Every day, commentators bemoan the large number and cost of federal regulations and the fact that our rulemaking process has become dysfunctional. These commentators are correct; agencies issue thousands of rules each year, making it all but impossible for Main Street businesses to keep up. But that is only one way to see the bigger picture. To truly understand how the regulatory system has gone off the rails, one must look closer and understand that a critical handful of rules are vastly more important than all of the others.
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Using the agency’s own data, these nine charts simply illustrate this point.
1. Since 1976 federal agencies have issued over 180,000 new regulations.
2. Between 2000 and 2013 federal agencies issued 4,468 significant rules; i.e. over $100 million annually in cost or of a very novel nature.
3. Between 2000 and 2013 executive branch agencies issued 30 rules that had a cost over $1 billion annually.
4. Of the 30 most costly rules, EPA issued 17 of them. The remaining 13 were spread among the rest of the federal agencies.
5. Between 2000 and 2013, 98% of EPA’s final rules had no estimated compliance costs.
6. Between 2000 and 2013, the annualized costs of EPA rules have risen dramatically.
7. While EPA issued 7,615 rules between 2000 and 2013, the 17 most costly rules accounted for almost all the costs and benefits of those 7,615 rules.
8. 97.2% of all of EPA’s claimed benefits between 2000 and 2013 come from reducing fine particulate matter (PM 2.5), which many times is not even the pollutant that EPA cites as justification for writing the regulation.
9. EPA’s 2013 standard for NAAQS PM 2.5 is 12 µg/m3, but the national annual average concentration of PM 2.5 in the U.S. is down to approximately 7.5 µg/m3.
The findings from these charts, found in the U.S. Chamber’s brochure, Charting Federal Costs and Benefits, are somewhat significant for explaining the impacts of the regulatory system.
To the small business community the 180,000 new regulations are a labyrinth. To the energy, natural resource, and manufacturing industries, the fact that EPA has issued 17 of the 30 regulations costing over $1 billion annually means extremely complex new regulations will permanently impact their operations. But most surprising is the fact that 97.2% of all the benefits claimed by EPA are for reductions in fine particulate matter (PM 2.5). This fact is significant because the U.S. is almost 30% below what EPA asserts is protective of health with an adequate margin of safety. Moreover, PM 2.5 benefits support almost all of EPA’s benefit claims, even when the agency claims it is reducing other pollutants such as mercury, sulfur dioxide, and even carbon dioxide. EPA claimed PM 2.5 benefits when it regulated hazardous air pollutants in the Portland cement and Boiler MACT rules.
In layman’s terms, although the United States already meets and exceeds PM 2.5 standards, EPA won’t stop justifying costly new rules with more claimed PM 2.5 benefits.
If there is a take away from these charts, it is that the focus of regulatory oversight should be on the biggest and most costly rules. In the end, it is those rules that are the main drivers of costs and benefits. The facts, economics, science and data underlying those rules must be solid, otherwise agencies are imposing massive costs with questionable benefits. This truly illustrates the principle that good data equals good policy.
Finally, there needs to be a “Truth in Regulating” law, which requires the agency to regulate what it claims it is regulating. In simple terms this means that if EPA is regulating X then EPA must achieve benefits from regulating X. This is not currently happening when 97.2% of all the benefits come from reducing PM 2.5 regardless of the pollutant EPA claims it is actually regulating. To regulate one pollutant but get all benefits from a different pollutant is purely bait and switch. Such a practice is an unlawful business practice; it should also be an unlawful regulatory practice.