OMB says benefits of regs likely outweigh costs

For the third year in a row, the Office of Management and Budget has estimated that the benefits of federal regulations probably outweigh their costs.

OMB's annual cost-benefit analysis estimated that the costs of the federal regulatory apparatus range from $84 billion to $140 billion a year. The estimated benefits are between $56 billion and $1.51 trillion a year.

The report, required by Congress since 1997, is wrapped in disclaimers describing the methodological problems associated with trying to attach dollar figures to regulatory actions.

For example, OMB was heavily criticized last year for including an upper limit of $3.2 trillion for the benefits of Environmental Protection Agency regulations. EPA said there was only a 5 percent probability that regulatory benefits are as high as $3.2 trillion a year. This year, OMB shaved more than a trillion dollars off its total estimate by using the benefit level EPA actually believes its regulations provide, which is $1.45 trillion a year.

"It is difficult, if not impossible, to estimate the actual costs and benefits of all existing federal regulations with accuracy," OMB said.

While EPA dominates the OMB analysis, other agencies have significant regulatory impact as well. The Health and Human Services Department, for example, accounts for an estimated $700 million to $800 million a year in regulatory costs and $12 billion to $14 billion in benefits, OMB said. The Agriculture Department's regulations cost Americans about $1.3 billion a year and provide benefits of $2.6 billion to $5.3 billion, the report said.

The OMB analysis, released last week, is a draft report to Congress. Experts in cost-benefit analysis have been asked to review the report, and public comments will be worked into the final report.

OMB also described reforms taking place in the federal regulatory arena, including a move to outcome-based standards, rather than command-and-control regulations; rewriting regulations into plain language; and reducing reporting requirements.