OMB: Benefits of 2006 regulations outweigh costs

Seven major regulations adopted over the past year provide between $6.3 billion and $44.8 billion in benefits annually, while costing just $3.7 billion to $4.2 billion per year, according to a draft report by the Office of Management and Budget.

In an initial draft for comment of an annual report on the costs and benefits of federal regulations, OMB wrote that from fiscal 1997 through fiscal 2006, major rules whose impacts could be easily quantified accounted for between $99 billion to $484 billion in benefits, with costs of between $40 billion and $46 billion.

The latest estimate of benefits is higher than that for the 10-year period ending in fiscal 2005, analysts said, largely due to a new Environmental Protection Agency review of the National Ambient Air Quality Standards for Particulate Matter, or soot. The new rule is expected to bring between $4 billion and $40 billion in annual benefits, much of that from avoided deaths, at a cost of $2.5 billion to $2.8 billion per year.

OMB analysts warned that the calculation of costs and benefits is not particularly rigorous, in part because agencies use a variety of methodologies, baselines and risk assessments in their calculations, which are then rolled into summations without correcting for those differences. Also, the report noted, "Many of these major rules have important nonquantified benefits and costs that may have been a key factor in the agency's decision to promulgate a rule-making."

OMB analysts did not incorporate the dollar value associated with three major rules adopted last year that they said were particularly difficult to put into dollars. One was an air cargo screening program that yielded hard-to-measure security improvements; two others permitted the hunting of migratory birds, and only certain benefits were quantified.

For the first time this year, OMB also published a draft of its report on unfunded mandates imposed on state, local and tribal governments and the private sector by federal regulations.

Several of the proposed or final rules are in homeland security, and would impose costs largely on the private sector. Analysts highlighted the introduction of a Transportation Worker Identification Credential for port employees, which they said could cost close to $1 billion.

The report also included an update to fuel economy standards for light trucks, for which a total cost to industry was not provided.