OMB Issues 2011 Final Report to Congress On Costs, Benefits of Federal Regulations

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The White House Office of Management and Budget on June 27 released the final version of its 2011 report to Congress on the costs and benefits of federal regulations, as well as the costs of unfunded mandates on state and local governments.

The estimated annual benefits of all major federal regulations reviewed by OMB from Oct. 1, 2000, to Sept. 30, 2010, are between $132 billion and $655 billion, while the estimated annual costs are between $44 billion and $62 billion.

The 2011 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities was released in draft form in March.

Major regulations are defined as those having an annual effect of $100 million or more on the economy. The wide ranges in the estimates reflect uncertainty in the benefits and costs of each rule at the time that it was evaluated, the report stated.

Some rules are estimated to produce far higher net benefits than others, the report stated. Moreover, there is substantial variation across agencies in the total net benefits produced by rules, it said.

EPA Air Pollution Rules

For example, air pollution rules from the Environmental Protection Agency produced 62 percent to 84 percent of the benefits and 46 percent to 53 percent of the costs, the report said. Most rules have net benefits, but several rules have net costs, typically as a result of statutory requirements, it stated.

During fiscal 2010, executive agencies promulgated 66 major rules, defined as having annual costs exceeding $100 million. The independent regulatory agencies, whose regulations are not subject to OMB review, issued 17 major final rules.

The report cautioned that many rules have benefits or costs that cannot be quantified or monetized in light of existing information, and that the aggregate estimates in the report do not capture non-monetized benefits and costs.

Among environmental regulations, a joint regulation setting greenhouse gas emission standards and fuel economy standards for light-duty vehicles had the largest estimated costs and benefits.

That regulation, from EPA and the National Highway Traffic Safety Administration, had annualized benefits in a range of $3.9 billion to $18.2 billion, and costs of $1.7 billion to $4.7 billion.

Feedback From OMB on Estimates

In that regulation as in others, OMB based its summary on the agency's cost-benefit estimates, which would have been developed with feedback from OMB in all cases of major rules. Such rules are submitted to OMB for review during development under Executive Order No. 12866.

Other EPA rules listed by OMB included, in order of the magnitude of costs:

• national emission standards for hazardous air pollutants (NESHAP) for Portland cement facilities;

• national ambient air quality standards for sulfur dioxide;

• an amendment to lead paint regulations;

• NESHAP for diesel-fueled reciprocating internal combustion engines; and

• NESHAP for natural gas-fired reciprocating internal combustion engines for existing stationary engines.

For the Department of Energy, OMB listed three regulations on energy-efficiency standards for, in order of cost magnitude: pool heaters and water heaters; small electric motors; and commercial clothes washers.

The annual report is the 14th since OMB began issuing the reports in 1997. The House Committee on Oversight and Government Reform is reviewing the report, a spokesman for committee Chairman Rep. Darrell Issa (R-Calif.) said.

Issa and other Republicans on the committee have been critical in hearings on the cost of federal regulations to the private sector, saying the costs inhibit job growth (29 DEN A-6, 2/11/11).

By Cheryl Bolen and Alan Kovski

The OMB report to Congress on the costs and benefits of federal regulations is available at .