STATEMENT OF JOHN D. GRAHAM, PH.D.
OFFICE OF INFORMATION AND REGULATORY AFFAIRS
OFFICE OF MANAGEMENT AND BUDGET
EXECUTIVE OFFICE OF THE PRESIDENT OF THE UNITED STATES
COMMITTEE ON SMALL BUSINESS
UNITED STATES HOUSE OF REPRESENTATIVES
May 1, 2003
Good morning, Mr. Chairman, and Members of this Committee. I am John D. Graham, Ph.D., Administrator, Office of Information and Regulatory Affairs (OIRA), Office of Management and Budget. I appreciate this opportunity to discuss OIRA’s responsibilities under the Paperwork Reduction Act (PRA) and our efforts to alleviate the paperwork burdens that Federal agencies impose on small businesses.
In your letter of invitation, you specifically requested that my testimony address OIRA’s interpretation of the term “collection of information” and describe the actions OIRA can take to enforce agency compliance with the PRA and the Regulatory Flexibility Act (RFA). Before discussing these issues, I would like to reiterate for the Committee OMB’s deep commitment to reducing the regulatory and paperwork burdens that America’s small businesses deal with every day. Both the PRA and RFA are vitally important to efforts by OMB, the Small Business Administration (SBA), and agencies such as the Department of the Treasury to eliminate unnecessary compliance burdens for small business.
The PRA Definition of Collection of Information
The PRA defines collection of information quite broadly. There are three specific types of information that are covered by the PRA: information that the public transmits to Federal agencies, recordkeeping requirements, and third party reporting requirements.
The first type of information collection is perhaps the first one that comes to mind for most individuals and businesses. This type involves requests for information from the public for transmission to the Federal government. These collections include tax returns, grant application forms, written report forms, telephone surveys, and electronic data collections. The second category of information—recordkeeping requirements—involve compilation and maintenance of specified records, either alone or in conjunction with the reporting of information to an agency or a third party. The final type of information collection involves what are referred to as “third-party” disclosure requirements, in which the Federal Government requires an entity or individual to disclose information to another entity or individual (an example is a Federal requirement for the disclosure of information on labels, such as the nutritional labels that are found on food packages).1
Information collections, recordkeeping requirements, and third-party disclosure requirements can be contained in or authorized by regulations as monitoring or enforcement tools. They can also appear in forms and their accompanying instructions. Subject to certain exemptions, all agency collections of information are subject to OMB review and approval, regardless of the format a collection may take (e.g., paper, telephone, in-person, automation, electronic).2
In 1996, in the Small Business Regulatory Enforcement Fairness Act, Congress amended the Regulatory Flexibility Act in several ways. One of these amendments included, within the coverage of the RFA, those “interpretative rules” that involve “the internal revenue laws of the United States” and are “published in the Federal Register for codification in the Code of Federal Regulations, but only to the extent that such interpretative rules impose on small entities a collection of information requirement.” The 1996 amendments to the RFA incorporated into the RFA, verbatim, the PRA’s definition of what is a “collection of information.” In other words, the term “collection of information” has the same meaning in both the PRA and the FRA.
OIRA and the Paperwork Reduction Act
The Paperwork Reduction Act directs OMB to work with Chief Information Officers—the officials designated by the PRA as responsible for the management of information resources within their agencies—to reduce information collection burdens on the public that “represent[s] the maximum practicable opportunity in each agency” and improve “agency management of the process for review of collections of information.” OIRA exercises its PRA oversight authority in a number of ways, the two most important of which are our day-to-day reviews of agency information collection requests and the annual development of the Information Collection Budget (ICB).
For all collections of information subject to the PRA, agencies must obtain OMB approval before implementing them. After the initial approval, agencies must receive extensions of OMB approval at least once every three years. OIRA’s reviews of agency requests involve an assessment of the “practical utility” of the information to agency and associated burden that collecting this information imposes on the public.
OIRA is particularly sensitive to collections targeted at small businesses, and continually seeks to ensure that the paperwork burdens imposed are justified by the usefulness and timeliness of the information to the government. The Paperwork Reduction Act itself directs agencies to reduce the burdens that collections of information impose on small businesses. The PRA’s statement of “purposes” expressly mentions the minimization of “paperwork burden” on “small businesses” as one of the Act’s goals. Moreover, the 1995 amendments to the PRA require agencies to certify, when the agency submits a proposed collection to OMB for review, that the collection “reduces to the extent practicable and appropriate the burden” on small businesses and other small entities. As the PRA indicates, agencies should reduce the paperwork burden on small businesses through “such techniques as – (i) establishing differing compliance or reporting requirements or timetables that take into account the resources available to those who are to respond; (ii) the clarification, consolidation, or simplification of compliance and reporting requirements; or (iii) an exemption from coverage of the collection of information, or any part thereof.”3 OMB incorporated this certification requirement into OMB’s PRA regulations [at 5 C.F.R. 13209.9(c)] as well as in the form that agencies must submit to OMB requesting OMB approval of a proposed collection (the Form 83-I). In addition, this PRA submission form requires agencies to tell OMB whether or not “this information collection [will] have a significant economic impact on a substantial number of small entities.”
Finally, I should also note that Congress in last year’s Small Business Paperwork Relief Act reinforced the PRA’s focus on minimizing the paperwork burden that the Federal government imposes on small businesses. In addition to establishing a multi-agency task force on this issue, to which I will turn shortly, Congress amended the PRA to require agencies to “make efforts to further reduce the information collection burden for small business concerns with fewer than 25 employees.”4
OMB recently submitted to Congress its FY 2003 Information Collection Budget, the annual development of which is a key component of OMB’s oversight of agencies. Each year, through our efforts to prepare the ICB, we ask agencies to review their information collections, keeping in mind the PRA’s burden reduction goals and OMB’s commitment to burden reduction. Agency CIOs send their agencies’ annual submission to OMB, identifying the “maximum practicable” paperwork burden reduction they can achieve, consistent with the agency’s statutory and programmatic responsibilities. Based on this information, OMB is able to manage overall burden and seek information on priority burden reduction initiatives.
During my tenure as OIRA Administrator, OMB has also adopted a “zero-tolerance policy” for violations of the PRA, which involve the use by agencies of information collections without the required OMB approval. Accordingly, we have been working diligently with agency staff and policy officials throughout the last 18 months to eliminate all existing violations and put procedures into place to avoid any future violations. The success that OMB and the agencies have had in significantly reducing the number of agency violations of the PRA is recounted in the FY 2003 Information Collection Budget and was also discussed by the General Accounting Office in its recent testimony before the House Government Reform Committee, Subcommittee of Energy Policy, Natural Resources and Regulatory Affairs.5
OIRA and the Regulatory Flexibility ActMr. Chairman, your letter of invitation asked about actions that OIRA has taken to enforce the Regulatory Flexibility Act. The Reg Flex Act does not give OMB an enforcement role. Nonetheless, many of OIRA’s activities provide an opportunity to encourage agency compliance with the spirit of the RFA. For example, OMB is currently in the process of implementing the Small Business Paperwork Relief Act of 2002. This Act established a multi-agency task force on information collection and dissemination chaired by OMB. Mitch Daniels, the Director of OMB, appointed Mark Forman, OMB’s Associate Director for Information Technology and E-Government, and me, to co-chair the task force. The task force includes representatives from the following agencies:
1 44 U.S.C. 3502(3)
2 44 U.S.C. 3502(3); 5 CFR 1320.3(c)(1); 60 Fed. Reg. 44978-79 (August 29, 1995)
3 a name="3"> 44 U.S.C. 3506(c)(3)(C)
4 Section 2(c) of the Small Business Paperwork Relief Act, adding 44 U.S.C. 3506(c)(4)
5 GAO-03-691T, April 11, 2003