really no 
longer needed. And we have seen that through Section 610 of the 
Regulatory Flexibility Act. We have seen it in the nomination 
process. And we have seen it in Executive orders. And so where 
are we after 64 years of effort? I think that is really what 
the question is.
    I think on the paperwork reduction side, it is a very mixed 
bag. You do have Congress putting more and more requirements on 
agencies, and you will see at this point in time about 10 
billion hours, so that is going to be the largest in history.
    On the information colleague side, I think where we, you 
can really make a difference, there is an enormous amount of 
frustration. GAO is here and they are going to talk about it, 
but they have done the analysis on what the CIOs do, and the 
CIOs are to certify that the efforts taken by the agencies are 
really efforts to get at the kind of data that they need and 
that is necessary. And there are actually 10 criteria, and GAO 
found that in 2005 that 98 percent of the CIOs certified the 
eight--98 percent of the 8,211 certifications requested were 
actually approved by the agencies and accepted by OMB. However, 
when GAO decided to do a review, they found 65 percent of those 
actually had missing or no data at all to support it. So that 
really is a problem, and I will be back to that in my 
recommendations.
    And, finally, what we think is the most important is the 
Data Quality Act. Here is an example where Congress in 2001 
said to the agencies we do have the kind of burden that we 
have, whether it is $1.1 trillion or maybe it is $500 billion, 
who cares? The fact is it is enormous. There are 4,000 
regulations a year, 102,000 regulations out there, and they 
cannot all be necessary, and no human being can read them. That 
is the problem. And so the Data Quality Act took the position 
that the agencies were to use the best quality data, the 
objective data, the most useful data. And 2 days ago, as I 
think you know by this time, the Fourth Circuit Court of 
Appeals ruled that the Data Quality Act was not enforceable, 
that there was absolutely no human being on Earth that had the 
standing to pursue it, and that it is an act that is solely 
between OMB and the agencies. So if you are looking for 
guidance as to how to move forward, you have to keep that 
process in mind.
    So what do we do? Well, we have three options that I think 
are practical. One is if you want private parties to really 
support you on it and take action against the agencies to deal 
with the paperwork issue, then you have to put judicial review 
at the center. It is just that simple.
    If you want this to continue to be between OMB and the 
various agencies, several things have to happen. OMB has to be 
serious about the process. This is the first thing. And it can 
be serious in two ways. One, it can tell the agencies, look, 
you have--when you file these certifications or when you do 
this data quality request, you have to have a mechanism of 
somewhat independent review, and that can be either an 
administrative law judge or--we don't care, but it has to be 
someone independent of the agency.
    In terms of the certification process, I think you have a 
serious chance there of doing something that really could be 
monumental, and that is, if you have all the CIOs rubber-
stamping all of these issues, there seems to be just a complete 
lack of concern, and if anyone has ever looked at one of the 
paperwork submission requests, it actually gives you the 
criteria on the back side in very simple, plain English, and 
yet the CIOs rubber-stamp it. You know, if a corporate official 
did this--you know, they worry about Sarbanes-Oxley. Even if 
you were a small builder in Michigan and you worried about 
storm water and you didn't--let's say you didn't have your Zip 
Code on it. Well, if you didn't have your Zip Code on the 
submission, they would hit you for $50. If you did not talk 
about weather conditions, just omitted it the day you filed the 
form, that is $500. And if you did not pay it within 30 days, 
the fine then would be $32,500 a day.
    So what I am saying is the simple answer is I think you 
need to make the CIOs accountable, and I think you can do that 
through the Office of Personnel Management. Anyway, I think my 
time has expired, but I would be glad to answer any questions.
    Thank you.
    [The prepared statement of Mr. Kovacs follows:]

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    Mrs. Miller of Michigan. Thank you very much.
    Our next witness is Andrew Langer, who is the manager of 
Regulatory Policy for the National Federation of Independent 
Business. He is in charge of making the voices of small 
businesses heard whenever new regulations would have a negative 
impact on Main Street. Mr. Langer.

                 STATEMENT OF ANDREW M. LANGER

    Mr. Langer. Thank you. I want to thank you for the 
opportunity to testify on this. I have testified before this 
committee and several congressional committees on this issue a 
number of times, and we are really at a crossroads here in 
terms of reducing paperwork and the paperwork burden on small 
businesses. So I am really thankful that I have the opportunity 
today.
    NFIB, of course, is the Nation's largest small business 
trade association with 600,000 members whose average employee 
size is five employees. So we represent the smallest of the 
small.
    The problem of paperwork is two-pronged. We focus on two 
sides of the issue: we focus on paperwork that has to do with 
regulations that are coming down the pipeline, and we focus on 
the problem of paperwork from regulations that are already on 
the books. We have a great many tools available to deal with 
reducing the burden of regulations that are coming down the 
pipeline, and those systems, when they work, work fairly well. 
They do need improvement. But we spend very little time dealing 
with the issue of the paperwork that is already on the books, 
which is the vast preponderance of the problem, frankly, as 
Bill said.
    Everyone involved in regulations--the regulated community, 
activist stakeholders, Members of Congress and their staffs, 
the Federal agencies and their personnel--all must ask the same 
question: What is it that we want from the regulated community 
in the end? After all, I am not here, NFIB is not here, we are 
not here engaged in this discussion on an academic basis. I 
have not grown frustrated with the regulatory process and the 
paperwork caused by it on mere philosophical grounds. We are 
here to talk about real solutions to a real problem, a problem 
that has real impacts for real people. You have called this 
hearing because you want to explore real solutions, meaningful 
relief for those small businesses. So I repeat the question: 
What is it that we want?
    The answer, at least in NFIB's estimation, is simple: we 
want the regulated community to understand what their 
responsibilities are, what paperwork they need to fill out, in 
as simple and as easy a manner as possible. We want them to 
spend as little time as possible having to figure out what 
their responsibilities are, what they need to do to comply, and 
then going out and complying with them.
    What is more, our members want to be in compliance with the 
law. They want to keep their workers and their communities safe 
and secure, and the last thing they want is for a Government 
inspector to show up at their offices to fine them for some 
minor transgression.
    But, unfortunately, we have created a regulatory state that 
is so complex that it is next to impossible for any business, 
any small business, to be in compliance with 100 percent of the 
law 100 percent of the time. It is a grossly unfair situation. 
It creates the situation where any small business could become 
the victim of an erstwhile Federal regulator interested in 
playing a game of ``gotcha.'' And in an era where an increasing 
number of Federal inspections are being driven by disgruntled 
former employees filing meritless complaints against their 
employers, small businesses are growing more vulnerable each 
and every day with each and every new regulation that comes 
out. And the stakes are much higher because of the way the laws 
work.
    Consider for a moment the fact that most Federal 
environmental regulations--and Mr. Lynch talked about TRI. For 
most Federal environmental regulations, they carry criminal 
penalties. And these criminal penalties are under what is 
called strict liability, the concept that you need not know 
that what you are doing is a crime in order for you to be 
charged as a criminal. Instead, under strict liability, all the 
Government needs to do is prove that you knew that you were 
doing the act that you were doing at the time you were doing 
it.
    So what does this mean for paperwork? Let's say you are a 
small business owner filling our Clean Water Act paperwork 
forms and you make a mistake. You leave off your Zip Code, you 
make some clerical error, you transpose two numbers, and you 
sign the bottom. And all of a sudden a Federal inspector comes 
out and looks through your paperwork--paperwork you have spent 
blind hours doing, you have been doing other paperwork as well. 
You can be charged criminally under the Clean Water Act for 
making that mistake under strict liability because all the 
inspector would have to do is say, ``You knew you were filling 
out a form, right?'' ``Of course, I did. I signed the bottom of 
it.'' You are guilty. And this is not an abstract thing. People 
have gone to jail because of this.
    So I want you to consider this as we think about going 
about reducing the amount of paperwork. Because the regulatory 
state continues to grow and the paperwork continues to 
increase, it is ever more important that we strengthen those 
gatekeeping roles, which is why NFIB, in my written comments, I 
said--and I want to submit those for the record, obviously--
that OIRA needs to be fully funded. And I don't think I need to 
repeat the arguments of those that came before me because I 
agree with all of them as to why OIRA needs to be fully funded, 
obviously because one of the reasons, the main reasons, is 
because as the number of regulations and those writing them 
continues to grow, the resources at OIRA have continued to 
shrink.
    I think clearly--and I have spoken on this before--
something needs to be done about tax paperwork, and I can talk 
about that as we move forward. But one of the things I want to 
focus on very, very briefly--and it is absolutely important--is 
one of these real solutions, and I talk about it extensively in 
my testimony. It is the issue of the business compliance one-
stop, or business.gov or the Business Gateway, as it is called, 
the idea being very, very simple, and it really gets to the 
heart of the matter. We want small businesses to be able to go 
to a Web site, those that use computers--and about 92 percent 
of small businesses use computers in some aspect of their 
business. And so if they choose to do so, they go to a Web 
site, they enter in some very simple plain-English data about 
their business, maybe their industrial classification code, the 
number of employees, and their Zip Code, and a data base spits 
out every Federal regulation that applies to them. It spits out 
everything that they need to do to comply with that regulation 
in very simple--no more than two pages of information. And if 
we are lucky, it walks them through how they go about 
complying. It allows them, if they so voluntarily choose to do 
so, to fill out that information on the computer itself. And it 
spits edit, gets all the information organized for them and it 
sends it out.
    Now, the SBA has been working on this for a number of 
years. We supported them through it, and we have something 
called business.gov that is out there. But it is just in its 
infant stages, and the time is now to take that seriously. We 
have an opportunity on our hands as you move forward with 
reducing Federal paperwork, through the reauthorization of the 
Paperwork Reduction Act, to take this in hand, and it is going 
to take congressional leadership and leadership from the 
executive branch in order to do this. But we have to start 
somewhere, and we have to start now.
    I look forward to taking any questions, especially if you 
have any on the Toxics Release Inventory, and I will conclude 
with that.
    [The prepared statement of Mr. Langer follows:]

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    Mrs. Miller of Michigan. I thank you. I think what we are 
going to do is recess at this time. We have a series of six 
votes, so we will probably be, I would say, a good hour. We 
need to recess for about an hour, with your indulgence. I don't 
know if you can stay until we come back. If you could do that, 
that would be very much appreciated, and thank you very much. 
We will adjourn for an hour.
    [Recess.]
    Mrs. Miller of Michigan. Calling the hearing back to order, 
our next witness is Linda D. Koontz, Director, Information 
Management Issues at the Government Accountability Office. At 
the GAO she is responsible for issues concerning the 
collection, the use, and the dissemination of Government 
information in an era of rapidly changing technology. She has 
been heavily involved in directing studies concerning the 
Paperwork Reduction Act's implementation, information access 
and dissemination, e-government, electronic records management, 
data mining, and privacy. And in addition to all of this, she 
has lead responsibility for information technology management 
issues at various agencies, including the Department of 
Veterans Affairs and Housing and Urban Development and the 
Social Security Administration as well.
    We certainly welcome you to the committee today, and the 
floor is yours.

                   STATEMENT OF LINDA KOONTZ

    Ms. Koontz. Thank you very much for inviting us here today 
to participate in the subcommittee's hearing on the Paperwork 
Reduction Act. I will be very brief.
    Last year, we reported to you the results of our study on 
implementation of agency review requirements. We found, quite 
simply, that agencies have not implemented the rigorous review 
process envisioned by the Congress. Specifically, we reported 
that governmentwide agency CIOs generally reviewed information 
collections before they were submitted to OMB and certified 
that the required standards in the act were met. However, our 
review of 12 case studies shows that CIOs provided these 
certifications despite often missing or inadequate support from 
the program offices sponsoring the collections. Further, 
although the law requires CIOs to provide support for 
certifications, agency files contained little evidence that CIO 
reviewers had made efforts to get program offices to improve 
the support they offered. Numerous factors had contributed to 
these problems, including a lack of management support and 
weaknesses in OMB guidance. As a result, we concluded that OMB, 
agencies, and the public had reduced assurance that the 
standards in the act were consistently met.
    To address these weaknesses, we recommended that OMB and 
the agencies take steps to improve review processes and 
compliance with the act. The agencies we reviewed have since 
taken action to respond to each of our recommendations.
    In our report, we also noted that IRS and EPA had 
established additional evaluative processes that focused 
specifically on reducing burden. In contrast to the CIO 
reviews, which did not reduce burden, both IRS and EPA have 
reported reductions in actual burden as a result of their 
targeted efforts. There appeared to be a number of factors 
contributing to their success.
    First, these efforts specifically focused on results, 
reducing burden, and maximizing the utility of the information 
collected.
    Second, they benefited from high-level executive support 
within the agency, extensive involvement of program office 
staff with appropriate expertise, and aggressive outreach to 
stakeholders.
    In our report, we concluded that these approaches to burden 
reduction were promising alternatives to the current process 
outlined in the PRA, and we suggested that the Congress 
consider mandating pilot projects to target some collections 
for rigorous review along these lines.
    We also cautioned, however, that such approaches would 
probably be more resource-intensive than the current process 
and might not be warranted at all agencies since not all had 
the level of paperwork issues that face agencies like IRS and 
EPA. Consequently, we advised that it was critical that any 
efforts to expand the use of these approaches consider these 
factors.
    In summary, Madam Chairman, the information collection 
review process appeared to have little effect on information 
burden. As our review showed, the CIO review process as 
currently implemented tended to lack rigor, allowing agencies 
to focus on clearing an administrative hurdle rather than on 
performing substantive analysis. Although we made 
recommendations in our report regarding specific process 
improvements, the main point that I would like to make today is 
that it is not enough to tweak the process. Instead, we would 
like to refocus agency and OMB attention away from the current 
concentration on administrative procedures and toward the goals 
of the act, minimizing burden while maximizing utility. By 
doing this, we could help to move toward the outcomes that the 
Congress intended.
    I look forward to further discussion on how the law and its 
implementation can be improved. This completed my statement, 
and I will be happy to answer questions at the appropriate 
time.
    [The prepared statement of Ms. Koontz follows:]

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    Mrs. Miller of Michigan. All right. Thank you very much.
    The final witness of the day is Mr. Robert Shull, who 
joined OMB Watch in 2004 as its director of Federal regulatory 
policy. Prior to going to OMB Watch, Mr. Shull was a training 
specialist and child advocate where he worked at Children's 
Rights, which is a nonprofit organization in New York. This 
organization works nationwide filing class action civil rights 
suits on behalf of abused and neglected children in order to 
reform foster care. He holds degrees from the University of 
Virginia as well as Stanford Law, and we certainly welcome you 
to the committee today and look forward to your testimony as 
well, Mr. Shull. The floor is yours.

                   STATEMENT OF ROBERT SHULL

    Mr. Shull. Now it is on. All right. All those fancy 
degrees, and I can't get a mic on.
    I want to say it is actually easy for me to come here and 
fumble about with the mic, because Professor Katzen came in and 
gave such a nuanced and very thorough discussion of many of the 
same points that I would like to raise.
    I would like to pick up on something that Mr. Langer said. 
He said that these issues that we are talking about today--
information and burden--are not an abstract thing because 
people have been arrested. And I want to add my wholehearted 
agreement that these are not abstract issues, because in 
addition to the people who have been arrested, people have 
died. Think about all the people who built their homes in Love 
Canal who did not know where their homes were being built and 
what was underneath them. Or think today about the first 
responders who rushed to the World Trade Center after September 
11th not knowing what they were breathing and not knowing that 
they needed to bring certain protective equipment with them.
    Information does come with a burden, but information comes 
with benefits. And that is the point that Professor Katzen 
wanted to make, and it is the point that I want to underscore.
    I think that there is cause for alarm, not because of the 
reports of burden hour increase, but because we have come here 
to talk about reauthorization of the Paperwork Reduction Act, 
and I have heard at least three panelists talk about issues 
beyond regulation, talking about regulatory policy and changes 
to the regulatory process that would be very controversial, and 
I say very harmful to the public.
    The first point that I would like to stress is that the 
reports of burden hour increases may be exaggerated, in large 
part because, as the GAO pointed out in its testimony last 
time, there is no science that goes into the calculation of 
these burden hours. They may not be a reliable estimate of 
anything.
    Professor Katzen also elaborated very thoroughly some other 
issues that need to be raised if we are going to assess burden 
hours, at least from a governmentwide perspective. I would like 
to stress that the causes for burden hour increases can be 
things like changing priorities. After September 11th, the 
Nation realized we need to put more attention on the security 
of the food supply and the safety of our ports, and that is 
going to mean more information and that will in turn mean more 
burden that gets calculated in these burden hour increases.
    Additionally, there are outside factors like Hurricane 
Katrina. There are more people who are filing for national 
flood insurance benefits or public benefits, and those people 
who file--when the populations who file increase, the reported 
burden hour increase governmentwide will also increase. That 
particular factor has already been designated by OMB every year 
in its adjustments category, but the program changes, although 
OMB stresses that new statutes and such factors can be 
responsible for those burden hour increases, they are not 
always precisely measuring just how much a factor that is. And 
so I just want to caution that when we consider burden hour 
increases, that is another very important factor.
    I also need to say that burden hours, above all, without 
context, cannot be the basis of our policy discussions because 
they can lead to misguided policy. Mr. Miller spoke about 
changing to a flat tax, and it is absolutely true that changing 
from our progressive income tax to a flat tax or even 
eliminating Federal income taxes altogether would absolutely 
drive down governmentwide reports of burden hours. But that 
would also mean less revenue to the Federal Government to do 
the things that we expect the Federal Government to do. It 
would mean losing something really valuable like the 
progressive income tax that protects people at the low end and 
asks people at the high end of the economic strata to pony up 
their fair share in a fair way.
    Another point that needs to be stressed is that we need 
this information for a purpose, and if we focus on burden hour 
reductions above all, we could be just shifting this 
informational burden. Because we need this information, we need 
food safety labeling, we need information to protect the 
public, the States might have to pick up the role that the 
Federal Government might be abdicating in the event of across-
the-board burden reduction targets.
    Another problem that has not been brought up is that the 
PRA itself is an act that comes with its own bureaucracy. It 
really is in many ways the worst--it brings out the worst of 
Government. There is paperwork involved in the Paperwork 
Reduction Act. There are technicalities of all sorts that I 
explain my written statement and would be happy to submit more 
information on.
    I would like to stress that the real focus should be 
shifting to information resources management. There are many 
fixes, even just simply changing the name of the bill that gets 
put forward to reauthorize the PRA, that could refocus OIRA's 
attention on the ``I'' of OIRA, on information technology and 
information resource management, which could reduce burden in 
many ways without reducing the quality or level of information 
that we receive.
    I have gone over time. I apologize. I would be happy to 
answer questions.
    [The prepared statement of Mr. Shull follows:]

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    Mrs. Miller of Michigan. Thank you very much.
    You know, one of the reasons I wanted to actually get on 
this committee when I first came to Government, I liked the 
name of the committee, ``Government Reform.'' I like to think 
of myself as a Government reformer, and I like to think of 
myself as sort of a common-sense approach to Government. And we 
had a hearing last week that I was going to ask a question on. 
Actually, I thought it was sort of an interesting hearing and 
certainly a topic--and Mr. Lynch and I have introduced a piece 
of bipartisan legislation about some of the--talking about all 
of the burden with the paperwork and everything. In this case, 
we were talking about plain English, where somebody that was 
actually trying to comply could understand what the Government 
was trying to ask them to comply with. And the testimony was 
fascinating. In fact, one of the fellows, who happened to be 
from Michigan, Cooley Law School, had written this book, 
``Lifting the Fog of Legalese: Essays on Plain Language.'' And 
as I said, I thought it was just a fascinating evaluation of 
how much time is spent in compliance, and again, you know, he 
articulated some various examples. He had given the first 
example, you could not understand--even if you were an 
attorney, you could not understand in many cases what the 
Government was asking you to comply with on some of these 
things.
    I guess I would just ask all of you generally if you think 
that the possibility of having some of these various 
collections written in plain English would be an advantageous 
act as well.
    Mr. Langer. Yes, I think that would definitely be helpful. 
One of the problems that we deal with--and I am NFIB's sort of 
principal liaison with the executive branch folks--is this idea 
both of plain English and putting a limit on compliance guides. 
You know, OSHA, for instance, put out a compliance guide on 
communication of hazardous materials. We all can agree that, 
you know, what is communicating what is hazardous and what 
isn't hazardous is an important thing. But if you are a small 
business owner, having something the size of a telephone book 
to go through to learn what you need to do to comply is 
ridiculous. Someone is going to look at that and just go--you 
know, they are going to go blank.
    We talked about TRI earlier, and Mr. Lynch brought it up. 
And the issue--you know, one of the issues that we had to deal 
with as they were reformulating TRI was the fact that they 
would not put executive summaries into the changes that were 
being advocated, and all I wanted was for them to simply put 
out, you know, a couple of pages saying here is a guide, here 
is what you need to do, maybe attached to the Table of Contents 
or with an index, for more information go here; but here are 
the basic things that you need to do.
    And I would just point out, you know, just a couple of 
things Mr. Shull brought up, just very quickly. With regards to 
Love Canal, Hooker Chemical let the community know what was 
hazardous there. They didn't have to, and what they were doing 
was fully in accordance with the law. So Love Canal I don't 
think is really apropos. Neither is September 11th only because 
September 11th was not an issue of paperwork burden and 
paperwork reduction. And the thing is, you know, what mistakes 
EPA might have made in terms of letting the public know had 
nothing to do with small businesses' burdens in filling out 
paperwork. So I don't think those are terribly accurate issues.
    We have no beef about the idea of protecting lives, but 
when you are talking about small businesses and--you have a 
situation where small businesses are different than larger 
businesses. When you have a business that has only five 
employees, invariably it is the owner who has to divine what 
the regulations say and what they need to do. They are not the 
large companies that are out there that are even building 
buildings like the World Trade Towers. You know, those 
companies can hire compliance specialists. My folks can't. They 
don't. They simply can't afford it. And yet they are being 
treated in the same way. That is one of our big issues with the 
TRI. And I am sorry Congressman Lynch isn't here for me to talk 
about that because, you know, one of the things with reforming 
the TRI that we have been dealing with is this issue that the 
reforms being proposed would account for 99 percent of the data 
that is currently out there, and the vast majority of the 
businesses that would be impacted emit 50 pounds--they emit 
either nothing or they emit less than 50 pounds of any 
chemical, and they should be treated differently.
    So with that, I will conclude. I know I went way over with 
that, but, yes, plain English would help.
    Mrs. Miller of Michigan. I would like to ask Mr. Kovacs as 
well: have you had discussion over there at the Chamber about 
plain English or something along those lines?
    Mr. Kovacs. Well, we like plain English. Our CEO requires 
everything that we send around to be less than one page. So no 
matter how complex it is, we have to break it down. And I think 
the theory is that unless you can break it down and explain it, 
you really don't understand.
    When we look at the regulations--my shop is also the 
regulatory side--I mean, they occupy shelves. I don't know how 
a small business person--I am just saying this. I have a 
group--I have a team of lawyers, and we have problems with 
them. And so if you give it to a small business that is worried 
about running it, it is really very difficult.
    The point I tried to make to Congressman Lynch was the 
Congress has been very good about--you have a lot of these laws 
to really help get a handle on this. You have to figure out a 
way to get cooperation from the agencies. They have the 
expertise. They are the ones who know what regulations are 
right, what regulations are wrong, what regulations do not 
work, and they have Section 610 of the Reg. Flex. Act, which 
they are supposed to come back to you with a plan and say this 
works, this--no one ever does it, and that is where I think the 
frustration is.
    Mrs. Miller of Michigan. Mr. Shull.
    Mr. Shull. We actually fully agree that plain language 
would be a very important step to take. In fact, we 
wholeheartedly encourage and we support the bill that you 
introduced, and I think that it is exactly the kind of thing 
that I wanted to stress--after fumbling about with the mic--
that really the goal of improving, taking things to the next 
step with the Paperwork Reduction Act, we really should be 
focusing on not just some across-the-board burden hour 
reduction target but how we can reduce the burden of supplying 
information without actually reducing the information itself. 
And I think that plain language is an example of the kind of 
thing that would make it much easier for businesses to find out 
what information they need to provide and actually provide it. 
I think that other examples might be--the Toxics Release 
Inventory has come up, and EPA has produced the TRI-ME software 
that is supposed to make it easier for businesses to report the 
toxics that they have released into our air and our water and 
in our own backyards.
    There are other things that we could do. For example, if 
businesses have to complete a lot of forms that require the 
same bits of information, even name, address, that kind of 
thing, there possibly should be a data base that allows them to 
get all of that information pulled out and filled out 
automatically on every form that they fill out that requires 
that information. That is something that would save businesses 
time and money, but not rob the public of the information that 
it needs to keep itself safe and healthy.
    When I brought up, arguably inapposite, examples of Love 
Canal and September 11th, I really meant to make a broader 
point that the Paperwork Reduction Act is about so much more 
than just the paperwork clearance process. It is meant to be a 
comprehensive information resources management law, and there 
are many components of the PRA that include dissemination 
requirements, that include information security privacy, 
electronic records and archiving, and these are aspects that 
GAO has reported over the years OMB has been deficient--I mean 
really from the very beginning of the life of the PRA--OMB has 
been deficient in paying sufficient attention to these aspects 
of its responsibility. And we could really significantly 
advance the very things that we have just talked about using, 
say, information technology to make reporting easier if OMB 
started shifting more of its resources away from regulatory 
reviews that are not sanctioned by any law or away from the 
paperwork clearance process even, and into this broader 
universe of activities that really is responsible for the law.
    Mrs. Miller of Michigan. Yes, I appreciate all those 
comments. You know, I am a firm believer that obviously 
Government does not create jobs, the private sector does, and 
it is for us to try to create an environment to encourage 
entrepreneurship, etc. I think on to this plain English thing, 
because I really believe that it is a psychological barrier for 
small businesses and people that want to start their own 
businesses and those kinds of things. So I was very glad that 
Representative Lynch and I were able to, as I say, have that 
hearing, and I appreciate your comments on the legislation.
    One of the questions that I asked the other panel and that 
we are still not--I am a person who believes generally less 
Government is better and less Government regulation is better, 
less taxes are better, etc. That is my ideology. But at the 
same time, you know, Government certainly has a role to play in 
so many areas, as we were talking about here today, and 
particularly OIRA. And so I guess I would ask the panel as 
well, as I asked the previous panel, do you think that they 
currently have enough resources or are you finding some 
difficulty in the amount of resources that the Government has 
provided them in order for them to do their jobs? If anyone has 
any comment on that, I would be interested.
    Mr. Kovacs. My comment is simple. What is lacking over at 
OIRA or even within the agencies is the will. I don't think we 
need any more laws. I don't think we need--maybe if you had 
more oversight, and you are certainly doing that. But at the 
end of the day, the question comes down to whether or not they 
want to do it. And I used the example before of certifications. 
It is very simple. You look at it, and then at the end it gives 
you--and it says, ``On behalf of the Federal agency, I certify 
that this request complies with 5 CFR 13.9.'' What is it? You 
know, does it avoid duplication? Does it get at information 
that is only necessary? Is this a proper agency function? These 
are really simple questions.
    So if you have 65 percent of the CIOs filing requests that 
do not have any of the supporting information, that is a 
willpower question. When you go to OMB or OIRA and you ask them 
about the data quality--you know, they have done a great job, 
if you read their regulations, on good practices or risk 
assessment, peer review, it is good. It is well written. And 
they talk about how you integrate the science and how you make 
sure that it is the best-quality information and it is not 10 
years out of date. It is not a question of whether they--it is 
a question of they don't implement--they don't have the 
willpower, nor have they set up the mechanisms. And yet the 
courts are telling us it is their responsibility. So this is a 
willpower question, not more laws.
    Mr. Langer. From a procedural aspect of it, I will talk 
about two specific examples. No. 1, on the paperwork side of 
things--and I will just blanket say, no, I don't think OIRA has 
enough resources. One of the issues--the last time I testified 
before this subcommittee, I brought a bootleg form, and it is a 
bootleg form that has not gone through the approval process 
yet; nevertheless, it is being used by agency personnel.
    If we are not to sort of--you know, to repeat what Sally 
said earlier about, you know, garbage in, garbage out, or she 
says in her testimony, if you are not getting an accurate 
picture of what is actually out there and what is actually 
being used in terms of paperwork, you are not going to get an 
accurate, you know, sort of idea of what the total burden is. I 
think if OIRA had more resources, they would be about to ferret 
out those forms much more easily.
    And then from a general regulatory standpoint, again the 
answer is no, and I point to OIRA's annual picture of the costs 
and benefits of regulation. The fact is I take great stock in 
Mark Crain's report, and the reason why I do is because it is a 
comprehensive look at the state of Federal regulation, and it 
goes along with what a lot of folks on the outside are saying 
about the regulatory state. But when you get to OIRA's annual 
snapshot of the costs of regulation, they are only looking at 
major rules, and the reason why is because they don't have the 
resources to look beyond those major rules.
    So you get these different numbers, and the media looks at 
them and they say, OK, OIRA is saying it is X, Crain is saying 
it is Y, Crain is clearly overstating it and OIRA is saying--
you are saying that OIRA is understating it. Well, the reason 
why OIRA is understating it is because they are only looking at 
a dozen rules, when, as we know--how many rules did you say 
there were, Bill?
    Mr. Kovacs. 192,000.
    Mr. Langer. 192,000. So, I mean, if you are looking at 11 
major rules--and for our, for our members, it is never one 
rule, it is never one big rule that they can point to. It is 
always 1,000 little itty, bitty things they have to do. You 
have TRI, which takes 100 hours to do the paperwork for, or 60 
hours, depending who you talk to. You have this, and you have 
that. So, you know, you are looking these cumulative things, 
and to look at the major rules presents a hugely inaccurate 
picture. So, yes, more resources for OIRA.
    Mr. Shull. First of all, I have to say that I take the 
position that both OIRA and Crain and Hopkins are wildly 
overestimating regulatory compliance costs, but that is a 
debate for another time.
    I really think that it would be incredibly inappropriate to 
ask for more resources devoted to OIRA at this time. I mean, 
this is a time in which we are cutting budgets or trying to 
eliminate programs like Evenstart, public housing. I mean, at 
such a time to devote more resources to the office that focuses 
on Government paperwork, I think many people in the public 
would find obscene. There are just way too many problems that 
actually this information paperwork reviews would help us 
determine more about and would help us focus more of our 
Government resources on that at such a time to focus on OIRA's 
budget and getting more people to do more regulatory reviews or 
more paperwork reviews would not well serve the public.
    It is actually not even clear that if OIRA had more 
resources and more staffing that they would actually devote 
more time to the paperwork clearance process. They have devoted 
significant amounts of time to regulatory reviews that they 
haven't been asked by Congress to do. Moreover, there is this 
large universe of activities that even from the beginning with 
what has been called full funding, OIRA still didn't pay 
sufficient attention to on the information resource management 
side of things. And it means that there are a lot of wasted 
opportunities.
    We could have more things like TRI-ME that makes the Toxics 
Release Inventory reporting easier. We could have--I mean, if 
OIRA really devoted its resources to information resource 
management, maybe we would have this business gateway that 
would make it easier for businesses to comply with regulations 
without reducing the public's protection that it needs. OIRA is 
really letting us down with the resources that it has, and it 
has been doing that from the beginning. It has a real job on 
information resources management, and I think it is time for 
Congress to send that signal to OIRA.
    Ms. Koontz. I just wanted to add that what we found in our 
study was that 65 percent of the certifications that were made 
were supported with either no--the certification was made 
without any support or with only partial support. And I think 
as some of the other witnesses have said, this is not all a 
matter of resources. I sat down and looked at these files as 
well, and when you see that the certification was made and then 
you go to the place where the support was supposed to be 
provided and it is one sentence or it is very little 
information, it would not take much time on the part of OIRA to 
say that the support was not there for the certification, we 
are going to give it back to you, agency, maybe we would like 
to see something a little better next time.
    Mrs. Miller of Michigan. I appreciate that. I have a number 
of other questions, but looking at the hour, it is almost 5 
o'clock. You have been so patient with us this afternoon. We 
appreciate that. Rather than asking any additional questions, I 
might just ask you generally, is there a question that I should 
have asked you that we haven't that you would like to put on 
the record? I will start with Mr. Kovacs. It is a free question 
for you.
    Mr. Kovacs. As long as it is a free question, let me try. 
You know, when you look at the regulatory process and what 
Congress has done, one of the things that comes to mind is that 
the system right now is almost--not almost, it is literally 
overwhelming. It is overwhelming to me, and I run an 
organization that deals with this all the time. I am sure it is 
overwhelming to you when you look at it. And it is 
overwhelming, frankly, to the agencies.
    I think with the tools that you have, like the Performance 
and Results Act, with Regulatory Flexibility, you almost, as a 
Congress, could turn around and say, look, we have fooled with 
this for 64 years, and we obviously are playing a game, and the 
agencies are winning because they are at the controls--to a 
large extent, there is nobody at the control other than what 
you tell them to do through the budget, but other than that, 
once they get their money, they go home and do what they want.
    And I think you could say to them, you know, we are going 
to give you so much in appropriations and you are going to have 
to really run this as a business; you are going to have to set 
up your priorities, and you are going to have to tell us what 
performance you are going to go for and what you will expect 
and what the business community will expect, and that gives you 
some regulatory certainty, but we are not going to try to deal 
with every issue that affects everything in the world because I 
think we waste a tremendous number of resources on that.
    I guess just the example that I would like to use, if you 
want to the EPA--and we have testified about this before. We 
have this data quality indication where they have 16 data bases 
and all the data bases are inconsistent with each other. They 
just--they don't need 16 data bases that are inconsistent. They 
need to have the right answers. And that is where their 
resources should be.
    Second, they have hundreds of models for how they model air 
pollution, and water pollution. They don't need hundreds so 
that every staff person has their favorite model and can take 
it off the shelf. They need to get the models together, and 
there is so much waste. And I don't want to get into waste, 
fraud, and abuse, but what they need to do is focus on what the 
priorities are, where they can protect public health the most, 
and that is where they need to do it. And if they don't get 
everything done but they get the major things done, that is a 
huge step forward, and not fight around the edges.
    So that would be my free suggestion. Thank you.
    Mrs. Miller of Michigan. Thank you. I appreciate that.
    Mr. Langer.
    Mr. Langer. You know, it is funny because as I am sitting 
here listening to Mr. Shull, I am talking about costs and 
benefits and how much we spend and how much time we spend 
measuring the costs. And it seems to me that on the other side 
of this issue there is the costs and benefits of what we are 
doing in terms of reducing paperwork. And it is not just in the 
abstract. We are not cutting costs of small businesses for the 
sake of small businesses. It is what we are gaining down the 
road.
    And so we might be cutting certain--we might be expending 
resources on OIRA at the sake of some other social programs 
that many Americans might not find acceptable. But what we are 
doing down the road is we are freeing up businesses' greater 
time and greater resources so they can hire those people so 
that we might not have to give them, you know, housing 
allowances because they are getting a better wage because they 
are going to have a better job.
    So I want to just leave you with that idea, that we are not 
just, again, doing this for the sake of just cutting it, that 
there are benefits down the road in terms of the American 
economy. The American Shareholders Association is about to come 
out with a report discussing the drag that regulation has on 
capitalization. The National Association of Manufacturers has 
come to you and talked to you about the impact of regulation on 
the manufacturing sector.
    To me, there was never any mystery during the 2004 election 
as to why Ohio's economy tanked. There was a reason why 
manufacturing fled Ohio, and it had everything to do with the 
great regulatory state that was created over the last 30 years. 
There is a direct relationship there.
    And in the end, what we are talking about here is 
prioritization, as Bill said. We want government to prioritize 
what is important and what is not important. One of those 
things that I like about OIRA and what they are doing now, they 
have a great guidance that they have just put out on 
comparative risk assessment, which next to cost/benefit 
analysis is the hallmark of good regulation. And, frankly, I 
want an OIRA that is doing more of that because the Government 
needs somebody to look over the shoulders of the regulated 
entities, the regulated community to determine whether or not 
they are doing the right thing. I think the American people 
want that. I think that is the hallmark of good government.
    You know, the fact is that down the road we want a 
government that protects the rights and interests of the 
citizens of this country, and OIRA does that and should do more 
of that.
    Thank you.
    Mrs. Miller of Michigan. Thank you.
    Ms. Koontz.
    Ms. Koontz. I would just like to summarize some of the 
things that we think need to be done from this point on because 
of the work we have done.
    Obviously, first of all, we do think that Congress should 
consider the pilot projects that we mentioned in our report and 
in doing so empower agencies to experiment in sort of a 
controlled fashion some alternative ways of reducing burden. 
And we outline our full statement all the different 
considerations that would have to go into that.
    Second, the second issue deals with public consultation. 
Public consultation is very important in terms of burden 
reduction, and one of the things that we saw particularly in 
the IRS model that was very effective was this sort of 
sustained outreach to the affected community, to trade groups, 
to the public, and others. And right now most of the public 
consultation is focused on the use of the Federal Register, and 
what we would like to see through pilot projects or some other 
means is some experimentation or some use of alternative ways 
of reaching the public, including using the Web sites, which I 
think the public is becoming much more accustomed to that being 
the public--the agency's face to the public. So we would like 
to see more of that.
    And, third--and this does not have to do with amending the 
law. It has to go with putting in place the kind of rigorous 
processes in the agencies that Congress had in mind when they 
passed the amendments in 1995, and to ensure that the 
certifications are based, in fact, on justifications.
    Mrs. Miller of Michigan. Thank you.
    Mr. Shull.
    Mr. Shull. I would like to make two final points.
    One is that there is still a need for more transparency in 
OIRA's implementation of its responsibilities under the 
Paperwork Reduction Act. It is really unacceptable that in the 
information age, the Office of Information and Regulatory 
Affairs does not have an online docket where the public can go 
to file comments, to get copies of the information collections 
that are under review, and to get copies of OIRA's feedback to 
the agencies. That is possible. It is possible, as we know, 
with the electronic dockets for rulemaking. It really should be 
happening now for the Paperwork Reduction Act and the paperwork 
clearance process.
    The other is that, again, we started by talking about the 
Paperwork Reduction Act is information resources management 
law, and many times in the course of this discussion, we have 
been talking about regulation. And I have seen some suggestions 
from the prepared statements from NFIB and from the Chamber, 
and I really want to stress that those ideas would really harm 
the public. They are really harmful, and above all, they are 
really controversial, and ultimately bipartisan, and would 
really divert too much attention away from the crucial issues 
of information resources management during the reauthorization 
of the Paperwork Reduction Act. And I really want to strongly 
suggest that this be a clean reauthorization without 
extraneous, non-germane riders that would put the public health 
and safety at risk.
    Mrs. Miller of Michigan. Well, again, thank you so very, 
very much, all of you. I sincerely appreciate your attendance 
here at the hearing today at the committee. I think it has been 
fascinating from my perspective, at any rate, and as we move 
forward with this reauthorization of the PRA, we certainly will 
take your input and suggestions into consideration. And we have 
some ideas for even possibly some other legislation that may 
come out of some of this testimony as well today.
    So, again, we thank you so very, very much. The meeting is 
adjourned.
    [Whereupon, at 5:03 p.m., the subcommittee was adjourned.]
    [The prepared statement of Hon. Tom Davis follows:]

    [GRAPHIC] [TIFF OMITTED] T9707.094
    
                                 
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