Public Comment on OMB's 2017 Draft Report to Congress on the Benefits and Costs of Federal Regulations

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Brian F. Mannix, Sofie E. Miller, & Susan E. Dudley
April 09, 2018

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The George Washington University Regulatory Studies Center improves regulatory policy through research, education, and outreach. As part of its mission, the GW Regulatory Studies Center conducts careful and independent analyses to assess rulemaking proposals from the perspective of the public interest. This comment on the Office of Management and Budget’s 2017 Draft Report to Congress offers suggestions for improving the information value of the Report, as well as the evidence on which regulatory policies depend, and does not represent the views of any particular affected party or special interest.

Introduction

Pursuant to the Regulatory Right-to-Know Act,[1] the Office of Management and Budget (OMB) submits to Congress each year an accounting statement and associated report providing estimates of the total annual benefits and costs of federal regulations; an analysis of impacts of Federal regulation on State, local, and tribal government, small business, wages, and economic growth; and recommendations for reform.

OMB’s 2017 Draft Report to Congress on the Benefits and Costs of Federal Regulations (the Report) provides information both on estimates of the effects of major executive branch regulations and also on OMB’s focus and priorities. Though the Report is an important source of agency information, the usefulness of this information is hampered by the scope of the report, the inadequacy of using ex ante estimates, and the difficulty of aggregating agency estimates.

The Report indicates that between fiscal year 2007 and FY 2016, agencies published 36,255 final rules, of which 2,670 (or 7%) were significant and underwent regulatory review at OMB. Of these OMB-reviewed rules, 609 were “major” rules. Importantly, the Report only includes benefit or cost information for 137 rules. In other words, it only includes 22% of all major rules, and less than 0.5% of all rules issued during that decade. According to agency estimates, these 137 major rules add up to $930.3 billion in annual benefits and $128.4 billion in annual costs (2015$);[2] but the more important finding may be the lack of quantified impact estimates for the vast majority of regulations.

While estimating the aggregate benefits and costs of regulations is a useful exercise, it is challenging and OMB is right to “emphasize that the estimates [it reports] have limitations.”[3] In these comments, we address some of these limitations and offer possible solutions. When relevant, we refer to salient “tips” presented in a 2017 Journal of Benefit-Cost Analysis article by 19 experts in regulatory analysis, “Consumers’ Guide to Regulatory Impact Analysis: Ten Tips for Being an Informed Policymaker” (“Consumer’s Guide”).[4]

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[1]    Consolidated Appropriations Act of 2001 (H.R. 5658, section 624, P.L. 106-554).

[2]    These aggregated values are from the high-end estimates of benefits and costs listed in table 1-1 of the Report.

[3]    OMB, p. 3.

[4]    Dudley, S., Belzer, R., Blomquist, G., Brennan, T., Carrigan, C., Cordes, J., Cox L., Fraas, A., Graham, J., Gray, G., Hammitt, J, Krutilla, K., Linquiti, P., Lutter, R., Mannix, B., Shapiro, S., Smith, A., Viscusi, K., Zerbe, R. (2017). Consumer’s Guide to Regulatory Impact Analysis: Ten Tips for Being an Informed Policymaker. Journal of Benefit-Cost Analysis, 8(2), 187-204. doi:10.1017/bca.2017.11