Rulemaking:

Report to Congress on the Costs and Benefits of Federal Regulations

Stated Purpose:

Report on the costs and benefits of federal regulations and solicit comments on proposals for reform.

Summary of RSP Comment:

Regulations impose a hidden tax on American citizens, yet, unlike the federal budget, the money spent and opportunities foregone to comply with government rules and regulations are not well-understood. Since OMB is in the best position to gather and synthesize government information on the costs and benefits of regulation, these reports offer an opportunity to remedy this deficiency and make Americans more aware of the positive and negative impacts of federal regulatory activity.

OMB's 2001 draft report to Congress on the costs and benefits of federal regulation provides little new information beyond that presented in previous reports. However, it does pose important questions, which suggest a willingness to improve future reports. In response to those questions, and based on our review of the 2000 and 2001 reports we make the following recommendations:

1. OMB should report best (i.e., expected value) estimates of aggregate benefits and costs, in addition to ranges.
2. The report should present OMB's objective estimates of the benefits and costs of individual regulatory actions. These estimates should be based on consistent measurement techniques and a transparent explication of assumptions.
3. OMB should continue to build its regulation-by-regulation database of the costs and benefits of regulations issued before April 1995. When OMB must rely on other aggregate estimates of benefits and costs, such as those in EPA's Section 812 retrospective report, it should adjust them, as necessary, to correct for identified problems.
4. OMB should identify in a concise but comprehensive manner variations in agency methodologies used to estimate benefits and costs of individual regulations. It should present a "report card" for agency analyses that highlights their strengths and weaknesses.
5. OMB should present information on the effects of federal regulation on state and local entities.
6. OMB should report aggregate costs and benefits in useful ways, e.g., by household, size of business, type of regulation, growth in burden, etc.