Federal regulations pay off, OMB report says

The benefits of federal regulations tend to outweigh their costs, according to a draft report by the Office of Management and Budget. OMB estimated that the costs of the federal regulatory apparatus range from $82 million to $5 billion a year. The estimated benefits ranged from $50 million to $25 billion a year. Agencies' calculated their estimates of the benefits of their regulations in a number of ways. For example, the Housing and Urban Development Department calculated the benefits of its lead-based paint hazards rule to include both the avoidance of costs of medical treatment for affected children and the estimated increase in lifetime earnings of children with lower levels of lead in their blood. The draft report published in the Federal Register last Wednesday analyzed the costs and benefits of 31 major federal regulations issued between April 1, 1999 and March 31, 2000. Experts in cost-benefit analysis have been asked to review the study, and public comments will be worked into the final report to Congress. EPA regulations accounted for the bulk of the cost-benefit analysis. OMB estimated that the agency's new motor vehicle emissions standards will amount to benefits between $13.7 billion and $25.2 billion a year by 2030, with a cost of $5.3 billion per year. HUD's regulation on lead-based paint hazards was estimated to provide benefits of $715.6 million for its first five years, while it would cost Americans about $564.2 million during the same period. Congress has required the annual report from OMB since 1997. OMB's last three reports have estimated that the benefits of federal regulations probably outweigh their costs. However, OMB has voiced concern over the methodology of its own analysis, acknowledging its inability to quantify and translate into dollar amounts certain types of costs and benefits. The agency solicited comments from the public on improving the accuracy of its cost-benefit estimates. In previous years, some comments have suggested the agency use its own independent estimates of costs and benefits instead of agencies' estimates. OMB currently works with agencies during its review to help them improve their cost-benefit estimates. Beginning in 2002, OMB will have to update its analysis annually and submit it along with the federal budget to Congress. Comments on OMB's draft report should be sent no later than July 2, 2001 to:
John F. Morrall III
Office of Information and Regulatory Affairs
Office of Management and Budget
New Executive Office Building
Room 10235
725 17th Street, N.W.
Washington, D.C. 20503
Fax: 202-395-6974
Email: jmorrall@omb.eop.gov
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