OMB Report to Congress on the Costs and Benefits of Regulations issued in FY 2012

By Susan E. Dudley on Apr 22, 2013


The Office of Management and Budget quietly released its draft 2013 Report to Congress on the Benefits and Costs of Regulations on Friday, April 19, covering regulatory activity through the end (September 30) of fiscal year 2012. The annual report, which including appendices, runs to over 100 pages, summarizes agencies’ estimates of the benefits and costs of regulations issued in FY 2012 and the preceding 10 years.

Recall that, as the presidential election approached, the White House was widely reported to be restraining the regulatory agencies out of concern for the state of the economy. But by the administration’s own estimates, the rules it issued in FY2012 alone imposed more costs on the economy than all the rules issued during the entire first terms of Presidents Bush and Clinton, combined.

The report does not highlight this fact, but instead points to the enormous regulatory benefits agencies calculate will flow from these rules.  The benefits are very different in character from the costs, however.  Of the reported benefits of regulations issued in FY 2012, over 95% derive from two assumptions that many scholars find questionable:  1) that reductions in emissions of fine particles will cause large reductions in premature mortality (contributing 55% of total benefits); and 2) that restricting consumer choice in purchasing appliances and cars will ultimately make them better off, because the fuel savings are worth more – to the consumers themselves – than consumers realize (contributing 41% of the total benefits).

In making comparisons of net benefits across different administrations, the OMB report applies different standards to different years.  If a court has vacated a rule issued by a previous administration, the report removes the net benefits from that administration’s tally.  Yet the report continues to include in the Obama administration’s tally the cross-state air pollution rule (CSAPR) vacated in August 2012.  With claimed net benefits of almost $40 billion per year, selectively taking credit for the vacated CSAPR clearly affects the net benefits comparison.  This seems particularly inappropriate because, as a result of the vacatur, the EPA is actually enforcing the Bush administration’s (also overturned, but not vacated) clean air interstate rule (CAIR).

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