Tag Archives: regulatory costs

CEI’s Battered Business Bureau: The Week in Regulation


It may have been a short work week, but it was still a busy one in the world of regulation:

  • 68 new final rules were published this week. That’s a new rule every 2 hours and 28 minutes, 24 hours a day, 7 days a week. All in all, exactly 500 final rules have been published in the Federal Register this year. If this keeps up, 3,327 new rules will hit the books in 2012.
  • 1,545 new pages were added to the 2012 Federal Register this week, for a total of 11,367 pages. At this pace, the 2012 Federal Register will run 76,804 pages.
  • There were 15 significant actions this week, as defined by Executive Order 12866. Of those, one is an “economically significant” final rule. That means it costs $100 million or more per year.
  • So far this year, 84 final rules affect small businesses. 16 of them are significant rules.
  • Economically significant rules published so far in 2012 cost at least $15.01 billion. Two of the nine rules do not have cost estimates. We assume that rules lacking this basic transparency measure cost the bare minimum of $100 million per year. The true cost is almost certainly higher.

Here are highlights from final rules that passed this week:

  • The Small Business Administration is changing the size requirements for certain types of businesses to qualify as small. By raising some size limits, the SBA hopes to increase the amount of money that it transfers from taxpayers to private businesses.
  • The EPA issued a 123-page final rule designating and revising critical habitats for two types of minnow, each measuring less than 3 inches in length.
  • The Pipeline and Hazardous Materials Safety Administration has revised its fireworks approval policy.
  • We dare you to read all the way through this regulation that was published today to implement part of the Dodd-Frank financial regulation bill.

For more data, updated daily, go to TenThousandCommandments.com.

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CEI Podcast for July 7, 2011: How Much Does Regulation Cost?

 

Have a listen here.

One federal government study says federal regulations cost $1.75 trillion. Another says it’s $62 billion. The difference is almost a factor of 30. Vice President for Policy Wayne Crews compares the two, and talks about the hazards of calculating regulatory costs and benefits. As it turns out, $1.75 trillion might be an understatement.

Costs and Benefits of Regulation

One of the major developments in regulation over the last thirty years has been the rise of cost-benefit analysis. At first, agencies squirmed and resisted. But then they realized something: they’re in charge of their own accounting. It’s not an independent audit. There’s no third-party involved. An agency is free to use its own standards and its own measures when calculating its own regulatory costs and benefits.

When it’s that easy to game the system, of course agencies are going to lowball their costs and highball their benefits. This is on full display in the Office of Management and Budget’s pithily titled “Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities.” (link goes to PDF)

On page 13 of the report, Table 1-1 lists cost-benefit numbers for selected agencies for their major rules (costing $100 million or more) over the last ten years. It can be hard to quantify costs with precision, so agencies typically report a range estimate. EPA, for example, estimates that its major rules cost from $23.3 billion to $28.5 billion over the last decade.

Benefits are much trickier to calculate. EPA estimates that its major rules have had benefits of $81.8 billion to $550.7 billion – a range of nearly a factor of 7. They might as well say they have no idea. Why such a large range? Because EPA is trying to put dollar figures on items such as its air quality rules lowering the number of premature deaths. To do that, they have to pull numbers out of thin air.

Remember, these estimates don’t come from an independent third party. They come from EPA itself. There is a conflict of interest here. EPA wants to maximize its budget and its activities. The more beneficial its regulations appear, the more of them they can issue without too much pushback. So when it comes to putting dollar values on things that aren’t quantifiable, EPA has an incentive to pick the highest numbers it can.

That’s why agencies shouldn’t try to calculate their own regulations’ benefits. After all, nobody claims the tax burden is negative because the benefits those tax dollars confer outweigh their cost. It’s easy to calculate how much people pay in taxes. It’s also fairly easy to calculate how much regulations cost. But the fudge factor in benefit calculations is so high – and so prone to abuse – that it’s literally impossible to come up with an honest number. If it were possible, maybe EPA’s benefit range would be tighter than a factor of 7.