OMB Releases Cost-Benefit Report for Federal Regulations

Written by FEDagent on .

This week, the U.S. Office of Management and Budget (OMB) released to Congress its annual cost-benefit analysis of federal agency rules and regulations.

In keeping with its catchy title, the 101-page 2017 Draft Report to Congress on the Benefits and Costs of Federal Regulations and Agency Compliance with the Unfunded Mandates Reform Act provides an overview of the highly complex process underlying determinations of agency successes and failures, ultimately painting a picture that might appear surprisingly rosy, to some.

As reflected in the chart below, shown in both 2001 and 2015 dollars, the annual benefits associated with major agency rules consistently outpace the associated costs.

Especially impressive are the statistics from the Environmental Protection Agency.

The report notes, “Across the Federal government, the rules with the highest estimated benefits as well as the highest estimated costs come from the Environmental Protection Agency and in particular its Office of Air and Radiation. Specifically, EPA rules account for over 80 percent of the monetized benefits and over 70 percent of the monetized costs. Of these, rules that have a significant aim to improve air quality account for over 95 percent of the benefits of EPA rules. As such, we provide additional information on the estimates associated with these rules.”

OMB states that those benefits are “mostly attributable to the reduction in public exposure to fine particulate matter” and that an additional EPA initiative, the 2006 National Ambient Air Quality Standards, which accounts for a benefit between $4 and $40 billion per year (compared to estimated costs of $3 billion) is excluded from some of the estimates, to avoid potential double-counting, due to the complex structure of the regulations.

Overall, according to OMB, “the largest benefits are associated with regulations that reduce risks to life.”

Below is an overview of the total annual benefits and costs, by year.

OMB recognizes that while “agencies have adopted somewhat different methodologies—for example, different monetized values for effects (such as mortality and morbidity), different baselines in terms of the regulations and controls already in place, different rates of time preference, and different treatments of uncertainty,” but that “these differences are reflected in the estimates” are ultimately reflected in the above tables and “agency practice is rooted in empirical research and is not widely variable.”



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