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Democratic Members of the House Small Business Committee today examined the paperwork burdens small companies face in trying to comply with regulatory hurdles.  At a hearing examining the Paperwork Reduction Act, Democratic Members of the Committee delved into how the law can be improved to better serve small firms.  

“For small firms, paperwork requirements are particularly burdensome,” said Rep. Nydia M. Velázquez (D-NY), the Ranking Democrat on the Committee. “Due to economies of scale and a lack of in-house lawyers and experts, paperwork compliance is especially costly for small firms.”  

The Paperwork Reduction Act or PRA was created in 1980, and amended in 1995, with the intent of curtailing the growth of paperwork. Unfortunately, paperwork requirements have continued to grow over the years.  Velázquez, cited data finding that, in Fiscal Year 2015, the public spent an estimated 9.78 billion hours responding to Federal information collections. This constituted a net increase of 350 million burden hours, or about 3.7 percent, from the estimated 9.43 billion hours that the public spent responding to federal information collections in FY 2014.

During the hearing, witnesses testified that, while paperwork reporting requirements can cause problems for small companies, there are valid reasons for the federal government to collect information and use it to inform policymaking and policy implementation. Additionally, funding cuts have harmed agencies that need adequate resources to effectively evaluate regulations and provide needed compliance assistance to small firms.

“Data based decision-making is clearly preferable to conjecture or speculation, and in many instances the requisite data are dispersed among individuals, businesses, or state and local governments,” testified Sally Katzen Professor of Practice and Distinguished Scholar in Residence at NYU School of Law.  “Regulatory agencies should be making decisions based on the best scientific, technical or economic information available. Otherwise the rules they impose on regulated entities including small businesses may be less efficient or effective ways of achieving their regulatory goals.” 

“Data collections exist for a reason,” added Velázquez. “Agencies rely on data to make informed decisions achieving important policy outcomes. These goals include ensuring worker safety, preserving clean air and water, and safeguarding taxpayer dollars in benefit programs.”

During the hearing, Members of Congress from both sides of the aisle noted the importance of improving the PRA so that it better meets small firms’ needs.  

“As the Committee evaluates how to improve the PRA, cut red tape for small businesses and reduce compliance costs, we must also keep in mind the legitimate need of agencies to obtain data and ensure programs are properly implemented,” Velázquez concluded. “Balancing these goals will be a challenge for the Committee, but one I’m confident we can achieve.”