16

and unbiased information concerning the nature and magnitude of health, safety,
and environmental risk” to bear on regulatory problems “in order to provide for
sound regulatory decisions and public education.” The result, it finds, will be to
“allow for public seratiny and [te] promote quality, integrity, and responsiveness of
agency decisions.” The Administration actively su; ese goals.

B. Administration Efforts to Improve Risk and Cost / Benefit Analysis

We have not only spoken often of the need for risk and cost/benefit analysis, for
good data and sound analysis, and for an open and transparent process, ve
already done a great deal to encou! and enhance their lopment and use. Ex-
ecutive Order No. 12866, which the President signed on September 30, 1993, re
resents the cornerstone of our efforts. It that there is an important role
for regulation in safeguarding the health, safety, and environment of the American
people. At the same time, it emphasizes that Government has a basic responsibility
to wisely and carefully, regulating only when necessary and only in the most

The Executive Order requi ies to adopt regulations only afte:

ixecutive ires agencies Be OF lations o1 r
determining that their benefits justify their coste and that the rules ‘themselves are
developed according to sound regulatory principles, including the use of market-
based incentives. It also requires agencies to base their regulatory, decisions on the

bly obtainable scientific, technical, economic, and r data, And it
specifically calls for the use of risk analysis in regulatory decisionmaking. The Exec-
utive Order states that ‘[i]n setting regulatory priorities, each agency shall consider,
to the extent reasonable, the degree and nature of the risks posed by various sub-
stances or activities within its jurisdiction.” It also asks agencies, in developing reg-
ulations, to consider “how the action will reduce risks to public health, safety, or
the environment, as well as how th itude of the risk addressed by the action
relates to other riaks within the jurisdiction of the agency.”

The Executive Order established the Regulatory Working Group, which I chair,
and which serves “as a forum to assist agencies in identifying and analyzing impor-
tant regulatory iseuee (including -  - the methods, efficacy, and utility of compara.
tive risk assessment in regulatory jion-making. . .”). One of the subco: ittees
of the Regulatory Working Group has been focusing on the issue of risk analysis,
and it recently produced a set of principles to give agencies more specific guidance
in assessing, managing, communicating, and prioritizing risks.

The Administration endorses efforts to promote the use of risk and cost/benefit
analysis as part of the Federal rulemaking process. Risk and cost/benefit analysis
are particularly valuable tools in helping agencies make decisions that would reduce
riaks to health, safety, and the environment in a sensible and cost-effective manner.
The Administration therefore supporte risk and cost/benefit legislation that is fair,
effective, and affordable. But we do not support legislation that is likely to burden
the lato: 8 with unnecessary or costly irements. We have reviewed
Title oft . 9 and regret that it appears not to live up to these standards, as
well as to its own professed standards of regulatory efficiency and cost-effectiveness.

C. Title III of H.R. 9; Overview

As drafted, Title III is an extreme measure, fraught with consequences, we as-
sume unintended, that would only exacerbate the problem it seeks to address: an
inflexible regulatory system insufficiently attuned to the benefits and costs of rule-
making. Indeed, many of the criticisms to which our current regulatory system is
subject—that there are too many requirements, many of which are too burdensome,
that it fails to tailor regulations to the particular characteristics of the regulated
community, that it relies on command and control rather than performance stand-
ards, that it requires excessive paperwork, that it produces rules that are difficult
to understand—can be leveled against the approach takeh in Title III. Its provisions
apply too broadly, are too prescriptive and too costly, and would create endless ana-
lytic loops and excessive opportunities for litigation. Let me be more specific.

1, Title III is Over-inclusive and Too Rigid

Title IT creates risk assessment, risk and costbenefit analysis, and peer review
requirements for agencies in conné in wit lat grams designed to
tect “human healtly safety, or the environment® These termse, which et their fore
are an apt description of a category of well-defined regulatory programs, would es
used here apply to a large number of unintended agency regulatory activities. For
example, do you really want the Department of Commerce to have to go through
the Title III risk assessment, certification, and peer review process befere issuing
a rule opening fishing season at a particular set of fisheries? The Department of In-
terior before it authorizes the seasonal hunting of certain migratory birds otherwise
illegal to shoot? The Internal Revenue Service before it revises its income tax regu-



37

Nunn, Senator Roth and others, and passed out of the Senate Government Affairs
Committee on February 1, 1995.
__ The Paperwork Reduction Act provides tools for OMB to better staff the President
in his executive management role. It also establishes a clearance process ensuring
public notice and comment, public protection and OIRA review. I feel very strong)
that strengthening OIRA an agency responsibilities for the reduction of paperwork
burdens on the public is important for the efficient operation of government. In fact,
I felt so strongly about this that, even after President Carter lost his bid for reelec-
tion, I continued to work hard for the passage of the Paperwork Reduction Act in
1980, and President Carter signed it in December over veto recommendations
of several agencies. In anticipation of the 1980 T established the Office of Regu-
latory and Information Policy, the predecessor of the Office of Information and Reg-
ulatory Affairs, in OMB to begin the challenge of reducing paperwork and red tape.
Paperwork reduction is a bipartisan issue and much of what J have to say, is rel-
evant for any President and any Congress, no matter which party controls the re-
"PRfany agoncien rested the igs of rede and red thou
lany agencies resist e idea of reducing paperwork an tape, even
the Provident, had asked them to do so. Thousands of reasons were invented to at
ou! ests for information on the need, practical utility, cost effectiveness, and al-
ternatives for proposed regulatory requirements. Whether it was “turf”, or the im-
peratives of program missions, there was resistance to following through on the
common sense questions asked about paperwork and regulatory demands upon the

ie
Puthe Paperwork Reduction Act of 1980 was needed to give teeth to a central man-
ment Function nevossary for a President to manage the regulatory system. The
ident and supporters in Congress believed that the Paperwork Reduction Act
should be passed and signed because it established important authorities and a
framework of accountability for any President, any Congress, the Executive Branch
agencies, and our citizens with respect to regulatory paperwork requirements. A
strong “traffic cop” function enables the President to better carry out his executive
responsibilities. Equally important, Congress, through its overaight fonction, can
more effectively hold the executive branch accountable if the President is more effec-
tive than if he is not.

‘The President's job is to manage the “whole interest” of the Executive Branch in-
stead of the fr enting concerns of thousands of “iron triangles” that pervade the
Nation’s Capitol. OMB ie the appropriate agency to perform that function for the
President, and the Paperwork Reduction. Act provides OMB the tools to stalf the
President in his executive management role. I believe that the burden of federal reg-
ulatory and paperwork requirements would be far greater today if it weren't for the
1980 Act. The 1980 Act, however, needs to be strengthened to support and encour-
age OIRA in the role it plays as’ the President's surrogate for information policies
and ultimate check for agency conformance to the common sense criteria in the Act
a8 well a8 to provide for public participation in, the information collection process.

In that regerd, I'am pleased tb see that the draft Chairman's mark would reau-
thorie O1RK indefinitely and. provide for much sume at may be neconsary fori to
carry out its responsibilities. The draft Chairman's mark clarifies and strengthens
OlitA's and the agency's responsibilities for the reduction of paperwork burdens on
the public in a clearance process enhancing public participation.

‘The legislation also addresses problems created by the Supreme Court decision in
Dole v. United Steelworkers of America. In this case, the Supreme Court held that
the Paperwork Reduction Act did not cover federally sponsored information collec-
tions which were provided to third parties. While the intent of the authors of the
1980 Act (of which I consider myself to be one) was clearly that such requests were
covered, this Court decision leaves a gaping hole in a coherent information collection
procese in which the public has an oppertunity to participate. The draft Chairman's
Fork (aa well ae Title V of HLR. 9 acd 8.244) wonld ensure that such information
collection requests would be covered. :

‘The emphasis on three year reviews and the opportunity to apply new information
technologies to reduce paperwork burdens are sound. We live in an information age
and government should be encouraged to be amart and take advantage of new infor-
mation technology. | also support public participation in the information collection
process to ensure that agencies obtain correct information on how the private sector
Works and to be sure that all reasonable alternative approaches have been explored
before issuing regulatory mandates. "

I suggest that the requirement to reduce the paperwork burden by 5% be
creased to 10%.

‘The committee may want to consider making this a binding provi-

1494 US.

(1990).


33

The Paperwork Reduction Act has made progress towards eliminating unneces-
sary paperwork. Since 1981, OIRA has eliminated more than 600 million hours an-
nually of federal information requests, saving consumers more than $6 billion each
year, by modest estimates. Unfortunately, these savings have been overwhelmed by
the dramatic increase in the federal paperwork burden. In 1980, consumers jired
1.8 billion hours to comply with federal information requests. By 1992 this figure
had jumped to 6.5 billion hours—the equivalent of more than three million people
working full time just to satisfy the federal paperwork burden. Federal information
collection requests impose real costs on the economy that raise prices for consumers
and reduce ivity of American businesses. Further, these costs are often
disproportional borne by small businesses,

authorizing ‘a strong Paperwork Reduction Act, therefore, should be an impor-
tant element of any regulatory reform efforts. Moreover, reauthorization must reaf-
firm the primary goal of the 1980 act—minimizing the federal ork burden
on consumers. Title V of H.R. 9 does just that, calling for federal agencies to mini-
mize “the Federal paperwork burden imposed through Federal collection of informa-
tion, with particular emphasis on those individuals or entities most adversely af-

A reauthorized Paperwork Reduction Act must also address the issue of third
party disclosures. These are information collections mandated by the federal govern-
ment for use by third parties. A lack of clarity in the language of the original Paper-
work Reduction Act has created a significant loophole that exempts an entire class
of federal information collection requests. A 1990 Supreme Court decision, Dole v.
United Steelworkers of America, found that third party disclosures were not covered

act.

It is estimated thet this decision exempted up to one-third of the federal paper-
work burden (ver two Bilin hovrs) from review by OIRA. Federal Trade Commis.
sion information collection submissions to OIRA by 88 percent after the
oe, and the Occupational Safety and Health Administration has virtually
stopped submitting paperwork approval Tequesta to OIRA.

Tt must be remenibered that federal information collection requirements, whether
used by the federal government or third parties, impose a substantial burden on
consumers. Agencies must be accountable for all paperwork burdens they impose on
the public. Title V of LR. 9 closee the loophole introduced by the Supreme Court
decision, restoring the review process for ail federally imposed paperwork burden.
To thie ‘end. I encourage the uew Congress to quickly pass a strengthened Paper-
work Reduction Act.

RISK ASSESSMENT

Title III of H.R. 9 introduces risk assessment, an additional tool for ensuring that
federal regulations are reasonable and generate benefits that justify the costs of reg-
ulation. Americans spend more than $100 billion annually to reduce risks; the prop-
er use of risk assessment will help ensure that scarce dollars are not squan
in attempts to reduce trivial risks that pose litle oF no threat to the public. Risk
assessment provides a more meaningful evaluation of the need for regulation, as
well as a better understanding of the risks involved and the benefits of allocating
scarce resources to eliminate particular riske.

Risk assessment should be viewed as an important complement to benefit-cost
analysis, Since benefit-cost analysis and centralized regulatory review were formal-
ized in 1980 with Executive Order 12291, consumers have saved billions of dollars
by climinating excessive regulation. Deregulation in the transportation sector, for
example, has increased consumer welfare by over $30 billion. However, in recent
years, health and safety regulations have surpassed economic regulations as the
source of the federal regulatory burden. While benefit-cost analysis was succeseful
in identifying excessive economic regulations, it is not as well suited for identifying
excessive health and safety regulations, Identifying the optimal level of safety re-
quires new tools that can be used in conjunction with benefit-cost analysis.

Risk assessment allows a more careful evaluation of the potential benefits of a
regulations by identifying particular hazards and the threat they pose for the public.
Accurate risk assessments allow both the regulators and the public to evaluate
whether a regulation is reducing real risks that consumers face in their daily lives.
Risk assessments aloo provide an opportunity to compare different risks, allowing
more rational and informed decisions concerning the benefits of particular regula-
tions relative to their costs.

To be effective, risk assessments must be based on sound, acientific principles.
‘The risk assessments should provide the public with useful information that can



42

going to think of it all, so it is much better to establish the broad

standards in the legislation, sort of like a performance standard,

and then let the executive branch try to implement that, and you

use your oversight powers to make sure they do what you want
lone.

Mr. McINntTosH. And perhaps create incentives in a system that
lead toward the right result.

Mr. McIntyre. Absolutely.

Mr. McINTosu. With that in mind, the second question I wanted
to ask was related to a proposal that one of our colleagues, Mike
Crapo from Idaho, made before you were here, Mr. Miller. I don’t
know whether you heard his testimony, Mr. McIntyre. Essentially
he said that under the Paperwork Act, that citizens can have a
legal defense if the provisions are not followed but they don’t have
an affirmative ability to come in and challenge an agency that re-
fuses to follow through the provisions of the Paperwork Act. He
recommended that we grant that, and similar proposals have been
made in the risk assessment and cost-benefit analysis.

Let me turn first to you,-Mr. Miller, because I know from work-
ing with you, you have a healthy skepticism of lawyers and their
ability to help a situation, but in this case, what would your com-
ment be to that suggestion?

Mr. MILLER. Well, present company excepted, I do have some
skepticism about the overlitigiousness of our society.

I would grant authority to people who are impacted by regula-
tions the right to seek judicial review of the procedural require-
ments. I would not want to put every judge in the position of hav-
ing to make judgments about whether the benefit-cost analyses
were done correctly or the risk assessments were done correctly.

I think some kind of arbitrary and capricious standard should
apply. Perhaps you could even look at how agencies perform under
the standard to see whether they begin to game it or whatever. If
they do, then grant these rights to individuals, as was suggested.

If you will recall the history of review under Executive Order
12291, at the very beginning it worked extremely well, the agencies
did comply. But as time went on, with the Supreme Court decision
holding that OIRA could not hold up a regulation where there was
a judicial requirement timetable, the agencies began to work with
their committees to get judicial timetables, and so there is a way
of gaming it and getting around it. I suspect that agencies would
find ways of gaming and getting around some of these require-
ments. Certainly a way of scotching that would be to give a right
of private action to individuals affected by regulations. So I think
it is a good idea to explore.

Mr. McINtTosH. Thank you.

Mr. McIntyre.

Mr. McINTYRE. Part of the problem I think the American people
have with the Federal Government is that it doesn’t work very
well, and I don’t think we want to put a lot of other opportunities
to throw monkey wrenches into the process.

Often times the failure to act is more a political issue than it is
a legal issue, and just because the Director of OMB doesn’t answer
somebody’s letter or something like that, I am not sure I would
want to take that kind of issue to court. But I do think we need


10

Affairs Committee reported out on February 1. I am pleased to re-
port that the administration supports those efforts.

In my written statement I have provided a detailed history of the
Paperwork Reduction Act, which dates back to the Federal Reports
Act of 1942. I go through the 1980 and 1986 amendments of the
Paperwork Reduction Act, showing how the act sets forth agency
and OMB responsibilities to ensure that the needs of the Federal
information collectors and users are balanced against the burdens
placed on information providers. The Paperwork Reduction Act in-
tegrated this paperwork control function within a broader informa-
tion resource management context so as to link all the act’s pur-
poses under a single management umbrella in order to focus the
attention of agencies on the twin tasks of reducing public informa-
tion collection burdens and maximizing the utility of Government
information to perform Government functions efficiently and effec-
tively.

My written statement also provides information about the imple-
mentation of the act and the Supreme Court’s decision in Dole v.
Steelworkers, which brings me to the current stages of the legisla-
tive effort.

Several years ago there was a growing bipartisan consensus that
the act needed to be strengthened, that the uncertainties intro-
duced by the Dole decision needed to be resolved, and, I would
admit from my own self-interest, that appropriations for the Office
of Information and Regulatory Affairs be reauthorized.

There were two basic legislative proposals. I am going to use the
Senate numbers because that is where the action has been the past
2 years. S. 560 was introduced by Senators Nunn and Roth, and
that became H.R. 2995 in the House. The other was S. 681, which
was introduced by Chairman Glenn.

These two bills approached the issue from two different sides,
but they were largely compatible, and the efforts that were under-
taken in the last 2 years or a bipartisan basis were to find the ele-
ments that were in common—or at least compatible—and merge
them into a stronger, better bill. That bill was reported out by the
Senate and retained the designation of S. 560. As the chairman
noted, no hearings were held on the House side.

What you have before you in H.R. 830 is very similar to S. 560,
accepted by the Senate last year. H.R. 830 provides further
strengthening of the Paperwork Reduction Act and further
strengthening of information resource management provisions.

There are minor differences between the House bill and the Sen-
ate bill. Some of them attempt to preserve the text of the existing
statute; others appear to be based upon specific proposals in H.R.
9; some are totally new. As this legislation moves forward, we will
have an opportunity to discuss these differences. They are minor
in the scheme of things. The most important point is that we have
now a bill in the Senate and in the House which has bipartisan
support and which the administration supports, and I would urge
that we move promptly to resolve this issue.

If I can turn then to Title III of H.R. 9, risk assessment and cost-
benefit analysis for new regulations. Title III, by its terms, seeks
to bring greater scientific and economic rationality to the regula-
tion of the risks of health, safety, and the environment, in its own


70

as bad and intrusive, rather than as an essential function of a responsive and re-
sponsible government.

_ Finally, the authority to grant waivers or exemptions from paperwork compliance
is too broad.

Allowing regulated entities to be exempted by OMB from compliance with a re-
quirement to collect information may seriously undermine the integrity of data pre-
viously collected by an agency, thereby creating inaccurate impressions for both the
regulatory agencies and the public. Additionally, exemptions and waivers which
produce an inaccurate picture of the need for a particular regulation undermines
public confidence in the role of government.

It should be noted here also, Mr. Chairman, that regulatory agencies often have
the power to grant waivers or exemptions in their organic laws and that this au-
thority is frequently used where i appropriate, If waivers or exemptions are to
be e granted, it should be done selectively upon solid evidence of need or Re
ticular circumstances. Waivers and exemptions should not be made by OMB; they
should only be granted by the agency which has the history, experience, and exper-
tise to make a sound judgment.

The United Steelworkers therefore urges the Subcommittee and the full Commit-
tee not to overturn the Supreme Court decision in Dole v. Steelworkers. We would
also strongly urge you to address the imbalance in the current bill which includes
numerous presumptions against record-keeping and information collection require-
ments.

Mr. Chairman, I would also like to address a few comments to the risk assess-
ment provisions contained in Title III of H.R. 9, the Job Creation and Wage En-
hancement Act of 1995.

Title I, Subtitle B—Analysis of Risk Reduction Benefits and Costs—would re-
quire agencies to estimate the risk for every major regulatory action to protect
human health, safety, the environment, conduct a comparative analysis of risk
addressed by the regulation relative to six other risks to which the public is exposed
(three regulated by the agency and three with which the public is familiar), and es-
timate the cost of implementation and compliance with the regulation.

Risk assessment issues have usually been left to the scientists and technocrats.
Recent discussions about risk assessments, however, have had little to do with
science, but a lot to do with politics. Specifically, some would like to use risk assess-
ment as a tool for slowing down or stopping regulations.

I am reminded of the old admonition “Don' i

miss the forest for the trees.” I am
afraid that some in Congress may be missing the forest and the trees,

ume for a moment that a parent is repeatedly hitting their child in the head.
Which do you think would be better? Assese how much damage the parent can in.
flict without doing serious harm to the child? Or find a way to stop the parent from
hitting the child?

The principal problem with risk assessment is that it puts the focus of action in
the wrong place; namely, in assessing the risk instead of minimizing or avoiding the
risk in the first place.

In theory, risk assessments and comparative risk analyses sound like appropriate
solutions to prioritizing dangers faced by the public. In fact, in a recent survey con-
ducted by the Harvard Center for Risk Analyste, 83 percent of the 1,000 respondents
felt that the government should use risk analysis to identify the most serious envi-
ronmental problems and give them the highest priority.

The same survey, however, also resulted in 66 percent of the reapondents stating
that government is not doing enough to protect the public from environmental pollu:
tion, and 76 percent said that when scientists are uncertain about how harmful pol-
lution is, environmental] regulations should err on the side of safety, even if that

s regulations more expensive. It is clear that what the American people really
are concerned about is not over-regulation, but under-regulation, especially when it
‘plates to environmental protection and public health and safety. In general, the
American people believe that the role of government is to protect them from risks
OY saluting’ sconce almost al duces bad public policy. Th

ing acience almost always produces bad public policy. The examples con-

tained in Title Il on risk assesement and cost-benefit shalyace are no exception.
itle II is based on the assumption that risk assessment and cost-benefit analy.
ses will provide a realistic estimate of risks, costs, and benefits. This assumption,
however, fails to recognize that both risk assessment and cost-benefit methodologies
are relatively recent, crude, value-laden policy instruments that can, at best, only
illustrate a portion of the costs, benefite, and riske associated with complex regu.
latory programs. By writing apecfc risk ansesement and cost-benefit methodologies
into law, Title [Il effectively discounts and possibly precludes other valid and poten


52

tices to the Government that the Government can more effectively
use technology. I don’t think we have a choice but to keep working
on it, and I do think the bill helps improve this.

You know, one of the neglected aspects of the Paperwork Reduc-
tion Act has been the information technology component of the act.
There has been a lot of focus on the paperwork reduction side, ap-
propriately so, but the areas of information technology have been
neglected, and the Government really hasn’t put a lot of invest-
ment in that area in terms of people.

Mr, PETERSON. Well, I think we also have a mind set problem.
You know, it just seems if somebody comes to Government from a
different background, just even in our offices there is this mind set
that unless you have all this bureaucracy and people checking each
other, somehow or another you are doing something wrong, and
those of us that try to do something different literally get criticized
because there is this whole mentality in the Government that ev-
erybody has got to check everybody else and there has got to be all
this paperwork. It drives me crazy. You know, that is why I am
skeptical.

Ms. Katzen talked about the example of coming up with the form
EZ. Well, frankly, I am not convinced at all that has been any sig-
nificant improvement in anything. The problem that I see from
people, they can’t figure out which form to file. I mean that is the

estion I get all the time: Am I supposed to file on the EZ or on
this other form? There really isn’t a whole lot of difference; they
just eliminated some lines.

And you are right on the point in terms of the way the IRS does
all of this and they haven’t focused on making it simple to elec-
tronically file your return. I mean I was just with my son this
weekend, who is trying to file his return electronically, and you
can’t do it because you have got to have a private vendor that you
have got to be signed up with and all of this monkey business, and
he finally just gave up and mailed it in, and so now they are going
to have to input that form manually.

You know, with the Internet and all, why can’t the IRS just have
a way that you can call up and transmit it without going through
all this other stuff?

Mr. Doparo. Yes. Basically they still have technology that they
installed in the 1960's.

Mr. PETERSON. That doesn’t work.

Mr. Doparo. And it doesn’t work very effectively. They have
Magnetic tapes. Until recently, they would input the data on mag-
netic tapes and actually have to physically fly the tapes around the
country to input into their computer system. Now they have finally
installed some efforts to at least transmit data electronically within
themselves.

Mr. PETERSON. If they just had whatever these new servers are
these A platforms or whatever they are—they are a PC. I mean all
they need is three or four of them. They can do everything in every
Tegion just with that, and it would only cost $20,000. You see, they
are so into this——

Mr. Doparo, I think your point, Congressman—well, I think
your point in terms of mind set is very important. What we
found—and this is why we are advocating that top officials get in-


50

ported the need for these kinds of rules, but were concerned about the operation of
the regulatory process and paperwork requirements.'? The business and union lead-
ers led for a more service-oriented approach to regulation in which agencies
would rovide more information and permit more input to gency standards-setting
and enforcement. Therefore, some of the problems associated with paperwork bur-
den may not be resolved until underlying legislative and implementation issues are

Some of the continuing regulatory probleme may sls be due to the paperwork
clesrance process pursuant fo the PRA. Section 2507 of the proposed Tegsltion
makes certain changes in that, process, including shortening the amount of time
OMB hes to review proposed rules, Section 3606 (©) of the proposed legislation also
explicitly requires federal agencies to establish a forms clearance process to approve
proposed collections of information prior to sending them to OMB for approval. Sec-
Ton 3607 describes the clearance process at both OMB and the agencies in some
detail. In doing s0, the proposed legislation may alleviate some of the problems we
have found. In 1994, we reported thet disagreements between the Environmental
Protection Agency (EPA) and OMB about the clearance process contributed to the
lapse of EPA's information collection approvels and the loss of $2 million in enforce-
ment penalties.!8
‘Section 3506 (c) (8) requires agencies to certify that they have reduced, to the ex-
tent practicable, the information collection burden they impogo on the publi: This
includes establishing different compliance and reporting requirements for small en-
tities, which is consistent with principles in the Regulatory Flexibility Act of 1980.
However, we reported last year that federal agencies frequently fail t comply with
this ‘act beceuse of a lack of enforcement provisions and processes! We rec-
ommended several changes to improve the ac’s enforcement, some of which have
already been implemented. For example, OMB and the Small Business Administra-
tion have agreed to work together more closely to ensure that agencies’ regulatory
flexibility analyses are complete. While the Chairman's proposed draft legislation
does not strengthen the act's enforcement it does emphasize that agen.
cies should consider the resurece and capabilities of those who have to respond to
the information collection requirements.
‘he proposed legislation aaa clarifies an important implementation ismus that has
‘rubject of litigation. In a 1993 report, we examined the effects of two court
cases on federal agencies—Dole v. United Steelworkers of America and Action Alli
ance of Senior Citizens v. Sullivan.%® We found that neither OMB nor the three
Agencies we examined had developed any formal guidance on how to implement the
decisions, and that there were clear differences of interpretation between the agen:
cies regerding what information collections were subject to clearance by OMB.
refore, we recommended that, in the absence of a legislative change, the Director
of OMB tame guidance to clariy when agencies are required to submit information
requests for review under the PRA. Section 3502 of the proposed legislation rede-
fines the term collection of information, and thus addresses our recommendation of
establishing a common understanding of the information enllectone that are wubjct
review.

CONCLUSIONS

Mr. Chairman, there is much work to be done in getting the federal government
to engage seriously in the difficult task of modernizing its operations. Improvement
goals must be set, accountability for results reinforced, the skills of the federal
workforce modernized, and targets of opportunity for eliminating, consolidating,

rivatizing, or reengineering government Einctions identified. Achieving these
Jectives can be greatly facilitated by a solid legislative foundation that emphasizes
the use of modern management practices in guiding the crucial decisions ahead. In
this regard, we believe that your proposed legislation takes positive steps for im-
proving governmentwide management of information technology at a time when mo-
mentous decisions are being made on actions to reduce or consolidate hundreds of
federal programs.

14 Workplace Regulation: Information on Selected Employer and Union Experiences (GAO/
HEHS-94-138, June 30, 1994).

33 Environmental Regulation: Differences Remain Between EPA and OMB Over Paperwork
Requirements (GAO/RCED-4-254, Aug. 23, 1994).
rep eteintory Flenibility Act: Status of Agencies’ Compliance (GAC/GGD-84-105, Ape. 27,
3 nea Reduction: Agency Responses to Recent Court Decisions (GAO/PEMD-93-5, Feb.


56

So thank you. I appreciate that.

Mr. Doparo. Thank you, Mr. Chairman, and we would be very
happy to work with you in the future.

Ir. HOENIG. Thank you.

Mr. McINTosH. Thank you.

Our final panel is a group of concerned citizens and representa-
tives of interest groups. First we are joined by Mr. Robert Coakley,
executive director of the Council on Regulatory and Information
Management. Mr. Coakley was formerly on the staff of the Senate
Governmental Affairs Committee and, working for then Senator
Chiles, helped draft the original Paperwork Reduction Act. I wel-
come him here and look forward to his insight.

We also have Mr. Jack Sheehan, who is the legislative director
of the United Steelworkers of America. The Steelworkers brought
the lawsuit which was referred to earlier in some of the testimony
and eventually resulted in the ruling by the Supreme Court that
certain information collections were not covered by the Paperwork
Reduction Act. I am certain that Mr. Sheehan will discuss that
case and welcome him here today.

Finally, I am very pleased to welcome Mr. Robert Stolmeier,
president of KLC Corp. Mr. Stolmeier is a constituent and a frien
from Indiana’s Second District. I have asked him to join us to dis-
cuss the impact of Federal paperwork burdens on his business, and
I want the record to demonstrate that I appreciate Mr. Stolmeier
for traveling to Washington to appear before this subcommittee and
welcome him here today.

Before we begin testimony, if each of you could rise.

[Witnesses sworn.]

Mr. McINntosH. Thank ioe:

Mr. Coakley, if you could lead off today.

STATEMENT OF ROBERT COAKLEY, EXECUTIVE DIRECTOR,
COUNCIL ON REGULATORY AND INFORMATION MANAGE-
MENT; JACK SHEEHAN, LEGISLATIVE DIRECTOR, UNITED
STEELWORKERS OF AMERICA; AND BOB STOLMEIER, PRESI-
DENT, KLC CORP

Mr. CoaKLey. Thank you, Mr. Chairman. Chairman McIntosh,
Congressman Peterson, members of the committee, thank you for
the opportunity to testify on the Paperwork Act of 1995.

My testimony today is on behalf of the Paperwork Reduction Act
Coalition, and if you permit, Mr. Chairman, I will summarize it
and ask that my full statement be included in the record.
nt MCINTOSH. Without objection, it will been done. I appreciate

it.

Mr. CoakLey. The coalition is an ad hoc organization composed
of some 75 trade, professional, taxpayer, and citizen organizations
which came together some 5 years ago to support development,
passage, and enactment of strengthening amendments to the Pa-
perwork Reduction Act of 1980. Seven organizations serve on the
coalition’s steering committee, and they and their memberships
have been most active and persistent in supporting the evolution
of the bill you have before you this morning. Bhey are C-RIM, the
U.S, Chamber of Commerce, Citizens for a Sound Economy, the
National Association of Manufacturers, the National Federation of


60

lation which Pissed the Senate unanimously and was suj d_ by President
Clinton last Congress. Enactment of the PRA of 1995 will be an important ex-
ample of how the new leadership in Congress will overcome the gridlock and
frustration on bills which promise common sense regulatory relief to the Amer-
ican public.

« An amount of time and effort equal to 9 percent of the Gross Domestic Prod-
uct is dedicated to meeting the Federal Government’s information needs. This
is a huge figure, presenting a picture of the cumulative paperwork burden. The

aramount reason new legislation needs to be enacted is that the ability of the
Executive branch to meet the promises of the existing law is eroding. The Act
needs to be strengthened, corrected, and renewed, not weakened by time and
neglect.

« Three crucial factors contribute to the erosion: the Supreme Court decision
in Dole v. United Steelworkers of America; agencies who increasingly ignore the
spirit and letter of the law; and six years of Congress and the Executive not
being able to agree on what amendments to the Act are needed. The Coalition
believes the PRA of 1995 will reverse the erosion.

« The Coalition stresses that a strong Office of Information and Regulatory
Affairs, a strong regulatory traffic cop for the President, is central to imple-
menting other parts of the regulatory reform agenda contained in H.R. 9 of the
“Contract”.

* Seven recommendations are made to improve the legislation upon which the
Committee will be deliberating imminently. The bill’s present goal to reduce the
public burden of paperwork five percent should be raised to ten percent. Lan-
guage to make the goals more enforceable should be considered. A private ri
of action should be granted to any citizen who petitions the Director of OMB
for a determination of whether a paperwork request is subject to the Act’s pro-
tection and does not get a response. Strong whistleblower language should be
retained and all recordkeeping requirements should be required to contain spe-
cific fecord retention requirements. Billions of dollars of waste will be elimi-
nated,

Chairman McIntosh, Congressman Peterson, members of the Committee. Thank
you for this opportunity to testify on the Paperwork Reduction Act of 1995.

My name is Robert Coakley. I am Executive Director of C-RIM, the Council on
Regulate and Information Management. I also serve as Co-Chair, with Nancy
Fulco of the U.S. Chamber of Commerce, of the Paperwork Reduction Act Coalition.
My testimony today is on behalf of the Coalition.

Coalition is an ad hoc organization composed of some seventy-five trade, pro-
fessional, taxpayer, and citizen organizations which came together five years ago to
support development, passage, and enactment of strengthening amendments to the
Paperwork Reduction Act (44 USC 35) of 1980. Those amendments include reau-
thorization of appropriations for the Office of Information and Regulatory Affairs
(OIRA), an office within the Executive Office of the President created by the Con-
gress in the 1980 Act.

n organizations serve on the Coalition's steering committee and they and
their memberships have been most active and persistent in sup ting the evolution
of the bill before you this morning. They are C-RIM, the U.S. Chamber of Com-
merce, Citizens for a Sound Economy, the National Association of Manufacturers,
the National Federation of Independent Business, National Small Business United,
and the Small Business Legislative Council.

THE COALITION’S POSITION

Mr. Chairman, we are enthusiastically united in our support for this legislation.
As you well know, this legislation has its origins in H.R. 2995, the Paperwork Re-
duction Act of 1994, legislation whose primary sponsors in the last Congress were
Chairman Clinger and Congressman Sisisky, and whose provisions are presently
manifest in Title V, of H.R. 9, the “Job Creation and Wage Enhancement Act of
1995". We believe these amendments to the generic Paperwork Reduction Act (PRA)
are a vibrant and vital piece of the “Contract With America” that can be enacted
avickly and with overwhelming bipartisan suppor.

Moreover, passage of the PRA of 1995 will be an important. example of how the
new leadership in the Congress can help overcome the gridlock and frustration on
bills which promised commen sense regulatory relief to the American publie and en-
jyed strong bipartisan support. Recall that last Congress a full quarter of the entire
Congress, Democrats and Republicans alike, actively sponsored similar legislation.
The Senate passed the PRA of 1994 unanimously and President Clinton supported



48

in place At the Department of Agriculture, we recommended that officials halt, «
multibillion project to improve service to farmers called Info Share because senior
management was not involved in mani the project and essential
reengineering was not taking place before major invet nts were to be made.® At
the Bepartment of Defense fack of program management involvement and mupport
is one of several key reasons why the Department’s rate Information Manage-
ment initiative has not approached its projected potential to save billions of dollars.’
‘Section 3506 of the proposed legislation strengthens the accountability of the
agency head and program managers for information resources supporting their pro-
ms. Working with the designated senior IRM official and the Chief Financial Of-
cer, they are to define program information needs and develop strategies to meet
those needs As our case study research demonstrates, increasing program man-
agers’ accountability and involvement works because it focuses information manage-
ment decision-making and systems development activities on measurable mission
outcomes of strategic importance.

ESTABLISHING AN OUTCOME-ORIENTED FOCUS

The current, law also does not emphasize mechanisms for selecting, controlling, or
evaluating information systems projecta in ways that maximize value or effectively
manage risks. The legislation assumes that requiring agencies to prepare plans for
meeting the agency’s information technology needs would translate into real results.
Instead, leading organizations use well-defined processes to direct scarce technology
resources towards high-value uses. They use technology to assist in reengineering
critical functions, and then they carefully control and evaluate the results of infor-
mation systems spending through specific performance and cost measures, which
are monitored throughout the project.

Investment decision processes are in place to help executives prioritize among
competing projects, concentrate on choosing the right mix of technology projects to
meet critical mission needs, and evaluate proj versus realized payoffs. In this
Way, unexpected problems are surfaced quickly and resolved with focused manage-
ment attention. This helps reduce delays, cost escalations, and failure to meet busi-
ness and customer needs.

By contrast, government agencies often buy computer hardware before they evalu-
ate their current business functions, lack discipline and accountability for their in-
vestments, and fail to rigorously monitor systems projects for real results. Time and
again, we have found agencies using technology to simply automate existing ineffi-
cient and ineffective processes rather than focusing on how it can be used to achieve
better results and improve mission performance.

Poor information systems management has plagued efforts to improve some of the
government's most critical activities. For example, after more than 12 years and
costs exceeding $2.5 billion, the FAA has chosen to cancel or extensively restructure
elements of its problem-plagued Advanced Automation System. We attributed major
schedule delays and cost escalations to a host of managerial and technical factors,
including FAA's failure to (1) accurately estimate the technical complexity and re-
source requirements of the effort, (2) stabilize system requirements, and (3) ade-
quately oversee contractor activities.®

In another case, we found that the Veterans Benefits Administration (VBA) pro-
curement of $680 million in computers, communications equipment, and associated
commercial software products was proceeding before old processes had been rede-
signed or new performance goals set. In 1992, we determined that without any busi-
ness process reengineering, this substantial technology investment would potentially
eliminate only 6 to 12 days from the average of 181 days it took VBA to process
an original compensation claim?

Provisions in the proposed legislation also call for stre: ening processes that
agencies use to deci ir information technology expenditures and to set goals
for measuring progress in using information techno BY 19 increase productivity and
accomplish outcome-oriented results. Most importantly, Section 3506 requires agen-

Tax System Modernization: Status of Planning and Technical Foundation (GAO/T-AIMD/

OeESDA Restos ing: Refocun Info Share Progra
ring: focus Info Share on Business Processes Rather Than Tech-

7 See Meebo tiga pe ited Prone Impl am

fense nt Initiatives: Limit in Implementing Management Improve-
ment Initiatives (GAO/T-AIMD-94-105, Apr. 14, 1994). i meee pr

* Advanced Automation : Implications of Problems and Recent Changes (GAO/T-
RCED-94-188, Apr. 13, 11

SVeterans Benefite: uisition of Information Resources for Modernization Is Premature
(GAOAMTEC-93-6, Nov. 4, 1992).


20

Let me actually turn to one question in the risk assessment area.
There has been a proposal in the Senate, that Senator Dole has
worked on in that area, that would, among other things, grant cen-
tralized review of those risk assessments in OMB or perhaps an-
other entity in the White House. What is your opinion about that
concept in the risk assessment and cost-benefit analysis?

Ms. KaTZEN. I think the concept is sound. Centralized regulatory
review began with President Ford with his inflationary impact
statements and was carried through by President Carter and then
Presidents Reagan and Bush with Executive Order 12291.

There were questions about the legitimacy or the appropriate-
ness of centralized review, and one of the small successes that I
take some pride in is that in the 2 years that we have been in of-
fice under Executive Order 12866, which is President Clinton’s Ex-
ecutive order on regulatory review and reform, the issue of central-
ized review has rarely been raised. We have heard few, if any, chal-
lenges to the legitimacy or the appropriateness of centralized re-
view.

Our Executive order states that the agencies are the primary
decisionmakers, but it reaffirms the legitimacy, the appropriate-
ness, of an office—and it is my office in OMB—that provides the
guidance, that provides the review, that provides the oversight to
the agencies in carrying out their regulatory responsibilities. I be-
lieve that is now a noncontroversial issue. To the extent that the
Dole bill, and I know Senator Roth has dropped a bill on regulatory
reform, codifies the authority of OMB to review regulations, I be-
lieve that is appropriate.

Mr. McINTosH. Let me now turn to another strengthening provi-
sion that is similar to what Mr. Crapo was suggesting in the Pa-
perwork Reduction Act. In fact, let me ask you, under both authori-
ties, what would your view be to allowing judicial review so that
members of the regulated community would have some ability to
affect what the agencies are doing in these two areas?

Ms. KATZEN. As a lawyer who has practiced administrative law
for 30 years, I believe ‘hat the courts should be available to the
citizens. But I also note that in each and every Executive order
that has been written, including President Reagan’s, there has
been a bar on judicial review of this particular function. That is not
surprising. It is not surprising because there are a number of ave-
nues of challenging regulations, and if the cost-benefit materials
are in the record, they can be looked at as supporting—or not pro-
viding support for—the agency decision. But to enable review on
whether the agency has taken the procedural steps to assemble the
data, I believe opens endless opportunities for litigation.

In the area of paperwork reduction, I would note that there are
two areas of confusion that raised the issues the gentleman was
discussing. One is, I think, as a result of the Dole decision and the
extent to which some third-party disclosure documents are or are
not subject to review, and this bill would clarify and put that issue
to rest by providing that they are to be reviewed.

The particular suit that he was referring to—I believe he identi-
fied it as an instance—involved an Inspector General that under-
took an investigation and sent out questionnaires to obtain certain
information. Because the questionnaires were sent to more than 10


38

sion, however, it may be too difficult to administer and enforce. But it should cer-
tainly by established as a goal. With the continued increase in paperwork require-
ments imposed by new legislation, it is more important than ever that agencies look
at ways to reduce the gusting. paperwork burden requirements. Ten percent seems
like reasonable goa! to establish in light of the total paperwork burdens imposed
by the federal government on the American people and in light of the potential to
reduce burdens by the use of new information logies.

In the context of today’s testimony, I was asked by the Committee to comment
on the issue of risk essesement. While I am not an expert on risk assessment, I do
have some experience with the subject which leads me to the following recommenda-
tion. Risk assessment is a very controversial issue. But, if the Congressional objec-
tives of Title III of H.R. 9 are to be achieved, an agent of the President is d
to coordinate government-wide efforts. Risk assessment and the government-wide
management of risk assessment are two very different things. While risk assess-
ment should be left in the hands of the agencies and their staff and scientists, the
President needs to have someone properly staffed on the policy options representing
him to ensure use of standardized methodologies, to ensure integrity of the process
and to hear disputes between and among agencies. The Director of OMB is the log-
ical person to provide this support for the President for the government-wide man-

ment of risk assesaments.
conclusion, Mr. Chairman, a strong OIRA will ensure that agencies follow the
law and comply with such Congressional requirements as imposed through the Reg-
ulatory Flexibility Act, the Administrative dures Act and the Paperwork Re-
duction Act. Too often, agencies ignore the law. The American public want to see
that the law ie followed.

Mr. McINTOsH. Thank you very much, both Mr. Miller and Mr.
McIntyre. I appreciate hearing from both of you and the bipartisan
support for this effort. In fact, as I was listening to your testimony,
I was thinking back to the fact that merely 5 years ago these issues
would have been quite controversial, and in fact we have come a
long way, that we have developed this consensus in the effort to
reduce the regulatory and paperwork burden on the private sector.

I will reserve the rest of my time for questions after my col-
leagues if they haven’t been addressed by then.

Let me turn now to Mr. Peterson. Mr. Peterson has no questions.
Let me turn to Mr. Fox.

Mr. Fox. Thank you, Mr. Chairman.

I would first ask that, to either gentlemen, some advocates of the
paperwork reduction have called for a mandatory 5 percent reduc-
tion of the paperwork burdens each veer in lieu of the 5 percent
goals in the current legislation. Would a mandatory 5 percent re-

luction be achievable in your opinion, or should it be a greater per-
centage?

Mr. MCINTYRE. Well, I am not sure that you can achieve a man-
datory reduction. I think that is an important question. I think,
however, it is important to set a goal, and as I said in my testi-
mony, I think a 10 percent goal is reasonable.

The problem that I have with the mandatory requirement is that
often it is very difficult to measure first of all, to have good meas-
ures of what the actual paperwork burdens are, and then how do
you reduce those, but also it is important to recognize that Con-
gress, like through the Clean Air Act amendments of 1990, puts
tremendous paperwork burdens on agencies, and I think there are
some real problems with trying to enforce a mandatory require-
ment. .

What do you do if an agency doesn’t comply, for example? Do you
fire the head of the ‘agency? There are Guat some real Droblems, I
think, in administering it, but I do think having a goal is impor-
tant, and having an agency that can address whether or not the


69

to have always been that the best regulation is the least regulation or even no regu-
lation, despite sometimes overwhelming evidence to the contrary.
Despite this unfortunate record at OMB, the legislation bebore you today would
give JMB sweeping new authority to interfere with the obligation of employers to
isclose information to their workers about safety and health risks in the workplace.
Under the legislation, OMB’s review authority would be extended to all information
required to be disclosed to third parties and the public.
justice Brennan observed in his opinion in the Dole case:

Among the regulatory tools available to government agencies ch
with protecting public Health and safety are rules which require regulated
entities to disclose information directly to employees, consumers, or others.
Disclosure rules protect by providing access to information about what dan-
gers exist and how they can be avoided.

1k is absolutely clear based upon the history of the past 14 years that this change
in the law will inevitably have a chilling effect upon the willi and the ability
of regulatory agencies to impose disclosure jirements in the future.

It is wrong both morally and as a matter of public policy not to tell a steelworker
in Wheeling, an oil worker in Houston, or a manufacturing worker in Chicago when
they are at risk from known toxic or hazardous materials in the workplace, espe-
cially after the agencies have followed a lengthy rulemaking process,

Chairman, lets not forget the extensive procedural safeguards which alrea
exist in current law before an agency can promulgate a finel rule. Each agency's
organic law sets out the scope of that agency's regulatory jurisdiction and often sets
Timits on the extent of its regulatory authority. Whenever an agency proposes a
Graft propocal, itis usually after there has been considerable publie demand for ac
tion. Under existing executive orders as well as the PRA, draft proposals and draft
rules are subject to review by OMB. Assuming that this initial hurdle is successfully
overcome, another set of procedures under the Administrative procedures Act must
be followed. These include publication of a Notice of Proposed Rulemaking in the
Federal Register, providing for notice and comment. The agency must then review
the docket of public comments and take these comments into consideration before
drafting its final rule. The final rule is once again subject to review by OMB. Agen-
cies must also pay attention to the requirements of the Regulatory Flexibility Act
and other executive orders as well.

It is clear that regulatory agencies are not simply proposing unwanted or unwar-
ranted rules given this lengthy and costly review process. More often than not, regu-
lations ere proposed because there is a clear need. These review procedures may
take years. ’s confined space rule took 17 years to implement from the time
it was first initiated, The Hazard Communication Standard, originally developed in
1974, was not fully extended to all workplaces until 1987.

Overturning Dole does not facilitate the dissemination of important health and
safety information. Instead, it makes it easier to keep people in the dark about risks
to their health and their lives.

Overturning Dole does not make government smaller, more efficient, or more ef-
fective. Instead, it reaffirms OMB’s role as a superagency of the Federal government
that can substitute its non-scientific political or economic judgments on urgent is-
sues of workplace health and safety.

Aside from overturning the Dole decision, this legislation js flawed in other ways
as wel

For example, it includes an expanded, overly-broad definition of what constitutes
a paperwork burden to include “time, effort, and financial resources expended for
organizing, installing and utilizing technology and systems” in addition to resources
necessary to review and complete information collections. Thus, practically all costs
of regulatory and statutory compliance with requirements such as workplace mon-
itoring of toxic chemicals or environmental releases would be considered to be a pa-
perwork burden that must be minimalized. Again, OMB would have the authori
to determine if such measures have practical benefits and should be scaled bac
even though other statutes might specifically require such measures. Again, OMB
should not be put in the position of making such determinations where it clearly
lacks the expertise to make sound decisions. These decisions should properly be
made at the regulatory agencies.

Another problem with the bill as drafted is that it fails to balance the paperwork
burden reduction with the benefits which may be derived from information collec-
tion. There is every presumption in the bill that regulations and reporting require-
ments impose unnecessary burdens. Unfortunately, there is very little recognition
of the benefits derived from information collection. Information collection is viewed



H.R. 830, PAPERWORK REDUCTION ACT AND
RISK ASSESSMENT AND COST/BENEFIT
ANALYSIS FOR NEW REGULATIONS

TUESDAY, FEBRUARY 7, 1995

House OF REPRESENTATIVES,
SUBCOMMITTEE ON NATIONAL ECONOMIC GROWTH,
NATURAL RESOURCES, AND REGULATORY AFFAIRS,
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
Washington, DC.

The subcommittee met, pursuant to notice, at 9:37 a.m., in room
2154, Rayburn House Office Building, Hon. David M. McIntosh
(chairman of the subcommittee) Presiding.

Present: Representatives McIntosh, McHugh, Fox, Scarborough,
Ehrlich, Tate, Peterson, and Spratt.

Also present: Representative Clinger [ex officio], and Representa-
tive Collins [ex officio].

Staff present: Mildred Webber, staff director; Kevin Sabo, chief
counsel, full committee; Jon Praed, chief counsel; Karen Barnes,
press secretary; and David White, majority clerk.

Mr. McINTOSH. A quorum being present, the hearing is now
called to order.

Thank you all for coming and joining us today. I wanted to say
thank you in particular to Chairman Clinger and Mrs. Collins for
coming.

Today we will be looking at a couple of the regulatory reform
measures included in the Contract With America—chiefly the Pa-
perwork Reduction Act, which finds its home in this committee,
and Title III of H.R. 9, the Job Creation and Enhancement Act of
1995. This act imposes risk assessment requirements on agency
rulemaking.

Reauthorization of the Paperwork Reduction Act is long overdue.
It has not been reauthorized since 1986 and has been expired, in
effect, since the beginning of this decade. I was shocked to find that
the predecessor of this committee, the Government Operations
Committee, had not even held an oversight hearing on the act for
well over 3 years. In view of the paperwork burdens imposed on in-
dividuals and taxpayers, overseeing the implementation of this act
will be a high priority of this committee during this Congress.

On Monday of this week, Chairman Clinger, Congressman Sisi-
sky, and I introduced H.R. 830 designed specifically to reauthorize
the Paperwork Reduction Act and strengthen the Office of Informa-
tion and Regulatory Affairs, an office in OMB that I have high re-
gard for and feel is necessary in order to reduce paperwork and

@


72

I have brought with me today just two examples of the paper-
work burden that has been placed on our company. The first exam-
ple is in my hand. I am holdin a single copy of KGL's 1994 affirm-
ative action plan. It totals 415 pages, and. it weighs 4% pounds.
The reason this plan is so large is because the EEOC would not
not accept our plan until we set minority employment goals at from
5 to 7 percent. However, the minority population of Shelbyville, IN
is less than 2 percent. Each year we make a sincere effort to fulfill
all of the steps outlined in this plan, and I want to accentuate, we
try to fulfill the plan, but each year we fall short of our goal, 80
each year our plan becomes more complex and we do more and
more paperwork.

The second example is the MSDA, the material safety data sheet.
We are required to have these forms on all material we purchase
and to keep multiple files within easy access of all our employees
and to send them to all of our customers who request the forms.
Even though our bags contain no hazardous material, our cus-
tomers request this form to complete their files for OSHA inspec-
tions. As you can see, the MSDS for plain reclosable bags that con-
tain no hazardous material is 5 pages long. This is one of them.

The burden this and all the other Paperwork requirements place
on small business is severe. The price of every bag we sell is higher
because of the cost of these paperwork requirements. Since our for-
eign competitors don’t incur these costs, their prices are lower and
they enjoy an even larger share of our domestic market.

The second impact the paperwork burden has is that it dimin-
ishes our already limited resources. Our time, money, and creativ-
ity needs to be invested in new and improved products, not wasted
on paperwork that has no value to anyone.

1 ank you for listening to me, and may I answer your questions,
please.

Mr. McINTosH. Thank you very much, Mr. Stolmeier.

As you may have gathered from Mr. Sheehan’s testimony, the
material safety data sheets were a subject of the lawsuit that ques-
tioned some of the Paperwork Act. Could you share with us some
of the requirements, things that you are required to disclose about
your plastic bags in that material data safety sheet?

Mr. STOLMEIER. Well, I can begin at the beginning. It says sec-
tion 1. It is supplier information. Section 2, hazardous ingredients
and the percentage of those. There’s none. Section 3, physical and
chemical characteristics; boiling point, not applicable; vapor pres-
sure, not applicable; vapor density, not applicable. And then we go
into the specific gravity, point 092, point 091 to 096. It goes into
all of the data that exists on this bag, and'I can’t tell you I’m famil-
iar with every one of these, you know; it is our engineers that put
this together.

But the problem that arises is, someone could simply say, “Well,
why is all this done?’ Obviously this bag isn’t going to hurt anyone.

ur customers are required by OSHA to keep files of all of the
material. The customer doesn’t want to take the chance that OSHA
is going to come in and say, “Do you—you know,” “Is there hazard-
ous material here?” And if the inspector says, “Well, how do I
know? How do I know?” If you don’t have the data sheet, you can’t
prove to the inspector, you will be in violation, and you could be


71

tially more reliable methods of determining the impact, effectiveness, and appro-
priateness of regulations.

Averaging a particular risk across the whole population may yield a very different
int tion of data than if it is aver: across subsectors of the population
which face high exposure. This could result in erroneous decisions not to regulate
or to issue regulations which are too weak even though high exposure communities
would face a disproportionate number of illnesses or deaths. Any movement toward
standardizing regulatory methodologies would thus be inappropriate.

‘A “one size fits all” philosophy is not practical or wise in a society and economy
such as ours where some of the most dangerous threats to workers’ health and safe-
ty are unseen and difficult to detect. Currently, agencies are free to use different
assumptions and models, consistent with the variety of laws and regulations for
which they are responsible.

Placing undue weight on risk assessments and cost-benefit analyses threatens to
open a Pandora’s box of ethical as well as political questions:

© Do risk assessments and cost-benefit analyses serve to bring government of-
ficials and citizens closer together in the search for solutions to pressing prob-
lems or do they simply remove officials even further from the real life daily con-
cerns and problems of the American people?

« Will workers be afforded regulatory protection in some industries where it
is more affordable but not in others where it is more costly?

Will certain workplace risks be condoned as being simply unavoidable or too
expensive to eliminate?

© What level of workplace injuries or fatalities will be considered acceptable
after analyzing risks, costs, and benefits?

These are real questions which concern steelworkers and all American workers.
I hope, Mr. Chairman, that these questions will also be of concern to you and the
Members of the Subcommittee. We urge you to proceed with caution and great care.
The health and lives of millions of Americans depend on it.

Thank you.

Mr. McINnTosH. Thank you very much for your testimony, Mr.
Sheehan.

Let me turn now to our final witness and welcome Mr. Stolmeier.
I particularly appreciate hearing the perspective of citizens, as I
have stated often in conducting the business of this subcommittee.

Mr. Stolmeier.

Mr. STOLMEIER. Thank you, Mr. Chairman. It is an honor to be
invited here to testify.

As you mentioned, my name is Robert Stolmeier. I am president
of KCL Corp. in Shelbyville, IN. KCL is a privately held small busi-
ness that was founded in 1906, almost 90 years ago.

Through a process of extrusion, printing, and conversion, KCL
manufactures reclosable plastic bags, commonly called Zip Lock
bag, and I have several here if you would care to see what our
product looks like. We employ about 375 people in the United

tates and about 100 in Canada. Our largest plant is unionized
and pays an average rate, including fringes, of about $14 an hour.
In the United States market, KCL competes with several multi-bil-
lion-dollar domestic companies as well as many small Asian compa-
nies who have little overhead, no OSHA, no EPA, no EEOC, no
OFFCP, and they pay their employees pennies per hour.

Although KCL is classified as a small business, our 375 employ-
ees make us large enough to be subjected to the paperwork require:
ments of virtually every law and regulation put forth by Federal,
State, and local Government. Paperwork requirements put forth by
OSHA and IOSHA, by EPA and IDEM, by the EEOC, by the
OFFCP, and by the IRS and the Indiana Department of Revenue.
These requirements are, in fact, a tax on KCL. They are unfunded
mandates which absorb a portion of KCL’s limited resources.


14

to be if they don’t have to do that?” You have to get almost every
part of the organization.

We have had to remake our business in the last 6 years. We have
gone from an industry that was controlled by patents and didn’t

ave any foreign competition to one that is wide open to foreign
competition. Prices of our product are half what they were 5 years
ago, half, and we have to make more and more product at less and
less cost, and we have to do it efficiently.

We had terrible data processing 10 years ago. Today we can give

‘ou a price instantly. You call up for a custom bag, and you have
it immediately. We will punch it in the computer and tell you right
now what is available, when it is available, and when you are going

t it. I don’t understand why somebody who is spending billions
an billions of dollars can’t do it a heck of a lot better than I can
lo it.

Mr. McINTosH. Thank you. We are all wondering that.

Mr. Sheehan, let me ask you quickly: You touched upon it briefly
in the summary of your remarks, but you found that the ability to
challenge the Paperwork Reduction Act was helpful in furthering
your views about its overreach. Would you, on the other hand, limit
the ability of others who might challenge decisions under that act
or under related acts for risk assessment to be able to have access
to the judicial system to stand up for their point of view and chal-
Tenge e agency’s decisions?

ir. SHEEHAN. First of all, I was thinking about the comments
that were just made there. If you don’t mind, I would like to say
something with regard to that.

However, your direct question was that we had experience in
challenging the Paperwork Reduction Act. I don’t know that we did
challenge the Paperwork Reduction Act at all. What we did was go
to court because of a decision by OMB, which prohibited OS!
from requiring that there be a disclosure to the workers in the
workplace.

But the comment that I would make directly to you, Mr. Chair-
man, is that we are very well aware that judicial review of regu-
latory agencies is a hazard for rulemakers and those for whom the
rules are being made. However, it is part of the due process, and
I don’t think you can change the Administrative Procedure Act to
limit or even exclude judicial review. But under the proposed Pa-
perwork Reduction Act, the action of the Administrator of the OMB
in deciding whether certain information should be disclosed or not,
is itself not subjected to judicial review. Why not?

heard Mr. Miller earlier say that he would subject OMB to judi-
cial review only if the procedures were not followed but their deci-
sions should not be subject to judicial review.

OSHA, for instance, is subject to a dual review procedure: first
where an OMB procedure is not followed and; second, based on the
evidence on the record, when a final rule or standard is promul-
gated. So in a way you have a double standard there.

But I think you have to be very careful that what you are put-
ting into this act is so prescriptive that OMB or the agency itself
can be challenged all up and down the line.

But if you will let me just make one comment here, and I will
make this very brief.


31

Mr. James McIntyre is an attorney with McNair law firm and
served as the OMB Director during the Carter administration.

Thank you both for joining us today. I welcome both of you and
ask, if possible, for you to summarize your written statements.

e staff is reminding me that I have been negligent in one of
my duties, and that is swearing in the witnesses. Please don’t feel
that because we are beginning with you that we have any reason
to doubt your veracity. It is merely an omission on my part with
the earlier witness, Ms. Katzen, although I am sure we can all
agree that her veracity is without question.

If you would both rise please.
jitnesses sworn].

Mr. McINnTosH. Thank you both.

Mr. Miller, would you please begin.

STATEMENT OF JAMES MILLER, CHAIRMAN, CITIZENS FOR A
SOUND ECONOMY; AND JAMES MCINTYRE, ATTORNEY,
MCNAIR AND SANFORD, P.A.

Mr. MILLER. Thank you, sir. I am glad to have an attorney
present at my left elbow, and a very distinguished one at that.

ank you, Mr. Chairman.

I have a statement that I have provided for the committee and
would ask that that statement be included in the record.

Mr. McINTOSH. Without objection, it shall be done.

Mr. MILLER. Well, sir, I am delighted to be here. This is an ex-
tremely important topic, and I am delighted to be here with my
friend, Jim McIntyre.

As you know, the Paperwork Reduction Act is not a matter of
partisan interest, it is of considerable bipartisan interest. In fact,
the Paperwork Reduction Act was the last bill passed by Congress
that was signed into law by President Carter. It came into Being
under President Reagan, and established, among other things, an
Office of Information and Regulatory Affairs. I was the first Admin-
istrator of that office, and Ms. Katzen is the latest.

Whether you are a Republican or a Democrat, it seems to me
that it makes sense to reauthorize the Paperwork Reduction Act.
Indeed, let me say I think it would be incumbent upon Congress
to give the PRA permanent authorization. I note that in this legis-
lation—if I understand it correctly—you fold the Office of Informa-
tion and latory Affairs into OMB as a permanent arrange-
ment. I think it makes sense to give it a permanent lease on life.

I think from my experience—and there are people like Wendy
Gramm and others who could probably comment on this to more
effect, having lived with the sort of hiatus on reauthorization for
a while—that it sort of puts OIRA at something of a disadvantage
vis-a-vis the agencies it has to deal with to be in a bit of limbo.
Sometimes agencies tend to encourage that state of limbo for OIRA.
To the extent that OIRA has to fight on several fronts, their effec-
tiveness in dealing with the agencies is somewhat compromised.

So I would urge you to move forward with the reauthorization of
the Paperwork Reduction Act. Give it a permanent authorization,
make it part of OMB, and have the OMB Director more directly re-
sponsible for its budget and its affairs is not a bad idea, in my
judgment.


17

jing the electric vehicle or the alcohol fuel tax credit? The Bureau of
Alcohol, Tobacco, and Firearms before it restricts the sale of a type of explosive? The
Department of Transportation before it issues mirror equirementa to help school
bus drivers see children near the bus? The Occupational and Health Admin-
istration before it can protect the forklift drivers who are crushed in roll over acci-
dents because of inadequate traini:

In some areas, Co: has spoken about factors that agencies are to consider
in issuing health, safety, and environmental lations, and it has done so clearly.
It has, on occasion, explicitly or implicitly precluded the consideration of cost and
risk in decisionmaking. The Delaney Clause and technology-based standards are two
examples. In those instances, what is served by requiring an agency to per-
form a full-blown risk assessment Gncuding a discussion of laboratory and epide-
miological data and of comparative animal and human iology, routes of expo-
sure, bioavailability, and pharmacokinetics; a presentation of plausible and alter-
native assumptions, a full description of the model used in the risk assessment and
the assumptions incorporated therein, and a indication of the extent to which this
model has been validated by empirical data; a statement of the reasonable range
of scientific uncertainties; a best estimate of risk; an explanation of the exposure
scenarios employed by the risk analysis; comparisons to other health risks; and an
analysis of any substitution riaks), to assess costs and benefits, to make the required
certifications, to conduct an external review, and to prepare a written response
to the peer review panel's comments? In such instances, we believe Title III would
serve only to increase costs, delay agency action, and, in the last analysis, make the

foo!

federal government .

Even in those circumstances where the underlying statute does not preclude con-
sideration of cost and risk, the requirements in Title III are too broad and undif-
ferentiated given the different missions of different agencies. For example, the focus
of several of Title II's provisions appears to be on cancer risks. That may be rel-
evant to EPA’s regulation of toxic chemicals, but does it make sense when evaluat-
ing OSHA’s regulation of safety hazards in the construction industry, FEMA’s regu-
lation of fire and flood hazards, or the DOT's side impact standards for auto safety?
What purpose would be served by requiring the FAA, in determining whether an
airplane should be grounded because of icing problems, to “explain the exposure sce-
narios” used in ite risk assessments, and the Department of Commerce, in regulat-
ing fisheries, both to compare the risk of fish depletion to six other risks and to
issue a statement of the human health risks its regulation could potentially create?

The excessive breadth of Title IT's one-size-fits-all risk assessment model is also
reflected in the many ways its provisions would be triggered. For example, under
Section 3103, every time an agency res a risk assessment (except in emer-
gencies or for screening analyses), it would have to do so according to iled risk
assessment standards. And Section 3105, which dictates how risk characterizations
are to be made, applies every time an agency makes a document characterizing
risks available to public. There is no distinction based on the significance of the
decision or the use to which the risk assessment is being put, But does it really
make sense to go through the full drill in every instance? Would there not be some
cases where the cost of following these detailed procedures would overwhelm the
benefit to be derived from the riek assessment?

We have noted that Subtitles B and C, which require risk and cost/benefit analy-
ses, and peer review, respectively, do include dollar thresholds. As drafted, agencies
would have to do risk and cot efit an: 8 for any regulation with an annual
effect of over $25 million. For peer review, threshold is $100 million—unless it
is a final rule under Section 3201(aX5XA) and the agency has received relevant in-
formation from interested ties, in which case the threshold falls to $25 million.

In ring Executive Order ‘No. 12866, the Administration consciously selected
$100 million Se the threshold for requiring a cost/benefit analysis, having deter-
mined that the resources devoted to regulatory analysis should be commensurate
with the significance of the regulatory decision to be made. There were suggestions
at the time that the threshold should be higher, since 12 years earlier President
Reagan’s regulatory review executive order had drawn the line at $100 million. Now
Title III would set the threshold at a quarter of the level President Reagan selected

14 years ago.

‘Conside® also that the requirements of Subtitles B and C can be red below
the specified threshold if the regulation ia likely to result in a “major increase” in
prices or would have “significant adverse effects on competitiveness, employment,
investment, productivity, innovation, or on the ability of the United States to com-
pete with foreign” enterprises. Who is to determine what constitutes a “major” in-
crease or a “significant adverse affect” on innovation? Is it the agency? Or is it the
regulated industry? A proposed regulation could cause an industry to be faced with

lations concerni



23

FY 1995—Continued
laformation Technology Mork-yuas Reqd

jem in Fie's

RRB 282
FEMA 208
nD 183
sec 166
Poo 152
SMITHSONIAN 182
mc 135
MARA 7
sss 100
SBA 96
Foc n
NSF 58
ol 49
EEOC . rn
A. a
rte 2
rr 2
PEACE CORPS 2
A ry
UsiTe 2
MR cy
crs “
ec un
acoA 10
122,413

EXCERPTED FROM OMB A-11 SECTION 43.
DEFINITIONS
Personnel—Work-years for civilian and military personnel compensation, person-

nel benefits (including overtime/shift pay) and travel for personnel whose cipal
duties are directly releted to information technology systems. Agencies should report
work-years based on their best estimate of the time spent on information techno
functions by all personnel connected with these functions (e.g., policy and manage-
ment, systems development and operations, telecommunications, computer security,
contracting, secretarial support, etc). If user organizations have personnel pria-
cipally assigned to information technology support functions for the user organiza-
tion, work-years for these personnel should be included. However, work-years should
not be reported for personnel in user organizations who simply use such systems
incidental to the performance of their primary functions.

Mr. PETERSON. The other thing I would like to know is, what
kind of a background do these people have that do this?

Ms. KATZEN. The qualifications will range from those with ad-
ministrative experience generally.

Mr. PETERSON. What does that mean?

Ms. KATZEN. Used to running programs, management, analysis.

Mr. PETERSON. Government programs?

Ms. KaTZEN. Government programs.

Mr. PETERSON. I hate to interrupt you, but maybe we ought to
require that they have never served in government before they
serve on these things, It might bring a different perspective to
things.

Ms KATZEN. Well, we have instituted a couple of changes. One
you mentioned in your opening statement, and that is the use of
technology. On the form that the agencies have to submit to us—
and we have streamlined that form consistent with paperwork re-
duction—we have asked them to identify the extent to which they


19

Jored to the types of risks they address and the relevant sciences that are involved?
The plan could be made available to the pul lic and could indicate which type of risk
assessments would be subject to peer review, whether external or internal.

3. Other Issues

Unfortunately, Title III not only emulates some of the most undesirable tech-
niques used in our current regulatory system, but it also creates seemingly endless
analytic loops that could introduce ‘additional inefficiency and delay in the rule-
making process, Section 3201(aX3), for example, requires that each proposed or pro-
rulgates rule be accompanied by, among other things, a statement of “other human
health risks potentially posed” by the rule and each regulatory alternative to it. This
requirement is wholly open-ended: must the agency list all health risks each alter-
native could create, no matter how unlikely or remote these risks may be? Then con-
sider that a statement of other health risks is itself a risk characterization and con-
sequently must also be prepared and presented according to the detailed require-
ments set out in other parts of Title III.

The objective of risk legislation should be to improve the regulatory process,
to create unproductive paper record requirements or additional opportunities for
gation. Title III, however, does the latter. Because Title III does not preclude judi-
cial review, the Administrative Procedure Act, which authorizes judicial review of
final agency action, would apply. Section 3301(e), moreover, explicitly makes peer
reviews and agency responses to peer reviews part. of the administrative record “for
purposes of judicial review of any final agency action.” Presumably then, both an
agency's compliance with each of the bill’s procedural steps and the content of the
agency’s risk and cost/benefit analyses could become the subject of court challenges
once a final rule is promulgated. That would be unfortunate, as it would likely re-
quire the Federal agencies to spend added time satisfying (with the extra margin
needed to assure affirmance in court) each of Title III’s many steps, and producing
even more paper and an even larger record—efforts that would take a good deal of
time without producing sounder regulations.

re closing, it is important to note that although Title III alone is before this
Committee, it is only one piece of a larger bill. As you consider our testimony on
Title III, the Judiciary Committee is about to take up Title VII, “Regulatory Impact
Analyses.” Title VII requires each agency, before proposing or Jesuing a lation,
to go through 23 analytical steps to perfect the regulatory impact analysis. Step six
is a statement that describes and quantifies the risks to human health or to the
environment; step seven is a cost-effectiveness requirement; step eight is a descrip-
tion of alternative approaches considered by and suggested to the agency; and ste)
10 and 11 require an estimate and evaluation of costs and benefits. These are the
same analyses that are to be performed under Title Ill. Is the agency to do it twice?
There are some differences in these Titles, such as different t] ids. How are
these to be reconciled? We would ask you to consider Title VII carefully when you
take up Title Ill, just as we will ask the Judiciary Committee to consider what is
in Title III when it takes up Title VII.

If the layering of the regulatory process with complicated requirements were
gostlens, we would not object so auch to the prescriptiveness and inflexibility of
Title II. But we must be clear about what is at stake. The effect of the require-
ments of Title III, whether taken alone or in conjunction with Title VII, is not to
bring sound science to bear on regulation, but to load on the regulatory system so
much that it cannot move forward, retarding substantially our ability to take sen-
sible steps to protect human health and human safety and the environment while
creating more bureaucracy, more paperwork, and less efficiency in government.

Because it is too broad, too prescriptive, too costly, and too inviting of additional
litigation, the risk assessment and cost/benefit provisions of H.R. 9 would cause far
more problems than they would solve. It remains my hope, however, that we will
be able to work together to help to bring the American people a rational regulatory
system that protects our health and safety and the environment on the basis of
sound science, without imposing undue costs and burdens.

not

. * . . .

Thank you for the opportunity to testify. I look forward to working with you coop-
eratively to help enact into law meaningful and helpful improvements to the Paper-
work Reduction Act. I also look forward to working with you to develop sound pro-
posals for developing better quality and more effective regulations. I weleome the
opportunity to answer any questions you may have.

Mr. McIntTosu. Thank you very much, Ms. Katzen.


32

On the issue of risk assessment which is Title III of H.R. 9, I
think it would be a good idea to approve Title III as well as Title
VII which I testified on yesterday. I think risk assessment is a very
good idea. The only suggestion have there is to make it an inte-
gral part of the centralized review process. If I read Title III cor-
rectly, it essentially requires risk assessment to be done but does
not make it part of the review process.

Now, there are two reasons to have it as part of the review proc-
ess. One is to help have some outside monitoring of the agencies’
compliance with the review process. But I also think it extremely
important that the agencies begin to make decisions about what to
regulate based on what those risk assessments show. That is to say
that I think we can agree that while there is excessive regulation
in many areas, there are areas of regulation the agencies don’t ad-
dress where the benefits of regulation are considerable as related
to their cost. Failure to make decisions and establish priorities ac-
cording to what those risk assessments show means that the Fed-
eral Government is passing up opportunities to protect citizens at
very little cost in some areas. So, it may sound strange—coming
from me—that I am suggesting that Federal Government do a bet-
ter job when it does regulate, but I think that if you were to amend
Title III to make risk assessment part of the centralized review
process, I think it would tend to improve overall rulemaking and
improve the cost-effectiveness of Government regulatory activity.

Mr. Chairman, that is all that I want to say in opening remarks,
and I would be glad to respond to your questions and those of other
panelists, and I am anxious to hear what my friend, Jim McIntyre,

as to say on these issues.

[The prepared statement of Mr. Miller follows:}

PREPARED STATEMENT OF JAMES MILLER, CHAIRMAN, CITIZENS FOR A SOUND
EcoNoMY

Good morning. Mr. Chairman and Members of the Committee: Thank you for the
opportunity to present the views of Citizens for a Sound Economy, a 260,000 mem-
ber advocacy group that promotes market-based solutions to public policy problems,
As you may Know, I was the first Administrator of the Office of Information and
Regulatory Affaire (OIRA), a post established under the Paperwork Reduction Act.
Thus, I have a strong interest in reauthorizing the Paperwork Reduction Act as well
as implementing the other regulatory reforms, included in the “Job Creation and
Wage Enhancement Act of 1995,” (H.R. 9). In addition to a strong Paperwork Reduc-
tion Act, improved tools for conducting benefit-cost analysis and risk assessment are

ired to eliminate unnecessary regulations that do not provide benefits commen-
surate with their costs,

Federal information requests impose a burden of more than six billion hours on
consumers and businesses. The costs of excessive regulations and paperwork present
a significant obstacle to economic growth while raising consumer prices and unnec-
essarily restricting consumer choice.

REAUTHORIZING THE PAPERWORK REDUCTION ACT

The Paperwork Reduction Act was first passed in 1980 with strong bipartisan
support Under the leadership of former Senator Lawton Chiles and former Rep-
resentative Frank Horton. As signed into law by former President Jimmy Carter,
the primary objective of the act was to minimize the federal paperwork burden im:
osed on the general public. To this end, the Office of Information and Regulatory

ffairs was established to review agency information collection requests and to
eliminate any unnecessary or duplicative burdens. The act set specific goals for pa-
perwork reduction, with federal agencies required to reduce the paperwork burden

y five percent the first year; additional five percent reductions were required for
each of the three following years.


14

(including 48 of 49 in OSHA), 12 of 720 at HHS, and 2 of 235 at EPA. This
accounts for a change of approximately 89 million burden hours?
In the wake of the GAO report, various bills were introduced to make explicit what
the proponents, thought was the original, congressional intent--namely, to bring
third party disclosures under the Paperwork Reduction Act review process,

D. Implementation of the Paperwork Reduction Act

The Paperwork Reduction Act has provided a way to measure trends in, paper-
work burden and to monitor progress across agencies. In the first years after the

assage of the Act, agencies made considerable progress in reducing paperwork bur-

see, 12.8% in 1982 and 10% in 1983). r these early efforts, however, the
paperwork problem proved to be more intractable. The governmentwide burden esti-
mate increased each year, despite specific reductions by various agencies each year.
Some of the increases came from new statutory requirements. Other increases came
from agency reevaluation of existing estimate biggest increase in the late
1980’s and early 1990's came from a recalculation of burden hours by the Depart-
ment of the Treasury (primarily IRS) not because of new burdens imposed on the
public. Indeed, from 1988 to 1993, the non-Treasury burden hours remained rel-
atively flat.

‘As part of this Administration's commitment to improving the regulatory system,
fe have stepped up our efforts to evaluate ageney need for information collected
from the public.’ In November 1994, we updated the form and instructions that
agencies use to submit an information collection for our review and approval. We

ically added to the instructions a requirement that, for revisions or extensions
of existing information collections, the ageney “indicate’ the actual use the agency
has made of the information received from the current collection.” This enables us
to ensure that agencies have used the information they have previously collected;
if not, we are prepared to disapprove its continued collection. In addition, to encour-
age the collection of information by electronic means, we have asked agencies to
identit
cally.

on this form the percentage of responses that they plan to collect electroni-

E. Legislative Efforts in the Last Congress

At the beginning of the 103rd Congress, two bills were introduced in the Senate—
S, 560 by Senator Nunn, and S. 681 by Senator Glenn. A large number of House
Members, on a bipartisan basis, introduced the counterpart to S. 560 as H.R. 2995,
‘That bill is now found in H.R. 9, Title V. While the House of Representatives did
got act on H.R. 2996 in the 103rd Congress, the Senate did mark-up and then pass

The process during the 103rd Congress built a bipartisan consensus that can lead
to a significant improvement in the Paperwork Reduction Act. S. 560 as introduced
(the same as H.R. 9) Title V) contained a number of provisions designed to strength.
en the paperwork clearance process. These included redrafting definitions explicitly
to include third party disclosure; the continuation of the five percent paperwork bur-
den reduction goals; and a more explicit statement of agency paperwork clearance
responsibilities, including a specific responsibility to consider, for small business, es-
tabli nt of differing compliance or reporting requirements that take into account
the resources available to respondents. S. 681 focused more on the need for agencies
to strengthen information resources management. It established policy standards for
information dissemination; strengthened OMB statistical policy oversight; and in-
cluded a number of designed to ensure better integration of information pol-
icy management in the electronic age.

Staff of the Senate sponsors of both bills, working together collaboratively with
OMB, GAO, and other interested groups, sought to identify the best features in each
of the bills, and to build upon them. Their goal was to create, synergistically, a re-
codification of the Paperwork Reduction Act that is more effective and stronger than
either bill individually. The Administration actively supported this effort, and even-
tually announced its support for Senate passage of this produet, which retained the
number S. 560.

S. 560, as passed unanimously by the Senate last October, embodied not only the
principal improvements found in both S. 560, as introduced, and in S. 681, but also
a number of other improvements.

®“Paperw Reduction: Agency Responses to Recent Court Decisions,” GAO/PEMD-93-6

cts ry Pp.
*It is Tindefetanding that the fact that a fow provisions included in H.R. 2995 do not ap-
pear in H.R. 9, Title V, was an inadvertent oversight.


73

fined, Now maybe on that they wouldn’t be fined, maybe the:
would go out and find it, but the reality is, everybody ends up with
material data sheets on everything.

The raw material that we receive—that is what we make our
product out of—is called polyethylene resin. It is FDA approved for
direct contact with food. You could eat it. I wouldn’t recommend it.
It wouldn’t hurt you, unless you ate too much of it, I suppose.

This is the material safety data sheet that we receive from the
supplier, and we buy it only from large companies, and it is, I don’t
know how many pages, I didn’t check the number. It is 6 pages
long, and it goes into very interesting things: For example, what
to do if there is respiratory discomfort or irritation occurs. Move
the person to fresh air. It sounds reasonable. I don’t know that I
need a Government regulation to tell me to do that. Our laws—and
these regulations are so oppressive that they affect everything. It
isn’t done by exception. It involves everything we do.

Mr. MCINTOSH. So you are at risk of receiving a fine if you don’t
have exactly the right paperwork?

Mr. STOLMEIER. Absolutely, and we are inspected by IOSHA peri-
odically, and they come in and check those files.

Mr. McInrosH. Let me ask you this, and it may be difficult to
calculate, but could you estimate the effect if, say, those two and
maybe some other paperwork requirements that you are aware of
were reduced in your business, would that affect your ability to
hire new employees?

Mr. STOLMEIER. It couldn’t affect our—well, it would affect our
ability, because what we would do is redirect that investment. We
wouldn’t let anybody go, but, as I said in my comments, we would
direct that to developing new and improved products, which in-
creases employment, which increases the amount of goods and
services we can put out into the marketplace that people buy. It
is a question of just redirecting the effort at this point.

It saps your strength, is what it does, and it saps the ability to
have an organization fired up to do what it needs to do. Today in
listening—frankly, in listening to some of the agencies about the
IRS that can’t accept, you know, electronic data processing, I mean
that is appalling for a taxpayer to come to Washington and listen
to that. I have to tell you that.

Mr. McINTOSH. Would you be able to survive in the marketplace
if you had such limitations?

ir, STOLMEIER. I would like to compete with them. I would put.
them out of business overnight, overnight. We have three plants,
one in Texas, one in Canada, and one in Shelbyville, and they are
all linked. We don’t have all of this paper. We have—a customer
calls in the morning, we ship in the afternoon, we don’t wait 135
days, and we are only a $29 million company. You know, we have
to do that to survive.

Again, when people see us filling out all these data sheets and
filling cabinets with all those data sheets, people say, “What are we
doing that for?” “Well, you have to do it.” And you get into the “we
have to do it,” or we are doing it just to fill the requirements. That
is what government does. If you get into that, people say, “Well,
why do I do my job right? Why do I make it as efficient as it has


58

reforms in the contract, and the coalition wishes to stress that a
strong OIRA, a strong regulatory traffic cop for the President, is
central to other sections of the regulatory reform agenda contained
in the contract.

A strong and clearly accountable institution to assist the Presi-
dent to carry out his review of executive agency actions on the reg-
ulatory front is key to strong congressional oversight of the regu-
latory system, and it is key to other reforms and regulatory flexibil-
ity, risk assessment, and risk management, cost-benefit analysis,
and protections against regulatory abuses that Congress declares it
wants done or taken seriously by the executive branch.

Parenthetically, Mr. Chairman, let me add that the coalition was
very supportive of President Clinton’s issuance of Executive Order
12866 on regulatory planning and review. We particularly wel-
comed the President’s focus on the integrity of the regulatory proc-
ess and his explicit directive to agency Treads, language which was
not found in the previous Executive order under President Reagan
and President Bush, his explicit directive to agency heads in sec-
tion 6(a)(3) of that order to follow the law, to adhere to the proce-
dural requirements of the Administrative Procedure Act, the Regu-
latory Flexibility Act, and the Paperwork Reduction Act.

Our problem has been that despite repeated instances of bringing
violations of these laws to the agencies’ and OIRA’s attention, we
and the President's directive are too frequently ignored, and we be-
lieve these failures to act when laws are ignored by Federal agen-
cies enrages the public. It destroys confidence in the workings of
government. A stronger OIRA and a more vigorous congressional
oversight will be necessary if the public perception of a fair and
reasonable regulatory process that has integrity is to be reinvented
and established.

A corollary point on the relationship to the contract, Mr. Chair-
man, is the point we just left with the GAO witnesses, and it is
that the PRA is the statute which links the executive and agency
regulatory actions with new information technology in the informa-
tion age. This, too, is key to successful implementation of other reg-
ulatory reforms in the contract, and the proposed amendments you
are looking at today will further inextricably link the information
aspects of regulatory action with regulatory review.

Let me turn to our recommendations. We as a coalition do rec-
ommend that the burden reduction goal of 5 percent be raised to
10 percent. We believe the committee should consider language to
make goals more enforceable, thereby encouraging agencies to
eliminate existing burdens when they find it necessary to add new
information burdens. We have had a good deal of discussion on how
you might go about doing that today, Mr. Chairman.

My quick suggestion here is, more focus needs to be put on how
we come up with the basic inventory of what is out there on bur-
den. That way, measuring goals and accomplishments becomes a
lot more doable thing and there is a lot less game playing that Di-
rector Miller and Director McIntyre talked about.

The proposal that you have before you today, Mr. Chairman, has
a provision which enables anybody in the public to petition their
Government and ask as to whether a paperwork requirement, a


6

overall leadership of Mr. Clinger in what he is doing with the mi-
nority leadership as well.

I would say in looking over this legislation, which is a step in the
right direction for this Federal Government, I also think that the
5 nt goal that we had in 1986 of reducing paperwork ought
to be more like a 50 percent reduction in the view of Americans,
I believe. The other item I think is worth clarifying is, if we have
less regulations we will have a chance for businesses to grow,
produce, and hire by having higher paying jobs, more profits, and
therefore more people employed. So that is part of the way I think
less regulation in this country can go, and I thank you for the op-

tunity.

Mr. MCINTOSH, Thank you very much, Mr. Fox.

Mr. McINToSH. Do any of the other members have statements at
this time? If not, let me now turn to one of our colleagues who has
asked to come and testify before us, the Honorable Michael Crapo
from Idaho. He is here with a suggestion of a means to strengthen
the legislation.

Welcome Michael, and we appreciate your coming and taking
time before us.

STATEMENT OF HON. MICHAEL D. CRAPO, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF IDAHO

Mr. Crapo. Thank you, Mr. Chairman, and I appreciate the op-
portunity to come before you and the other members of the commit-
tee this morning.

I would ask at the outset if I could get unanimous consent to
submit my written comments as a part of the record.

Mr. MCINTOSH. Seeing no objection, so ordered.

Mr. Crapo. Thank you.

Mr. Chairman and members of the committee, I have already
submitted some specific lan, re which I believe should be in-
cluded as an amendment to the legislation that we are considering.
I think that a critical aspect of your work on Title V, H.R. 9, is the
strengthening amendment which I have suggested.

When Congress enacted the PRA in 1981, it specifically included
public protection provisions in section 3512 designed to prevent un-
authorized regulatory requirements from being imposed on the
public. These days, we are doing a lot of work to try to address the
question of agency actions which are improperly imposed on the
public. We talk about it through unfunded mandates, we talk about
it through regulatory reform and other areas, but section 3512 spe-
cifically states that every regulation must be cleared by OMB and
bear an OMB control number or they can be disregarded by the
public. This was bipartisan legislation with Senators Danforth and

hiles, and as the lead sponsors and during the hearings on the
PRA in 1979 and 1980, both left little doubt as to their intent with
regard to this section.
nator Danforth said if an information request goes out of
Washington without being approved by the paperwork watchdog,
the person who gets it doesn’t have to answer it, and Senator
Chiles said a properly cleared form will have an OMB number in
the right corner, and if it is not there it is going to be a bootleg


29

quately equipped to do, and, second, whether H.R. 3 or some of the
other provisions on risk assessment would help further that process
of. Prioritization?
is. KATZEN. I think there is a need for prioritization. I think
that we are not well equipped now. But Title III wouldn’t do it. It
would not provide the wherewithal. An agency’s analysis is only as
good as its data, and what we need is Support for getting better
lata to make some of these comparisons. at_ we also have to
focus on are the statutes. That is why I am very glad that Congress
is en, d in this debate, because there are a certain number of
things that the executive branch can do, but if we are talking about
different areas and priorities, those are largely governed by the or-
ganic statutes and what one subcommittee will want for the agen-
cies under its jurisdiction may be very different from another sub-
committee’s choices.

For example, at the Labor Department under OSHA, they are
talking about risks that are 1 in a 100, while at EPA they are talk-
ing about risks that are 1 in 1 million. Now that may be right, that
may be wrong, but that is not something that we can solve except
through the organic statutes, which set those criteria. Maybe one
should be adjusted or the other, but that is why I think it is impor-
tant to engage the Congress in reviewing these issues, and I think
Justice Breyer’s last 10 percent theory is an excellent example of
the need for more prioritization. He also likes the Office of Infor-
mation and Regulatory Affairs. So I subscribe to that.

Mr. McINTOSH. Yes, I am aware he is quite a supporter.

Perhaps, though, there is some need for an overarching statute
in this area that sets a standard of risks that would be—the level
at which the Government begins to engage in protecting society so
that you don’t have this disparity among agencies.

Ms. KATZEN. I am not sanguine about Feing able to do it with
a simple one-size-fits-all, let’s modify all statutes with one. There
are such differences in the kinds of risks we deal with, the kinds
of regulations we have, the kinds of resources available to the De-
partments. There are different threshold levels that pertain. Even
within a Department like the Department of Transportation, it
does very different things in auto safety than it does in Coast
Guard regulation, than it does in the field of aviation.

Mr. MCINTOSH. But don’t you see some benefit to society by step-
ping back and seeing that each agency or component of an agency
that has its own program understands the risks, understands what
they are trying to accomplish in their regulatory effort; and that
unless they fit into a larger picture, we end up having certain
agencies driving to much more risk prevention than another agen-
cy, and as a result you may steer more social resources into fight-
ing that risk than would otherwise be available for tackling a
greater risk to society or greater cause?

Ms. KaTZEN. I agree that this is something that warrants, indeed
demands, attention. But I do not think that it is something that
can be handled by a one-size-fits-all piece of legislation. I think
there are a number of tasks that we need to do, and that is what
I hope that we will be able to work together on in the coming
weeks and months, because there are many areas where our regu-
latory system can be improved in this process.


65

tained in the ‘Contract” be used. It is and more clear. (Replace Section
3517(b) of the pro) with Section 5306 of H.R. 9).

3. A private it of action should be granted to any citizen who petitions the Di-
rector of OMB for a determination of whether a paperwork request is subject to
Act’s protections and does not get a response. Stated another way, a citizen should
have standing to sue in court and seek an aj ite remedy if the Director does
not answer the mail and respond to alleged tleg” requirements. We recommend.
that the following language added at the end of the appropriate section. “Who-
ever is adversely affected y the failure of the Director to respond under this sub-

ion, relief.

4, The “whistleblower” suopted by this proposal to amend the existing
law's Section 3507 (h) To eee oe ae the Tengsoge contained in the “Con-

act” and Je superior to the language in Senate bill S.244.

5. The bill should be amended to explicitly ire all recordkeeping requirements
contain a specific record retention requirement. rdkeeping requirements should
not be approved unless they display how long respondents must keep them.

This recommendation has been highlighted by a professional association in the
Coalition, The Association of Reco: lanagers ang. Administrators, as_a change
which will eliminate billions of dollars of waste. The Coalition urges the Committee
to adopt such an amendment.

6. The Coalition has been asked whether we support permanent or periodic au-
thorization of appropriations for the Office of Information and Regulatory Affairs.
We acknowledge there are arguments on both sides of this question, We support
periodic authorization. We believe periodic authorization does create an incentive for
the Congress to _periodi revisit how well the Act is working and encourages
needed Congressional o it.

. The tracts the Senate bill's change of the existing law's definition of
“i mn resources management” and adds a complementary definition for “in-
formation resources”. As we testified before the Senate last Congress, this concept
is fundamental to the Act’s entire structure. We remain concerned that these two
defined terms may narrow the existing law's meaning that the management of infor-
mation resources encompasses more just the direct use of information tech-
nology and labor resources by Federal agencies. It includes the use of the public by
agencies to maintain and provide information.

‘Accordingly, we recommend that the phrase, “and the persons who provide or
maintain information to fulfill the Federal Government’s information needs” be
added at the end of the proposed definition for “information resources”. This will re-
inforce the Act’s central contribution that the most important aspect of better infor-
mation resources management is that it will lead to a reduction of the burden on
the American public.

Mr. McINTosH. Thank you. I appreciate that.

When we get to the questions, I will want to explore further on
that question of legal review.

Mr. Sheehan, thank you for joining us today and welcome. If you
could provide your insights into this issue.

Mr. SHEEHAN. Thank you, Mr. Chairman.

We do have a broader text, and I submitted a summary text
which I will read to you right now.

The original Paperwork Reduction Act was passed by Congress
in 1980 as a response to what was perceived as a legitimate con-
cern about the multitude of Federal regulations and reporting re-
quirements, Like all human endeavors, government is an imperfect
enterprise. Occasionally some agencies of Government were draft-
ing and implementing regulations and reporting requirements un-
aware of related activities occurring at other agencies of Govern-
ment. As a result, duplicative regulations and reporting require-
ments increased the cost both of Government agencies as -
lators and to those entities that were being regulated. Thus
PRA was originally designed as a response to the lack of inter-
agency coordination.

Continuing efforts to improve efficiency and effectivess of Gov-
ernment regulations are a legitimate objective of public policy. The


67

Now, Mr. Chairman, let’s not forget the extensive procedural
safeguards which already exist in current law before an agency can
promulgate a final rule. Each agency’s organic law sets out the
scope of that agency’s regulatory jurisdiction and often sets limits
on the extent of its regulatory authority. Whenever an agency pro-
poses a draft proposal, it is usually after there has been consider-
able public demand for action.

Under existing Executive orders as well as the Paperwork Reduc-
tion Act, draft proposals are subject to review by OMB. Moreover,
another set of procedures under the Administrative Procedure Act
must be followed. The final rule is once again subject to review by
OMB and is open to judicial review challenge after it has been pro-
mulgated.

It is clear that regulatory agencies are not simply proposing un-
warranted and unneeded rules given this lengthy process. Over-
turning Dole does not facilitate the dissemination of important
health and safety information. Instead, it makes it easier to keep
people in the dark about risks to their health and their lives. Over-
turning Dole does not make Government smaller, more efficient,
more effective. Instead, it reaffirms OMB’s role as a superagency
of the Federal Government that can substitute nonscientific, politi-
cal, economic judgments on urgent issues of workplace safety and
health. Setting aside and overturning the Dole decision, this legis-
lation is flawed in a number of ways that we mentioned in our text.

I am very close here to the end, I think, and perhaps I should
stop.

Mr. McINTOsH. If you could go ahead and summarize the re-
mainder of it, yes, that would be great, Mr. Sheehan.

Mr. SHEEHAN. The one item that I would just make a brief ref-
erence to is this whole question of risk assessment and cost-benefit
analysis, and, frankly, Mr. Chairman, if you read your own bill you
will see an unbelievable prescriptive text, and obviously there are
many of the regulated people in the private sector that are com-
plaining about prescriptive texts of regulations that apply to them.

Tf there is some kind of rule of consistency here, what you are
imposing on these agencies is an unbelievable text, I think. In
reading some of the literature, you will find that also being spoken
about in others. I have a sentence in my testimony which indicates
that methodologies, detailed in this act, are excessively prescriptive
and are inducive to gridlock, regulatory gridlock, which would
cause an agency to be bogged down in the labyrinth of vague and
theoretical exercises. Again I have heard comments that regulatory
opponents would like to see that process being subjected to judicial
review. We would have had one holy war going on if each of the
steps in this procedure of risk assessment and cost-benefit analysis
would be subjected to subsequent judicial review.

Frankly, Mr. Chairman, we need regulations. The marketplace
can’t do it for us. We have to internalize these costs. We do it
through a regulatory government.

Thank you.

[The prepared statement of Mr. Sheehan follows:]


68

PREPARED STATEMENT OF JACK SHEEHAN, LEGISLATIVE DirEcTOR, UNITED
STEELWORKERS OF AMERICA

Mr. Chairman, I will address the reauthorization of the Paperwork Reduction Act
first followed by some comments on the risk assessment sions of Title III in
"he original Paperwork Reduion Act was paged by. Congre t0

01 ‘aperwo! n Act was 88 as a response

what was’ perceived aa a legitimate concern about the multitude of Federal regula-
tions and reporting requirements. Like all human endeavors, government is an im-
perfect enterprise. Occasionally, some agencies of government were drafting and im-
plementing regulations and reporting requirements unaware of similar activities oc-
curring in other agencies of the government. As a result, duplicate regulations and
Tepo! requirements increi the costa both to government agencies regu.
lators and to those entities that were being regulated. Thus, the was origin ly
designed as a response to a lack of interagency coordination. Continuing efforts to
improve the efficiency and effectiveness of government regulations are a legitimate
objective of public policy.

‘or example, the Environmental Protection Agency (EPA) is conducting its own
“Common Sense” initiative designed to streamline its rulemaking and enforcement
activities. The Steelworkers union is participating along with other interested par-
ties in helping EPA to achieve its goals. Other agencies, such as OSHA, have also
initiated their own internal regulatory reforms to improve their effectiveness. Addi-
tionally, President Clinton’s Executive Order 12866 which provides for improved
regulatory coordination and planning within Federal agencies, builds upon previous
executive orders by Democratic and Republican presidents dating back to the early
1970's. The Executive Order requires new disclosure procedures which are already
producing increased openness and accountability. For example, the public can now

ow when agencies have submitted proposed regulations to OMB for review. The

iblic can also learn what non-governmental entities have contacted OMB regard-
Ha regulations. There is also new recognition that lengthy delays in reviewing regu:
lations, such as plant safety guidelines, literally costs workers’ lives. These are le-
gitimate examples of efforts to improve government Fgulation.

Problems arise, however, when laws such as the are used as legislative vehi-
cles not to improve how government regulates, but to prevent government from reg-
ulating.

The legislation before the Subcommittee would overturn the 1990 U.S. Supreme
Court decision in Dole v. United Steelworkers of America where the Court held that
the Office of Management and Budget (OMB) did not have the authority to dis-
approve provisions of OSHA’s Hazard Communication Standard requiring employers
to disclose information about the hazards of toxic chemicals to workers.

The Dole case reached the Supreme Court after years of foot-dragging by OMB
in complying with the decisions of lower Federal courts which had previously found
that OMB had exceeded its legal authority in blocking the third-party disclosure re-
quirements in the OSHA standard.

Indeed, throughout the 1980’s, OMB became a “super regulator” substituting its
views and its Political ideology for the scientific and policy determinations of the
regulat ies.

Peasy les of OMB’s extensive interference under Executive Orders on sci-
entific and issues include:

* Blocking the OSHA proposed standard on grain elevator safety for 144 years
until OSHA included provisions for dry sweeping instead of mechanical controls
for dust recommended by the National Academy of Sciences. During this period
of delay, dozens of workers were killed or seriously injured in grain elevator ex-
plosions nationwide;

« Forcing OSHA to delete a short-term exposure limit (STEL) from a court-
ordered standard on the toxic chemical ethylene oxide. The U.S. Court of Ap-
peals for the D.C. Circuit later found that the ehort-term exposure limit was
necessary to protect workers from peak exposures to this cancer-causing chemi-
cal gad ordered OSHA {9 issue the short t term lim yde . tte

Develo) own risk assessment for form: in an attempt to prove
that cae estimates were too high and the proposed Rpulatee t too sinict,
In its review of the final standard, the Court of Appeals for the D.C. Circuit
held that OSHA's risk estimates may, in fact, have been too low. The court or-
dered OSHA to reconsider its estimates and whether the lower standard was
warranted.

Throughout the 1980’s, ] am unaware of even one example where OMB used its
review authority to recommend that OSHA strengthen a proj standard to pro-
tect workers’ health and safety. Indeed, the presumption on the part of OMB seems



26

Mr. McINTosH. Ms. Katzen, would you be willing to submit that
side-by-side for the record? I understand how those things, some-
times you want to be careful. Maybe the staff could share jooking
at it.

Ms. KATZEN. I will provide it to the staff. That would be fine.

Mr. McINTosH. OK. I understand.

Ms. KATZEN. It was done very quickly for the testimony, and I
don't want to represent that it is totally accurate. I know it is very
much—

Mr. MCINTOSH. 99.9 percent accurate.

Ms. KATZEN. Exactly.

Mr. McINTosH, OK.

Mr. McHugh, did you have any further questions?

Mr. McHucu. No further questions, Mr. Chairman.

Mr. McINTosH. Thank you.

Mr. Spratt, do you have any questions for the witness?

Mr. Spratt. Thank you, Mr. Chairman.

I am just educating myself as we go along because this provision
came to the House floor last year on a vote, and I think it probably
came to the attention of most of us with the same sort of prepara-
tion I made for this hearing.

My first encounter with the Paperwork Reduction Act was years
ago. It didn’t parade under this name, but we were doing a study
in the Pentagon to revamp the way the Defense Department com-
pensated for profits. We had done quite a bit of work with people
I was working with, with the Industry Advisory Committee. Com-
pletely with their concurrence, we were putting out a questionnaire
to ask different questions about capital employed and different
techniques of pricing capital and what-have-you, all ready to go,
and we found out there was this law which nobody had taken note
of before. Our problem then was to go to OMB, explain it to them,
find somebody in OMB who knew something about it, and then
generate some interest in OMB.

As a result, a project that had quite a bit of momentum suddenly
came to a screeching halt and something that was needed was de-
layed for nearly 1 year because nobody in OMB had any expertise
in the issue really and those who had a passing acquaintance with
it didn’t have a lot of interest in it either.

That is my first question. Do you have resident in OMB today
the knowledge, skills, to really do cost-benefit analysis, professional
cost-benefit analysis, and also to do risk assessment analysis,
which I take is infinitely more complex than cost-benefit analysis?

Ms. KatzEN. We do have very highly trained people. When I look
at the credentials of my staff, I am awed. They all have advanced
degrees in public policy or economics. The Statistical Policy Office
is in our office, including the Chief Statistician of the United
States. On some questionnaires, there is an issue as to whether
you are going to get statistically significant responses.

One of the things about the bill is, it has certain time limits. We
can’t just stop things dead in their tracks, nor would we want to.
My efforts have consistently been to be responsive to the agencies,
and if in fact an agency comes forward with a type of questionnaire
that has been prevetted with the group to whom it is going and
there is concurrence on the need and concurrence that it is the


78

orous dissent, and he was joined by Justice—the Chief Justice, Jus-
tice Rehnquist.

Mr. PETERSON. I have got a little bit more time. Well, maybe I
can get this clarified on my own. It is just, I am not understanding
exactly what the ramifications are of this. We have a vote on, ani
maybe I can visit with—— .

Mr. CoaKLEy. Congressman, if I can make just a quick 1-minute
statement though, what was done in the past isn’t important for
what you all ought to do today. The real issue is whether or not
you think this act ought to cover those paperwork requests that the
Government sponsors when an outside party has to provide infor-
mation to a third party, and if you want a quick tangible feel for
that, look at all the requirements we ask employers to employ em-
ployees. Do we want to apply the standards of practical utility and
need to those kinds of paperwork requirements when the Govern-
ment offers them, or don’t we? And that is what is really is at
stake here, and what the Court did in the past, what we in the coa-
lition have argued is, it created an argument that all the agencies
use now to basically say we don’t have to pay attention to the act.

So we really see whether you overturn this or not as an issue of
whether you want an act or not. But from the perspective of once
you reach that determination that you want an act, whether you
want them to cover disclosure requirements, is the next decision.

Mr. SHEEHAN. I guess I would just add to that, if I might, the
question is whether during the rulemaking procedure there should
be intervention so that the disclosure is not unnecessarily detailed.
You have a rulemaking process and procedure to do this. What is
before you is whether, regardless of how realistic the disclosure re-
quirement might be, can OMB just simply say, based on paperwork
reduction, we can control an agency promulgating even reasonable
disclosure requirements? That is what is at stake.

Mr. MCINTOSH. Mr. Fox had one question, and then I think we
will stand in recess.

Mr. Fox. Thank you, Mr. Chairman.

I was going to ask Mr. Stolmeier whose testimony I thought was
very illuminating as well as the other colleagues who joined him.
But I do want to ask him, how often do you get employees Mr.
Stolmeier, asking to look at these materials data safety sheets?

Mr. STOLMEIER. Very, very infrequently. Out of 375 employees,
if we have had 2 or 3 ask for it, it would be a lot. Maybe once or
twice. So you might get five requests in a year, maybe not even
that. You might go a year without even anybody looking at them.

Mr. Fox. All right. What percentage of time are you spending on
fulfilling regulations from the Federal Government or State govern-
meni

Mr. STOLMEIER. I wish I could answer that with a precise num-
ber, but it is such an all-involving thing, and what affects one af-
fects somebody else. Somebody in one department fills this out and
takes it to somebody else who ends up in the computer department.
It is a substantial portion of our time.

Mr. Fox. And what percentage of your costs, if you know?

Mr. STOLMEIER. Again, it is a substantial portion. I don’t have a
number for you. I wish I did.


3

The staff has informed me that we have a request from one of
our colleagues in Congress. Before we turn to him, let me ask if
Chairman Clinger has any remarks that he would like to make at

‘is point

Mr. CLINGER. Thank you very much, Mr. Chairman.

As you stated, yesterday we did introduce H.R. 830, the Paper-
work luction Act of 1995. The bill resulted from months of hard
work by both members and staff of the House and Senate working
to the common goal of strengthening and centralizing the regu-
latory review function at the Office of Management and Budget.

The legislation we consider now is premised on what I believe to
be Co: ss’ continuing belief in the principles and requirements
of the Paperwork Reduction Act of 1980. All of the legislation’s
amendments to the 1980 act are intended to further its original

yurposes—to strengthen OMB and agency paperwork reduction ef-
forts, to improve [B and agency information resources manage-
ment including in specific functional areas such as information dis -
semination, and to encourage and provide for more meaningful
public participation in paperwork reduction and broader informa-
tion resources management decisions.

With regard to the reduction of information collection burdens,
the legislation maintains the act’s 1986 goal of an annual 5 percent
reduction in public paperwork burdens. OMB is required to include
in its annual repre to Congress recommendations to revise statu-
tory paperwork burdens. The legislation includes third party disclo-
sure requirements in the definition of “collection of information” to
overturn the Supreme Court’s decision in Dole v. United Steel-
workers of America. This will ensure that collection and disclosure
requirements are covered by the OMB paperwork clearance proc-
ess.

The act is also amended to require each agency to develop a pa-
perwork clearance process to review and solicit public comment on
proposed information collections before submitting them to OMB
for review. Public accountability is also strengthened through re-
quirements for public disclosure of communications with OMB re-
garding information collections, with protection for whistle blowers
complaining of unauthorized collections, and for OMB to review the
status of any collection upon public request.

In combination with more general requirements such as encour-
aging data sharing between the Federal Government and State,
local, and tribal governments, the legislation strives to further the
act’s goals of minimizing Government information collection bur-
dens while maximizing the utility of Government information.

Mr. Chairman, I am pleased the committee is moving so swiftly
to enact this important legislation. I look forward to hearing the
views of our many distinguished witnesses this morning and also
look forward to hearing the witnesses’ assessment of the risk as-
sessment provisions of the Job Creation and Wage Enhancement
Act of 1995.

Thank you, Mr. Chairman.

Mr. McINTosH. Thank you very much, Mr. Chairman.

Let me now turn to the ranking member, Mr. Collin Peterson
from Minnesota.

Mr. PETERSON. Thank you, Mr. Chairman.


2

regulatory burdens throughout the Government. It is nearly iden-
tical to a bill pending in the Senate with a few strengthening
changes.

In brief, this bill is intended to reauthorize appropriations for the
Office of Management and Budget’s Office of Information and Reg-
ulatory Affairs for an indefinite period of time to carry out the pro-
visions of the Paperwork Reduction Act of 1980. In addition, I
would imagine that in H.R. 9 there will be other duties that are
assigned to OIRA and it would be appropriate to include those in
the Authorization Act as well, strengthening OIRA and agency re-
sponsibilities for the reduction of paperwork burdens on the public,
particularly through the inclusion of all federally sponsored collec-
tions of information, in a clearance process involving public notice
and comment, public protection, and OIRA review.

It establishes policies to promote the dissemination of public in-
formation on a timely and equitable basis and in useful forms and
formats; it strengthens agency accountability for managing infor-
mation resources and the support of efficient and effective accom-
plishment of agency missions and programs. Finally, it improves
OIRA and other central management oversight of agency informa-
tion resources management policies and practices.

(NoTE.—The bill H.R. 830 can be found in subcommittee files.]

Mr. McINTOSH. We have also asked our witnesses to provide tes-
timony on Title III of the Job Creation and Wage Enhancement Act
of 1995. This Title requires that for all proposed Federal rules that
have an economic impact of $25 million or more, agencies would
have to perform an analysis of costs and benefits as well as the
risks. For final rules, a certification would be required that the
benefits from the rule will justify the costs imposed and that the
rule would substantially advance protection of human health and
the environment. In addition, a peer review process of risk assess-
ment would be conducted for regulations with an impact of over
$100 million. Risk assessment and cost-benefit analysis is crucial
to setting our priorities given our limited resources and also finding
out how we can regulate in the least costly and burdensome man-
ner and maximize the benefits intended from those regulations.

We have an outstanding list of witnesses to speak on these topics
today. Our first witness is the Honorable Sally Katzen, Adminis-
trator of OMB's Information and Regulatory Affairs. She will be
followed by a panel of former OMB directors including James Mil-
ler who served during the Reagan administration and James MclIn-
tyre who served during the Carter administration. Next will be As-
sistant Comptroller General of the General Accounting Office, Gene
Dodaro, who will speak on information resource management re-
quirements included in the Paperwork Reduction Act. Mr. Dodaro
is accompanied by Mr. Chris Hoenig of the GAO staff.

The final panel will consist of Robert Coakley, executive director
of the Council on Regulatory and Information Management. I know
that Robert has been laboring in this field for many years, and I
am glad to have him here today. Jack Sheehan, legislative director
of the United Steelworkers of America. And, finally, my constituent
and friend, Bob Stolmeier, president of KLC Corp. in Shelbyville,


15

‘As to the paperwork clearance process, S. 560, as passed by the Senate in the last
Congress, directs agencies to establish a more thorough and open cy paperwork
clearance process to improve the quality of paperwork review and increase public
confidence in government decision-making. The senior agency official responsible for
information resources management, independently of the program office initiating
or sponsoring the information collection activity, is required to evaluate the need for
the information, the burden estimate, the agency s plans for management and use
of the information to be collected, and whether the proposed collection meets the
other requirements of the Paperwork Reduction Act.

S. 560, as by the ate, also directs agencies to consult with the public
on their proposed colfections and to certify to O] that the clearance steps have
been taken. These steps include assuring that there is a real need for the informa-
tion, that the collection was not unnecessarily duplicative of information otherwise
reasonably accessible to the agency, and that the burden to be im has been
minimized. S. 560, a8 passed, also clarified that “burden” includes 1 respondent's
resources expended in acquiring, installing, and utilizing technology and systems,
and directs OMB to issue guidelines by which agencies are to estimate burden.

Similarly, S. 560, as passed by the Senate, strengthens Federal agency respon-
sibilities in the area of information resources management (IRM). It spells out the
Act’s functional IRM areas (paperwork control, dissemination, etc.) as agency oper-
ational responsibilities to match OMB's policy and oversight responsibilities, Ac-
countability for carrying out these responsibilities is more clearly spelled out. Under
the leadership and direct responsibility of each agency head, the legislation assigns
program officials the responsibility and accountability for information resources as-
signed to and supporting their programs, and assigns IRM oversight within the
agency to the senior official responsible for information resources management.

P. The Support for Improving the Paperwork Reduction Act Continues

This year, the bipartisan progress that was attained in the 103rd Congress is con;
tinuing. Seniators Nunn, Roth, Glenn, Bond, and Bumpers, among others, introduced
the bill that passed the Senate last October. That bill is now designated as S. 244.7
The Senate Committee on Governmental Affairs ordered 8. 244 reported on Feb-
ruary 1.

In this chamber, H.R. 8, the “Job Creation and Wage Enhancement Act,” contains
a Title V, “Strengthening of Paperwork Reduction Act,” which is essentially H.R.
2995, 103rd Congress (a counterpart to S. 560, as introduced). Chairman Clinger,
taking advantage of the bipartisan legislative efforts over the past two years, re-
cently circulated for comment a draft “Paperwork Reduction Act of 1996,” which
contains not only the significant features embodied in H.R. 9, Title V, but also the
improvements contained in S. 244, as ordered reported. The Administration sup-

rts S, 244, as ordered reported. Similarly, the Administration supports your draft

perwork Reduction Act of 1995,” and we urge that you move it forward for con-
sideration by the full Committee and House of Representatives.

I should note that there are some differences between the House and Senate ver-
sions of this bill. Some appear merely to preserve the text of the existing statute;
others appear to be based upon specific proposals in H-R. 9, Title V; some are totally
new. As this legislation moves forward, we would welcome the opportunity to dis-
cuss with you the differences between your draft bill and S. 244, and to work with
you to accommodate whatever concerns may arise.

Il, “RISK ASSESSMENT AND COST-BENEFIT ANALYSIS FOR NEW REGULATIONS,” H.R. 9,
TITLE Il

I would now like to discuss Title III of H.R. 9, which is called “Risk Assessment
and Cost-Benefit Analysis for New Regulations.”
A. Improving Regulatory Decisions

Title III seeks to bring greater scientific and economic rationality to the regula-
tion of risks to our health, safety, and environment. It recognizes that
“{e]nvironmental, health, and safety regulations have led to dramatic improvements
in the environment and have significantly reduced human health risk.” At the same
time, it finds that [t]he public and private resources available to address health,
safety, and environmental concerns are not unlimited; those resources need to be
allocated to address the greatest needs in the most cost-effective manner, . . . 80
that the incremental costs of regulatory options are reasonably related to the incre-
mental benefits.” To this end, it proposes to bring the “most scientifically objective

changes, modified in part to reflect agency concerns, S. 244 is identical to S. 560,
. in the form it passed the Senate.



5

ica, or is this actually a contract with big business? In the debate
over the regulatory moratorium we see this same issue. Stop regu-
lations, we are told, even if those regulations protect coal miners
from fires or cave-ins.

I am offering a simple amendment to strike the language in this
bill that overturns the Supreme Court decision. The Paperwork Re-
duction Act should be used for that purpose; that is, reducing pa-
perwork; it should not be used to endanger health and safety by
eliminating notices of hazards to workers.

Mr. Chairman, I yield back the balance of my time.

Mr. McInrosu. Thank you, Mrs. Collins.

Mr. Peterson, did you have a statement?

Mr. PETERSON. Mr. Chairman, I just would want to commend
you for holding this hearing, and I don’t have a prepared state-
ment, but I do have a couple of comments I would like to make if
that would be all right.

First of all I want to associate myself with the remarks that were
just made the distinguished ranking member in terms of the
case that is being overturned in this legislation. I also have some
concerns about that, and I am here today to learn more about the
Paperwork Reduction Act. I have to admit to you that I am not
very familiar with this act, and, as you are aware—I think we have
had some discussions—it kind of troubles me that we have to cre-
ate a bureaucracy in the Government to try to untangle what the
bureaucracy is doing wrong. It just flies in the face of reason, at
least in the way that I view things, and it seems to me there
should be a better way to do it. Maybe there isn’t, and maybe this
is the best we can do, but, you know, in this new information age
we ought not to have any paper at all if we were doing things cor-
rectly. And to have a paperwork reduction program—I don’t know,
it just seems to fly in the face of where we are going in this coun-
try, and in my own personal understanding of the act the only
thing I have ever really been involved with is doing income tax re-
turns, and at the bottom of the pages or in the instructions—I can’t
remember exactly where—they have these ridiculous estimates of
what it takes to fill out these forms. Now whoever is doing this
ought to be investigated because they have for example 48 hours
to do a form that can be done in 15 minutes, and if we are paying
people to make these kinds of estimates under this act, this is one
place, it seems to me, we ought to look at.

In any event, what I am here today to do mostly is to learn more.
I commend you for holding this hearing. I also, as someone who
has been interested in the concept of cost-benefit analysis and risk
analysis, I am also looking forward to getting some testimony in
those area. So I commend you for holding the hearing and look for-
ward to hearing the witnesses.

Mr. McINTosH. Thank you very much, Mr. Peterson.

Let me ask if any of the other members have opening statements
that they would like to make at this point. If not, we will move on
to witnesses.

Mr. Fox.

Mr. Fox. Mr. Chairman, just a brief comment, first to give our
gratitude to you as the chairman of the committee for embarking
on this important effort and your leadership as well as that of the


21

individuals, there is an argument that they should have come with-
in the Paperwork Reduction Act. Inspector Generals are special
creatures, as this committee knows, as the Judiciary Committee
knows. We have used this instance as an opportunity to work with
the Ingpectors General to bring them within the ambit of this act
in a collegial way to make sure they understand the responsibilities
that they have.

There have not been a lot of challenges made, and section 3512,
the public protection provision that he referred to, is in fact where
most of the questions have come up in the tax area.

I noted that Congressman Peterson was mentioning tax forms.
Under the paperwork burden which we calculate each year, rough-
ly 80 percent of the paperwork burden in this country comes from
a single department. That is the Treasury Department, driven
largely by the IRS. .

ow the good news is that 1040-EZ came out of our process, ty
ing to find an easier way to file your tax information, and the L
Commissioner, Peggy Richardson, has been working with us to try
to develop other simplified forms. But my point here is that when
yo hear about paperwork and you talk about reducing paperwork
@ percentage, realize that most of that paperwork is tax forms
at generate revenues, and that is, I think, an important consider-
ation in this area.

Mr. McINTosH. Thank you very much.

Let me just say, from my experience, that the prospect of a citi-
zen’s review of the process in NEPA, for example, has greatly
strengthened the ability of the regulated community to have input
and to ensure that the agencies are complying with the statutory
requirements, and so for that reason, I have a great deal of sym-
pathy with using that tool for allowing the regulated community to

ave greater impact on the agencies and the agencies stricter ad-
herence to the statutes.

My time has expired, Let me turn now to Mr. Peterson.

lr. PETERSON. Thank you, Mr. Chairman.

How many people work in this process? Do you have any idea?

Ms. KATZEN. My staff is about 50 FTEs.

Mr. PETERSON. fifty?

Ms. KaTzEn. Fifty, 5-0.

One of the things I like about the bill before you is that it im-
poses the obligations and the responsibilities on the agencies. Your
comment I thought was well taken: Do we need to create a new bu-
reaucracy to do what the agencies should be doing in the first

lace? And one of the strong points of the legislative proposals both
here and in the Senate is that they say that the agencies them-
selves are responsible for renewing new paperwork, for making
them available to the public, and for receiving and responding to
the public’s comments back, and that is highly salutary.

Mr. PETERSON. How many people then work in each of these
processes? Do you have a handle on that at all?

Ms. KATZEN. I don’t have that number. It will differ from agency
to agency. In many instances it is part and parcel of the regulatory
group. In other instances it is separate.

Mr. PETERSON. Do they actually have somebody designated as a
paperwork reduction person?


H.R. 830, PAPERWORK REDUCTION ACT AND
RISK ASSESSMENT AND COST/BENEFIT ANALY.
SIS FOR NEW REGULATIONS

HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL ECONOMIC GROWTH,
NATURAL RESOURCES, AND REGULATORY AFFAIRS

OF THE

COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUS# OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
FIRST SESSION
ON

H.R. 830

TO AMEND CHAPTER 35 OF TITLE 44, UNITED STATES CODE, TO FUR-
THER THE GOALS OF THE PAPERWORK REDUCTION ACT TO HAVE
FEDERAL AGENCIES BECOME MORE RESPONSIBLE AND PUBLICLY AC-
COUNTABLE FOR REDUCING THE BURDEN OF FEDERAL PAPERWORK
ON THE PUBLIC, AND FOR OTHER PURPOSES

FEBRUARY 7, 1995

Printed for the use of the Committee on Government Reform and Oversight

oe

U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1996

For sale by the U.S. Govemment Printing Office
Superintendent of Documents, Congressional Sales Office. Washington, DC 20402

ISBN 0-16-052351-6



44

ing on the information technology aspects of the legislation for two
very important reasons. First, as has been mentioned here this
morning, there is great potential to psing technology to help reduce
the burden on the public in terms of collecting information; second,
because Federal agencies are experiencing tremendous problems in
attempting to use technology to improve service and reduce cost.

Federal problems with information technology are becoming in-
creasingly severe in the last 14 years since the original passage of
the Paperwork Reduction Act. During this time the zap between
the public’s expectation for modern, effective service and the Gov-
ernment’s performance has widened considerably, and it grows
wider every day. More and more, the American Reorle, are experi-
encing the everyday benefits of technology in the private sector
such as 24-hour, one-stop customer service numbers, automated
bank tellers, overnight package delivery, and telephone credit card

ents. Our national government, however, has been unable to
chieve similar improvements. Unfortunately, the Federal sector
] far behind leading organizations that have successfully used
information technology to streamline their operations and enhance
service levels.

After spending a_ quarter of a trillion dollars since the passage
of the Paperwork Reduction Act, the Government is in the worst
possible situation. It is investing heavily in projects that often fail
to produce dramatic service improvements or significantly reduce
costs. Serious system development problems exist throughout the
Government in key agencies such as the Federal Aviation Adminis-
tration, the IRS, the Defense Department, the Department of
culture, the Social Security Administration, and the Veterans’
ministration, to just name a few notable examples.

To help find solutions to these problems, GAO studied successful
organizations to learn how they effectively use technol to im-

rove their performance. We found that organizations used a set of

ndamental management practices that were instrumental in
their success. These practices are described in this report we issued
last May [indicating document] which we have made available to
members of the subcommittee, and we would be happy to talk
about it at any length at a future point in time. The practices con-
tained in this document require no legislative action, and Federal
agencies can readily adopt these best practices, although the provi-
sions in H.R. 3400 would ensure that they do so.

Many agencies need and want our help. Our report has been
widely received. Over 14,000 copies have been distributed, and we
have given 120 briefings to over 2,000 Federal decisionmakers.
These practices, however, need to be implemented, not just talked
about. at is why we are very pleased that H.R. 830 incorporates

em,

Let me underscore a few key examples of how the bill incor-
rates these practices. First, the bill strengthens accountability
for information management results by placing it with senior pro-
gram management, not just information resource officials in the
agencies. Too often Federal managers leave important decisions to
technical staff. This lack of involvement consistently produces ex-
cessive spending on information technology solutions that do not fix
underlying business problems.



8

PREPARED STATEMENT OF HON. MICHAEL D. CRAPO, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF IDAHO

Good morning Mr, Chairman and Members of the Subcommittee. I appreciate the
opportunity to testify this morning on what I view as a critical aspect of your impor-
fant work on Title V of H.R. 9 to clarify and strengthen the Pape Reduction

t, (PRA).

When Congress enacted the PRA in 1981 it specifically included “Public Protec-
tion” provisions in Section 3512 designed to prevent unauthorized regulatory re-
quirements from being imposed on the public, Section 3512 specifically states that
every regulation must. leared by OMB and bear an OMB control number or they
can be disregarded by the public. This was bipartisan legislation with Senators Dan-
forth and Chiles as the lead sponsors, During the hearings on the PRA in 1979 and
1980, both left little doubt as to their intent regarding Section 3512:

¢, ‘If an information request goes out of Washington without being approved by

the paperwork watchdog, the person who gets it doesn't have to answer it” (Sen-

ator Danforth, 1979).

+ “A properly cleared form will have an Office of Management and Budget num;

ber in the right comer. And if it's not there, it going to be a bootleg form and
dy should be on notice that they can throw that form away, that they

won't have to fill it out.” (Senator Chiles, 1980).

Unfortunately, it has come to my attention that a great deal of confusion exists
among the regulatory agencies and the courts regarding what Congress intended in
exacting this important legislation, which has allowed some agencies to blatant!
disregard the Public Protection provisions of Section 3512. In at least one case
now of, a Federal agency did not clear a rule with OMB and did not obtain an
OMB control number, and then penalized the company for not complying with the
invalid regulation. So far, the agency has refused to even respond to the threshold
question of whether it complied with the PRA or not. I'm sure that many of you
have heard of similar cases from your constituents.

Some courts have held that private citizens have the right to use a violation of
the PRA as a defense when charged with a violation of Federal agency regulations,
which means that you have to wait until you are attacked for not complying with
& regulation promulgated in violation of the PRA and then use the violation as a
defense. Unfortunately, most courts have refused to take the next logical step and
eonclude that the ul lic has an affirmative private right of action to challenge a
bootleg regulation. If you are not an attorney, in particular a litigator, you may not
realize how important this distinction is—but I can assure you that it is critical be-
cause making it clear that citizens have an affirmative right of action means that
they can immediately move to set aside agency sction not in complisnee with the

Title V of H.R. 9 contains several amendments strengthening the PRA. The addi-
tion of an amendment clarifying the intent of Congress that private citizens have
an affirmative private right of action to challenge bootleg rules promulgated by a
Federal agency without an OMB control number would further strengthen this im-
portant legislation by providing an important check against regulatory excess.

Ihave had a chance to review some of the testimony that you will hear today and
note that Mr. Robert Coakley, Executive Director of the Council on Regulatory and
Information Management, will be testifying later this morning on behalf of the Pa-
perwork Reduction Act Coalition. Mr. Coakley makes a number of excellent sugges-
tions, one of which is very similar to mine regarding the need for a affirmative pri-
vate right of action to enforce the PRA. He su; granti a private right of ac-
tion to any citizen who petitions the Director oi B for a ruling on a ‘ible
violation and does not et & response. Although I am unable to stay for the entire
hearing today, I would like you to know that Mr. Coakley’s suggestions regarding
this issue are a very good first step, but I urge the Subcommittee to go even further
and take a more direct approach to this issue along the’lines I have suggested.

Mr. Chairman, I thank you and the Members of the Subcommittee for your cour-
tesy in allowing me to testify today, and I look forward to working with you and
the Subcommittee on such an amendment.

Mr. McINTosH. Thank vou very much, Mr. Crapo.

I was wondering, just for clarification, would the proposed action
lie against the agency or against OIRA for failing to issue a control
number?

Mr. Crapo. Under the amendment which I have proposed, it pro-
vides that any action taken by the Federal Government that is not



7

form and everybody should be on notice that they can throw that
form away, they won't have to fill it out.

Unfortunately, it has come to my attention that a great deal of
confusion exists among regulatory agencies and the courts regard-
ing what Congress intended in enacting this important legislation
which has allowed some agencies to blatantly disregard the public
protection provisions of section 3512. In at least one case I know
of, a Federal agency did not clear a rule with OMB, did not have
an OMB control number, and then penalized a company for not
complying with that invalid regulation. So far, the agency has actu-
ally refused to even respond to the threshold question of whether
it has complied with the PRA. I am sure that many of you have
heard of similar cases from your own constituents.

Some courts have held that private citizens do have the right to
use a violation of the PRA as a defense when the violation of Fed-
eral regulations is brought against them, which means you have to
wait until you are attacked for not complying with the regulation
or promulgation in violation of the PRA and then use the violation
as a defense.

Unfortunately, most courts have refused to take the next logical
step and conclude that the public has an affirmative right of action
to challenge a bootleg regulation. If you are an attorney or a litiga-
tor you understand the importance of this distinction, but I can as-
sure you that it is critical in making it clear that citizens have an
affirmative right of action that means they can immediately move
to set aside agency action that is not in compliance with the PRA
rather than waiting to be attacked and not knowing whether they
will be able to sustain the defense to that attack.

Title V of H.R. 9 contains several amendments strengthening the
PRA, and the addition of an amendment clarifying the intent of
Congress that private citizens have an affirmative right of action
to challenge bootleg rules Promulgated by the Federal agency with-
out an OMB control number would further strengthen this legisla-
tion by providing an important check against regulatory excess.

I have had a chance to review some of the testimony you will
hear today, and I note that Mr. Robert Coakley, the executive di-
rector of the Council on Regulatory and Information Management,
will be testifying later this morning on behalf of the PRA Coalition.
Mr. Coakley makes a number of excellent suggestions, one of which
is very similar to mine regarding the need for an affirmative pri-
vate right of action to enforce the PRA. He suggests granting a pri-
vate right of action to any citizen who petitions the Director of
OMB for a ruling on a possible PRA violation and does not get a
response.

Although I am unable to stay for the entire hearing today, I
would like you to know that Mr. Coakley’s suggestions regarding
this issue are a very good first step, but I urge the subcommittee
to go even further and to take the more direct approach to this
issue along the lines I have suggested.

Mr. Chairman, I thank you and the members of the committee
for your courtesy in allowing me to testify today, and I look forward
to working with you on these amendments.

[The prepared statement of Hon. Michael D. Crapo follows:]


57

Independent Business, National Small Business United, and the

Small Business Legislative Council. Mr. Chairman, we are enthu-

siastically united in our support for this legislation, and that is a

broad broad-based coalition that is not always together, but we are
ther on this one.

t me say that we just look very much forward to working with
you, our renewed work with you and with this committee, to see
the Paperwork Act signed by the President before spring. We wel-
come the opportunity to change the experience of the past three
Congresses. It is time. It is time to embrace these Proposed
changes, look to the future, and move forward to the hard work of
implementation and oversight.

ly organization—as to the need for this legislation, my organiza-
tion estimates that we as a Nation spend almost an amount of time
and effort equal to 9 percent of the Gross Domestic Product just to
meet the Government’s information needs. That is a huge figure.
It presents a picture of the enormity of the cumulative Federal pa-
perwork burden. Couple this concern with the fact that violations
of reporting and recordkeeping requirements are often attached to
new fines and criminal indictments, and you further sense how out
of whack the overall Federal role has become.

The paramount reason that we need this legislation, and it needs
to be enacted to strengthen the tools of the Paperwork Reduction
Act, is that the ability of the executive branch to meet the promises
of the original act are eroding. It needs to be strengthened, cor-
rected, and renewed, not weakened by time and neglect, and we be-
lieve that the erosion which has occurred to the act’s underpinning
will be reversed by this legislation.

The Paperwork Reduction Act makes basically two fundamental

promises. First, it promises that Government will check the need
for information before it asks citizens to maintain or provide that
information. Control numbers assigned to each information collec-
tion as proof that it has been approved are to be displayed on all
information requests. It amounts to a good housekeeping seal, Mr.
Chairman, so that every citizen can see that their Government has
at least checked on something before they are asked to go through
the effort of maintaining or providing it, and absent the display of
a validly assigned number, we have this rather strong provision,
the public protection provision, that says, notwithstanding any pro-
vision of law, public protection prevails over bootleg requirements;
you don’t have to fill out or you don’t have to maintain or provide
the information.

The second promise of the Paperwork Act is that the effective use
of the structural and policy framework established by the law to
improve information and resources management will minimize the
public burden.

Now there have been three key crucial factors behind the erosion
that we have seen in the nineties. The Dole decision is key and is
perhaps the most significant one, but the problem today is also
agencies who increasingly ignore the spirit and letter of the law
and 6 years of the Congress and the executive not being able to
agree on what amendments to the act are needed.

Let me point to what we believe the relationship of Title V of
HR. 9 and your proposed addition of it is to the other regulatory


40

But it just shows that the requirements that you have really de-
termine how much paperwork is out there, and all the efforts of an
OIRA cannot reduce that paperwork burden below that necessary
level. You can, in turn, simplify the tax laws or whatever. That
would reduce the paperwork burden dramatically.

Mr. Fox. Thank you very much.

Thank you, Mr. Chairman.

Mr. McINTosu. Thank you, Mr. Fox.

If only they would let our committee take care of that. We, unfor-
tunately, don’t have jurisdiction over everything.

Let me turn now to Mr. McHugh.

Mr. McHucu. Both of you gentlemen—Mr. McIntyre, Mr. Miller
indicated in his written testimony —suy port the provisions of this
bill that overturn Dole. We have heard, both this morning and as
we talk to various people about this legislation, that from those
who would consider—that overturning places in jeopardy the safet;
of many American workers in the workplace. I assume you don’t
share that assessment. I would be interested to hear your com-
ments as to how you feel such a situation would not occur and why
this is an important provision of the bill.

Mr. McIntyre. I don’t think the situation would occur because
the requirement is simply that OMB’s level is to review what the

rency has done and to comment on whether it is within the law,
whether there are other alternatives that would accomplish the ob-
jective better, or to basically make sure that the agency has looked
at all of the issues. OMB is not in a position of substituting its
judgment about the need for safety for that of the agency, so I do
not see any risk.

I think the people that see risk are folks that have direct pipe-
lines that are part of the iron triangle that I mentioned, that have
direct pipelines to these agencies, that want their positions adopted
as opposed to what may be a reasonable position adopted. I think
that is the big difference. I think it is very important that this loop-
hole in the law be eliminated.

Mr. McHucu,. Mr. Miller.

Mr. MILLER. I agree with what he said.

Mr. McHucu. Simply said.

Thank you, Mr. Chairman.

Mr. McINTosH. Thank you very much, Mr. McHugh.

Let me turn now to my colleague from Florida, Mr. Scarborough.

Mr. SCARBOROUGH. Thank you, Mr. Chairman. I would just like
to thank Mr. McIntyre and Mr. Miller for coming. I have no ques-
tions at this time.

Mr. McINTOSH. Thank you very much.

And last but not least, my colleague from Maryland, Mr. Ehrlich.

Mr. EHRLICH. Thank you, Mr. Chairman.

I understand what you all said today about the mind set that has
existed around here for a long time. I also understand the point
you made with respect to the ineffectiveness of mandatory reduc-
tions. In view of those two observations, since you two have been
around since the inception of this act in 1980, what grade would
you give this act? Has it worked?

Mr. McINTYRE. Since eu administered it, I’ll let you go first.

Mr. MILLER. On a scale of 1-10, a 9.


28

the complaints about agencies’ risk assessment, which is legiti-
mate, is that there are very conservative assumptions that are
used; in some instances properly so because that is what the stat-
ute calls for. There is then a piling on of conservative assumption
on conservative assumption on conservative assumption that may
or may not be legitimate.

The important thing is that the decisionmaker knows what those
assumptions are and that they are conservative and they are being
added on one to the other, and that the public is aware of that, in
terms of opening up the process and making assumptions clear.

But my problem with the risk assessment provision of Title III
is that it is all cancer related, all end points. You are talking about
extrapolating from mice to men in every instance, but in some in-
stances if you are talking about airplanes falling out of sky or fork-
lifts falling over, it doesn’t matter what some of the studies of lab-
oratory epidemiological materials are.

If you are concerned about other end points, it is not just fatali-
ties from cancer, as troubling as they obviously are, and I do not
mean to belittle it, but some hazards can have effects on your re-
productive systems or on your respiratory systems that will be ter-
ribly serious, and render you unproductive, and you can’t hold a
job, and you are a drain on your family and on society, but you are
still alive. We need to resist the one size cancer end point which
is what is cast in concrete in Title III, subpart A.

Mr. Spratt. Does OMB then have a formulation that goes be-
yond 12866, is more extensive, more rigorous, than this simple ref-
erence in Executive Order 12866 that might substitute for Title III?

Ms. KATZEN. We have a Regulatory Working Group, and one of
the subcommittees is the subgroup on risk analysis—which has
worked to develop principles—broad principles, that are much more
specific than Executive Order 12866 Pat not as prescriptive as Title
IH, that sets forth the various processes that should be used by
agencies. We are using them internally to bring the agencies closer
to the state-of-the-art because there is enormous variety in the
agencies.

One of the other problems with Title III is that it applies Govern-
ment-wide. Some agencies are very good in their analysis, and
some are not so good, and some of the ones who are not so good
lack experience because their statutes preclude consideration of
cost or consideration of risk, We need those agencies to learn the
skills, learn the methodologies, and that is what we are working

on.

Mr, McINTOSH. The time of the gentleman has expired.

Did you have any further questions?

Mr. Spratt. Thank you, Mr. Chairman.

Mr. MCINTOSH. Let me just close along the same line by asking,
Ms. Katzen, whether the provisions in Title III on risk assessment
would provide tools that would be helpful in conducting a related
activity that Justice—now Justice Breyer, then Professor Breyer,
wrote about setting priorities in addressing in the regulatory proc-
ess areas where there are risks to society? He pointed out numer-
ous examples where we would regulate quite extensively for a rel-
atively minor risk and leave unattended much more significant
risks to health. Is that something that you feel currently ade-


45

Second, the proposed legislation requires agencies to more rigor-
ously control information technology investments. Time and time
again, we find agencies using technology to automate inefficient
processes. Further, enormous projects are allowed to proceed un-
checked for years without any demonstrated progress or meaning-
ful benefit.

Third, H.R. 830 recognizes the need for improved skills. Govern-
ment agencies are too often held back by an antiquated skill base.
Improved qualifications are essential if we are to make progress in
this important area.

Collectively, these changes can help improve the Government's
chances of achieving real results from the $25 billion a year invest-
ment it makes in information technology. We fully support your ef-
forts, They come at a critical time when many agencies are strug-
gling to identify and improve the way they deliver services and con-
trol costs,

Moreover, straining capabilities in the information technology
area can open up untapped opportunities to achieve paperwork re-
duction. We believe this is a fruitful area that the subcommittee
may want to focus its attention on in the future. Today’s informa-
tion technology can help reduce the need for paperwork entirely or
in large part. It offers tremendous opportunities for submitting and
exchanging information electronically without the need for addi-
tional entry or collection.

However, Federal agencies must improve their capabilities to
take full advantage of these opportunities. For example, both wit-
nesses this morning mentioned the Internal Revenue Service and
the fact that about 80 percent of the information burden is caused
by tax return filing. The IRS desperately needs to improve its infor-
mation systems.

We are actually in the perverse situation right now where many
people buy home computer packages to prepare their tax returns,
generate their forms, send them into the IRS service centers, they
are put in carts, transferred around the service center in paper
baskets, taken by IRS people and entered the data manually from
the paper return into their computer systems. This causes tremen-
dous amounts of error. It also overburdens the system so that IRS
cannot do properly its matching responsibilities and follow up on
delinquent returns and filings.

So technology can also not only help reduce the burden on the
public, but it can also produce much more effective and efficient

vernment, operations. Much needs to be done to bring the Gov-
ernment into the information technology age.

This concludes my opening statement, Mr. Chairman. We would
be ‘fied to answer any questions you may have or other members
of the subcommittee.

[The prepared statement of Mr. Dodaro follows:]

PREPARED STATEMENT OF GENE DODARO, ASSISTANT COMPTROLLER GENERAL, AC-
COUNTING AND INFORMATION MANAGEMENT Division, U.S. GENERAL ACCOUNTING
FICE

Mr. Chairman and Members of the Subcommittee:

It is a pleasure to be here today to discuss the Chairman's draft legislation reav-
thorizing the Paperwork Reduction Act (PRA). The PRA is @ vital component of an
overall legislative framework--including the Chief Financial Officers Act, the Gov-


27

minimum amount of paperwork required, it can be processed very
expeditiously.

Our objective is not to stand in the way where there is consensus
but to bring to bear a second opinion where a form otherwise would
end up on your desk and you would say, “Oh, no, another piece of
paper.” For too many people in this country, their only contact with
the Government is forms, and they don’t like it, and they are not
happy, and we need to be responsive to that, and I think that is
what this act is all about.

Mr. Spratt. But when it comes to regulatory oversight, do you
have the talent and the people sufficient to make a rigorous——

Ms. KATZEN. I have some of the most talented, knowledgeable,
experienced people in the field of cost-benefit analysis. Many of the
people that are now testifying on these issues about the need for
it are alumni of our office. I say this with enormous pride that my
staff is fully equipped to do the job that they are being asked to

0.

Mr. Spratt. Now with respect to risk assessment, does the same
hold true with respect to risk assessment?

Ms. KaTzENn. That is right. Recall, we are not being asked to do
the basic research and to make the analysis ourselves, but to re-
view it. I have likened our position to that of a Ph.D. thesis advi-
sor. The doctoral candidate comes forward and the doctoral can-
didate should do the research and should do the analysis. The the-
sis advisor should say things like, “Are you aware of this body of
data?” “Are you aware of that body of data?” “How does your as-
sump ‘ion in chapter one square with your assumption in chapter
two?” “You haven’t thought through the implications of what you
are proposing in chapter three.” Those are questions that an ana-
lyst can apply to a process, and that is what we do. We are not
there to do the basic research, we are not there to replicate what
the agencies should be doing; we are there to make sure the agen-
cies do what they are supposed to do in the first instance. That is
why I speak of the primacy of the agencies with the review func-
tion in OMB.

Mr. Spratt. You took your text on I think it is Title III of H.R.
9, which requires risk assessment.

Ms. Katzen. Right.

Mr. Spratt. Which, if I could just ask one further question about
this, Mr. Chairman?

Mr. McINTOSH. Certainly. No objection.

Mr. Spratt. Thank you.

As I understand it, the President's Executive Order 12866 sets
out a very broad and nonspecific standard for risk assessment to
the extent it should be done. I think it is sort of an admonition
rather than a requirement.

The bill, on the other hand, sets down some very, very specific
provisions about risk assessment, and you are saying you are try-
ing to fit too many disparate cases to one type of standard and
some very onerous standards to boot. Is there some ground in be-
tween that we can come to that is a happy medium?

Ms. KaTZEN. Yes, I think there is. I think the risk assessment
could be set in terms of a performance standard that specifies such
items as using good data, good analysis, and transparency. One of


64

© The third factor in the erosion is the inability of the Executive branch and
Congress to come to an agreement on what ts to the PRA are needed.
The authorization language for a jations to OIRA expired in 1989. Since
then, three Congresses during the Bush and Clinton Administrations have
been considering various proposals to amend the PRA. A effect has been

to to the agencies that they do not need to pay attention to the
role Congress assi, to the OIRA. The inability to amend the Act has contrib-
uted significantly lect of the Act’s promises.

We believe itive action to enact these amendments, and a strong signal from
Cc 88 are absolutely essential if creditability is to be restored to the promises
made by the PRA to the American ople. For this reason, the Coalition believes
Title V of HR. 9 of the “Contract wit ica” carries special significance. We be-
lieve the legislation are considering today will reverse the erosion which has
accelerated since the Supreme Court decision in February of 1990.

RELATIONSHIP OF THE PRA TO OTHER REGULATORY REFORMS IN THE “CONTRACT”

The Coalition wishes to stress that a strong OIRA, a strong regulatory traffic cop
for the President is central to other sections of the regulatory reform agenda con-
tained in H.R. 9 of the “Contract”.

The PRA stands as the single most important instance where Congress declared
it wants the President, through OMB to review the regulatory actions of the agen-
cies, As President Carter noted when he signed the law after the November 1980
elections:

The act I'm signing today will not only regulate the regulators, but it will also
allow the President, through the Office of agement and Budget, to gain bet-
ter control over the Federal Government's appetite for information from the
public. For the first time it allows OMB to have the final word on many of the
regulations issued by our Government. . . . (Presidential Documents, Adminis-
tration of Jimmy Carter, December 11, 1980, at 2795.)

A strong, and clearly accountable institution to assist the President carry out his
review of executive agency actions on the regulatory front is key to strong Congres-
sional oversight of the regulatory system. It is key to whether reforms in regulatory
flexibility assessment, risk management, cost benefit analysis, and protections
against regulatory abuses that the Congress declares it wants done are taken seri-
ously by the executive branch.

Parenthetically, let me add the Coalition was very supportive of President Clin-
ton’s issuance of Executive Order 12866 on latory Planning and Review. We
particularly welcomed the President’s focus on integrity of the regulatory proc-
ess and explicit directive to agency heads in Section 6(aX3) of the Order to follow
the law—to adhere to the procedural requirements of “. . . the Administrative Pro-
gedure Act, the Regulatory Flexibility Act, [and] the Paperwork Reduction

ct

Our’ problem has been that despite repeated instances of b lations of
these laws to the agencies and OIRA’s attention, we and the Presi directive
are too frequently ignored. We believe these failures to act when laws are ignored
by federal agencies enrages the public. It destroys confidence in the workings of gov-
ernment, A stronger OTRA and more vigorous Congress oversight will be Deceanary
if the public perception of a fair and reasonable regulatory process that has integri
is to be reinvented and established.

A corollary point is that the PRA is the statute which links the Executive and
agency review of regulatory actions with new information technology and the infor-
mation age. This too, ia Key to successful implementation of other regulatory re-
Torms in the “Contract”. The proposed amendments will further inextricably link the
information espects of regulatory action with regulatory review.

RECOMMENDATIONS

Mr. Chairman, we were asked to review the legislative proposal the Subcommittee
will be deliberating upon imminently. We make the following recommendations
which we believe will strengthen and improve the legislation.

1, The bill’s present goal to reduce the burden of all federally sponsored paper-
work by five percent should be raised to ten percent. The Committee should consider
language to make the goals more enforceable, thereby encouraging agencies to elimi-
nate existing burdens when they find it necessary to add new information burdens.

2. The proposals language requiring a written answer by the Director of OMB to
& public inguiry of whether # paperwork request js subject to the paperwork act
tracts the Senate bill's language. We recommend the corresponding language con-



4

I would defer to the distinguished ranking member of the full
committee if she has a statement, if that would be all right.

Mr. McINTosu. Certainly.

Mrs. CoLuins. Thank you.

Mr. Chairman, I thank you for holding this hearing on legislation
to reauthorize the Paperwork Reduction Act which is language
without reauthorization since 1989. It is a pleasure to see move-
ment at last, and I would like to congratulate the President’s team
at OMB. Their efforts to forge a compromise is an important factor
in getting where we are today.

uring the last 2 years we have seen how the Office of Informa-
tion and Regulatory Affairs can and should operate. Under the
leadership of Administrator Sally Katzen, OIRA has used its au-
thority to review regulations to reduce the burden on small busi-
nesses while following congressional intent. At the same time,
OIRA has moved aggressively to make Government information
more accessible to the public. That has been a bipartisan goal.

The Office of Information and Regulatory Affairs has also led the
way in bringing innovation to information collection. This is a
central part of the Paperwork Reduction Act. Under Ms. Katzen’s
leadership, we have improved both the way we collect information
and become more selective in what we collect. I am particularly
pleased that for the first time in 30 years we have removed a sub-
stantial portion of the bias against women in the way we collect
unemployment statistics. We are now using the latest technology
to reduce the burden on the public of collecting this information.

This rereauthorization puts into law a number of principles
which will make Government information more accessible to the
public. The bill requires the Government to develop a system to

elp citizens locate information held on a particular topic. It also
requires those agencies to charge no more for that information than
the cost of disseminating it to the public. The Government should
not be making any profit by charging citizens for information devel-
oped with taxpayers’ dollars.

This bill contains a number of improvements in how we use in-
formation to better manage agencies and improvements in how we
communicate with the business community and the public. It is a
good compromise in many areas.

There is one place in the bill, however, where there is no com-
promise and I am disappointed in the solution that has been cho-
sen. It represents the Paperwork Reduction Act, I believe, in its
worst light. I am of course referring to the decision to overturn the
Supreme Court decision in Dole v. United Steelworkers of America.
The subject of that case were Federal requirements that when haz-
ardous chemicals are used at a workplace there should be a com-
mon site where those hazards are posted. OMB stepped in and
blocked those requirements in the name of relieving the burdens on
business. The Steelworkers sued, and in 1990 the Supreme Court,
in a unanimous decision, agreed with the Steelworkers that OMB
had overstepped its bounds. This bill would overturn that unani-
mous decision, and that is wrong.

Now I fail to understand why the authors of the Contract With
America constantly protect business and routinely ignore protecting
citizens. Aren’t the Steelworkers and other workers part of Amer-


18

a 10 percent increase in the cost of one of its inputs. To some of the companies in
that industry, 10 percent may be major. Does that mean that a rule whose overall
annual cost is $100,000 (or less) must follow the elaborate risk and cost/benefit anal-
ysis and peer review steps in Title III, which could easily cost the taxpayers two
or three (or more) times that amount?

2, Title II] is Too Prescriptive and Unduly Layered

Unfortunately, Title III is not only broad and costly, but unduly prescriptive and
unnecessarily layered as well. The terms of the bill set forth with precision each and
every step that an agency is to take. For example, Section 3108 tells agencies that
any characterization of risk is to describe the subject of the risk characterization,
to estimate risks on the basis of a “best estimate,” to state a “reasonable range of
scientific uncertainties,” to explain exposure scenarios used in the risk assessment,
to make six comparisons (of two different varieties) to other riske with which the
public is familiar and routinely encounters, to include a statement of any significant
substitution risks to human health, and to present a summary of any risk asseas-
ments submitted by public commenters.

This is quintessential command and control, It tells agencies how to do some-
thing—rather than specifying what is to be achieved (or, in regulatory parlance, the
performance standard that is to be met), But that is one of the principal legitimate
criticisms of our regulatory system—namely, that it relies too heavily on command
and control rather than on performance standards. Would it not be better to set
forth the goals that agencies should achieve rather than telling them precisely how
to do their work?

There is general agreement that agencies should use objectively verifiable sci-
entific methods, provide sufficient information ao that their scientific analysis could
be replicated, explain and make transparent their assumptions, (including who or
what is being protected and why), and provide meaningful explanations of risks (in-
cluding comparisons that are meaningful to the public and relevant to the decision
being made). Why draft detailed provisions setting forth the fine pointe of each of

8?

Section 3104(a) (which seeks to distinguish scientific findings from policy consider-
ations) and Section 3104(bX2) (which requires an explanation of assumptions, an ex-
planation of the basis for any choices, identification of any policy or value judgments
that have entered into the analysis, and a description of any model used in the risk
assessment and the assumptions it incorporates) represent a promising start in that
direction. If this were all there were, we would not be so negative. But, as noted
above, these general statements are simply one version of multiple requirements.
It’s like requiring that a belt be worn while saying that the prescribed dress code
spenders, all to keep the pants up.

ire:

‘ad to the analytical steps and written certifications and explanations that Title
III would require the extensive reporting requirements in Section 3106 and Section
3301(g). Consider: 15 months after enactment, the President would be required to
issue guidelines for conducting and a format for summarizing risk assessments;
three months later, each agency would have tg publish a plan to review and revise
its earlier risk assessments; and within the following 18 months, each agency would
have to provide a report to Congress on the types of policy judgments it had made
in its risk assessments. The President, meanwhile, in addition to reviewing his
guidelines every four years, would have to appoint special Peer Review Panels that
would conduct—every year—a review of the risk and cost assessment: practices of
each agency and submit an annual report to Congress. This does not seem consist:
ent with Title V of H.R. 9, “Strengthening the Paperwork Reduction Act.”

Title II's peer review requirements (Subtitle C) follows the same pattern of exces-
give prescription and unnecessary layering. Subtitle C starts off promisingly enough.
Each agency, Section 3301(a) states in part, “shall develop a systematic program for
peer review of risk assessments and’ economic assessments used by the
agency . . . consisting of independent and external experts who are broadly rep-
resentative and balanced to the extent feasible,” and “may provide for differing lev-
els of peer review depending on the significance or the complexity of the problems
or the need for expeditiousness.” That seems adequate to do the job and is sensitive
to the notion that the amount of analysis devoted to e regulation should be propor.
tional to its significance. But then Section 3302(b) describes precisely what a peer
review panel must do, how the agency shall respond to the peer review, and even
which of the panels comments must be published as text and which as appendix.
In fact, Title III’s peer review provisions carry micromanagement so far that they
make an exception to customary standards of ethical conduct and prohibit agencies
from restricting the participation in peer reviews of those with an interest in the
outcome. Why couldn't agencies be required simply to have a peer review plan, tai-



55

mind set. It is not just in the agencies, it is in the Congress, and
it is in these budget committees. I mean that is the problem right
there in our own committee. They don't understand this.

Mr. SCARBOROUGH. Let’s say Bob Livingston was ready to write
you a check and say, “How much do you need to get the IRS into
the 21st century, get their information services into the 21st cen-
tury?” I understand you haven’t done an exact accounting, but can
either of you two come close to estimating what type of price tag
such a task would take?

Mr. Doparo. I think it would be very difficult at this time.

The two things I would start doing at the IRS which they are not
doing now, we have urged them for years, is, No. 1, begin to
streamline their business processes. They are just throwing people
at the problem, and that is not going to get anywhere; and, second,
I would look at fixing their financial information. They don’t even
have good information on how much accounts receivable they owe.

We did our first financial audit at IRS a few years ago, and we
haven’t been able to give them an opinion on their financial state-
ments. They thought they had $110 billion of accounts receivable.
We figured they only had 65 when we looked at it, and, of that,
only 20 was collectible. So you have bad financial data to start
with, and then you have the people issue, and I would look to hire
and bring in people who have state-of-the-art experience with this.

Part of the reason that they are having difficulties is that their
work force is largely skilled in old techno ogy and they haven't had
a lot of new talent come into the agency. They have tried, but it
is very difficult to attract and retain the right type of people to un-
de e these massive operations. I mean this is not _a small task
to try to do this given the complexity of the Tax Code and the
amount of paper that they are taking in, but it is very difficult at
this time to do it, but I would definitely start with those three
areas. I would get control on the people, I would focus effectively
on trying to get better information, and I would look at my busi-
ness processes and really figure out how you can streamline those
first before I even ask for a lot of additional money. They could get
away right now with their existing computer systems for a while
until they could come up with a good plan. I don’t think they have
a good plan now, they have a collection of projects and things they
are studying.

For example, Congressman Peterson mentioned electronic filing.
They have not figured out how they could use electronic filing yet

art of their modernization effort. It doesn’t make sense now.
Right now, you have to ey to electronically transmit their data.
I think they charge $65. You can only transmit it when you are due
a refund, and the average person—people find this just absolutely
Perplexing. So there’s a lot of their policies that you could start
with as well.

Mr. SCARBOROUGH. Thank you.

Mr. McINTOSH. The time of fentleman has expired.

Thank you both very much for appearing today. I appreciate your
testimony and helpfu insights. In fact, Mr. Peterson and I were
just talking that perhaps this area is something that we should
Jook further into in the subcommittee after we finish the legislative
work that we have under the Contract With America.


79

Mr. Fox. I understand. Well, if you get those figures you can
send them on to our chairman. I know he would appreciate dis-
seminating them to us.

Mr. STOLMEEER. I will.

Mr. Fox. I thank you all three of you for your testimony.

Mr. McIntosu. Yes. Thank you all for coming. I appreciate hear-
ing from you.

‘is 8 mmittee stands adjourned.

Mr. COAKLEY. Thank you, Mr. Chairman.

Mr. SHEEHAN. Thank you.

[Whereupon, at 12:35 p.m., the subcommittee was adjourned.]

O°


62

The Paramount reason new legislation needs to be enacted to atre: en the tools
in the rk Reduction Act is that the ability of the Executive branch to meet
the promises of the existing Paperwork Reduction Act is eroding. The Act needs to
be strengthened, corrected, and renewed, not weakened by time and neglect.

The erosion which has occurred to the Act’s underpinni
We believe the Paperwork Reduction Act of 1995 will accomplish this objective.

WHAT THE PRA DOES

The existing law makes two essential promises:
¢ First, it promises the public, state and local government, educational insti-
tutions, federal contractors, and business persons, big and small, that their Gov-
ernment will check the need for information before anyone is asked to provide
information or maintain records. It entitles the public—who must provide and
maintain the information the Government needs—to participate in the develop-
ment and oversight of each information request. Control numbers, assigned to
each information collection as proof that it has been approved are to be dis-
played on all information requests, Absent the display of a validly assigned
number, no one is obligated to respond. Notwithstanding any provision of law,
“public protection” prevails over “bootleg requirements.”
The premise is that the Government has an affirmative responsibility to do
its job before anyone in the public is mandated to respond to @ paperwork re-

juest.
WP Second, it promises that effective use of the structural and policy framework
estabished by the law to improve “information resources management” will
minimize the costs and public burden of providing and maintaining the informa-
tion that Government needs to deliver services and maximize the usefulness of
the information collected.

‘As the Speaker and the President have both highlighted recently, we live in
the Information Age. Transition to a “third wave” society is upon us. Applying
new information technology and being “smart” about how Government meets its
vital information needs will reduce the burden upon the public and deliver more
with less, Certainly, this broad strategic approach is critical to a successful re-
engineering of how the federal government operates and asks American citizens
to participate.

THREE CRUCIAL FACTORS BEHIND EROSION

The problem today is that the law’s effectiveness is increasingly eroded by three
major factors: the Supreme Court decision in Dole v. United Steelworkers off Amer.
ica; agencies who increasingly ignore the spirit and letter of the law; and six years
of Congress and the Executive not being able to agree on what amendments to the
Act are needed.

* The Dole decision has confused Federal agencies as well as the public as
to what is covered by the Act under the “public protection” section and other
provisions providing procedural safeguards, such a8 the public notice and OIRA
approval requirements. The Court decision suggests that some paperwork re-
quirements—where the public respondents do not provide the information re-

ested directly to the government but rather to a third party—are not within

e scope of the Act. This interpretation strikes at the heart of the definition
of recordkeeping requirements in instances where the data are not provided di-
rectly to the government. Most importantly, it has given agencies an excuse to
avoid meeting responsibilities under the law.

The damage done to the integrity of the statute by this Court case cannot be
overestimated. OMB's own Information Collection Budget (ICB) of 1992 notes
that in fiscal 1991, the first year after the decision, the Departments of Labor,
Transportation, Health and Human Services, as well as the Environmental Pro-
tection Agency’ and the Federal Trade Commission, began to remove informa-
tion collections from what they previously recognized as covered.

More specifically, the budget document noted that the FTC removed 88 per-
cent of its paperwork burden. It also noted thet the Occupational Safety and
Health Administration (OSHA) determined that virtually none of its informa-
tion collection requirements are subject to the Act. OSHA has ruled that all rec-
ordkeeping activities used to monitor compliance with health and safety stand-
ards are exempt from provisions of the PRA,

“The General Accounting Office, in its February 1993 report, “Paperwork Re-
duction, Agency Responses to Recent Court ions” (CAO/PEMB-93-6), ox.
amined the impact of the deci: on agency interpretations of the law and
found “inconsistency and confusion”, The examination was restricted to OMB



35

Mr. McINtyRE. Thank you, Mr. Chairman. It is also a pleasure
for me to be here testifying with my friend, Jim Miller. It is amaz-
ing how OMB Directors generally agree on most things regarding
budget matters no matter what party they may be from. We do
have a few disagreements, but in general we generally agree on the
basic principles.

I would also like to comment, Mr. Chairman, this is the first

time I have testified in this room that Congressman Horton, who
was one of the cofathers of the Paperwork Reduction Act, hasn’t
been present. He was a real champion of trying to reduce Govern-
ment paperwork, and I also considered him to be a friend both
while I was at OMB and afterwards.
The Paperwork Reduction Act, when established, actually passed
on my watch. I worked very hard to get that bill passed. I felt very
strongly that it should be passed and that it should include inde-
pendent agencies. We had a tremendous amount of pressure on the
President to veto the bill, but he signed it and exhibited his per-
sonal and very strong beliefs that we needed to control the Federal
paperwork.

T even felt so strongly about the need to control Federal paper-
work that prior to the passage of the act, I established in OMB the
Office of Regulatory and Information Policy to begin to deal with
the challenge of reducing paperwork and red tape.

Paperwork reduction is a bipartisan issue, and much of what I
have to say about it is relevant to any President or any Congress
no matter which party controls the respective branches of our Fed-
eral Government. To that end, Mr. Chairman, I would like to ask
that my testimony be incorporated in the written record of the com-
mittee.

Mr. MCINTOSH. Seeing no objection, it will been done.

Mr. McINTYRE. The Paperwork Reduction Act was needed to give
some teeth to a central management function necessary for a Presi-
dent to manage the regulatory system. The President and support-
ers in Congress believed that the Paperwork Reduction Act should
be passed and signed because it established important authorities
in a framework of accountability for any President, any Congress,
the executive branch agencies, and our citizens with respect to reg-
ulatory paperwork requirements. A strong traffic cop function en-
ables the President to better carry out his executive responsibil-
ities, and, equally, Congress through its oversight function, can
more effectively hold the executive branch accountable if the Presi-
dent is more effective than if he is not.

The President’s job is to manage the whole interest of the execu-
tive branch instead of the fragmenting concerns of thousands of
iron triangles that pervade the Nation’s capital. OMB is the appro-
priate agency to perform that function for the President, and the
Paperwork Reduction Act provides OMB the tools and the staff to
carry out this function on behalf of the President in his executive
management role.

I am also very pleased to see that the House bill would reauthor-
ize OIRA indefinitely and provide for such sums as may be nec-
essary for it to carry out its responsibilities. I believe that is a very
important provision in the House bill and would urge you to fight
very strongly to retain that provision.


vi}

Mr. McINTosnH. If there is no objection. My time has expired, but
continue.

Mr. SHEEHAN. I think the only point that I would make after lis-
tening to the comment just made by my cowitness: The issue before
your committee is not whether a disclosure standard is too detailed
or too length . The question before your committee is whether
there should be a disclosure standard in the first place. There are
very few of us that would object to an unreasonable lengthy stand-
ard. But the question that is before you in the repeal of the Dole
v. Steelworkers is that there would then be no obligation for disclo-
sure even if the disclosure was modest and reasonable.

Mr. McINTosH. Let me check on that. It is my understanding
that the case actually went to whether or not those disclosures
would be reviewed by OIRA, not whether or not there was a disclo-
sure that was required by the substantive statute.

Mr. SHEEHAN. No.

Mr. McINTOSH. The question in the Steelworkers case was that
OIRA should not be involved in OSHA’s decision about whether
there would be a disclosure, not whether or not OSHA should have
made a requirement for a disclosure.

Mr. SHEEHAN. No. It is my understanding—and maybe I am not
going to say it quite the same way, but if I could respond to that,
it is my understanding that OMB canceled a decision by OSHA to
disclose information to workers in its hazard standard. The issue
is: the Supreme Court indicated that OMB did not have authority
under the Paperwork Reduction Act to prohibit this agency from
requiring paperwork, namely disclosure to employees. It could pro-
hibit or limit the paperwork requirement of OSHA and other agen-
cies by requiring information for the Federal Government. But the
court said OMB went further and claimed under the Paperwork
Act that OSHA could not require employers to give the information
to the workers. That is what is under discussion, and that is what
is before you in this committee.

Mr. MCINTosH. Right, but not necessarily all disclosures. It was
that particular decision. In other words, OMB could say yes, it
makes sense for OSHA to require disclosure about hazardous sub-
stances that truly are hazardous as compared to substances like
plastic that are inert.

Mr. SHEEHAN. But OMB could just as equally say no.

Mr. McINTosH. Right. They ultimately have the authority to do
that under the changes that would be made to the statute.

Mr. SHEEHAN. Under the changes. My point is that it is the rule-
making process itself through which the affected agency that could
make a determination as to whether information should be dis-
closed. Not every hazardous substance needs to have disclosure,
but that would be part of the rulemaking process. Some of these
rulemaking processes, as you know, take a long time—many years.
Employers and others can participate in that rulemaking process.
But if the agency then says it is in the best interest of affected
workers or the community to disclose that information, that pro-

osal becomes subject to judicial review under the Administrative
Procedure Act. Why then should some people in the White House
have this authority to overturn that decision and then not have
that decision subject to judicial review?


36

T also am pleased to see that the bill strengthens OIRA and the
agency’s responsibility for the reduction of paperwork burdens on
the public, and particularly I am pleased to see that you have ad-
dressed the problem of Dole v. United Steelworkers of America. I
think that case leaves potentially a very large loophole in the Pa-
perwork Reduction Act, and I think that the House bill would en-
sure that such information collection requests would be covered. I
think that is very important to the objectives of the Paperwork Re-
duction Act.

I also am pleased to see the emphasis on 3-year reviews and the
opportunity to apply new information technologies to reduce paper-
work burdens. We live in an information age, and Government
should be encouraged to be smart and take advantage of new infor-
mation technology.

One other provision that I strongly support, that I am not sure
all OMB Directors would support, is the public participation re-

uirements. I have found in my experience in the private sector
that it is important that the public participate in information col-
lection requirements of agencies. Believe it or not, agencies don’t
know everything about the groups or the individuals or the compa-
nies they are trying to regulate, and when they sit down and meet
with people who are experienced they can find out some very im-
portant things that will help them make better decisions and still
carry out their responsibilities. So I support the public participa-
tion and again would urge you to make sure that is retained.

I have one suggestion. I would like to see that the requirement
to reduce the paperwork burden by 5 percent be increased to 10
percent. While this is a goal, I still think it is important to have
those goals out there and would urge you to consider increasing the
goal from 5 to 10 percent.

With respect to the risk assessment issue, my suggestion in my
testimony was that while risk assessment should left in the
hands of the agencies and their staffs and scientists, the President
needs to have someone properly staffed on the various policy op-
tions representing him to ensure use of standardized methodolo-
gies, to ensure integrity of the process, and to hear disputes be-
tween and amon; e agencies. In my judgment, the Director of
OMB is the logical person to provide this support for the President.

Thank you.

[The prepared statement of Mr. McIntyre follows:]

PREPARED STATEMENT OF JAMES MCINTYRE, ATTORNEY, MCNAIR AND SANFORD, P.A.

Good morning, Mr. Chairman and Members of the Committee.

My name is Jim McIntyre. I served as Deputy Director (1977) and Director (1978-
81) of the Office of Management and Budget during President Jimmy Carter's ad-
ministration.

Thank you for the opportunity to testify before the Subcommittee on National
Economic Growth, Natural Resources and Regulatory Affairs, and to share my per-
spective gained from four years in the White House Office of Management and

judget regarding the President’s responsibilities for regulatory policies in the execu-
tive branch of our government.

I strongly support legislation such as Title V of H.R. 9, and the draft version of
the Chairman's mark which reauthorize appropriations for the Office of Information
and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) and
strengthen OIRA and agency responsibilities for the reduction of paperwork burdens
on the public. These bills are also very similar to S.244, introduced by Senator


51

Looking ahead, this Subcommittee can also play a leadership role in focusi
the importance of using technology to minimize the burden of federal information
collection requirements, This can be done by exploring how information technology
can help betfer reduce the need for paperwork and facilitate information sharing be-
‘ween agencies,

ition, while we should remain attentive to the difficulties of measuring bur-

den, I firmly’believe that the government should continue to minimize the imj
of federal information needs on individuals and businesses. The changes embodied
in the proposed legislation are steps in that direction

Mr. Chairman, this concludes my statement. I would be glad to answer any ques-
tions you or other members of the Subcommittee may have at this time.

Mr. McINTosH. Thank you. Thank you very much for joining us

oday.

I will defer my questions until my colleagues have had a chance
to ask theirs.

Mr. Peterson.

Mr. PETERSON. Thank you, Mr. Chairman.

As you probably realize, I couldn’t agree with you more. I sup-
pose I shouldn’t have such a bad attitude about this and be so
skeptical. I guess what I am curious about, and I still don’t really
understand this whole paperwork reduction business as well as I
should, but it just seems to me there is a lot of effort being put into
that whole process and by extending it we are just kind of continu-
ing and kind of ratifying that effort. I mean without reading this,
I am persuaded that this is what we need to do.

Are we going to be sending the wrong signal with this? I mean

rou may have met with all of these people and given them all this
information, but I am highly skeptical whether it sinks in or not
or whether they understand what you are talking about.

Mr. Doparo. Well, Congressman, there is definitely a need to fol-
low up to implement this, and there is a role both for the agencies
and for the Congress. For example, what we have developed with
this material is to help them benchmark where they are against
these practices so that they can begin to make improvements. They
definitely need to improve their skill base. They definitely need to

uit throwing technology at the problem and really approach it

m a business direction.

I will Bive you gust one example which I think really illustrates
this point. The Social Security Administration handles disability
claims, so if somebody is disabled they can file a claim, and it takes
the Social Security Administration 155 days on average to give an
initial response to that claim. They were going to buy computers
to automate that process. We said, “whoa, wait a minute. Why
don’t you go back and figure out exactly how long it takes you to
process that claim.” In the 155 day average, it only takes them 13
hours of staff time to really process that claim, and what they need
to do is streamline their business processes. They were having 25
to 30 different people handle the claim, forms and files were passed
from person to person, claims were waiting in review. Whereas in
the private sector, if you have a claim, whether it is an automobile
insurance claim, et cetera, you can call right away and have one
person answer your claim.

Now Social Security has listened to us. They have hired some ex-
erts to help them reengineer their process, and right now the
ave a proposal to shrink that processing time up to 40 days. We

are hopeful that if we can bring these modern management prac-


24

afford an opportunity for electronic transmission of the data, and
if they are not doing that, why not. ae

Another change that we made last year was to ask them if it is
@ renewal of approval of a form. Currently, when you get an OMB
control number it is for 3 years and 3 years only, so they have to
come back and demonstrate continuing need for the information.
We have added a new instruction that requests information on how
the agency has used the information, because we have heard that
some information is not being used on a timely basis. So we are
instituting a number of management—I would call those manage-
ment—techniques to ensure that this Brocess is working.

Mr. PETERSON. So there is some effort to try to get away from
paperwork?

Ms. KATZEN. Absolutely.

Me, PETERSON. And who is doing that? That is someone in your
shop?

Ms. Katzen. Yes. I have an Information Technology and Policy
Branch in my office, and they are concerned with enhancing use of
information technology. It is also part of the Vice President’s Na-
tional Performance Review. We developed a whole series of propos-
als to use information technology to have Government perform bet-
ter and cost less.

Mr. PETERSON. Well, I guess maybe it is not appropriate here,
but I would just—from what I have seen of what has happened in
my investigations of other agencies in terms of trying to develop
computer systems—and I am frankly not very impressed—it seems
to me from what I have been able to see that the agencies that are
set up that are supposed to guarantee that you do the right thing
in my opinion actually guarantee that you do the wrong thing.

For example, GSA being involved in computer purchasing. I real-
ly have a hard time seeing that they are serving a useful purpose.
T don’t know how you fix this.

Ms. KaTZEN. We have done some work in thinking about this
area. Part of the problem is the budget system, which is on an an-
nual basis. For these kinds of systems, you need really several
years to figure out where you are left; otherwise, you are left at the
end of the year; and so there have been a number of efforts made
to try to bring some rationalization, and I would be happy to talk
with you further about that.

Mr. PETERSON. The problem is, the technology changes every 6
months.

Ms. KaTZEN. Exactly. .

Mr. PETERSON. And the way the Government operates, they can’t
do anything unless it is 3 years, and so they always are two or
three generations behind, and we have really made a mess out of
this whole area, the agencies that I have looked at. I mean I think
we would almost be better off to give each Federal employee a
budget of $2,000 and tell them to go out and buy whatever they
want and let them figure out how to talk to each other than what
we are doing.

Ms. KaTZzEN. The procurement reform legislation of last year will
be very helpful, es) cially with respect to purchasing things that
have a very short shelf life.


54

ations first and then figured out how to bring technology in. They
broke their projects down to a more manageable size, they didn’t
undertake these massive efforts that the Government is trying to
undertake. They broke it down, they measured the results, and
then they focused on having good performance measures and good
cost information to be able to weigh the two. In the Government
you have neither at this point. You don’t have good measures of
what exactly the modernization efforts are supposed to accomplish,
and you don’t always have good reliable information about the cost.

I will let Chris offer his views on it.

Mr. HoENIG. I would just make two points on that, Congressman,
getting back to something that Congressman Peterson had men-
tioned, that most of the leading State and private sector organiza-
tions that we studied actually generated their sense of urgency to
change by a problem with the bottom line, whether it was a budget
cut or some other significant problem. That forces the urgency to
change and ultimately to reevaluate the existing pool of capital in-
vestment and redistribute it.

Right now there is plenty of money being spent. What needs to
be evaluated is the redistribution of the current pool of capital in-
vestment, and that is why it is not an either/or question. Ulti-
mately the forcing function of the cost reduction ically stimu-
lates a real redirection as long as you have got the ‘ipline of the
investment control processes that force you to look at prioritization
of high-value and low-risk types of investments versus low-value,
high-risk types of investments.

. SCARBOROUGH. You stated—one of you stated that the IRS
has spent $2.5 billion over the past 6 or 7 years updating the proc-
ess, their information services. What did that money go to?

Mr. Doparo. It went to a collection of various projects. For exam-
ple, now they are trying to study the imaging—how to image the
returns, and they have had different projects under way over time,
and we can submit—I have detailed information on that that I can
submit for the record.

Mr. McIntosu. If the gentleman would yield 1 second, they are
studying imaging?

Mr. Doparo. Yes.

Mr. McINrosu. They ought to just go to any computer store and
buy technology off the shelf.

ir. DopaARO. A big problem is that they have about 1,000 com-
puter programmers over there that are trying to develop the soft-
ware themselves, which is a problem in many agencies. I mean
there are plenty of off-the-shelf opportunities. But again it goes
back to the mind set that, “We have created this; we need to create
it ourselves,” so a lot of the moneys went for personnel costs in a
number of these areas, a number of the moneys went for upgrade
of hardware components, but the big problem is developing the
software.

Mr. PETERSON. Would the gentleman yield?

Mr. SCARBOROUGH. Sure.

Mr. PETERSON. You know, you don’t have to go to the IRS. We
have it right here in the House. You cannot do what you need to
do because the HIS bureaucracy is in your way and literally you
can’t get done what you need. I mean that is my talk about the



63

and three sgencie the Environmental Protection Agency, Health and Human
Services, and th partment of Labor. Significantly, ‘AO identified the dif-
ferences between how the three agencies viewed the decision and cited examples
of Previously: cleared information collections no longer submitted for public com-
ment and OMB review. And as GAO put it, “OMB does not object when an
agency does not submit ICRs for OMB review based on the agency’s interpreta-
tion of the case.”

Mr. Chairman, we respectfully observe that you can drive truckloads of paper-
work requirements through that opening to escape accountability, We believe
that is what is happening ‘increasingly.

‘The Coalition’s position is that all regulatory paperwork requirements should
be covered by the Act’s protections—not just those that are submitted to the
federal government. If the erosion surrounding the Act’s promises is to be re-
versed, we believe Congress must take this step to clarify what the PRA means.

° The second factor contributing to the erosion is the growing tendency of

ncies to fail to follow the requirements of law—to just plain ignore the Ta a

e Act requires federal officials to go through some common sense steps to
check for need and duplication, and to seek public participation and approval
from OIRA before they display the corresponding control number—the “Good
Housekeeping Seal” if you will—that mandates that the public maintain or pro-
vide information. Any information collection lacking this control number is an
illegal “boo! collection. The Government thus has an affirmative responsibil-
ity to do its job before asking the public to do theirs.

"The “sunset” provisions ‘Of the law require paperwork requirements to be re-
approved every three years, and the law explicitly prohibits an agency from

ing out and collecting information without a validly assigned control number.
Snes agencies find that very little happens if they fail to meet their responsibil-
ities, they tend to ignore them. We believe this is happening ever more fre-
quently, and absent enactment of this legislation, the integrity of the regulatory
process is likely to deteriorate further.

For example, in a June 1987 GAO Report, “Information Management, Status
of Formerly Approved Paperwork Requests” (GAO/IMTEC-87-22), investigators
sampled how well agencies were meeting the three year sunset requirement for
paperwork. They found that agencies failed to follow the law 8 percent of the
time.

This finding raised minor concerns compared to the situation Administrator
of EPA, Carol Browner, found when she assumed her position. In February of
1993 the Administrator of EPA, Carol Browner, publicly announced an internal
agency-wide investigation of EPA’s failure to comply with the PRA. As she put
ie (fd| has been brought to my attention thet OMB epproval for some informa-
tion requests has not been consistently maintained.”

To the best of our knowledge, the final results of the investigation are not
available to this day, two years after the initial announcement. We do know
that EPA had to halt its law enforcement program until it could assess the con-

ences of hundreds, if not thousands, of instances where the agency failed
to follow the law over the past ten years.

While Administrator Browner moved forcefully to correct the problem, she did
not report the Agency’s lack of management controls regarding its information
resources as a “material weakness” in her latest Federal Managers Financial
Integrity Act Report to Congress, and OIRA’s most recent annual report does
not list the violations as required by the PRA’s “Responsiveness to Congress”
section. Moreover, in reviews of EPA notices in the “Hederal Register”, we con-
tinue to observe that the “bootleg” problem in new regulations persists.

We believe the proliferation of “bootlegs” is occurring across the government.
‘The EPA is only the tip of an iceberg. ring the recent rulemaking regarding
the Education Department’s rewrite of accreditation procedures—a rule whic
will fundamentally change the Federal Government's relationship with higher
education—the O1 noted that for four years the Department had not met the
requirements of law and justified the paperwork required of educational institu-
tions in the existing procedures. Recall the Agriculture Department’s recent
rulemaking on “safe meat” handling. Despite a tortuous rulemaking involving
litigation and a Federal Ju: ordering a reopening of the public comment pe-

iod, the rule still does not display a validly assigned control number indicating
that its information requirements are legally enforceable and subject in the
three year “sunset” ‘irements of the PHA.

These abuses must stopped if we are to reverse further erosion of trust
in the integrity of the rulemaking process,





43

to have built into our laws provisions so that if agencies don't fol-
low the law then that is certainly challengeable in court.

I would be very careful. We are a very litigious society anyway,
and I would be very careful about giving people the opportunity to
go to court over just whimsical things. That would be my concern
about the civil suit. But if it is structured toward the procedure
and following the law, then I would support that.

Mr. McINTOosSH. And let me ask just one quick follow-up on that.
In general, does the Administrative Procedures Act and the rem-
edies under that provide sufficient ability to review that, or do we
need to grant explicit rights for challenging agencies that may not
follow, say, a cost-benefit or a risk assessment procedure?

Mr. McIntyre. I think you probably need to have some further
legislation to address the cost-benefit and the compliance with the
Paperwork Act. That is really not—I am not entirely certain, but
my ie ent is that it probably would not be completely covered
by the Administrative Procedures Act.

Mr. McIntosH. Thank you. Thank you both for your testimony
today. I appreciate it, and it has been greatly helpful to us.

Mr. MILLER. Thank you, sir.

Mr. McIntyre. Thank you.

Mr. McINTosH. Our next panel represents the General Account-
ing Office. Mr. Gene Dodaro is the Assistant Comptroller General
at the Accounting and Information Management Division of GAO.
He is responsible for all of GAO’s financial management and budg-
et work as well as in issues surrounding the Government’s use of
information technology. He is accompanied by Christopher Hoenig,
the Director of GAO for Information Resource Management Policies
and Issues. In that position, he leads GAO’s efforts to identify and
implement valuable private and public sector practices for use in
improving the performance of Federal agencies.

Welcome to both of you. So that I don’t neglect my duties, if I
could ask each of you to rise.

(Witnesses sworn.]

Mr. McINTosH. Thank you.

STATEMENT OF GENE DODARO, ASSISTANT COMPTROLLER
GENERAL, ACCOUNTING AND INFORMATION MANAGEMENT
DIVISION, U.S. GENERAL ACCOUNTING OFFICE; ACCOM-
PANIED BY CHRISTOPHER HOENIG, ASSOCIATE DIRECTOR,
ACCOUNTING AND INFORMATION MANAGEMENT DIVISION,
INFORMATION RESOURCE MANAGEMENT POLICY AND IS-
SUES GROUP

Mr. Doparo. Good morning Mr. Chairman, members of the sub-
committee. We are pleased to be here today to discuss H.R. 830.
It contains important provisions to strengthen the Government’s
management of technology and reduce collection burdens placed on
the public, and we fully support the information management pro-
visions of the bill.

With your permission, Mr. Chairman, I would like to have my
detailed statement submitted into the record.

Mr. McINTosH. Seeing no objection, it will be done.

Mr. Doparo. While my detailed statement discusses various as-
pects of the bill, I would like to focus my brief remarks this morn-


4l

Mr. McINTyRE. I think given the environment that OIRA has
had to operate under with no authorization, having to struggle
under some of the limitations of the Supreme Court case, I think
the have done an excellent job, and I would give them an 8 or a

also.

Mr. EHRLICH. What one thing would you like to see us accom-
plish to reach a 10?

_Mr. MILLER. I think constant encouragement of OIRA and an in-
dication of confidence in it, and I think that requires some over-
sight of OIRA and some working together with the OIRA Director.
I am very high on Ms. Katzen. I think she is a very capable person.
I think the extent to which OIRA doesn’t do its job—I hate to say
it this way-is probably due to the ability of agencies to circumvent
OIRA and to defeat its requirements.

Mr. McIntyre. I think one of the most important things you
could do is pass this House bill.

Mr. MILLER. Yes.

Mr. MCINTYRE. That is the most important thing you could do to
support OIRA and to ect it up toa 10.

ir. EHRLICH. Thank you.

Thank you, Mr. Chairman.

Mr. McINTOSH. Thank you.

I have got two questions, one on the risk assessment area al-
though one applies to both. In risk assessment in the House bill,
there is no provision for centralized review, and there have been
proposals that would model what was done in the Paperwork Act
for that area and for cost-benefit. Do you_see that as a helpful
change to the legislation, to strengthen OIRA’s ability to have
input, essentially givin them final sign-off authority before regula-
tions go forward, that the agencies have accurately done cost-bene-
fit and risk assessment?

Mr. MILLER. I think the answer is yes, and I think OIRA should
be instructed or encouraged to utilize the science office in the
White House to help with evaluations of some of the technical ma-
terials in ways that they probably are not quite as facile now, but
I think this would be very helpful. And back to what I was saying
earlier, I think it would help prioritize the Government’s regulatory
activity and result in its being much more cost effective than it is
now.

Mr. McINTYRE. I agree with what Mr. Miller said, but I also
would like to support what Ms. Katzen said. I think she gave a
very good statement on the risk assessment issue.

ne of the problems you need to be concerned about in this legis-
lation, in my judgment, is that Title III does tend to be very pre-
scriptive. I think it is focused more on health issues and other
types of issues that arise throughout the Government. It would
probably work better to establish what you mean by risk assess-
ments and establish performance standards you expect the agen-
cies to take into account and then give OMB the authority to over-
see that on behalf of the President, and it also helps you with your
oversight responsibilities if OMB is doing its job.

I really think when you get too prescriptive you find you just
can’t outthink agencies, you can’t outthink industry, and you can’t
outthink the American people here in Congress, and you are not


66

burden, however, of duplicative disclosure to Government agencies
should not be confused with the obligation of disclosure to exposed
populations. Thus, for example, with regard to effectiveness within
Government, the EPA is conducting its own common sense initia-
tive designed to streamline its rulemaking and enforcement. activi-
ties. The Steelworkers Union is participating along with other in-
terested parties in helping EPA to achieve its goals. Other agencies
such as OSHA have also initiated their own internal regulatory re-
forms to improve their effectiveness. Additionally, President Clin-
ton’s Executive Order 12866 which Provides for improved regu-
latory coordination and planning within Federal agencies builds
upon previous Executive orders by both Democratic and Republican
Presidents.

Problems arise, however, when such laws as the Paperwork Re-
duction Act are used as legislative vehicles not to improve how
Government regulates but rather to prevent Government from reg-
ulating.

The legislation before the subcommittee would overturn the 1990
Supreme Court decision in Dole v. United Steelworkers of America
where the Court held that OMB did not have the authority to dis-
approve provisions of OSHA’s hazard communications standard re-
quiring employers to disclose information about the hazards of
toxic chemicals to workers. The Dole case reached the Supreme
Court after years of foot dragging by OMB in complying with deci-
sions of the lower Federal court which had previously found OMB
had exceeded its legal authority in blocking third party disclosure
requirements in OSHA standards. Indeed, throughout the 1980's
OMB became a superregulator, substituting its views and its politi-
cal ideology for scientific and policy determinations by the regu-
latory agencies.

ermore, I am unaware of even one example where OMB
used its review authority to recommend that OSHA strengthen a
proposed standard to protect worker safety and health. Indeed, the
presumption on the part of OMB seems to have always been that
the best regulation is the least regulation or no regulation despite
sometimes overwhelming evidence to the contrary.

Despite this unfortunate record at OMB, the legislation before
you today would give OMB sweeping new authority to interfere
with the obligations of employers to disclose information to their
workers about safety and health in the workplace. Under the legis-
lation, OMB’s review authority would be extended to all informa-
tion required to be disclosed to third parties and the public.

Justice Brennan, in his court case, observed: “Among regulatory
tools available to Government agencies charged with protecting
public safety and health are rules which require regulated entities
to disclose information directly to employees, consumers, and oth-
ers. Disclosure rules protect by providing access to information
about what danger exists and how they can be avoided.”

It is absolutely clear based on the history of the last 12 years
that this change in the law which you are now contemplating will
inevitably have a chilling effect upon the willingness and the abil-
iy y of regulatory agencies to impose disclosure requirements in the

e.


1

words, in order to provide for sound regulatory decisions and public
education. The administration actively supports these goals. We
have spoken frequently and forcefully of the need for good data, for
good analysis of costs, of benefits, of risks, and for an open and
transparent process. That is what I do every day in reviewing regu-
lations.

We have not only talked about it but we have done a great deal
administratively—through our Executive Order 12866, through the

latory Working Group, and in task forces in the White House
and with the agencies. Moreover, this administration is on record
in support of legislation that is fair, effective, and affordable. It is
with regret that I have to say that Title III does not live up to
these standards nor does it live up to its own professed standards
of regulatory efficiency and cost-effectiveness.

Many who have testified in support of Title III testify in favor
of cost-benefit and risk analysis. I concur, but I urge you to look
at the words of the bill as they are written. As drafted, Title III
is an extreme measure which is fraught with consequences, I as-
sume unintended, that would only exacerbate the problem it seeks
to address—an inflexible regulatory system which is insufficiently
attuned to the benefits and costs of rulemaking.

This bill, as drafted, is subject, I believe, to the same criticisms
that many of you have leveled against the regulatory system. It is
too broad, it is too prescriptive, and it is too costly. My written
statement sets forth a number of those concerns. I have testified
before the Commerce Committee on Title III.

I would also note that much of what is in Title III is replicated
in Title VII, and I testified yesterday before the Judiciary Commit-
tee on that provision. There are differences between Title III and
Title IV that need to be reconciled. Part of the problem comes from
the attempt to write this in very specific provisions rather than—
if you will forgive me lapsing into regulatory jargon—through the
use of performance standards instead of a command and control ap-
proach to this subject.

I would be happy to answer any questions that you have because
it remains my hope that we will be able to work together to bring
the American people a rational regulatory system that protects our
health and safety and the environment, on the basis of sound
science and sound economics, without imposing undue costs or bur-
dens. That is my objective; I know that is your objective. I would
be happy to work with you in that effort.

(The prepared statement of Ms. Katzen follows:]

PREPARED STATEMENT OF SALLY KATZEN, ADMINISTRATOR, OFFICE OF INFORMATION
AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND BUDGET

Good morning Mr. Chairman and Members of this Subcommittee. I am Sally
Katzen, Administrator of the Office of Information and Regulatory Affairs (OIRA)
within the Office of Management and Budget (OMB). It is a pleasure to be here to
discuss the current legislative efforts to improve the Paperwork Reduction Act of
1980. I am also pleased to discuss Title III of H.R. 9, which is called “Risk Assess-
ment and Cost-Benefit Analysis for New Regulations.” The Administration looks for-
ward to working with you on these important topics, and on improving the regu-
latory system in general, in the coming weeks and months.


53

volved in this in the agency—we found systems problems in these
leading organizations. They just didn’t automatically figure out
how to do this. The key where they started is, their top executives
really spent time to invest in this area and how they can improve
their business, and they made it a critical part of their operation.

Mr. PETERSON, But generally they are forced into this because
the bottom line isn’t there and they have got a problem and they
have got to fix it. The trouble in Government is, there is no bottom
line and nobody still thinks this is a serious problem. I mean all
this talk about reinventing government and balancing the budget,
but there really, truthfully, has not been any serious attempt to ac-
tually do something significant in these agencies in terms of
downsizing, getting rid of all this middle management that
shouldn’t have been put there in the first place, and all this other
stuff that is there.

My time has expired, but I just hope that there is some way we
can—those of us that are interested can try to bust through this.

Mr. Doparo. I think one way to start, Congressman, if I may
just add one more issue, is by getting control of the budgets of
these agencies. I mean we have advocated slowing down some of
these major initiatives that aren’t going to produce a good return
on the public’s investment, and that gets the attention of top offi-
cials both at IRS and at Social Security—at the Agriculture De-
partment we recommended stopping the $2.6 billion effort that
wasn’t headed in the right direction. So I think good oversight and
using the leverage of the budget process is a reasonable proxy for
the Government for a bottom line beginning.

Mr. PETERSON. Thank you very much.

Mr. McINTosH. Thank you.

Let me turn now to Mr. Scarborough.

Mr. ScarBoroucH. Thank you, Mr. Chairman.

Let me say up front that you certainly have an ally in saying
that we need to slow down the budgets of these agencies. I person-
ally believe we need to reduce the number of existing agencies by
three or four as soon as possible. But what would you say—and I
would like to ask each one of you to respond to this—what would
you say to critics who would says on one hand you are saying we
need to make sure that the IRS updates its information services,
and we need to bring modern management capabilities I think
were your, words, to these agencies on one hand, and then on the
other hand you say we need to cut their budgets?

Obviously you are not going to be able to update the information
services on a huge, monstrous bureaucracy like the IRS that is in
1960’s technology without significant cost. Have you all done a cost,
analysis of that, and what would you say to critics that say you
can’t have it both ways?

Mr. Doparo. Well, what I would say to that is that we are in-
vesting an awful lot of money and getting little in return for it. For
example, at the IRS they have spent an estimated $2.5 billion
working on their tax system modernization effort for the last 6 or
7 years and we have seen very little progress in that area.

at I would say is that what we find in leading organizations
is that they first cut through, as we were talking before, their mind
set and really change the way they were doing their business oper-



59

regulatory paperwork requirement, is covered under the act, and
whether the act has been complied with.

Our experience with this in the past has been somewhat frustrat-
ing, and what we recommend now is that a private right of action
should be granted to any citizen who petitions the Director of OMB
for a determination of whether a paperwork request is subject to
the act’s protection and does not get a response.

Stated another way, a citizen should have standing to sue in
court and seek an appropriate remedy if the Director does not an-
swer the mail and respond to alleged bootleg requirements, and we
recommend specific language there, Mr. Chairman. You are prob-
ably somewhat familiar with it. It is found elsewhere in the con-
tract, but the point that we make here is that it is one thing to
say that a citizen has a right to petition and get an answer, but
we have been doing that, many members of our coalition now, for
some time and there are too frequently, too often, instances where
you don’t get any answer at all.

Ms. Katzen this morning spoke of the case that my organization
was a part of, of going to court seeking review under the Adminis-
trative Procedures Act to ask for an opportunity to publicly com-
ment on a survey by the Department of Labor. The judge did not,
entertain our case, but his basic ont was that your remedy is
with the Administrator of OIRA. We wrote her in January a year
ago and also sent her the judge’s suggestion, and we have yet to
this date had an opportunity to respond to this request. Whether
or not that bootleg or potential bootleg is covered under the act has
been a request that has come from a number of organizations, and
there has been no response.

So what we are suggesting here—and there are a number of
other examples to this that we could take—that we could go
through here. I believe Congressman Crapo this morning was
thinking of a different example. But this is one where we as a coa-
lition in our 5-year evolution have come to somewhat of a new
point of view, and it would be different from what is in the legisla-
tion now, and we strongly recommend that you take it up, and very
sympathetic with your view that this is a means properly con-
structed that could be used to empower the public to see to it that
the law is followed. We also recommend that the bill be amend-
ed—_

Mr. McInTosu. Mr. Coakley, if you could summarize the remain-
der of your testimony, and perhaps we can elicit it in questions.

Mr. COAKLEY. Surely, The bill should be amended to explicitly re-
quire all recordkeeping requirements contain the specific retention
requirement, and, Mr. Chairman, that is one that would save bil-
lions of dollars.

Thank you.

[The prepared statement of Mr. Coakley follows:]

PREPARED STATEMENT OF ROBERT COAKLEY, EXECUTIVE DIRECTOR, COUNCIL ON
REGULATORY AND INFORMATION MANAGEMENT

EXECUTIVE SUMMARY

* The Paperwork Reduction Act Coalition enthusiastically supports the Paper-
work Reduction Act of 1995 (PRA), Recall that last Congress a full quarter of
the entire Congress, Democrats and Republicans alike, actively sponsored simi-
lar legislation. Title V of H.R. 9 of the “Contract” has its origins in similar legis-


13
fimmy Carter, and just as enthusiastically endorsed by the new President, Ronald

Paperwork Reduction Act strengthened the paperwork clearance process ea-
tablished under the Federal Reports Act by claritin g that the Act ove red rec-
01 ‘coping requirements and information collection activities associated with -
lations; (2) consolidating Federal paperwork review authority in OMB; (3)

agencies to eliminate duplication, minimize burdens, and develop plans for using the
information before requesting OMB ay of proposed information collection ac-
tivities; and (4) creating a “public ion provision” stating that no penalty may
be imposed on a person who fails to respond to an unapproved paperwork require-
ment. The other major initiative of the Paperwork Reduction Act was to integrate
this revitalized work control process within a broader information resources

ment Tinking fulfillment of all of the Act’ der
Consolidated manegement Sombrelle nn ne Aas Purposes under &
‘Thus, the rk Reduction “Act created a si nt framework

8, manageme!

within Federal agencies to govern their information mies and it consolidated
guyeramentwide policy and oversight functions for these activities in a new OMB

fice of Information and Regulatory Affairs. These IRM functions included the re-
view and approval of agency information collection ests, Federal statistical ac-
tivities, records management activities, privacy of records, interagency sharing of in-
formation, and acquisition and use of automatic data Processing, telecommuni-
cations, and other technology for managing information resources. In its scope, the
Act represented an historic effort to focus the attention of Federal agencies on the
twin tasks of reducing public information collection burdens and maximizing the
utility of rament info)
and effectively.

B. The 1986 Amendments to the Paperwork Reduction Act

Building on six years of experience, Congress acted to further stre1 n the Pa-
perwork Reduction Act in 1986. The 1986 amendments, adopted with large biparti-
san support, established an annual five percent paperwork den reduction goal,
required a agencies to provide the public with more information about paperwork pro-
posals, and revised the definition of “information collection request” to include pa-
perwork contained in regulations. With regard to information resources manage-
ment, the 1986 amendments established new requirements and deadlines for
plans and | policies; required the appointment of a professional statistician to carry
out a broadened array of OMB's statistical policy oversight functions; revised the
of the Act’s information technology provisions; and strengthened OMB respon-
sibilities for information security and dissemination.

C. Third Party Disclosure
In 1990, in a case titled Dole v. Steelworkers of America,* the Supreme Court in-

terpreted the language of the Paperwork Reduction Act and ruled that OMB lacked
suthorty to disapprove third party information disclosure requirements. The Court

mation to perform government functions more efficiently

01
ased its decision on its view that the specific statutory language in the Act re-
quired that the Federal agency receive or use that information, spite legislative
isclosure \-

history suggesting that the sponsors intended to include third party
in the scope of the Act.

Third party disclosures have been interpreted by various agencies to include Fed-
eral requirements for labeling, self-certification recordkeeping, conveying informa-
tion between third ‘ies; and conveying information directly to State or local RY
ernments. In each instance, the information is not required to be given to the Fed-
eral government.

Third party disclosure requirements are being used in part because agencies, with
their limited resources to collect and analyze information, have discovered that their

rogram objectives may be met by requiring private parties to provide information
directly to the intended beneficiary. Third party disclosure also serves to supple-
ment enforcement efforts since self-certification and recordkeeping that is made
available to the public can replace extensive information collections that the agen-
cies themselves would have to prescribe.

‘A few years ago, GAO was asked to review the impact of the Dole decision. In
summary, GAO found:

re is a great deal of variation in the number and type of ICRs [informa-
tion collection requests] no longer being sent to OMB for approval. To date, 77
submissions or portions of submissi ve not been forw: to OMB for re-
newal based on the Steelworkers decision: 63 of 351 total submissions at DOL

4494 U.S. 26 (1990); see Action Alliance v. Sullivan, 930 F.2d 77 (D.C. Cir. 1991).


CONTENTS

Page
Hearing held on February 7, 1995 ... 1
Statement of:
Coakley, Robert, executive director, Council on Regulatory and Informa-
tion nt nt; Jack Sheehan, legislative director, United Stee]-
workers of America; and Bob Stolmeier, president, KLC Corp ... a «BB
Crapo, Hon. Michael D., a Representative in Congress from the State
of ldaho - 6
Gene, Assistant Comptroller General, Accounting and Informa-
tion Management Division, U.S. General Accounting Office; accom-
ied by Christopher Hoenig, Associate Director, Accounting and In-
formation Management Division, Information Resource Management
Policy and Issues Group .. 43
Katzen, Sally, Administrator, Office of Information and Regulatory Af-
fairs, Office of Management and Budget ..... 9
Miller, James, chairman, Citizens for a Sound Economy; and James
‘Mcintyre, attorney, McNair and Sanford, P.A ... . BL
Letters, statements, etc., submitted for the record by:
Coakley, Robert, executive director, Council on Regulatory and Informa-
tion Management, prepared statement of 59
Crapo, Hon. Michael D., a Representative in Congress from the State
of Idaho, prepared statement of .... 8
Dodaro, Gene, Assistant Comptroller General, Accounting and Informa-
tion Management Division, U.S. General Accounting Office, prepared
statement of ...... 45
Katzen, Sally, Administrator, Office of Information and Regulatory
fairs, Office of Mi ment and Budget:
Number of Federal employees responsible for implementing the Pa-
perwork Reduction Act 22
Prepared statement of .. rel
McIntyre, James, attorney,
ment of 36
Miller, Jame
ment of 32
Sheehan, 3
pared statement of 68

ay


34

used to make realistic risk comparisons. Risk assessment should require at the fol
lowing:
«An open and transparent risk assessment. The analysis should identify the
underlying scientific assumptions used in the assesament so that all concerned
parties can evaluate the assessment.
© Objective and unbiased estimates of risk. The conservative, worst-case sce-
nario underlying current risk assesament methodology provide little more than
an upper bound estimate of risk that is difficult to compare or evaluate relative
to other riske. Important assumptions are buried in the analysis, limiting the
usefulness of the assessment.
« Full disclosure of the information underlying the risk assessment. Exposure
levels, the population at risk, confidence levels, and ranges of risk should be in-
cluded in all risk assessments to allow the public a better understanding of the
risk in question.

Establishing a risk assessment process that incorporates the best available sci
entific knowledge while clearly explaining the underlying assumptions will provide
an important addition to benefit-cost analysis that can be used to reduce the burden
of federal regulation by identifying those cases where regulations reduce negligible
risks at very high prices. Risk assessment. allows establishes one more check in the
regulatory process where it is possible to ensure that a regulation provides net bene-
fits for the public.

‘Title I of H.R. 9 is an important step towards reforming the risk assessment
process within the federal government. The legislation makes the process more open
while improving the use of cience in risk assessments, In fac, risk asseasment pro-
visions included in Title III are “to present the public and executive branch with
the most scientifically objective and unbiased information concerning the nature and
magnitude of health, safety, and environmental risks in order to provide for sound
regulatory decisions and public education.”

lowever, in its current form, H.R. 9 lacks two fundamental elements of an effec-
tive risk assessment process. First, the legislation should include centralized review
with presidential oversight. OIRA plays this vital role for benefit-cost analysis and
there should be a similar role established for risk assessment. The president and
his science advisers should have the capability to oversee and coordinate risk as-
seesments within the executive branch. It is an important part of the president’s
constitutional obligation to manage the executive branch. Centralized review of the
regulatory process has been underway began in the 1970s and was formalized in
1980. Risk assessment is a vital element of the regulatory process and should be
included in any centralized review of agency regulations.

The second element that this committee should consider adding to Title III of H.R.
9 is a requirement for risk prioritization. Not only should agencies conduct risk as-
sessments, but they should use the findings of these assessments when determining
how to allocate scarce resources. Consumers are better served when dollars are
spent reducing the greatest risks. Risk prioritization would require agencies to rank
various risks and address the most dangerous hazards first. Including this require-
ment in Title III would ensure more reasonable regulations that provide greater
protections to consumers.

CONCLUSION

Both a reauthorized Paperwork Reduction Act and regulatory reform are crucial
for ensuring the federal goverament does not impose excessive or duplicative bur-
dens on the American public. Although there have been successes in reducing the

aperwork burden and unnecessary regulations, the overall burden of federal regu-
lation has grown substantially since 1980. H.R. 9 contains reforms that will flow
further reductions in unnecessary regulations and burdens. As a former Adminis-
trator of OIRA, I am an ardent supporter of a strong reauthorization of the Paper-
work Reduction Act; Citizens for a ind Economy has also been working to ensure
reauthorization. Risk assessment is another important tool for avoiding unnecessa!
regulations. urge you to move forward with HR. 9 aa an important step towards
rationalizing the federal regulatory burden. I will be happy to answer any questions
on these issues. Thank you, Mr. Chairman and members of the Committee.

Mr. McINTosH. Thank you very much, Mr. Miller.

I am shocked to learn that the agencies may not wholeheartedly
embrace OIRA review.

Mr. McIntyre.


76

Mr. McINTosH. OK. I understand your point.

Let me answer your question why they should have that ability,
or at least in my view, and that is because of these myriad of ex-
amples that we have seen where OSHA has made the wrong sub-
stantive call and we have a great deal of faith that OIRA will make
better judgments in this area. But I think you have analyzed cor-
rectly what is at stake in making the change or not. Thank you
very much.

Let me turn now to Mr. Peterson.

Mr. Peterson. Thank you, Mr. Chairman. I apologize, I was
working on something else, I didn’t hear all of that, so I don’t want
to be redundant.

Mr. Sheehan, I guess I share what I know about this situation,
the concern of what happened in your particular case, your court
case. My question is, are there other examples of this that have
happened that you are aware of? This is an area I am not real fa-
miliar with.

Mr. SHEEHAN. No, not that I know of. But let me put it to you
this way. I just happened to hear the previous witness from the ad-
ministration say that after the Supreme Court decision was ren-
dered, the agencies no longer submitted to OMB their rules and
regulations on disclosure because the Supreme Court had indeed
upheld the agency’s right to require in its rule that there could be
disclosure. Hence the agencies no longer submitted to OMB, for the
purpose of the Paperwork Reduction Act, review of those disclo-
sures. I think she mentioned that there were some 77 cases that
might have previously been submitted to OMB and—pardon my
language, to the OMB axe. After the Supreme Court decision they
were no longer submitted to OMB for review.

So it isn’t so much there were many cases in the past. When this
act passes, how many more proposals now will really proliferate
here? How many issues involving disclosure to communities and to
workers will be subjected to OMB? For what purpose? To decide
whether you can restrict the paperwork required in giving proper
disclosure, not necessarily because of too much detailed forms.
Should a worker or a community be made aware of the fact there
is a hazard?

Mr. PETERSON. I am not sure who can answer this question, but
OMB doesn’t have to take anything into consideration other than
the paperwork reduction?

Mr. SHEEHAN. That is my understanding.

Mr. CoaKtey. If I may, Congressman.

Mr. Peterson. Is that true, Mr. Chairman?

Mr. McINTosu. I’m sorry?

Mr. PETERSON. That OMB doesn’t take anything into consider-
ation other than paperwork reduction when they are looking at
these regulations. I mean they must be looking at more than that.

Mr. McINTosH. Their authority in granting the control number
is to look at the paperwork reduction, and it is my understand-
ing—

Mr. PETERSON. My question is, does that take precedence over
everything else? In other words, if it was clear that whatever the
situation was was going to be—a threat, would they go ahead and


22

Ms. KATZEN. Yes, there is a senior information resource manage-
ment person for each agency, and they generally have responsibil-
ity for implementation of the Paperwork Reduction Act.

Mr. PETERSON. Do you work with those folks?

Ms. KaTZEN. Yes, I do, sir.

Mr. PETERSON. Can we find out how many people are in these
agencies working on this? Is that something we can find out?

Ms. KATZEN. We certainly can try.

Mr. PETERSON. I would like to know.

{The information referred to follows:]

Honorable Collin Peterson
.S. House of Representatives
Washington, DC 20510

DEAR CONGRESSMAN PETERSON:

At the February 7th hearing of the Committee on Government Reform and Over-
sight, you asked how many Federal employees were responsible for implementing
the Paperwork Reduction Act. According to information supplied by the agencies in
response to OMB Circular A-il, “Preparation and Submission of Annual Budget Es-
timates,” we estimate that approximately 122,000 FTE are used in direct support
of information resources mana; ment, primarily through the oversight and use of
information technology (as you know, FTE is not an employee head count). We esti-
mate that an additional several hundred Federal workyears are expended annually
in direct administration of the paperwork clearance function.

Of course, many other Federal FTE are involved in the collection, creation, man-
agement and dissemination of information. These include FTE involved in process-
ing tax returns at the Internal Revenue Service, collecting and analyzing Federal
statistics at the Census Bureau and the Bureau of Labor Statistics, disseminating
scientific research results at the National Science Foundation and the Department
of Energy, and evaluating and managing technica) data provided by contractors to
NASA and the Defense Department.

Thave enclosed the agency-by-agency breakdown of the 122,000 and a copy of the
instructions given to agencies for supplying those data. Should you desire further
information, please do not hesitate to contact me.

Sincerely,
SALLY KATZEN

FY 1995
Information Technology Work-years Requested

gency



COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
WILLIAM F. CLINGER, JR., Pennsylvania, Chairman

BENJAMIN A. GILMAN, New York CARDISS COLLINS, Illinoit

DAN BURTON, Indiana HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut ROBERT E. WISE, Jr., West Virginia
STEVEN SCHIFF, New Mexico MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida EDOLPHUS TOWNS, New York
WILLIAM H. ZELIFF, JR, New Hampshire JOHN M. SPRATT, JR., South Carolina
JOHN M. MCHUGH, New York LOUISE MCINTOSH SLAUGHTER, New
STEPHEN HORN, California York

JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
PETER BLUTE, Massachusetts GARY A. CONDIT, California

THOMAS M. DAVIS, Virgi
DAVID M. McINTOSH, I
JON D. FOX, Pennayivar

COLLIN C. PETERSON, Minnesota
KAREN L. THURMAN, Florida
CAROLYN B. MALONEY, New York

RANDY TATE, Washington THOMAS M. BARRETT, Wisconsin
DICK CHRYSLER, Michigan GENE TAYLOR, Mississippi

GIL GUTKNECHT, Minnesota BARBARA-ROSE COLLINS, Michigan
MARK E. SOUDER, Indiana ELEANOR HOLMES NORTON, District of
WILLIAM J. MARTINI, New Jerney Columbia

JOE SCARBOROUGH, Florida JAMES P. MORAN, Virginia

JOHN B. SHADEGG, Arizona GENE GREEN, Texas

MICHAEL PATRICK FLANAGAN, Illinois CARRIE P. MEEK, Florida

CHARLES F. BASS, New Hampehire FRANK MASCARA, Pennsyiva:

STEVEN C. LaTOURETTE, Ohio CHAKA FATTAH, Pennsylvania
MARSHALL “MARK” SANFORD, South

Carolina BERNARD SANDERS, Vermont
ROBERT L. EHRLICH, JR., Maryland (Independent)
JAMES L. CLARKE, Staff Director
KEVIN SABO, General Counsel
JupitH McCoy, Chief Clerk
BuD MYERS, Minority Staff Director

SUBCOMMITTEE ON NATIONAL ECONOMIC GROWTH, NATURAL RESOURCES, AND
REGULATORY AFFAIRS

DAVID M. MCINTOSH, Indiana, Chairman

JON D. FOX, Pennsylvania COLLIN C. PETERSON, Minnesota
JOHN M. MCHUGH, New York HENRY A. WAXMAN, California
RANDY TATE, Washington JOHN M. SPRATT, JR., South Carolina
GIL GUTKNECHT, Minnesota LOUISE McINTOSH SLAUGHTER, New
JOE SCARBOROUGH, Florida York
JOHN B. SHADEGG, Arizona PAUL E. KANJORSKI, Pennsylvania
ROBERT L. EHRLICH, JR., Maryland GARY A. CONDIT, California

Ex OFFICIO

WILLIAM F. CLINGER, JR., Pennsylvania © CARDISS COLLINS, Illinois

MILDRED WEBBER, Staff Director
Davip WHITE, Clerk

(ay


46

ernment Performance and Results Act, and the Federal Acquisition Streamlining
‘Act—designed to resolve basic management problems that undermine effective im-
plementation of many government programs. We commend the efforts of your Sub-
committee and the full Committee to revise the current statute to help strengthen
government's sat of information and technology.

Last year before the Senate Committee on Governmental Affairs, we outlined sev-
eral sals to improve the information management and technology aspects of
the PRA.! The Comptroller General again supported these proposals befove that
Committee last week.? Today, I will comment on several of these proposals now in-
cluded your draft legislation. In addition, | will summarize our work relating to the
government's role in limiting the paperwork burden on individuals and businesses.

‘THE NEED TO IMPLEMENT MODERN INFORMATION MANAGEMENT PRACTICES USED BY
LEADING ORGANIZATIONS:

The public environment has changed dramatically in the 14 years since initial
passage of the PRA. The law was enacted at a time when information management
was viewed largely as a support function rather than as an integral part of agency
management and operations. Since then, rapid changes in information technolo,
and management techniques have greatly increased the act’s potential to help
streamline operations and produce higher quality services delivered more effectively,
faster, and at lower cost.

These developments make it essential to update the act and place it within the
context of the information 28 of the 1990s and beyond. GAO’s work over the last
decade highlights how most federal agencies have invested in costly information sys-
tems projects that have produced little return in operational improvements or reduc-
tions in costs. Agencies also still lack essential information to man: programs,
contro] costs, and measure results. This poor record exists even though federal agen-
cies have invested a quarter of a trillion dollars in information technology since the
act was passed in 1980.

We find huge, complex computer modernizations at great risk from two basic
management problems: (1) the failure to adequately select, plan, prioritize, and con-
trol system and software projects and (2) the failure to use technology to simplify,
direct, and reengineer functional processes in ways that reduce costs, increase pro-
ductivity, and improve service. These problems_involving an annual investment of
$26 billion in public funds—permeate critical government operations in key agen-
cies, such as the Federal Aviation Administration (FAA), the Internal Revenue Serv-
ice (RS), Defense, Agriculture, Veterans Affairs, and the Social Security Adminis-

ration.

There is much to be done to bring our national government into the information
age. Improvements to the PRA are an essential element of this process. We know
from our research on leading organizations that effective management solutions do
exist. In a May 1994 report, we described a set of fundamental practices that were
instrumental in these organizations’ success.‘

Executives in the leading organizations we studied actively invest their time to
manage risks and maximize the return on information technology projects using the
following 11 practices.

DECIDE TO CHANGE

1. Recognize and communicate the urgency to change information management
practices

2. Get line management involved and create ownership

3. Take action and maintain momentum

DIRECT CHANGE,

4. Anchor strategie planning in customer needs and mission goals
5. Measure the performance of key mission delivery processes
6. Focus on process improvement in the context of an architecture

Jlmproving Government: Actions Needed to, Sustain and Enhance Management Reforms
(GAGA-OCE-84-1, Jan. 27, 1904); Paperwork Reduction Act: Qnportunity to Strengthen Gov-
grament’s Management of Information and Technology (GAO/T-AIMD/GGD-94-126, May 19,

3 Government Reform: Using inoering and Technology to Improve Government Perform.
3 Appendix I lista key GAO reports.

«Executive Guide: [mproving Mission Performance Through Strategic Information Manage-
ment and Technology—Learning From Leading Organizations (GAO// 'D-94~116, May 1994).


30

Mr. McINTosH. Finally, the section of Title III that this commit-
tee has jurisdiction over, altho I don’t believe we have any in-
tention of marking it up since other committees are taking up the
bill, is the peer review section. Do you have any specific comments
on the way the peer review is structured?

Ms. KaTZEN. The peer review section begins very promisingly by
setting forth a standard that provides flexibility for the agencies
and calls for a plan. It then goes into supreme micromanagement.
I mean there is a provision that says what goes in the text and
what goes in an appendix, and, with all respect, it seems to me
that is just a tad too much command-and-control.

There is another provision that I know has raised a lot of concern
having to do with conflict of interest—saying that someone should
not be excluded from a peer review panel simply because he or she
has a financial interest in the outcome, but then as you go thro
you find that a peer review is necessary for any document ma
available to the public and it must include any information sup-
plied by an interested party. So you have an endless analytic loop
where an industry representative could submit risk information,
which would then have to be reviewed by a panel, including a rep-
resentative of the industry before it could be commented on.

I think if yu start at the beginning of the section, and stop
quickly, you have the basis for a sensible performance standard.
What you want in peer review is objective, verifiable, integrity—
someone who is outside the process, who says, “This can be rep-
licated and this makes sense,” with the assumptions transparent.
That is what you are looking for in the process, and if you write
that that is what is to be achieved and that each agency should de-
velop a plan to achieve it, then I think you are on the right track.
If you go down the track that is here though, en are saying what
goes in the text and what goes in the appendix, and I thin that
is a waste of your time.

Mr. McINTosH. Thank you for your comments. I assume there is
some historical antecedent to that of which I am unaware, but that
somebody is trying to address. We will look at that.

Do any of my colleagues have any further questions for Ms.
Katzen?

poveing none, thank you very much for coming today. I appreciate
that.

Ms. KaTZzEN. Thank you.

Mr. McINTosH. And we may have some additional questions. If
we could submit them to you, that would be helpful to us as we
are compiling the record on this bill, and we will transmit those to
you today.

Ms. KATZEN. I would be happy to respond.

Mr. McINTosH. OK. The next panel is two former Directors of
the Office of Management and Budget who have been leaders in
this area both in terms of paperwork reduction and regulatory re-
view.

Mr. James Miller served in OMB during the final years of the
Reagan administration. He also served President Reagan as the
first OIRA Administrator. In between then, he has served as chair-
man of the Federal Trade Commission. He is currently chairman
of Citizens for a Sound Economy, a citizens grassroots organization.


39

agencies or departments meet those goals through the budget proc-
ess I think is probably the appropriate way to go.

Mr. Fox. I just have one more question.

Mr. Miller.

Mr. MILLER. Could I just suggest something? If you have a spe-
cific target that is very rigid, you will end up with the agencies
gaming that target or that specific requirement, and sometimes,
you will leave things out. So, for example, from 1 year to the next
you may find that there was a whole area of paperwork require-
ments that you didn’t know about, and so you have been reluctant
to put it in the base because then that means that you can’t pos-
sibly obtain your reduction target.

On the other hand, it is quite important to have legislated par-
ticular targets because that gives OIRA a very strong hand in deal-
ing with the agencies. Then OIRA can say, Congress has mandated
that we reduce the paperwork burden, and I know that you have
got problems, but we have got to do this.

So reduce it as much as feasible, at least 5 percent, or maybe,
as Mr. McIntyre was suggesting, reduce it 10 percent unless there
are extraordinary circumstances to the contrary.

Mr. Fox. Let me ask you gentlemen one more question, if I may.
Often we find the public’s perception varies from the actual reality
of the risk and therefore drives the allocation of resources and de-
termines our priorities. What role should the public play in the risk
assessment process?

Mr. MILLER. Well, I think they should play a direct role, as my
colleague here was suggesting. I think open access is really impor-

tant.

Could I speak to something I think is really important for Mem-
bers of Congress to think about, and that is, the paperwork burden
is very much a function of what Congress requires, and just a mind
set of Congress to realize that if you make some changes, you, by
changing the law, can relieve the American people of a lot of paper-
work burden.

Let’s take, for example, as you probably know, more than half of
the paperwork burden is filling out income tax forms; it is IRS.
Now I remember—this is a true story. I remember meeting with
the head of IRS in the Office of the Deputy Treasury Secretary,
and I suggested that—try to think of innovative ways to reduce the
burden. I said, “I’m not sure we should have income tax filing every
year. Why not file every other year. For example, you could”.

Mr. Fox. You ought to run for office. I think that is a good slogan
to run on.

Mr. MILLER [continuing]. “Say, if you were born on an odd-num-
bered year, then you file on odd-numbered years, so you file every
2 years. That would reduce the burden somewhat, maybe not cut
it in half but reduce it a lot.”

Mr. Fox. It may not reduce the pain.

Mr. MILLER. So I felt the IRS Director was going to faint, and
the Deputy Director of the Treasury, Jim McNamara said, “Jim
Jim, no, that doesn’t make sense. I think they ought to file every
third year.” Of course at that point the Director did have a coro-

nary.



25

One of the problems that we have with decentralized control is
that many agencies have their own systems, which may work well
within the agency but cannot communicate with that of another
agency, and so we need to have greater interoperability.

Mr. PETERSON. And some of the agencies have systems that can’t
even talk to each other within the agency.

Ms. KATZEN. That is also a problem.

Mr. PETERSON. Thank you, Mr. Chairman.

Mr. MCINTOSH. Thank you, Mr. Peterson.

I would like to now turn to my colleague Mr. McHugh.

Mr. McHucu. Thank you, Mr. Chairman.

Ms. Katzen, welcome. I appreciate your continuing efforts in this
important regard.

T have one question. During your comments you mentioned that
ou. saw the differences between the current House bill and the
‘enate bill as being minor in the scheme of things. Can I interpret

that to mean that you consider those totally inconsequential in that
ye don’t have a preference as to the Senate bill over the House
ill or vice versa?

Ms. KATZEN. They are not major issues, but I do have a view on
each of them; some I prefer the Senate version and some I prefer
the House, but none is so significant that would cause us to be con-
cerned about passage of either bill as it now sits. In any event,
there are some provisions where I think the House bill states it
better, and there are others where I think the Senate bill states it

tter.

.Mr. McHucu. But you feel the President would sign either ver-
sion?

Ms. KATZEN. Yes, sir.

Mr. McHusu. In the interests of time and because we are on the
House side, could you detail for us which House provisions you feel
are better?

Ms, KATZEN. My own self-interest starting first: The very last
provision of the bill provides a permanent authorization for OIRA
appropriations whereas the Senate, I think, is for 4 years. I will
take the House one there happily.

Second, there is a disclosure provision in which what has tradi-
tionally been an OIRA function in the Senate bill moves to the Di-
rector’s Office of OMB, and I think it should stay where it is in the
House bill. There is a provision—I’m sorry, I——

Mr. McHucu. Well, I understand that is out of left field. If you
would compare those more fully, I think it would be helpful to have
your position on the record regarding the differences between the
two provisions.

Ms. KATZEN. All right. There is a provision having to do with in-
formation dissemination that has been added to the House bill that
I think goes beyond the scope of the bill and gets into a particular
matter; I think the Senate had it right in not including it. I could
discuss this with counsel for the committee if you would like. I
have done a side-by-side. It is just that it is voluminous and I am
sitting here flipping through pages and don’t want to take your
time.

Mr. McHucu. Yes. That would be fine with me.

Ms. KATZEN. Surely.


9

in compliance with the PRA is subject to a private right of action
to enjoin or set aside the action, which would be an action against
the agency seeking to undertake the illegal enforcement activity.

Mr. Mc! 3H. OK. That was what I had assumed was the pur-
pose of that. I wasn’t gute clear from the description of Mr.
Coakley’s amendment if that was the case, so I will check with him
later as well.

Thank you. I appreciate that.

As you know, I am a big proponent of empowering citizens to
make sure that the Government agencies respond to the standards
that we set forth in these areas, and so I have a great deal of sym-
pathy with your proposal.

Mr. Crapo. Thank you.

Mr. McINTOSH. Seeing no other questions, thank you for joining
us today.

Mr. Crapo. Thank you, Mr. Chairman and members of the com-
mittee.

Mr. McINTosH. And now for our first witness this morning. The
Honorable Sally Katzen is the Administrator ot’ the Office of Infor-
mation and Regulatory Affairs at the Office of Management and
Budget. Ms. Katzen has a long and respected career as an adminis-
trative law attorney and is a leader in the American Bar Associa-
tion’s Administrative Law Section.

Ms. Katzen administers the Paperwork Reduction Act and has
been working under that statute without benefit of reauthorization,
but continuation through appropriations. I look forward to your tes-
timony in telling us how that has worked and how you see the pro-
visions of these strengthening amendments affecting your ability to
conduct that review.

Ms. Katzen.

STATEMENT OF SALLY KATZEN, ADMINISTRATOR, OFFICE OF
INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MAN-
AGEMENT AND BUDGET

Ms, KaTZEN. Thank you, Mr. Chairman. Good morning, members
of the subcommittee.

I have had a long career. I have an even longer written testi-
mony which I ask be incorporated in the record so that I could use
my brief time here to summarize the salient points.

T am very pleased to be here to discuss the current legislative ef-
forts to improve the Paperwork Reduction Act and will also com-
ment briefly on Title III of H.R. 9, the risk assessment provisions.
The administration, as you know, looks forward to working with

‘ou on these particular issues and on the general question of regu-
latory reform in the coming months.

It is truly gratifying to be here today in what I hope is the last
phase of improving and strengthening the Paperwork Reduction
Act. For more than 2 years, Congress has had legislative proposals
to update and expand the Paperwork Reduction Act consistent with
and building upon its original purposes. My commendations to the
congressional staff who have worked professionally and construc-
tively to develop a consensus, a bipartisan approach, which is con-
tained in H.R. 830 and in S. 244, which the Senate Governmental


61

the effort. Nevertheless, the Chairman to the House's Government Operations Com-
mittee refused repeatedly to hold hearings or otherwise act on the legisla tion.

Senate Committee on Governmental Affairs unanimously reported com;
legislation last Wedné . Senators Nunn and Roth, the primary sponsors of 8.244,
anticipate full Senate action soon. We very much look forward to our renewed work
with Mr. an, and with this Committee to see the Paperwork Reduction
Act of 1995 signed by the President before Spring. We welcome the opportunity to
chi the experience of the past three Congresses. It is time to embrace these pro-

changes, look to the future, and move forward to the hard work of implemen-
tation and oversight.

WHY THE LEGISLATION IS NEEDED

The Coalition testified before the House Small Business Committee (October 28,
1993) and the Senate Committee on Governmental Affairs (May 19, 1994) last Con-
gress. The views expressed by our Coalition on those occasions as to why the legisla-

fion is needed are even more valid today. Let me reiterate the most important rea-
sons and conclude with some recommendations to the Committee.

My organization, C-RIM, estimates that an amount of time and effort equal to
9 percent of the Gross Domestic Product is dedicated to meeting the Federal Gov-
ernment’s information needs. That is a ballpark figure of what the off-budget cost
of federal paperwork requirements—the “hidden taxes” of government programs—
amounts to.

Here is how we reach that number. The Government's own estimate of the hours
it takes the public to collect information, report, keep the records, fill out the forms,
and answer all the questions that accompany the delivery of federally sponso1
services is compiled for the annual Information Collection Budget. The fiscal 1991
estimate (the last annual estimate reflected in an Annual Report by the Office of
Information and Regulatory Affairs) is 6.5 billion hours. Eighty-three percent of that
is associated with the Treasury Department.

Treasury's large share is due to an adjustment made by the IRS in the late 1980's
when an commissioned 5-year study by Arthur D. Little indicated that the IRS
previously had underestimated the burden of ite reporting and recordkeeping re-
quirements by a factor of 7. It adjusted its burden figures accordingly. The rest of

take the nemansing 17 djust it tively by a factor of 4 instead

e remaining it, adjust it conservatively a factor of 4 in:
of 7, and the total burden four number comes to 10.2 billion hours.

Time is money. At 50 dollars an hour—a reasonable estimate of the average cost
of an hour spent for meeting federal reporting or recordkeeping requirements—the
cost of the federal paperwork burden comes to 510 billion dollars, which approxi-
mates 9 percent of the 1992 Gross Domestic ct.

This is a huge figure, ting a picture of the enormity of the cumulative fed-
eral paperwork burden. Relate it to individual small business persons for example,
and you begin to sense why so many are so anxious about so much paperwork. A
8 business person often can not even do what they are being asked to do. A new
employee means new paperwork mandates, and that affects choices about growth

new jobs, Couple this concern with the fact violations of reporting and record-
keeping requirements are often attached to new fines and criminal indictments, and
you further sense how out of whack the overall federal role has become.

It suggests that estimates that forty-eight cents out of a dollar in health
care go to paperwork costs are probably on point.

* It explains why 20 many teachers are concerned sbout having to spend too
much time filling cut forms instead of teaching students.

e It helps explain why federal contractors are enthusiastic about the prospec-
tive impact of streamlining the Federal procurement process. A 10 percent sav-
ing on paperwork costs in a 200 billion dollar program is 20 billion dollars that
the taxpayers do not have to pay to get the same amount of goods and services
to meet our acquisition needs.

It explains why state and local government officials are so concerned over
the paperwork burden. They are affected by some 20 percent of the overall bur-
den, suggesting that over 100 billion dollars of the cost to meet the Federal Gov-
ernment’s information needs are involved in unfunded mandates.

No one denies the importance of information in delivering vital government serv-
ices and meeting necessary government roles—be it health care, environmental pro-
tection, education, defense conversion, taxes, or the incentives for new job creation
in our economy—but the problem of excessive, cumulative regulatory paperwork
pervades the ebility to make: progress on every single domestic issue of our time.


77

suspend it because there was going to be less paperwork? Is that
the way it works?

Mr. McINTOSH. Oh, in other words, are they not allowed to also
take into consideration the underlying goal and the benefit from
the paperwork? No, I think their goal is to maximize those benefits
and reduce any unnecessary paperwork but when there is a clear
benefit for it. Otherwise, you would end up with the result where
you didn’t have any forms.

ir. PETERSON. Well I'm not sure, the way the Government
works, if that is what would happen.

Mr. Coakley, did you have a comment?

Mr. Coak.ey. If I may, Congressman, there is a standard of re-
view in the act, determination of need for information, which in-
cludes practical utility, but essentially it is the agency's respon-
sibility to justify that they have met that standard of need when
they promulgate an information request, and if that information re-
quest is to occur in a rulemaking, as was the case in the Court
case, that standard of review, the Director of OMB reviews whether
the agency has done that and has the final decision.

But in a rulemaking that is all on the record, subject to statutory
time limits as to how long he can make that decision, and indeed
if he disapproves what the agency believes it has justified, the act
very specifically entitles judicial review in the case of paperwork in
rules.

So the issue in the Court case is not so much whether there will
be a standard for disclosure, the issue is whether the procedural
requirements of the Paperwork Act will extend to those instances
when agencies promulgate disclosure requirements in rulemaking.

Mr. PETERSON. And I apologize, I haven’t read this case, and I
admit I don’t know a whole lot about this. So did this case not have
the effect of suspending this disclosure? I mean, is that not what
happened after it was all——

Mr. SHEEHAN. If the Supreme Court had not overturned Sec-
retary Dole, information would not have to be disclosed to workers
because OMB would have intervened and said it is not needed.

Mr. PETERSON. And this went through the whole process, and
you lost. Is that is correct?

Mr. SHEEHAN. No, no. It went through the OSHA review process.
Then it went—

Mr. PETERSON. And OSHA said that there should be disclosure.

Mr. SHEEHAN. Said there should be disclosure, and OMB inter-
vened.

Mr. PETERSON. Said no?

Mr. SHEEHAN. Said no. Then it went to a lower court, and then
it moved up to the Supreme Court, and the Supreme Court said
back off.

Mr. PETERSON. Back off to OMB?

Mr. PETERSON. To OMB, right. And then subsequently,
OSHA—

Mr. PETERSON. And that was a unanimous decision?

Mr. COAKLEY. No it was not. I would like to correct that part of
the record. Mrs. Collins mentioned that was unanimous. It was not
unanimous. It was a 7-2 decision. Justice White wrote a very vig-


47

7. Manage information systems projects as investments
8, Integrate the planning, budgeting, and evaluation processes

SUPPORT CHANGE

9. Establish customer/supplier relationships between line and information man-
agement professionals
10. Position a Chief Information Officer as a senior management partner
11. Upgrade skills and knowledge of line and information management profes-
sior
Essentially, they employ three basic principles: They decide to manage informa-
tion technology differently, direct technol gy Tesourees towards high-value uses, and
support improvements with the right people and training. In Particular, they
increase accountability for information technology results by involving execu-
tives and line managers in information technology decisions and creating own-
ership,
© establish an outcome-oriented strategic information management framework
by (1) linking technology investments to business needs that are defined in cus-
tomer terms, (2) managing and controlling information technology as an invest-
ment, (3) measuring the results of technology by examining its impact on mis-
sion effectiveness and efficiency, and (4) integrating information management
into organizationwide planning, budgeting, and financial management, and
* institute proper support for information management with the right mix of
skills, knowledge, and defined roles and responsibilities for managers and tech-
ni specialists.
Leading organizations implement these practices as an integrated set to strategi-
cally manage for short- and long-term n performance improvements. Used in this
manner, the practices can serve as a vital starting point for lasting solutions to the
problems and challenges we face in improving federal operations. We did not find
any f federal case study agency using all these practices as mutually reinforcing ac-
tivities.

CHANGES NEEDED TO BOLSTER INFORMATION MANAGEMENT PROVISIONS IN THE PRA

We are pleaged that several changes contained in your proposed legislation to re
authorize the PRA are based on the best practices followed by leading organizations.
Despite the urgency to change, little meaningful progress towards improving govern-
ment productivity, mission performance results, and service delivery can be
achieved unless federal agencies adopt these sound strategic information manage-
ment approaches. The improvements to the PRA can help construct a useful frame-
work to bring modern technology management approaches to the federal govern-
ent. Let me illustrate by focusing on changes made by several key provisions con.
tained in the proposed legislation.

INCREASING ACCOUNTABILITY FOR INFORMATION TECHNOLOGY RESULTS

Current provisions in the PRA place the responsibility for effective information
management and technology on designated senior officials for information resources
management (IRM) and their respective organizational units. Executives and senior
program managers, the initiators and benefactors of mission improvement efforts,
are excluded from accountability for achieving results from information system in-
vestments. In contrast, leading organizations make business or line managers ac-
countable for technology decisions and results. Under this arrangement, technolo;
investments are initiated and evaluated in terms of proposed and achieved benefit
to the business.

In many government agencies, however, information issues are often viewed as
an administrative function that is delegated to technical staff. Designated senior
IRM officials are often burdened with a number of additional administrative respon-
sibilities, such as payroll, human resources management, contracting, and space
management, that Keep them from giving adequate attention and review to informa-
tion management issues. Consequently, information and technology initiatives are
often not treated as integral parts of an overall strategic approach to mission im-
provement, but rather as separate improvement efforts in and of themselves.

For example, IRS’ Tax System Modernization has been underway for 6 years and
has spent $2.5 billion without the necessary technical and management foundation



49

cies to assess and manage their information technology initiatives with defined proc-
esses for selecting, controlling, and evaluating the initiatives based on anticipated
benefits com to actual results. Additio1 , Sections 3504 and 3506 help bet-
ter manage risks by requiring the Director of the Office of Management and Budget
(OMB) to take steps to infuse more discipline and accountability into the govern-
ment’s technology expenditures.

INSTITUTING PROPER SKILLS AND ROLES

The current act does not emphasize the necessary technical skills or the clear de-
lineation of management roles and responsibilities, both of which are needed to
manage information technology as part of an 0 business strategy. Leading or-
ganizations work to anticipate and define key skills needed, starting at the top of

organization with a qualified Chief Information Officer (CIO). The CIO, as a
senior management partner, helpe to focus executive decision-making on high-value
technology issues, decisions, and investments. Leading organizations also delineate
the responsibilities of program managere—who assert control over information sys-
tem project funding and direction—and information management professionals—
who concentrate on applying the best technological solution to a business problem.

Conversely, government agencies are all too often held back by an antiquated skill
base and confused roles and responsibilities that consistently inhibit the effective-
ness of major m development and modernization efforts. Our work at FAA and
IRS, in particular, have highlighted the consequences of failing to accurately esti-
mate the technical complexity and resource requirements of large system mod-
ernizations. Although the PRA establishes designated senior officials for information
resources management for all departments and agencies, it does not preclude re-
sponsibilities from being largely dele; to lower management levels, is silent on
essential qualifications for the position, and does not limit responsibilities exclu-
sively to information resources management.

To help address this issue, Sections 3504 and 3606 of the proposed legislation re-
quire that training be developed to educate program officials about information tech-
nology. Section also requires joint icipation of program and IRM officials
in the development of systems and capabilities to meet program needs.

In addition, we are pleased to see that the senior [RM official for the agency re-
tains a direct reporting relationship to the head of the agency and is to be selected
with special attention to the professional qualifications essential for effectively sup-
porting top management and program officials in defining information and
strategies. Because of the magnitude of information management problems facing
most federal agencies, ideally it would be preferable for this official to have only as-
signed responsibilities directly related to information management.

‘MINIMIZING BURDEN

Another primary goal of the PRA is to minimize the federal paperwork burden
imposed on individuals and businesses. Care must be taken, however, in interpret-
ing measures of paperwork burden, For example, we reporied in 1988 that, while

aperwork burden OMB reported rose from over 1.8 billion hours in 1987 to
nearly 6.6 billion hours in 1992, most of this increase was due to a redefinition and
reevaluation of burden hours by the Department of the Treasury, not because of
new burdens imposed on the public.1°

The difficulty in precisely quantifying burden lies, in part, with methodological
approaches that involve complex interpretations and questionable data, making em-
pirical assessments of burden reduction suspect. Section 3502 of the proposed legis
lation expands the current definition of “burden” to include acquiring, installing,
and utilizing technology and systems as part of the provision of information to the
federal government. While this redefinition may further complicate the task of
measuring paperwork burden, it may also provide a more complete picture of the
actual burden imposed on individuals and businesses.

Paperwork burden can be caused by the complicated nature of underlying stat-
utes. For example, in a recent study of tax system burden we found that businesses
tax compliance burden was primarily a function of the complexity of the tax code
and frequent changes to the code.!! Paperwork burden can also be caused by the
way rules are enforced. A study we completed last year of workplace regulations
found that the employers and union representatives we spoke with generally sup-

19 Paperwork Reduction: Reported Burden Hour Increases Reflect New Estimates, Not Actual
Changes (GAO/PEMD-94-3, Dec. 6,
fax

, 1993).
System Burden: Tax Compliance Burden Faced by Business Taxpayers (GAO/T-GGD—
95-42, Dec. 9, 1994).


12

I, PAPERWORK REDUCTION ACT OF 1995

It is gratifying to be able to appear here today, on what I hope is the last phase
of improving the Paperwork Reduction Act, This Act is important for all Americans.
The authors of the Paperwork Reduction Act in 1980 and those who amended it in
1986 recognized that information is valuable—indeed essential to decision-making
in both the private and public sectors—but that it is not a free resource. Its collec-
tion, organization, and use by some necessarily imposes costs and burdens on oth-
e

rs.
For more than two years, Congress has had under active consideration legislative
roposals to update and expand the Paperwork Reduction Act consistent with and
Guilding upon ‘the Act's original purposes. Congressional stalf have worked profes-
sionally and constructively to develop consensus, bipartisan approach which is
contained in the draft “Paperwork Reduction Act of 1995,” that has been circulated
for comment. We are pleased to report that we support this effort.

Before discussing the Paperwork Reduction Act of 1995, I would like to step back
a little and put this legislative effort to amend the Paperwork Reduction Act of 1980
into perspective.

A. The Paperwork Reduction Act of 1980

Enactment of the Paperwork Reduction Act of 1980 was an outgrowth of an effort
to modernize the Federal Reports Act of 1942, a law intended to help allay public
concerns related to the growth of paperwork and reporting requiremente resulting
from our wartime mobilization efforts. The opening lines of the Federal Reports Act
of 1942 capture the core of the Paperwork Reduction Act’s concern for reducing in-
formation collection burdens and improving the management of Federal information
resources:

It is hereby declared to be the policy of the Congress that information which
may be needed by the various Federal agencies should be obtained with a mini-
mum burden upon business enterprises (especially small business enterprises)
and other persons required to furnish such information, and at a minimum cost
to the Government, that all unnecessary duplication of efforts in obtaining such
information through the use of reports, questionnaires, and other such methods
should be eliminated as rapidly as practicable; and that information collected
and tabulated by any Federal agency should insofar. as is expedient be tab-
ulated in a manner to maximize the usefulness of the information to other Fed-
eral agencies and the public.

During the mid-1970's, growing public complaints about government “red tape”
led Congress to create the Commission on Federal Paperwork. The Commission re-
ported in 1977 that the annual cost of Federal paperwork was $100 billion, and it
concluded that a new, broader information management framework was needed to
control the growing Federal information appetite and help agencies more efficiently
and effectively perform their legitimate information functions,

It is time to view the problems of paperwork and red tape, not as documents
to be managed, but rather as information content to be treated as a valuable
resource. By applying the principles of management to this valuable national
resource we not only get at the root cause of paperwork and red tape, but cause
a rippling effect in the application throughout Government: the design of pro-
grams is improved; government becomes more sensitive to the burdens it im-
poses on the public, becomes more understandable, and develops clearer goals
and objectives. In the end, government improves the delivery of services to peo-
ple as well as fulfills its other functions of regulation, defense, enforcement and
Tevenue collection more effectively.

Information resource management .. . can... make a significant impact
in reducing the economic burdens of paperwork on the public by reducing dupli-
cation, clearly justifying information needs, improving reporting forms and col-
lection processes, and effectively and efficiently utilizing information handling
techniques and technologies.

Jn Congress, the consensus view was to strengthen the leadership in agencies, as
well as OMB oversight, to reduce public paperwork burdens and improve the man-
agement of information resources in Federal agencies. The result was the Paper-
work Reduction Act of 1980.3 It passed Congress with broad bipartisan support and
was enthusiastically signed into law in December 1980 by the outgoing President,

1 Public Law 831 (December 24, 1942); 56 Stat. 1078, section 2.
2“Information Resources Management: A Report of the Commission on Federal Paperwork,”

September 9, 1977, p. 16.
PL. 6-511.