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Testimony :

Before the Subcommittee on Energy, Policy, Natural Resources and 
Regulatory Affairs, Committee on Government Reform, House of 
Representatives:

For Release on Delivery 
Expected at 10 a.m. EDT
Friday, April 11, 2003:

PAPERWORK REDUCTION ACT:

Record Increase in Agencies' Burden Estimates:

Statement of Victor S. Rezendes, Managing Director
Strategic Issues Team:

GAO-03-619T:

GAO Highlights:

Highlights of GAO-03-619T, testimony before the Subcommittee on Energy 
Policy, Natural Resources and Regulatory Affairs, Committee on 
Government Reform, House of Representatives

Why GAO Did This Study:

The Paperwork Reduction Act requires federal agencies to minimize the 
paperwork burden they impose on the public. The act also requires 
agencies to obtain approval from the Office of Management and Budget 
(OMB) before collecting covered information. At the Subcommittee’s 
request, GAO examined changes during the past fiscal year in federal 
agencies’ paperwork burden estimates, focusing on the Internal Revenue 
Service (IRS). GAO also examined changes in the number of violations of
the Paperwork Reduction Act. 

What GAO Found:

As of September 30, 2002, federal agencies estimated that there was 
about 8.2 billion “burden hours” of paperwork governmentwide. IRS 
accounted for about 6.7 billion burden hours (81 percent) of this 
estimate. The federal paperwork estimate increased by about 570 million 
burden hours during fiscal year 2002—nearly double the previous record 
increase for a 1-year period. IRS and the Department of Transportation 
(DOT) accounted for almost 90 percent of the increase. IRS increased 
its paperwork estimate by about 330 million burden hours during fiscal 
year 2002, which the agency said was primarily caused by growth in the 
number of taxpayers using Form 1040. DOT’s burden estimate rose by 
about 165 million burden hours, an increase that the department said 
was almost entirely attributable to the reintroduction and reestimation 
of one information collection. 

Federal agencies identified 244 violations of the PRA during fiscal 
year 2002—a significant reduction from the number of violations 
reported during the previous fiscal year. OMB deserves a great deal of 
credit for this decrease in violations. However, 244 violations of the 
law during a single fiscal year are still troubling and should not be 
tolerated. Also, although some longstanding violations have been 
resolved, others remained open at the end of the fiscal year and, in 
some cases, had been open for 2 years or more.

What GAO Recommends:

GAO is not making any recommendations. However, because IRS accounts 
for most federal paperwork and for most of the increase in the 
governmentwide estimate, OMB could focus more of its burden reduction 
efforts on that agency. Also, its previous efforts notwithstanding, OMB 
could take additional actions to reduce violations, such as encouraging 
the budget side of OMB to use its influence and promote the use of 
“best practices” in agencies with good compliance records.

www.gao.gov/cgi-bin/getrpt?GAO-03-619T.
To view the full report, including the scope and methodology, click on 
the link above. For more information, contact Victor Rezendes at (202) 
512-6806 or rezendesv@gao.gov.

[End of section]

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss the implementation of the 
Paperwork Reduction Act of 1995 (PRA). As you requested, I will discuss 
changes in federal paperwork burden during the past year, with a 
particular focus on the Internal Revenue Service (IRS). I will also 
revisit an issue that we have discussed during previous hearings before 
this Committee--violations of the PRA in which information collections 
were either not authorized by the Office of Management and Budget (OMB) 
or those authorizations had expired.

In brief, the agencies' estimate of federal paperwork at the end of 
fiscal year 2002 stood at about 8.2 billion burden hours. The paperwork 
estimate increased by about 570 million burden hours from last year--
nearly double the previous record increase for a 1-year period that I 
reported last year. Two agencies--IRS and the Department of 
Transportation (DOT)--accounted for almost 90 percent of the increase. 
IRS increased its paperwork estimate by about 330 million burden hours, 
most of which involved adjustments to the agency's burden-hour estimate 
for Form 1040. DOT's burden estimate rose by about 165 million burden 
hours, an increase that was almost entirely attributable to the 
reintroduction and reestimation of one information collection.

Also, federal agencies identified 244 violations of the PRA that 
occurred during fiscal year 2002--a more than 40 percent reduction in 
the number of violations that were reported during the previous fiscal 
year and about one-fourth the number reported for fiscal year 1998. 
Some agencies reported fewer violations in each of the last 3 fiscal 
years, but other agencies reported increases in 1 or more of those 
years. Although some longstanding violations were resolved, others 
remained open at the end of the fiscal year and had been in violation 
for 2 years or more at that point. OMB has taken several actions to 
address PRA violations since last year's hearing--and deserves a lot of 
credit for the reductions that have occurred in the past year. However, 
244 violations of the law during a single year are still troubling and 
should not be tolerated. We continue to believe that OMB and the 
agencies can do more to ensure that the PRA is not violated and that 
long-standing violations are resolved.

Background:

Before discussing these issues in detail, it is important to recognize 
that a large amount of federal paperwork is necessary and serves a 
useful purpose. Information collection is one way that agencies carry 
out their missions. For example, IRS needs to collect information from 
taxpayers and their employers to know the correct amount of taxes owed. 
The Bureau of the Census collects information that was used to 
reapportion congressional representation and is being used for a myriad 
of other purposes. The events of September 11, 2001, have demonstrated 
the importance of accurate, timely information. On several occasions, 
we have recommended that agencies collect certain data to improve 
operations and evaluate their effectiveness.[Footnote 1]

However, under the PRA, federal agencies are required to minimize the 
paperwork burden they impose. The original PRA of 1980 established the 
Office of Information and Regulatory Affairs (OIRA) within OMB to 
provide central agency leadership and oversight of governmentwide 
efforts to reduce unnecessary paperwork and improve the management of 
information resources. Currently, the act requires OIRA to develop and 
maintain a governmentwide strategic information resources management 
(IRM) plan. In February 2002, we reported that OMB had not fully 
developed and implemented a strategic IRM plan that articulated a 
comprehensive federal vision and plan for all aspects of government 
information, including reducing information burdens, and we recommended 
that the agency develop such a plan.[Footnote 2] During the past year 
OMB has taken a number of actions that demonstrate progress in 
fulfilling the PRA's requirement of providing a unifying IRM vision 
with a focus on burden reduction. For example, OMB's E-Government 
Strategy outlines the federal government's action plan for electronic 
government. One focus of that strategy is implementing initiatives that 
will reduce burden on businesses by reducing redundant data collection 
and providing one-stop streamlined support. In addition, the Federal 
Enterprise Architecture Business Reference Model provides an integrated 
view of the federal government's activities, thereby allowing agencies 
to look at federal business operations and understand the gaps, 
overlaps, and opportunities for consolidation. Although OMB's 
strategies and models are promising, their ability to reduce paperwork 
burden and accomplish other objectives depends on how OMB implements 
them.

OIRA also has overall responsibility for determining whether agencies' 
proposals for collecting information comply with the PRA.[Footnote 3] 
Agencies must receive OIRA approval for each information collection 
request before it is implemented. Section 3514(a) of the PRA requires 
OIRA to keep Congress "fully and currently informed" of the major 
activities under the act, and must submit a report to Congress at least 
annually on those activities. The report must include, among other 
things, a list of all PRA violations and a list of any increases in 
burden. To satisfy this reporting requirement, OIRA develops an 
Information Collection Budget (ICB) by gathering data from executive 
branch agencies. In November 2002, the OMB director sent a bulletin to 
the heads of executive departments and agencies requesting information 
to be used in preparation for the fiscal year 2003 ICB (reporting on 
actions during fiscal year 2002).

OIRA published its ICB for fiscal year 2002 (showing changes in 
agencies' burden-hour estimates during fiscal year 2001) in April 2002. 
OIRA officials told us that they did not expect to publish the ICB for 
fiscal year 2003 until today's hearing. Therefore, we obtained 
unpublished data from OIRA to identify changes in governmentwide and 
agency-specific "burden-hour" estimates during fiscal year 2002. We 
then compared the data to agencies' burden-hour estimates in previous 
ICBs to determine changes in those estimates over time.

"Burden hours" has been the principal unit of measure of paperwork 
burden for more than 50 years and has been accepted by agencies and the 
public because it is a clear, easy-to-understand concept. However, it 
is important to recognize that these estimates have limitations. 
Estimating the amount of time it will take for an individual to collect 
and provide information or how many individuals an information 
collection will affect is not a simple matter.[Footnote 4] Therefore, 
the degree to which agency burden-hour estimates reflect real burden is 
unclear. Nevertheless, these are the best indicators of paperwork 
burden available, and we believe they can be useful as long as their 
limitations are kept in mind.

Governmentwide Paperwork Burden Estimate Has Increased:

At the end of fiscal year 1995--just before the PRA of 1995 took 
effect--federal agencies estimated that their information collections 
imposed about 7 billion burden hours on the public. The amendment and 
recodification of the PRA that year made several changes in federal 
paperwork reduction requirements. One such change required OIRA to set 
a goal of at least a 10-percent reduction in the governmentwide burden-
hour estimate for each of fiscal years 1996 and 1997, a 5 percent 
governmentwide burden reduction goal in each of the next 4 fiscal 
years, and annual agency goals that reduce burden to the "maximum 
practicable opportunity." Therefore, if federal agencies had been able 
to meet each of these goals, the 7-billion burden-hour estimate in 1995 
would have decreased about 35 percent to about 4.6 billion hours by 
September 30, 2001.

However, as figure 1 shows, this anticipated reduction in paperwork 
burden did not occur. In fact, the data we obtained from OIRA show that 
the governmentwide burden-hour estimate stood at more than 8.2 billion 
hours as of September 30, 2002--about a 1.2 billion hour (17 percent) 
increase since the PRA of 1995 took effect. Nearly half of that 
increase (about 570 million hours) occurred during fiscal year 2002 
alone, and about 70 percent (about 860 million hours) occurred during 
the last 2 fiscal years.

Figure 1: Governmentwide Paperwork Burden-Hour Estimate Continues to 
Grow:

[See PDF for image]

Note: Data are as of the end of each fiscal year. The governmentwide 
burden-hour estimate as of September 30, 2002, was about 8.2 billion 
hours.

[End of figure]

It is also important to understand how the most recent estimate of 
federal paperwork is allocated by the purpose of the collections. As 
figure 2 shows, data that we obtained from the Regulatory Information 
Service Center (RISC) indicate that almost 95 percent of the 8.2 
billion hours of estimated paperwork burden in place governmentwide as 
of September 30, 2002, was being collected primarily for the purpose of 
regulatory compliance.[Footnote 5] Less than 5 percent was being 
collected as part of applications for benefits, and about 1 percent was 
collected for other purposes.

Figure 2: As of September 30, 2002, Most Federal Paperwork Was 
Primarily Collected for Regulatory Compliance:

[See PDF for image]

Note: The governmentwide burden-hour estimate as of September 30, 2002, 
was about 8.2 billion hours. The "other" category includes program 
evaluation, general purpose statistics, audit, and research. Addition 
of individual elements does not total 100 percent due to rounding.

[End of figure]

Figure 3 shows that more than 60 percent of the governmentwide burden 
estimate was primarily directed toward businesses or other for-profit 
organizations. About one-third of the burden was primarily on 
individuals or households, and less than 3 percent was on state, local, 
or tribal governments.

Figure 3: As of September 30, 2002, Most Federal Paperwork Was 
Primarily Directed at Businesses:

[See PDF for image]

Note: The governmentwide burden-hour estimate as of September 30, 2002, 
was about 8.2 billion hours. The "other" category includes farms, 
nonprofit organizations, and the federal government.

[End of figure]

As figure 4 shows, as of September 30, 2002, IRS accounted for about 81 
percent of the governmentwide burden-hour estimate (up from about 75 
percent in September 1995)--nearly 6.7 billion burden hours. Other 
agencies with burden-hour estimates of 100 million hours or more as of 
that date were the departments of Health and Human Services (HHS) and 
Labor (DOL), DOT, the Environmental Protection Agency (EPA), and the 
Securities and Exchange Commission (SEC). Because IRS constitutes such 
a significant portion of the governmentwide burden-hour estimate, 
changes in IRS' estimate can have a significant--and even 
determinative--effect on the governmentwide estimate.

Figure 4: IRS Accounted for Most of the Federal Paperwork Burden-Hour 
Estimate as of September 30, 2002:

[See PDF for image]

Note: The governmentwide burden-hour estimate as of September 30, 2002, 
was about 8.2 billion hours.

[End of figure]

Changes in Individual Agencies' Estimates During Fiscal Year 2002:

As table 1 shows, only a few agencies' paperwork burden estimates 
decreased during fiscal year 2002, most notably the Federal 
Communications Commission (FCC)--from more than 40 million hours to 
less than 27 million hours. Other agencies (most notably the Department 
of the Treasury, DOT, HHS, and SEC) significantly increased their 
burden hour estimates. Still other agencies with relatively small 
burden-hour totals experienced large percentage increases in their 
estimates--most notably the Department of Housing and Urban Development 
(HUD) (an 81 percent increase) and the Department of State (a 76 
percent increase).

Table 1: Changes in Federal Agencies' Burden-Hour Estimates During 
Fiscal Year 2002:

Burden hours in millions.

Governmentwide; FY 2001 estimate: 7,651.4; 
Program changes: New statutes: [Empty]; 
Program changes: Lapses in
OMB approval: [Empty]; Program changes: 
Agency action: [Empty]; Program changes: 
Total: [Empty]; Adjustments: [Empty]; 
Total change: 570.5; FY 
2002 estimate: 8,221.7.

Non-Treasury; FY 2001 estimate: 1,235.6; 
Program changes: New statutes: [Empty]; 
Program changes: Lapses in
OMB approval: [Empty]; Program changes: 
Agency action: [Empty]; Program changes: 
Total: [Empty]; Adjustments: [Empty]; 
Total change: 236.3; FY 
2002 estimate: 1,471.8.

Departments:

Agriculture; FY 2001 estimate: 86.7; 
Program changes: New statutes: 1.5;  
Program changes: Lapses in
OMB approval: 0.5; Program changes: Agency 
action: (0.3); Program changes: Total: 1.8; 
Adjustments: 0.0; 
Total change: 1.8; FY 2002 estimate: 88.5.

Commerce; FY 2001 estimate: 10.3; 
Program changes: New statutes: 0.2;  
Program changes: Lapses in
OMB approval: 0.0; Program changes: Agency 
action: 1.2; Program changes: Total: 1.3; 
Adjustments: (0.5); 
Total change: 0.9; FY 2002 estimate: 11.2.

Defense; FY 2001 estimate: 92.1; hours 
in Program changes: New statutes: -;  
Program changes: Lapses in
OMB approval: 0.5; Program changes: Agency 
action: 0.6; Program changes: Total: 1.0; 
Adjustments: (0.7); 
Total change: 0.3; FY 2002 estimate: 92.4.

Education; FY 2001 estimate: 40.5; 
Program changes: New statutes: 0.2;  
Program changes: Lapses in
OMB approval: (0.1); Program changes: Agency 
action: (3.2); Program changes: Total: (3.1); 
Adjustments: 1.0; 
Total change: (2.1); FY 2002 estimate: 38.4.

Energy; FY 2001 estimate: 3.9; hours 
in Program changes: New statutes: -;  
Program changes: Lapses in
OMB approval: -; Program changes: Agency 
action: 0.1; Program changes: Total: 0.1; 
Adjustments: (0.2); 
Total change: (0.1); FY 2002 estimate: 3.8.

Health and Human Services; FY 2001 estimate: 
186.6; Program changes: New statutes: 35.9; 
Program changes: Lapses in
OMB approval: 1.4; Program changes: Agency 
action: (2.0); Program changes: Total: 35.3; 
Adjustments: 1.9; 
Total change: 37.2; FY 2002 estimate: 223.8.

Housing and Urban; Development; FY 2001 
estimate: 12.1; Program changes: New 
statutes: 0.0; Program changes: Lapses in
OMB approval: 9.9; Program changes: Agency 
action: 0.0; Program changes: Total: 9.9; 
Adjustments: (0.1); 
Total change: 9.8; FY 2002 estimate: 21.9.

Interior; FY 2001 estimate: 7.6; hours 
in Program changes: New statutes: 0.1;  
Program changes: Lapses in
OMB approval: 0.1; Program changes: Agency 
action: 0.3; Program changes: Total: 0.4; 
Adjustments: (0.3); 
Total change: 0.1; FY 2002 estimate: 7.7.

Justice; FY 2001 estimate: 40.5; hours 
in Program changes: New statutes: 5.1;  
Program changes: Lapses in
OMB approval: (0.0); Program changes: Agency 
action: 0.8; Program changes: Total: 5.9; 
Adjustments: 0.2; 
Total change: 6.1; FY 2002 estimate: 46.6.

Labor; FY 2001 estimate: 186.1; hours 
in Program changes: New statutes: 0.1;  
Program changes: Lapses in
OMB approval: -; Program changes: Agency 
action: 2.4; Program changes: Total: 2.5; 
Adjustments: 0.7; 
Total change: 3.1; FY 2002 estimate: 189.2.

State; FY 2001 estimate: 16.6; hours 
in Program changes: New statutes: 12.1;  
Program changes: Lapses in
OMB approval: 0.4; Program changes: Agency 
action: -; Program changes: Total: 12.5; 
Adjustments: 0.1; 
Total change: 12.6; FY 2002 estimate: 29.2.

Transportation; FY 2001 estimate: 80.3; 
Program changes: New statutes: 0.8; 
Program changes: Lapses in
OMB approval: -; Program changes: Agency 
action: 163.2; Program changes: Total: 164.0; 
Adjustments: 1.2; 
Total change: 165.2; FY 2002 estimate: 245.5.

Treasury; FY 2001 estimate: 6,415.9; 
Program changes: New statutes: 64.1;  
Program changes: Lapses in
OMB approval: (0.1); Program changes: Agency 
action: (9.5); Program changes: Total: 54.6; 
Adjustments: 279.6; 
Total change: 334.2; FY 2002 estimate: 
6,750.0.

Veterans Affairs; FY 2001 estimate: 5.3; 
Program changes: New statutes: -; 
Program changes: Lapses in
OMB approval: 0.3; Program changes: Agency 
action: -; Program changes: Total: 0.3; 
Adjustments: 1.8; 
Total change: 2.1; FY 2002 estimate: 7.4.

Agencies:

Environmental Protection
 Agency; FY 2001 estimate: 130.8; 
Program changes: New statutes: 0.1;  
Program changes: Lapses in
OMB approval: -; Program changes: Agency 
action: 0.6; Program changes: Total: 0.7; 
Adjustments: 9.0; 
Total change: 9.7; FY 2002 estimate: 140.5.

Federal Acquisition; Regulatory Council; FY 
2001 estimate: 23.8; Program changes: New 
statutes: -; Program changes: Lapses in
OMB approval: -; Program changes: Agency 
action: 0.7; Program changes: Total: 0.7; 
Adjustments: -; 
Total change: 0.7; FY 2002 estimate: 24.5.

Federal Communications; Commission; FY 2001 
estimate: 40.1; Program changes: New 
statutes: (0.5); Program changes: Lapses in
OMB approval: -; Program changes: Agency 
action: (1.7); Program changes: Total: (2.3); 
Adjustments: (11.1);  
Total change: (13.3); FY 2002 
estimate: 26.8.

Federal Deposit; Insurance Corporation; FY 
2001 estimate: 10.5; Program changes: New 
statutes: -; Program changes: Lapses in
OMB approval: -; Program changes: Agency 
action: 0.1; Program changes: Total: 0.1; 
Adjustments: (0.7); 
Total change: (0.5); FY 2002 estimate: 10.0.

Federal Emergency; Management Agency; FY 2001 
estimate: 5.5; Program changes: New statutes: 
0.0; Program changes: Lapses in
OMB approval: 0.0; Program changes: Agency 
action: 0.3; Program changes: Total: 0.3; 
Adjustments: 2.0; 
Total change: 2.3; FY 2002 estimate: 7.8.

Federal Energy Regulatory
 Commission; FY 2001 estimate: 4.4; 
Program changes: New statutes: -;  
Program changes: Lapses in
OMB approval: 0.0; Program changes: Agency 
action: 0.0; Program changes: Total: 0.0; 
Adjustments: -; 
Total change: 0.0; FY 2002 estimate: 4.4.

Federal Trade; Commission; FY 2001 estimate: 
72.6; Program changes: New statutes: -; 
Program changes: Lapses in
OMB approval: -; Program changes: Agency 
action: -; Program changes: Total: -; 
Adjustments: (2.9); Total 
change: (2.9); FY 2002 estimate: 69.7.

National Aeronautic and
 Space Administration; FY 2001 estimate: 6.9; 
Program changes: New statutes: -; 
Program changes: Lapses in
OMB approval: (0.9); Program changes: Agency 
action: 0.0; Program changes: Total: (0.9); 
Adjustments: 0.0; 
Total change: (0.9); FY 2002 estimate: 6.0.

National Science; Foundation; FY 2001 
estimate: 4.8; Program changes: New statutes: 
-; Program changes: Lapses in
OMB approval: -; Program changes: Agency 
action: 0.0; Program changes: Total: 0.0; 
Adjustments: (0.3); 
Total change: (0.3); FY 2002 estimate: 4.5.

 Nuclear Regulatory; Commission; FY 2001 
estimate: 8.2; Program changes: New statutes: 
-; Program changes: Lapses in
OMB approval: -; Program changes: Agency 
action: -; Program changes: Total: -; 
Adjustments: 0.2; Total 
change: 0.2; FY 2002 estimate: 8.4.

Securities and Exchange; Commission; FY 2001 
estimate: 114.3; Program changes: New 
statutes: 0.2; Program changes: Lapses in
OMB approval: -; Program changes: Agency 
action: 4.3; Program changes: Total: 4.5; 
Adjustments: 17.8; 
Total change: 22.3; FY 2002 estimate: 136.6.

Small Business; Administration; FY 2001 
estimate: 1.9; Program changes: New statutes: 
-; Program changes: Lapses in
OMB approval: 0.3; Program changes: Agency 
action: 0.0; Program changes: Total: 0.4; 
Adjustments: 0.5; 
Total change: 0.9; FY 2002 estimate: 2.8.

Social Security; Administration; FY 2001 
estimate: 24.2; Program changes: New 
statutes: 0.4; Program changes: Lapses in
OMB approval: -; Program changes: Agency 
action: 0.3; Program changes: Total: 0.7; 
Adjustments: 0.0; 
Total change: 0.6; FY 2002 estimate: 24.8.

Source: OMB and agencies' ICB submissions.

Note: Data on the Federal Acquisition Regulatory Council were submitted 
by the General Services Administration. Data from the 27 departments 
and agencies may not equal the governmentwide figure because smaller 
agencies' requirements are also included. Cells with "0.0" values were 
non-zero values rounded to zero. Cells with "--"entries were zero 
values. Addition of individual elements may not equal totals due to 
rounding.

[End of table]

However, changes in agencies' bottom-line burden-hour estimates do not 
tell the whole story and can be misleading. It is also important to 
understand how the agencies accomplished these results. OIRA classifies 
modifications in agencies' burden-hour estimates as either "program 
changes" or "adjustments.":

* Program changes are the result of deliberate federal government 
action (e.g., the addition or deletion of questions on a form) and can 
occur as a result of new statutory requirements, agency-initiated 
actions, or through the expiration or reinstatement of OIRA-approved 
collections.

* Adjustments are not the result of deliberate federal government 
action, but rather are caused by factors such as changes in the 
population responding to a requirement or agency reestimates of the 
associated with a collection of information. For example, if the 
economy declines and more people complete applications for food stamps, 
the resultant increase in the Department of Agriculture's (USDA) 
paperwork estimate is considered an adjustment because it is not the 
result of deliberate federal action.

The agencies' ICB submissions identified what drove the changes in 
agencies' bottom-line burden-hour estimates during fiscal year 2002. 
For example, more than 80 percent of the 13 million hour decline in the 
FCC estimate was due to the adjustment of one information collection. 
However, OMB does not require agencies to explain the causes of 
significant adjustments in agencies' burden-hour estimates. Therefore, 
it is not clear whether the FCC adjustment reflected a real reduction 
in the burden felt by the public (e.g., a change in the population 
responding to the collection), or was simply a reestimation of the 
burden that already existed. In any event, it appears that most of the 
FCC decrease was not the result of agency burden-reduction initiatives.

In contrast, HHS indicated that the 37 million burden-hour increase in 
its paperwork estimate during fiscal year 2002 was almost entirely 
driven by a statutory program change in a single collection related to 
the enactment of the Health Insurance Portability and Accountability 
Act of 1996.[Footnote 6] In its ICB submission, HHS said the purpose of 
this statutory change was "to establish standards for electronic 
transactions and for code sets to be used in those transactions." HUD 
indicated that the 87 percent increase in its burden estimate was 
entirely driven by program changes--specifically the reinstitution of 
two information collections that had been in violation of the PRA. 
Therefore, although the department's burden estimate increased, the 
actual burden imposed on the public by the collection did not change.

In some cases, we found the agencies' explanations in their ICB 
submissions for the changes in their burden estimates somewhat 
misleading and/or inconsistent. For example, DOT indicated in its 
summary table that virtually all of the department's 165 million 
burden-hour increase in its estimate was driven by program changes--
specifically, an "agency action." However, the narrative that the 
department submitted to OMB indicated that almost all of this change 
was driven by the reinstatement of a collection that had been in 
violation ("Driver's Records of Duty Status") and an adjustment to the 
collection's burden estimate.[Footnote 7] DOT's estimate of the burden 
associated with this collection declined about 42 million burden hours 
when the violation occurred during fiscal year 2001, so the adjustment 
was about 120 million hours. Documentation that we obtained from DOT's 
Office of the Chief Information Officer indicated that the adjustment 
was caused by significant increases in the department's estimates of 
the time needed for drivers and motor carriers to perform certain 
tasks. Therefore, the actual burden associated with this information 
collection did not change. The same information was being collected 
when the authorization had lapsed during fiscal year 2001 and when it 
was reinstated during fiscal year 2002. The rest of the increase was 
caused by the department's reestimation of the burden, not a change in 
the burden itself.

Reasons for Changes in IRS Burden Estimate:

The increase in the IRS burden-hour estimate during fiscal year 2002 
(about 330 million burden hours) was more than the increase in the rest 
of the government combined. Therefore, although all agencies must 
ensure that their information collections impose the least amount of 
burden possible, it is clear that the key to controlling federal 
paperwork governmentwide lies in understanding and controlling the 
increases at IRS.

The Department of the Treasury's ICB submission indicated that more 
than 80 percent of the increase in the department's estimate during 
fiscal year 2002 (about 280 million burden hours) was caused by 
adjustments. An IRS official told us that this adjustment was largely 
driven by an increase in the number of taxpayers using Form 1040.

IRS identified a number of burden-hour increases that it said were 
caused by the underlying statutes. For example, IRS said that it added 
more than 18 million burden hours to its estimate because of changes to 
Form 1040 and its associated schedules and instructions that were 
precipitated by the Economic Growth and Tax Relief Reconciliation Act 
of 2001.[Footnote 8] Also, IRS said it added nearly 17 million hours to 
the burden associated with Form 4562 ("Depreciation and Amortization") 
because of changes made by the Job Creation and Worker Assistance Act 
of 2002.[Footnote 9]

However, IRS said that other increases in its burden-hour estimate were 
made at the agency's initiative--not because of new statutes. For 
example, the agency said that an increase of more than 22 million hours 
in its estimate for Form 941 and related forms were due to changes 
"requested by IRS."[Footnote 10]

The Department of the Treasury also indicated in its ICB submission 
that it had taken a number of initiatives to reduce paperwork burden. 
For example, beginning with the 2002 tax year, Treasury said that IRS 
had eliminated the requirement on small corporate filers (i.e., those 
with total receipts and assets of less than $250,000) to file certain 
schedules with their returns, resulting in a reduction of about 26 
million burden hours. Treasury also said it had decided to increase the 
threshold for taxpayers having to file Schedule B (Form 1040) from $400 
to $1,500. As a result, the department said that more than 10 million 
fewer taxpayers would have to file the schedule--about one-third of 
those who previously had to file. However, Treasury did not estimate 
how many burden hours would be reduced as a result of that action.

Focusing on IRS to Control Paperwork:

In summary, the agencies' information collection estimates for the ICB 
being released today indicate that federal paperwork continues to 
increase at a record pace, and that IRS continues to account for most 
of the increases in estimated burden. Because IRS constitutes such a 
significant portion of the annual increases and the governmentwide 
burden-hour estimate, one strategy to address increases in federal 
paperwork could be to focus more of OIRA's burden-reduction efforts on 
that agency. Just as increases in IRS's estimates have had a 
determinative effect on the governmentwide estimates, reduction in the 
IRS estimates can have an equally determinative effect. For example, 
just one IRS information collection (related to Form 1040) is estimated 
to impose more paperwork burden than all of the non-Treasury 
collections combined. Just five IRS information collections represent 
about half of the 8.2 billion hour paperwork estimate governmentwide. A 
small reduction in the burden associated with those five collections 
could have a major effect on the governmentwide effort to reduce 
paperwork burden.

However, significant reduction of the burden hours associated with 
these and other IRS information collections may ultimately depend upon 
congressional action. IRS officials maintain that the agency's 
paperwork burden totals reflect the information that is needed to 
administer the tax laws. Therefore, they suggest that significant 
reductions in IRS's paperwork burden would require changes to the tax 
laws. Within the current tax laws, however, IRS has some discretion 
that can affect paperwork burden. For example, in January 2001 IRS 
altered the threshold over which businesses must pay employment taxes 
on a quarterly rather than a more frequent basis. In general, when 
considering reductions in the amount or frequency of data collection, 
IRS must also balance the potential for decreasing its ability to 
ensure that taxpayers fulfill their tax obligations with the amount of 
burden imposed.

Agencies Identified Fewer PRA Violations:

I would now like to turn to the other main topic that you asked us to 
address--PRA violations. The PRA prohibits an agency from conducting or 
sponsoring a collection of information unless (1) the agency has 
submitted the proposed collection and other documents to OIRA, (2) OIRA 
has approved the proposed collection, and (3) the agency displays an 
OMB control number on the collection. The act also requires agencies to 
establish a process to ensure that each information collection is in 
compliance with these clearance requirements. OIRA is required to 
submit an annual report to Congress that includes a list of all 
violations. Under the PRA, no one can be penalized for failing to 
comply with a collection of information subject to the act if the 
collection does not display a valid OMB control number. OIRA may not 
approve a collection of information for more than 3 years, and there 
are currently about 8,000 approved collections.

As table 2 shows, the agencies indicated in their ICB submissions that 
a total of 244 PRA violations occurred during fiscal year 2002 (i.e., 
were either carried over from the previous year or were new 
violations). As in previous years, most (217) of these violations were 
collections whose OIRA approvals had expired and had not been 
reauthorized. Four cabinet departments were responsible for nearly 60 
percent of the violations--USDA, the Department of Commerce (DOC), HUD, 
and the Department of Veterans Affairs (DVA).

Table 2: Reported Violations of the PRA During Fiscal Year 2002:

Departments.

Agriculture; Expired information collections: Departments: 65; Other 
violations: Departments: 1; Total violations: Departments: 66.

Commerce; Expired information collections: Departments: 28; Other 
violations: Departments: 2; Total violations: Departments: 30.

Defense; Expired information collections: Departments: 7; Other 
violations: Departments: 0; Total violations: Departments: 7.

Education; Expired information collections: Departments: 3; Other 
violations: Departments: 1; Total violations: Departments: 4.

Energy; Expired information collections: Departments: 0; Other 
violations: Departments: 0; Total violations: Departments: 0.

Health and Human Services; Expired information collections: 
Departments: 11; Other violations: Departments: 7; Total violations: 
Departments: 18.

Housing and Urban Development; Expired information collections: 
Departments: 24; Other violations: Departments: 0; Total violations: 
Departments: 24.

Interior; Expired information collections: Departments: 6; Other 
violations: Departments: 0; Total violations: Departments: 6.

Justice; Expired information collections: Departments: 16; Other 
violations: Departments: 1; Total violations: Departments: 17.

Labor; Expired information collections: Departments: 0; Other 
violations: Departments: 0; Total violations: Departments: 0.

State; Expired information collections: Departments: 4; Other 
violations: Departments: 0; Total violations: Departments: 4.

Transportation; Expired information collections: Departments: 0; Other 
violations: Departments: 0; Total violations: Departments: 0.

Treasury; Expired information collections: Departments: 0; Other 
violations: Departments: 0; Total violations: Departments: 0.

Veterans Affairs; Expired information collections: Departments: 23; 
Other violations: Departments: 0; Total violations: Departments: 23.

Agencies.

Environmental Protection Administration; Expired information 
collections: Departments: 0; Other violations: Departments: 1; Total 
violations: Departments: 1.

Federal Acquisition Regulation; Expired information collections: 
Departments: 0; Other violations: Departments: 0; Total violations: 
Departments: 0.

Federal Communications Commission; Expired information collections: 
Departments: 2; Other violations: Departments: 0; Total violations: 
Departments: 2.

Federal Deposit Insurance Corporation; Expired information 
collections: Departments: 0; Other violations: Departments: 0; Total 
violations: Departments: 0.

Federal Emergency Management Agency; Expired information collections: 
Departments: 6; Other violations: Departments: 8; Total violations: 
Departments: 14.

Federal Energy Regulatory Commission; Expired information collections: 
Departments: 1; Other violations: Departments: 0; Total violations: 
Departments: 1.

Federal Trade Commission; Expired information collections: 
Departments: 0; Other violations: Departments: 0; Total violations: 
Departments: 0.

National Aeronautics and Space Administration; Expired information 
collections: Departments: 12; Other violations: Departments: 0; Total 
violations: Departments: 12.

National Science Foundation; Expired information collections: 
Departments: 0; Other violations: Departments: 0; Total violations: 
Departments: 0.

Nuclear Regulatory Commission; Expired information collections: 
Departments: 0; Other violations: Departments: 0; Total violations: 
Departments: 0.

Securities and Exchange Commission; Expired information collections: 
Departments: 0; Other violations: Departments: 0; Total violations: 
Departments: 0.

Small Business Administration; Expired information collections: 
Departments: 9; Other violations: Departments: 0; Total violations: 
Departments: 9.

Social Security Administration; Expired information collections: 
Departments: 0; Other violations: Departments: 6; Total violations: 
Departments: 6.

Total; Expired information collections: Departments: 217; Other 
violations: Departments: 27; Total violations: Departments: 244.

Sources: OMB and agencies' ICB submissions.

[End of table]

Number of Violations Has Declined in Recent Years:

As figure 5 shows, the number of PRA violations that the agencies 
identified has fallen markedly during the past 5 fiscal years--from 872 
violations during fiscal year 1998 to 244 during fiscal year 2002. The 
decline in the number of violations between fiscal year 2001 and fiscal 
year 2002 is particularly notable. Last year, OIRA only asked the 
cabinet departments and EPA to report data on violations. The number of 
violations during fiscal year 2002 in just those agencies was less than 
half the number reported by the same agencies during fiscal year 2001 
(200 versus 402).

Figure 5: The Number of PRA Violations Has Declined During the Past 5 
Fiscal Years:

[See PDF for image]

Note: In fiscal year 2001, OMB reported the violations only for the 
cabinet-level departments and the EPA. Therefore, the data for that 
year does not include information for 12 independent agencies included 
in the other years.

[End of figure]

As figure 6 shows, federal agencies vary in the extent and the 
consistency with which they have been able to reduce their number of 
violations. In some agencies, the number of violations has gone down in 
each of the last 3 fiscal years (e.g., USDA and the Department of 
Justice). In other agencies, the number of violations has gone up 
during this period (e.g., DOC) or exhibited an inconsistent pattern 
(e.g., HUD and DVA).

Figure 6: Agencies Exhibit Varying Patterns of Compliance with the PRA:

[See PDF for image]

[End of figure]

Some cabinet departments have made particularly notable progress during 
the past fiscal year--the Department of the Treasury (from 14 
violations during fiscal year 2001 to zero during fiscal year 2002); 
DOT (from 12 violations to zero); DOL (from 8 violations to zero); and 
the Department of Energy (from 6 violations to zero).

OIRA Efforts to Reduce Violations:

OIRA deserves a great deal of the credit for the reduction in the 
number of PRA violations during the past year. In June 2002--2 months 
after last year's hearing before this Committee--the OIRA Administrator 
sent a memorandum to agency chief information officers (CIOs), general 
counsels, and solicitors emphasizing the importance of compliance with 
the PRA. The Administrator said that, despite recent progress, the 
number of overall and unresolved violations was still "unacceptably 
high," and asked each agency to identify progress on violations 
reported in the ICB for fiscal year 2001 and to identify any new 
violations that had occurred since September 30, 2001. He also asked 
the agencies to describe the procedures that they had in place to 
prevent future violations, and said OIRA was planning to meet with the 
CIOs and general counsels of the five agencies with the highest number 
of overall, long-standing, or high-burden violations--USDA, HHS, HUD, 
the Department of State, and DVA.

In November 2002, the OIRA Administrator sent another memorandum to the 
CIOs, noting that although most agencies had done a good job of 
resolving existing violations, some were still having problems in this 
area. He also reported that six agencies had reported 10 or more new 
violations from October 2001 through June 2002--USDA, DOC, the 
Department of State; the Federal Emergency Management Administration, 
the National Aeronautics and Space Administration, and the Small 
Business Administration. The Administrator said OIRA's goal was "to 
achieve zero violations by no later than April 1, 2003," and urged each 
agency to reexamine the efficacy of its PRA clearance system. To assist 
in that effort, he attached a list of collections that had expired in 
the previous 30 days and those that were due to expire in the next 150 
days, and asked the agencies to take action to resolve existing 
violations and to prevent future ones.

Long-standing Violations Still a Problem:

In our previous testimonies on the implementation of the PRA, we noted 
that many of the agencies' PRA violations had been occurring for years. 
The agencies appear to have made some progress in this area, resolving 
certain long-standing violations by either obtaining OMB clearance or 
discontinuing the collections. For example, during fiscal year 2002, 
the Department of the Interior resolved three violations that had been 
occurring since 1993 or 1994. DVA resolved five violations that had 
been occurring since 1996 or 1997.

However, the agencies also indicated that many other long-standing 
violations had not been addressed. Of the 244 violations that occurred 
during fiscal year 2002, 120 were still occurring at the end of the 
fiscal year (September 30, 2002). Forty-five of these 120 violations 
had been occurring for at least 1 year at that point, and 27 had been 
occurring for at least 2 years.

Some agencies had a particularly large number of long-standing 
unresolved violations.

* USDA indicated that 27 of its 66 violations were unresolved as of 
September 30, 2002. Of these, 14 had been occurring for more than 1 
year, and 6 had been in violation for more than 2 years. Three of the 
USDA collections had been in violation for at least 5 years--since 
1997.

* HUD indicated that 23 of its 24 violations during fiscal year 2002 
were unresolved as of September 30, 2002. Of these, 17 had been 
occurring for at least 1 year, and 13 had been in violation for at 
least 2 years.

* SBA indicated that 8 of its 9 violations during fiscal year 2002 were 
unresolved as of September 30, 2002. Of these, 6 had been occurring for 
at least 1 year, and 4 had been occurring for at least 2 years.

Federal agencies brought a number of their unresolved violations into 
compliance after the fiscal year ended. For example, by the end of 
January 2003, HUD had resolved 15 of its 23 violations that were open 
at the end of fiscal year 2002. USDA resolved 12 of its 27 open 
violations by January 2003. Overall, 46 of the 120 violations that were 
still occurring as of September 30, 2002, were resolved between that 
date and the end of January 2003. However, that still leaves 74 
violations occurring during fiscal year 2002 that had not been resolved 
by the end of January 2003.

Violations and Costs:

In our testimony in previous years, we provided an estimate of the 
monetary cost associated with certain PRA violations. To estimate that 
cost, we multiplied the number of burden hours associated with the 
violations by an OMB estimate of the "average value of time" associated 
with each hour of paperwork.[Footnote 11] Although the ICBs list the 
information collections that were in violation during the previous 
year, they do not show the number of burden hours associated with each 
of the violations. Therefore, we obtained data from OIRA on the 
estimated number of burden hours for the 45 information collections 
that had been in violation for at least 1 year as of September 30, 
2002.

The data suggest that PRA violations may constitute significant costs 
for those required to provide the related information. The 45 
violations that we examined involved an estimated 48 million burden 
hours of paperwork, or (at $30 per hour) about $1.4 billion in costs. 
Just 2 of the 45 collections accounted for more than $1 billion in 
estimated opportunity costs.

Many of the information collections that were in violation were being 
administered for regulatory purposes, so if the respondents knew that 
the collections were not valid they might not have completed the 
required forms. However, other violations involved collections in which 
individuals or businesses were applying for benefits such as loans or 
subsidies. Therefore, it is not clear whether these individuals or 
businesses would have refused to complete the required forms if they 
knew that the collections were being conducted in violation of the PRA.

OIRA Can Do More to Address Violations:

Although OIRA and the agencies have clearly made progress in reducing 
the overall number of PRA violations in recent years, more progress is 
needed. As I am sure that the Administrator would agree, 244 violations 
of the law in 1 year is not acceptable. Agencies can and should achieve 
OIRA's goal of zero violations.

As I noted earlier, OIRA has taken a number of steps during the past 
year to try to address this problem. As we recommended last year, OIRA 
has used its database to identify information collections that (1) have 
recently expired and attempted to determine whether the agencies are 
continuing to collect the information and (2) are about to expire, 
thereby attempting to prevent future violations. OIRA has also asked 
the agencies to describe the procedures that they have in place to 
prevent future violations and has met with agencies that have the 
highest number of overall, long-standing, or high-burden violations. We 
believe that these actions precipitated the improvements that occurred 
during fiscal year 2002, and will have positive benefits for years to 
come.

However, OIRA still has not taken some of the actions that we 
previously recommended to improve compliance with the PRA. For example, 
OIRA could notify the budget side of OMB that an agency is collecting 
information in violation of the PRA and encourage the appropriate 
resource management office to use its influence to bring the agency 
into compliance. OIRA could also encourage the use of "best practices" 
in agencies with a good record of PRA compliance. Agencies that have 
recently eliminated their violations altogether (e.g., the Department 
of the Treasury, DOT, and DOL) may have much to teach agencies that 
continue to violate the act.

Although OIRA's current workload is clearly substantial, we do not 
believe the kinds of actions that we suggested would require 
significant additional resources. Primarily, the actions require a 
continued commitment by OIRA leadership to improve the operation of the 
current paperwork clearance process. However, we also recognize that 
OIRA cannot eliminate PRA violations by itself. Federal agencies 
committing these violations need to evidence a similar level of 
resolve.

Mr. Chairman, this completes my prepared statement. I would be pleased 
to answer any questions.

(450192):

FOOTNOTES

[1] See, for example, U.S. General Accounting Office, Veterans' Health 
Care: VA Needs Better Data on Extent and Causes of Waiting Times, GAO/
HEHS-00-90 (Washington, D.C.: May 31, 2000); Public Housing: HUD Needs 
Better Information on Housing Agencies' Management Performance, GAO-01-
94 (Washington, D.C.: Nov. 9, 2000); and Environmental Information: EPA 
Needs Better Information to Manage Risks and Measure Results, GAO-01-
97T (Washington, D.C: Oct. 3, 2000).

[2] U.S. General Accounting Office, Information Resources Management: 
Comprehensive Strategic Plan Needed to Address Mounting Challenges, 
GAO-02-292 (Washington, D.C.: Feb. 22, 2002). Our conclusions in this 
report were similar to those in a report issued several years earlier. 
See U. S. General Accounting Office, Regulatory Management: 
Implementation of Selected OMB Responsibilities Under the Paperwork 
Reduction Act, GAO/GGD-98-120 (Washington, D.C.: July 9, 1998).

[3] The act requires the director of OMB to delegate the authority to 
administer all functions under the act to the administrator of OIRA but 
does not relieve the OMB director of responsibility for the 
administration of those functions. Approvals are made on behalf of the 
OMB director. In this testimony, we generally refer to OIRA or the OIRA 
administrator wherever the act assigns responsibilities to OMB or the 
director.

[4] See U.S. General Accounting Office, EPA Paperwork: Burden Estimate 
Increasing Despite Reduction Claims, GAO/GGD-00-59 (Washington, D.C.: 
Mar. 16, 2000) for how one agency estimates paperwork burden. 

[5] RISC is part of the General Services Administration but works 
closely with OIRA to provide information to the President, Congress, 
and the public about federal regulations. It maintains a database that 
includes information on all information collection review actions by 
OIRA. 

[6] Pub. Law 104-191.

[7] This collection is used by DOT to determine the compliance of motor 
carriers and commercial motor vehicle drivers with the maximum driving 
and duty time limitations prescribed in the Federal Motor Carrier 
Safety Regulations. For a discussion of how DOT's burden-hour estimate 
for this collection changed, see 67 Fed. Reg. 1396 (Jan. 10, 2002).

[8] Pub. Law 107-16.

[9] Pub. Law 107-147. IRS said that the provisions that affected Form 
4562 include an additional 30 percent depreciation deduction for 
qualified property placed in service after September 10, 2001, and an 
increase in the section 179 expense deduction for property placed in 
service in the New York Liberty Zone. 

[10] Form 941 is used by employers to report payments made to employees 
subject to income and social security/Medicare taxes and the amounts of 
those taxes. 

[11] Office of Management and Budget, Draft Report to Congress on the 
Costs and Benefits of Federal Regulations, 67 Fed. Reg. 15014 (Mar. 28, 
2002). In this report, OMB used an average value of time of $30 per 
hour to estimate the cost associated with paperwork burden.