Bush Administration Says Federal Regulations Save Money

Oct. 24, 2003
A review by the Office of Management and Budget (OMB) of 107 major federal rulemakings over the past 10 years has concluded that the total annual benefits from the regulations are worth three to five times the aggregate costs of the same rules.

The 2003 final report to Congress, prepared by OMB's Office of Information and Regulatory Affairs (OIRA), is required each year by the Regulatory Right-to-Know Act and differs greatly from the one submitted last year by the administration.

In last year's report, the costs of regulations fell within the range of the estimated benefits. OIRA offered two reasons for the shift: the 2003 report covers a 10-year period, while last year's report was for six years. Second, OIRA corrected inadvertent mistakes in last year's cost estimates.

John Graham, the current administrator of OIRA, has been criticized by environmental, health and safety activists for his alleged hostility to government regulation and his ties to industry groups. Prior to joining the Bush administration, Graham founded and led the Harvard Center for Risk Analysis, an organization that has called on the government to use stricter cost-benefit analyses before issuing new rules.

Of the 107 rules, the report singled out four EPA regulations that together account for benefits of $101 to $119 billion per year, and costs of only $8 to $8.8 billion per year. The four EPA rules include two that limit particulate matter and NOX emissions from heavy-duty highway engines, the Tier 2 rule limiting emissions from light duty vehicles, and the acid rain rule.

The report reviewed two OSHA regulations. OIRA estimated the Confined Space rule had annual costs of $250 billion and annual benefits of $540 billion. But OSHA's Occupational Exposure to Asbestos regulation was not such a bargain, with estimated costs of $448 billion and benefits of only $92 billion.

The report valued each fatality and each case of asbestosis at $5 million and each lost-workday injury at $50,000. OIRA gave no value at all for non-lost-workday injuries and assumed a 20-year latency period between exposure and onset of cancer or asbestosis.

The total benefits of the rules reviewed by OIRA range from $146 billion to $230 billion, while the estimated annual costs are $36 to $42 billion.

The full report is available at www.whitehouse.gov/omb/inforeg/2003_cost-ben_final_rpt.pdf.

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