Congressional Testimony

STATEMENT OF SEAN O'KEEFE
DEPUTY DIRECTOR
OFFICE OF MANAGEMENT AND BUDGET
BEFORE THE
SUBCOMMITTEES ON
ENERGY POLICY, NATURAL RESOURCES AND
COMMITTEE ON GOVERNMENT REFORM
U.S. HOUSE OF REPRESENTATIVES

April 24, 2001

(Note: Read by Austin Smyth, Executive Associate Director)

Good morning, Mr. Chairmen and members of the Subcommittee. Thank you for your invitation to testify today. I am pleased to have the opportunity to appear and discuss with you the Executive Branch's efforts to reduce the paperwork and regulatory burden on the American people. The record over the last eight years is mixed, and the Office of Management and Budget (OMB), led by the Office of Information and Regulatory Affairs (OIRA), is working diligently to assess the situation and plan for the future.

However, as can be expected, this period of transition makes our job all the more difficult. Our focus, since January 20, has been the production of the President's Budget, completed and transmitted to Congress on April 9, and the review of the so-called "Midnight Regulations," those regulatory actions issued in the last months of the previous Administration. In addition, OIRA's Administrator-designate, John Graham, has not yet been confirmed by the Senate, so OMB does not have its primary policy official for the Paperwork Reduction Act (PRA) yet in place. Once he is sworn in, he will begin a more thorough review of the information collections imposed on the public and of opportunities for improving their quality and reducing their burden.

Purposes of the Paperwork Reduction Act

This Administration takes very seriously the requirements of the PRA. The PRA provides an important framework for managing Federal information resources, including the information collected by or for the Federal government. The PRA includes as its purposes:

reducing information collection burdens imposed on the public;
increasing the productivity, efficiency, and effectiveness of Federal programs; and
balancing the practical utility of information collections against the burden they impose.

Under the PRA, the agencies and OMB have specific roles intended to help achieve these purposes of the Act.

Reducing Burden. The PRA requires the head of each agency, supported by his or her Chief Information Officer (CIO), to be responsible for the agency's information collection activities, including the reduction of paperwork burden on the public. Under the PRA, OIRA oversees the CIO's management of each agency's collection of information. The PRA also requires OMB to set, in consultation with the agencies, annual agency goals to reduce burden on the public.

Improving Government Programs. OIRA also monitors CIO information resource management to assist agency efforts to increase the productivity, efficiency, and effectiveness of their programs. As part of this responsibility, OIRA works with the agencies to improve their management of information. For example, OIRA encourages data sharing among agencies when possible. OIRA also reviews agency information collection activities to ensure that they effectively serve agency needs and increase program efficiency.

Balance the Need for Information vs. Burden. OIRA oversees CIO paperwork management by reviewing Federal agencies' information collection activities that are covered by the PRA, weighing the burdens of each collection on the public against the practical utility it will have for agencies. Last fiscal year, for example, OIRA approved over 3,000 agency requests to collect information. This included roughly 2300 renewals of previous approvals, which the PRA requires every three years. Before approving each request, OIRA worked to ensure that any burden imposed was justified by the accuracy, adequacy, reliability, and timeliness of the information collected.

The Information Collection Budget

Each year, OIRA, working with 27 of the Executive Branch agencies, develops the Information Collection Budget (ICB). The ICB is a look back on significant changes in the information collection burden imposed on the public during the last fiscal year and a description of significant changes expected in the current fiscal year. Through the development of the annual Information Collection Budget (ICB), OIRA oversees CIO paperwork management -- including CIO initiatives to reduce paperwork burden, improve agency programs, and balance agencies' need for information against paperwork burden.

The ICB is also the management oversight mechanism through which agency CIOs and OIRA establish agency paperwork burden targets for the coming year, taking into account agencies' anticipated program and statutory initiatives. Based upon the prior year's experience and the best estimates of "burden hours" imposed by each form, survey, and other information collection, each agency's CIO submits to OIRA a proposed accounting of total burden hours and burden costs for the new fiscal year, together with a description of the changes in existing information collections that are necessary to meet its needs. In addition, agency CIOs report on paperwork management initiatives designed to improve the collection and use of information over time. OIRA reviews these reports and consults with CIOs to develop final information collection budget targets that minimize paperwork burden, consistent with the program needs and planned uses of the collected information.

With the transition and the absence of policy officials at the agencies, OIRA has not completed the ICB in time for this hearing. However, I am pleased to present some of our preliminary results.

In fiscal year 2000, the reported information collection burden imposed by Federal agencies on the public increased by 2.5 percent, from 7.2 billion hours to 7.4 billion hours. Of that increase, slightly less than half can be attributed to actions taken within an agency's discretion to implement or improve existing programs, and half can be are attributed to new burden imposed due to the implementation of new statutes.

Agency Efforts to Reduce Paperwork Burden

This year's Information Collection Budget will mention a number of agency paperwork accomplishments and improvements. The ICB will detail these agency efforts agency-by-agency. I'd like to summarize just a few below.

Agencies are reducing information collection burden by revising existing regulations to eliminate unnecessary requirements or by completely changing the way they regulate.

Environmental Protection Agency (EPA) amended its rules implementing the Resource Conservation and Recovery Act (RCRA) to reduce the number of Boiler and Industrial Furnaces that need to report and keep records, reducing burden on these facilities by over 130,000 hours.

The Federal Communications Commission (FCC) reduced burden on local exchange carriers (LECs) by reducing the amount of information they would need to provide in order to request a change in the access fees they charge to other telecommunications companies. This change reduced burden on this industry by over 1.7 million hours.

The Federal Trade Commission reduced burden on makers and sellers of textiles by streamlining requirements to disclose content and country of origin information to customers. This change reduced burden on this industry by 6 million hours.

Agencies are reducing burden by making their forms simpler to read and fill out and by making their programs easier to apply for.

The Department of Agriculture (USDA) has created a "low-doc" loan application for their Farm Loan Program. This form, which can be used for loans under $50,000 or for recurring operating loans, requires significantly less time and information than the regular loan application, reducing the burden on small farmers by over 16,000 hours.

The Department of Labor (DOL) estimates that it reduced burden on the public by over 300,000 hours by streamlining and simplifying its Form 5500. This form is used by businesses to document their employee benefit plans.

The Department of the Treasury's Internal Revenue Service reduced the burden of the 1040 by over 13 million hours by increasing by 2 million the number of taxpayers that could use the 1040A, a simplified version of the1040.

Agencies are changing the way they do business, incorporating information technology into their own work and allowing the public to their existing IT systems to communicate with the agencies'.

USDA created an automated version of the form it uses to administer the Noninsured Crop Disaster Assistance Program, reducing the amount of time it takes the public to apply by almost 850,000 hours.

DOL changed their rules to allow employers to distribute employee benefit plan disclosures electronically, reducing burden by over 170,000 hours.

OMB Oversight of Agency Efforts to Reduce Paperwork Burden

Factors that Influence Paperwork Burden. Despite these fine accomplishments, the total burden for FY 2000 still went up. There are many factors that contribute to paperwork burdens going up, not down. New legislative initiatives and amendments to existing laws typically require more, not less, data collection. For example, in FY 2000, agencies attributed over 5.2 million hours of increased burden to their implementation of provisions of the Gramm-Leach-Bliley Act that, for example, require financial institutions to enable consumers to restrict disclosures of their nonpublic personal information and require public disclosure of Community Reinvestment Act agreements between banks and non-governmental parties. In addition, even in the absence of legislative changes, the paperwork associated with agency statutory and program responsibilities can expand over time due to a number of factors beyond the agency's direct control, such as economic growth and demographic trends. For example, as the number of businesses grows, the number of applications to the Small Business Administration for loans increases, the number of respondents to Occupational Safety and Health Administration reporting requirements increases, and the number of reports to the IRS of payments made to employees increases.

Frankly, it is not surprising that the information collection requirements of the Federal government continue to grow. In this Information Age, the Federal government has come to rely more and more on information to perform its most basic functions. Information is the key to an effective government that provides its citizens with necessary services -- national security; a sound financial system; health, safety and environmental protections -- in the least intrusive and most efficient manner possible. With a population that is geographically dispersed, highly mobile, and diverse; with an economy that is robust, innovative, and operating on a global scale; and with a society that is living through the development of the computer as a primary personal and commercial tool -- one of the American government's primary functions is that of an information collecting and management enterprise. Although the Federal government has always depended on accurate and timely information, in today=s complex, rapid-pace, globalized world, the ability of the government to collect and use information is more critical than ever before.

For example, it is well known that the Federal Government collections information to verify compliance with Government requirements. People are most familiar, particularly at this time of year, with some version of the IRS Form 1040, used to calculate and declare personal income tax. From the point of view of a taxpayer, the annual preparation of a tax return is an annual paperwork burden. In total, the Treasury Department (specifically the Internal Revenue Service (IRS), Customs Service, and the Bureau of Alcohol, Tobacco, and Firearms (ATF)) collects over $2.0 trillion in individual and business income taxes, tariff duties, user fees, excise taxes, registration fees, license fees, and other assessments that fund the Federal programs that protect and support Americans. These agencies, particularly IRS, collect and have the public maintain information to determine if the correct amount of taxes, fees, and other revenue has been paid and to correct errors that have been identified. The Treasury Department is responsible for roughly 80% of all information collection and recordkeeping conducted by the Federal Government.

Agency Compliance. While the PRA acknowledges Federal agencies' legitimate need for information to perform their missions, it also requires agencies to obtain OMB approval of those information collection activities that are covered by the PRA. It is very important that these information collections have OMB approval because it is the process by which agencies request and receive OMB approval that requires agencies and OMB to assess, among other things, the trade-off between the practical utility of information collections and the burden they impose on the public.

Since the FY 1998 ICBs, we have listed agency violations of the PRA. These occur primarily when agencies continue to use collections for which OMB approval has expired. These lists have been much too long and indicate a substantial problem that we will work to resolve. We take agency violations of the PRA very seriously, and will be working with the agencies to improve their compliance with the Act.

OMB's Continuing Role. In light of the government's need for information to best serve the public, it is more critical than ever that we do more to lead a governmentwide effort to reduce paperwork burden on the public. OMB looks forward to the confirmation of John Graham as the Administrator of OIRA so that we can move forward in this direction. Of course, OMB welcomes any suggestions you may have on how we can achieve more burden reduction, and looks forward to working with you toward that end.

Midnight Regulations

I would like to take this opportunity to also discuss one of the other significant issues on which OIRA has been working since January 20. Over the last months of the Clinton Administration, the Executive Branch issued a large number of significant rules. Some were rushed through the normal process so quickly as to raise real concerns about the policies they implemented and doubts about the procedures by which they were issued. For example, the National Park Service's final rule to phase out snowmobile use in Yellowstone National Park was sent to the Federal Register only hours after the comment period on the proposal ended, during which the agency received over 5,000 comments.

This Administration took action on these "midnight regulations" immediately. On January 20, the Chief of Staff, Andrew H. Card, Jr., issued a memorandum entitled, "Regulatory Review Plan," establishing procedures to ensure that -- during the transition period -- appointees of President Bush reviewed and approved agency rulemakings that would be issued under the new Administration. To expedite needed rulemakings, OMB was to permit agencies to publish rules related to "emergency or other urgent situations relating to health and safety." Agencies were to withdraw rules from the Federal Register that had not been published. Agencies were to postpone by 60 days the effective date of final rules that had not yet taken effect. OMB was to exclude from these requirements those rules relating to "emergency or other urgent situations relating to health and safety."

A week later, the OMB Director issued a memorandum (M-01-09) entitled, "Effective Regulatory Review," emphasizing the importance for the new Administration to review planned agency rulemakings. Subject to the same exceptions in the January 20^th memorandum, agencies were to withdraw rulemakings from OIRA review that had been submitted prior to January 20^th. After the Administration's appointees had reviewed and approved these withdrawn rules, they were to be resubmitted for OIRA review under E.O. 12866.

We are very pleased with the results of our efforts in these first weeks of the Administration and with the work OIRA has done. OIRA has conducted reviews of numerous rules that had already been published but not yet effective. In some cases, the Administration affirmatively decided to let the rules to become effective without further action. For example,

The Department of Health and Human Services (HHS) rule on egg labeling will take effect on June 4. This rule requires egg cartons that have not been treated for Salmonella carry a statement for consumers on how to handle them safely. The rule also sets a maximum temperature for storage and display of shell eggs that have not been treated to destroy Salmonella.

The Administration also allowed an HHS rule expanding Medicare coverage for Outpatient Diabetes Self-Management Training and Diabetes Outcome Measurements to become final without delay.

The Administration reviewed and decided to move forward with EPA's January 18 final rule to reduce pollution from heavy-duty trucks and buses. Beginning in 2007, the rule will require engine manufacturers to reduce particulate matter (soot) by 90 percent and smog-causing nitrogen oxide emissions from new trucks and buses by 95 percent from current levels, guaranteeing cleaner air and improved public health for many Americans. The rule also requires refiners to reduce the sulfur in diesel fuel to ultra-low levels needed to allow advanced emission control technologies to operate effectively.

EPA's Lead rule was also allowed to take effect without change. The rule establishes uniform, national standards for paint, dust and soil in pre-1978 housing and child-care facilities. The hazard standards established in the rule will serve as the focal point of several key components of the Federal lead program. In addition, these hazard standards will be incorporated in HUD rules requiring cleanup of housing receiving Federal assistance. They will also serve as the basis for the cleanup of Federally owned housing (e.g., DOD housing) and the cleanup of property (e.g., military bases) transferred to State and local governments or sold to private parties.

USDA moved forward with its proposed rule that would expand Listeria control program and establish Salmonella and E. Coli performance standards for ready-to-eat meat and poultry, requiring firms to either test plant surfaces for Listeria or to incorporate control programs for Listeria in their prevention plans.

However, some of the previous Administration's regulatory actions do require significant additional scrutiny, so the agencies have initiated rulemakings to give this Administration that opportunity.

On March 23, 2001, the Department of the Interior proposed to rescind the Bureau of Land Management final rule that imposed new environmental performance standards on mining on public lands.

On April 3, 2001, the Federal Acquisition Regulation Council indefinitely stayed the "Contractor Responsibility" rule and proposed its revocation.

Our review of these "midnight regulations" continues as we speak. Many of these rules are highly contentious and deserve a full airing, both within the Executive Branch and in public. We will err on the side of delaying a rule to allow further consideration rather than allow the artificially-compressed timetables of the previous Administration limit our deliberations.

Conclusion

Overall, the Office of Information and Regulatory Affairs has a lot of work ahead of it as this Administration evaluates its starting position with regards to regulations and information collection and develops concrete plans of action. There are significant opportunities to relieve the American people of unnecessary Federal burdens. We look forward to the confirmation of John Graham as Administrator and know that he will be ready, willing, and able to lead OIRA's effort to streamline and reduce the regulatory and information collection burden the Federal government imposes on the public. I personally look forward to working with him and with you, Mr. Chairman and members of the Subcommittee, to accomplish this important task. Thank you.