[Federal Register Volume 64, Number 198 (Thursday, October 14, 1999)]
[Notices]
[Pages 55788-55790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-26846]


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OFFICE OF MANAGEMENT AND BUDGET


Office of Information and Regulatory Affairs; Estimating 
Paperwork Burden

AGENCY: Office of Information and Regulatory Affairs, Office of 
Management and Budget.

ACTION: Notice of reevaluation of OMB guidance on estimating paperwork 
burden.

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SUMMARY: The Paperwork Reduction Act (PRA) seeks to ensure that Federal 
agencies balance their need to collect information with the paperwork 
burden imposed on the public in complying with the collection. Agencies 
must estimate the burdens that their individual collections impose on 
the public. The public learns of these burden estimates by PRA notices 
that agencies publish in the Federal Register and with the forms used 
for collection.
    The Office of Management and Budget (OMB) has begun a preliminary 
reevaluation of its guidance to agencies on estimating and reporting 
paperwork burden. As part of this effort, OMB seeks comment on how to 
increase the uniformity, accuracy, and comprehensiveness of agency 
burden measurement. Based on comments that OMB receives, as well as its 
experience in evaluating agency burden estimates, OMB will prepare (and 
seek additional comment on) a more detailed proposal to revise its 
guidance to agencies on estimating and reporting paperwork burden. OMB 
will consider comments on its proposal before finalizing its burden 
guidance.

DATES: Written comments are encouraged and must be received on or 
before January 12, 2000.

ADDRESSES: Comments should be submitted to the Office of Information 
and Regulatory Affairs, Office of Management and Budget, New Executive 
Office Building, Room 10202, 725 17th Street, NW, Washington, DC, 
20503. Comments received on this notice will be available for public 
inspection and copying at the Office of Information and Regulatory 
Affairs

[[Page 55789]]

Docket Library, New Executive Office Building, Room 10102, 725 17th 
Street, NW, Washington, DC, 20503. To make an appointment to inspect 
comments, please call (202) 395-6881.

FOR FURTHER INFORMATION CONTACT: Alexander T. Hunt, Policy Analyst, 
Commerce and Lands Branch, Office of Information and Regulatory 
Affairs, at (202) 395-7860 or [email protected]. 

SUPPLEMENTARY INFORMATION:

I. Background

    Under the 1995 PRA (44 U.S.C. Chapter 35) and OMB's implementing 
regulations (5 CFR part 1320), we measure PRA paperwork burden in terms 
of the time and financial resources the public devotes annually to meet 
one-time and recurring information requests. The term ``burden'' means 
the ``time, effort, or financial resources'' the public expends to 
provide information to or for a Federal agency, or otherwise fulfill 
statutory or regulatory requirements. 44 U.S.C. 3502(2); 5 CFR 
1320.3(b). This includes:
     Reviewing instructions;
     Using technology to collect, process, and disclose 
information;
     Adjusting existing practices to comply with requirements;
     Searching data sources;
     Completing and reviewing the response; and
     Transmitting or disclosing information.
    Under the Paperwork Reduction Act, agencies must take into account 
the burden that their information collections impose on the public. 
This burden is balanced with the ``practical utility'' of the 
information to be collected. In earlier decades, when information was 
maintained manually rather than through automation, paperwork burden 
could be captured by estimating the ``burden hours'' that an 
individual, a company, or other entity would have to expend in filling 
out a form or otherwise responding to an agency collection. Over the 
succeeding years, as computers and other automated systems have assumed 
an ever-increasing role in society, paperwork burden has increasingly 
come to be represented by the financial costs associated with 
information technology. The financial costs imposed by a Federal 
collection have been included as ``burden'' in the Paperwork Reduction 
Act and in OMB's implementing regulations. See 44 U.S.C. 3502(2) (1995 
PRA); 44 U.S.C. 3502(3) (1980 PRA); 5 CFR 1320.3(b) (regulations issued 
in 1995); 5 CFR 1320.7(b) (regulations in effect during 1983-95).
    Currently, agencies separately estimate the ``hour burden'' and 
``cost burden'' of each particular information collection. This ensures 
that all types of burden are taken into account, but requires two 
calculations of burden, one in the form of ``burden hours'' and the 
other in the form of ``dollars.'' This approach also poses difficulties 
for evaluating over the years a particular collection's overall burden. 
For example, as respondents move from manual to automated information 
processing, a collection's ``hour burden'' would typically decrease. 
Its ``cost burden'' might increase or decrease, depending on the level 
of offsetting ``cost burden'' reductions from electronic recordkeeping 
and reporting. While the use of automation can decrease overall burden, 
the current reliance on separate categories of burden poses 
difficulties for arriving at precise comparisons over time of a 
collection's overall burden. For similar reasons, the current reliance 
on separate burden categories can sometimes pose difficulties for 
comparing the overall burden imposed by different collections of 
information, since collections can involve significantly different 
mixes of ``hour burden'' and ``cost burden.'' For example, in the case 
of collections involving household respondents, overall burden would 
typically consist primarily of ``burden hours.'' In the case of 
collections involving large business respondents, ``cost burden'' would 
assume a larger significance, due to the greater reliance on 
automation.
    Given these complexities, agency estimation methodologies can 
produce imprecise and inconsistent burden estimates. A detailed 
description and assessment of current burden estimation practices is 
provided in the FY 1999 Information Collection Budget. See Information 
Collection Budget of the United States Government, Fiscal Year 1999, 
Office of Management and Budget, pp. 31-36 (available at http://
www.whitehouse.gov/OMB/inforeg/icb-fy99.pdf).

II. Burden Measurement

    In reevaluating its guidance on estimating burden, OMB has relied 
on a number of principles:
     Consistency. Burden estimation techniques should be 
applied consistently to help ensure that a burden hour reported by one 
agency represents a burden hour equal to that of a burden hour reported 
by any other agency. Since the value of precise burden estimates 
increases with the size of information collections, we must use 
competent professional judgment to balance the thoroughness of the 
analysis with its practical limits.
     Accuracy. Burden measurement should incorporate recent 
developments in methodological, data collection, and estimation 
techniques and reflect changes in the collection, storage, processing, 
preparation, and transmission of information.
     Integrity. Measurement should provide proper incentives to 
agencies to undertake initiatives that actually reduce burden, as 
opposed to initiatives that simply reduce burden estimates. Such 
measures, for example, would not rely exclusively on proxies for 
burden, such as the number of lines on a form.
     Sensitivity. A burden measure should allow agencies to 
assess the impact of ongoing improvements in procedures and customer 
service that are not measured by current methodologies.
     Comprehensiveness. The measurement of burden must capture 
all burden (time and out-of-pocket expenses) without double-counting 
and must reflect the real costs imposed on the public.
     Practicality. Agency personnel must be able to implement 
measurement methods in a practical and straightforward way.
     Transparency. Improved burden estimates should improve our 
understanding of the tradeoffs among burden, customer satisfaction, and 
the utility of collected information.
    In relying on these principles, OMB hopes to minimize variation in 
paperwork burden measurement so that future estimates are more useful 
in comparing agency inventories and evaluating individual agency and 
governmentwide performance. It also hopes to improve the 
comprehensiveness, consistency, and accuracy of burden hour measurement 
and the way agencies now measure and report out-of-pocket dollar costs. 
Agencies can continue to report time and financial costs, but estimates 
of burden hours and financial costs will reflect improved estimation 
methodologies.

III. Issues for Comment

    OMB invites comment generally on all aspects of measuring and 
reporting paperwork burden. OMB welcomes any suggestions on how to 
address problems with the current agency practices, as well as 
recommendations on methodologies to improve estimates of time burden 
and financial burden. It specifically requests comments on burden 
measurement options.
    Please give particular attention to these issues:

[[Page 55790]]

    Monetizing Burden Hours. OMB seeks comment on the idea of 
monetizing the ``burden hour'' calculation by converting a collection's 
burden hours into a dollar measure of burden. If a dollar-equivalent 
value is calculated for a given collection's ``burden hours,'' a single 
estimate--in dollar terms--of the collection's overall burden could be 
provided by combining the monetized ``burden hour'' calculation with 
the ``cost burden'' calculation. This approach would raise a number of 
implementation issues. Two issues deserve particular attention. The 
first involves improving agency burden accounting practices to resolve 
salient differences and improve the dollar measure of out-of-pocket 
expenses. The second issue involves revising OMB guidance to agencies 
to provide consistency in the measurement of time and financial burden.
    One potential benefit of developing a unified dollar measure of 
burden is that it would be available for cost-effectiveness analysis. 
Analytically, a dollar measure has the potential to better capture 
opportunity cost (as explained below), as well as the burden of PRA 
requirements not easily measured in hours (e.g., recordkeeping). We 
seek comments on whether this and/or any other potential benefits would 
outweigh possible negative effects of this approach.
    Monetizing burden hours would present a daunting methodological 
challenge and raises issues concerning certainty and ease of 
administration by agencies. The key issue would be how to estimate the 
value of the time devoted by the public to complying with the 
government's information collection requirements. Monetizing time 
burden presents different issues when considering information 
collections from firms versus collections from households. When 
information is collected from firms, it may be relatively easy to 
estimate the employee cost associated with responding to the 
collection. Indeed, some agencies already do this, using, for example, 
data on wage rates provided by the Bureau of Labor Statistics. The 
challenge in firm-based collections is primarily one of implementation. 
In order to assure a meaningful basis for comparison of costs across 
agencies, it will be necessary to obtain appropriate wage rates.
    In estimating the appropriate wage rate, it is critical that the 
wage be properly ``loaded'' to include overhead and fringe benefit 
costs associated with the employee's time. For example, although a 
technical employee's wage may be $20 per hour, she may also receive 
benefits from her firm such as health and life insurance, paid 
vacation, and contributions to a retirement plan. To support her work 
activities, her employer must also purchase office supplies and 
services, including office space, furniture, heat and air conditioning, 
electricity, a telephone and telephone service, a personal computer, 
printer and photocopier access, and various office supplies. These 
costs need to be accounted for when assessing the overall impact of the 
Federal information collection on the resources of the respondent.
    For household-based collections, the issue is inherently more 
complex. People are generally not paid a wage for non-work activities 
that they perform at home. Instead, for burden measurement purposes, 
the value that people place on their time is usually expressed in 
economic terms as ``opportunity cost,'' or the value of an activity 
(for example, spending time with family or developing a new 
professional skill) that a person would expect to engage in were he or 
she not occupied in complying with a government reporting requirement. 
Economic theory suggests that the opportunity cost of giving up an hour 
of leisure will be equal to the wage foregone from the next hour the 
individual would have worked. In most cases, this will be the same as 
the respondent's average wage. In other cases--for example, if the 
respondent is eligible for overtime pay for her forty-first hour of 
work in a week--it may be more than the average wage.
    Alternatively, to measure the value of leisure time, agencies could 
observe the actual fees paid by individuals and businesses to others 
(e.g., paid tax preparers, contractors) to prepare and submit 
information to the government. This measurement approach is sometimes 
referred to as ``revealed preference.''
    Given the methodological and implementation challenges involved 
with monetizing burden hours, OMB requests responses to a number of 
specific questions:
     What are the advantages and disadvantages to trying to 
monetize burden hours?
     Is monetization worth doing at all?
     Should a single valuation of time (as represented, for 
example, by a respondent's wage rate or the fee paid to a contractor) 
be used for all collections, or should it be derived separately for 
different types of collections? A successful methodology may need to be 
tailored to individual collections and agencies.
     If the latter, should a single valuation be used for all 
respondents to a particular collection, or should valuations differ 
according to respondent characteristics. A successful methodology may 
need different values of time for collections responded to by 
individuals in different circumstances.
     Should OMB establish a means for reporting annual burden 
estimates rather than the three-year average burden estimates that are 
commonly reported today?
    Categories of Burden. OMB also seeks comment on the advantages and 
disadvantages of expanding the categories of burden that agencies 
report to OMB. Such an approach could involve dividing estimates of 
Federal paperwork burden into three categories, with a fourth category 
representing an aggregate measure of burden. The first two categories, 
burden hours and financial costs, are used under the current approach, 
but could be improved using new procedures designed to address problems 
with burden estimation practices. A possible third category could be 
burden hours converted, or ``monetized,'' into dollars, depending on 
resolution of the issue discussed above. A possible fourth category 
might combine financial costs and monetized burden hours to create, for 
the first time, a dollar measure of total Federal paperwork burden.
    Estimating Burden Hours. Whether or not the categories of burden 
are expanded, OMB plans to provide guidance to agencies intended to 
help them improve their estimates of time burden, measured in burden 
hours. OMB seeks comments specifically on ways to improve current 
agency hour burden estimation methodologies.
    OMB will review and consider all comments received in response to 
this notice. It will then prepare a draft revised guidance to Federal 
agencies and provide another opportunity for public comment before 
issuing final guidance to agencies.

    Dated: October 4, 1999.
John T. Spotila,
Administrator, Office of Information and Regulatory Affairs.
[FR Doc. 99-26846 Filed 10-13-99; 8:45 am]
BILLING CODE 3110-01-P