Today, the Senate Homeland Security and Government Affairs Committee is holding a Hearing on legislation focused on the regulatory system entitled, “A Review of Regulatory Reform Proposals.”
CPR Vice-President and Wake Forest University School of Law professor Sidney Shapiro will be testifying.
It is a good thing that Congress has directed agencies to issue regulations to achieve important social goals because these regulations have produced enormous benefits for the American people.1 Consider the following:
The White House Office of Management and Budget (OMB) estimates that regulatory benefits exceed regulatory costs by about 8 to 1 for significant regulations.2 The Environmental Protection Agency (EPA) estimates that the regulatory benefits of the Clean Air Act exceed costs by a 25-to-1 ratio.3
The failure to regulate some hazards related to the workplace, the environment, product safety, food safety, and more, and the failure to enforce existing regulations on such hazards results in thousands of deaths, tens of thousands of injuries, and billions of dollars in economic damages every year. Sometimes, the damages reach a catastrophic scale. The BP Oil Spill caused tens of billions of dollars in damages.4 The Wall Street collapse may have caused trillions. Regulation to prevent catastrophe can be far cheaper, and less painful, than cleaning up damage to lives, property, and the environment later.5
Dozens of retrospective evaluations of regulations by the EPA and the Occupational Safety and Health Administration (OSHA) have found that the regulations were still necessary and that they did not produce significant job losses or have adverse economic impacts for affected industries, including small businesses.6
Individual examples of regulatory successes paint an even more compelling portrait. The EPA estimates Clean Air Act rules saved 164,300 adult lives in 2010, and will save 237,000 lives annually by 2020. The National Highway Traffic Safety Administration’s vehicle safety standards have reduced the traffic fatality rate from nearly 3.5 fatalities per 100 million vehicle miles traveled in 1980 to 1.41 fatalities per 100 million vehicle miles traveled in 2006. An Endangered Species Act recovery program developed by the U.S. Fish and Wildlife Service helped increase the Bald Eagle population from just 400 nesting pairs in 1963 to 10,000 nesting pairs in 2007, enabling the Service to remove Bald Eagles from the Endangered Species List.7
The testimony concludes:
As explained above, the regulatory system has become out of balance with an excess of procedural requirements undermining the administrative law principle of productivity. As currently drafted, the one-size-fits-all requirements that would be imposed by the proposed bills discussed above threaten to exacerbate this problem.
To restore greater productivity to the regulatory system, Congress should consider ways that it can reinvigorate agencies, enabling them to carry out their statutory missions of protecting people and the environment in a more timely and effective manner. Here are some places to start:
Provide agencies with the resources they need. One of the reasons that regulatory agencies cannot fulfill their statutory missions is that financial resources and available personnel have been reduced or maintained at constant levels in recent years. This has been occurring as the agencies’ missions have become more complex, forcing these agencies to effectively do more with less. Many agencies’ budgets have stagnated for decades, while the job at hand – more food and imported toys to inspect, for instance – has grown. And the situation is getting worse, not better. For example, past rounds of sequestration hundreds of millions of dollars from the EPA’s already historically low budget. Among other things, these cuts have forced the agency to scrap several air pollution monitoring sites and scale back its program for assessing the human health impacts of several potentially harmful chemicals.
Provide agencies with enhanced legal authority. For many regulatory agencies, the statutes under which they operate have not been reviewed or refreshed in decades. The intervening years have revealed shortcomings in those statutes while new public health, safety, and environmental issues that were not initially addressed by the original statutes have emerged. In some cases, agencies lack the authority they need to tackle these issues. It is time to end the political gridlock that has prevented the adoption of legislative changes to accommodate shifting social needs.
Free agencies from unnecessary analytical requirements. Over the past few decades, the rulemaking process has become encumbered by a growing number of analytical requirements. These analytical obstacles draw upon agencies’ already stretched resources and distract them from focusing on their regulatory missions without meaningfully improving the quality of agency decision-making. Regulatory process legislation of the kind introduced in Congress during the last few years would exacerbate this situation, creating a rulemaking process so laden with unnecessary and unhelpful requirements that the process would become completely dysfunctional. Perhaps that is the true aim of those who advocate an overhaul of regulatory process requirements – to construct a system that is so burdensome for agencies to navigate that they become incapable of adopting even urgently needed regulatory protections whose social benefits greatly exceed their costs. Even taking the reformers’ aims at face value, they have misdiagnosed the problems with existing regulatory processes and proposed solutions that are ill-equipped to achieve the socially optimal levels of regulation they seek.
1 See Sidney A. Shapiro et al., Saving Lives, Preserving the Environment, Growing the Economy: The Truth About Regulation (Ctr. for Progressive Reform, White Paper 1109, 2011), available at http://www.progressivereform.org/articles/RegBenefits_1109.pdf.
2 Office of Mgmt. & Budget, Executive Office of the President, Draft 2014 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities 11, available at https://www.whitehouse.gov/sites/default/files/omb/inforeg/2014_cb/draft_2014_cost_benefit_report-updated.pdf.
3 Envtl. Protection Agency, The Benefits and Costs of the Clean Air Act from 1990 to 2020, 7-9 (Mar. 2011), available at http://www.epa.gov/oar/sect812/feb11/fullreport.pdf.
4 See Aaron Smith, BP: We’ve Spent $2 Billion on Clean-Up, CNNMoney, June 21, 2010, available at http://money.cnn.com/2010/06/21/news/companies/bp_oil_spill/index.htm. In June of 2010, Credit Suisse predicted that the total costs would be around $37 billion, with $23 billion in clean-up costs and $14 billion in settlement claims. Linda Stern, Gulf Oil Spill Could Cost BP as Much as $37 Billion, MoneyWatch.com, June 8, 2010, available at
5 Office of Mgmt & Budget, Executive Office of the President, Fiscal Year 2012: Analytical Perspectives: Budget of the U.S. Government 47 (2011), available at www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/spec.pdf. The Congressional Budget Office (CBO), which employs a different methodology for calculating costs than does the OMB, estimates the costs of TARP to be $19 billion. Cong. Budget Office, Report on the Troubled Asset Relief Program—March 2011, 1 (2011), available at http://www.cbo.gov/ftpdocs/121xx/doc12118/03-29-TARP.pdf. See also Barbara Butrica, Karen E. Smith, & Eric Toder, How Will the Stock Market Collapse Affect Retirement Incomes? 1 (The Urban Institute, Older Americans’ Economic Security Report No. 20, 2009), available at http://www.urban.org/uploadedpdf/411914_retirement_incomes.pdf.
6 Sid Shapiro et al., Saving Lives, Preserving the Environment, Growing the Economy: The Truth About Regulation 10, 20-30 (Ctr. for Progressive Reform, White Paper 1109, 2011), available at http://www.progressivereform.org/articles/RegBenefits_1109.pdf.
7 Id. at 5-6.