STATEMENT
of the Honorable Nydia M. Velázquez, Chairwoman
United States House of Representatives, Committee on Small Business
Full Committee Hearing: “Improving the Paperwork Reduction Act for Small Businesses”
Thursday, February 28, 2008

The federal paperwork burden continues to grow for small firms.  As agencies churn out regulations and notices at a rate of nearly 1,500 pages per week, it seems that every day brings some new paperwork on small businesses.  In their most recent annual report, OMB found that the overall burden increased nearly 700 million hours from FY 2005 to FY 2006. 

Paperwork is costly for small firms.  According to an NFIB study, paperwork and recordkeeping costs small businesses nearly $50 per hour.  Not surprisingly, small businesses cited the volume as being the one of the most difficult problems.

The Paperwork Reduction Act or PRA was created in 1980 with the intent of curtailing the growth of paperwork, but unfortunately, it hasn’t done so.   One question the Committee seeks to address today is whether current law provides OMB with the right tools to limit this growth or if changes must be made to the PRA to improve its effectiveness. 

At today’s hearing, we have present the Administrator of the office that was created as part of the Paperwork Reduction Act—the Office of Information and Regulatory Affairs.  Administrator Dudley is charged with overseeing and enforcing this important law.  It is my hope that she can talk frankly about the underlying weaknesses of the law and whether she has adequate resources to enforce it.  While OIRA has a difficult task, small businesses deserve to know exactly why their paperwork burden continues to grow.

In today’s testimony, we will surely hear about some of the successes of OIRA, but we also wish to understand the obstacles that are preventing the Office from reducing paperwork requirements for small businesses.  Additionally, it is critical to get answers why some agencies continue to violate the law.

It is our hope to identify what steps are needed to reverse the growth in paperwork.  Some critics have pointed out the reason there is poor compliance with PRA may be due to the fact that OMB guidance is inconsistent with the intent of the Act.   

While the statute says that agencies should work to reduce paperwork burdens on small businesses, OMB guidance seems to incorrectly limit the scope of the law.   I am interested in hearing the reasons for this inconsistency and whether the small business sections of the law are being misinterpreted by OIRA.

Ensuring that agencies are considering the economic impact of their regulations and paperwork requirements on small firms is critical.  It is a primary reason, the committee established the Regulatory Flexibility Act – to focus on reducing unnecessary paperwork burden created due to federal regulations.  We have already has passed legislation to strengthen RegFlex this Congress, but it is important to examine whether that law and the PRA are working in a cohesive manner.  

The PRA should not serve to discourage agencies from conducting proper regulatory flexibility analyses.  All too often we see agencies implementing regulations that ignore or understate economic impacts on small businesses.  In many instances, this is because of a lack of communication between the agencies and the small business community.

Under the PRA, an agency that wishes to survey more than 10 small businesses to determine the economic impacts of a rule is required to receive OMB approval. 

Since approval may take months, agencies that are eager to move forward with regulations may not be properly assessing potential impacts on small business.

Enforcement and oversight of PRA is important, but we have to open the prospects of strengthening it to achieve real change.  Today’s panels will offer insight on what type of reforms may be needed and if the need for further accountability is required.

The reality is the federal paperwork burden continues to grow at a troubling rate and it is harming our nation’s entrepreneurs.  And it is clear that the purpose of the Paperwork Reduction Act is not being realized.  I look forward to working with Ranking Member Chabot to ensure this important law is meeting its full potential for small businesses.