Tuesday, September 30, 2003

Regulations Costly? Oops, Nevermind.

When it comes to environmental and workplace safety, the benefits to communities, workers, society and the economy far exceed the costs. This is not a surprise.

What is a surprise is that the White House's Office of Management and Budget agrees. (This report was released last week, but I'm still catching up from Isabel.)
A new White House study concludes that environmental regulations are well worth the costs they impose on industry and consumers, resulting in significant public health improvements and other benefits to society. The findings overturn a previous report that officials now say was defective.

The report, issued this month by the Office of Management and Budget, concludes that the health and social benefits of enforcing tough new clean-air regulations during the past decade were five to seven times greater in economic terms than were the costs of complying with the rules. The value of reductions in hospitalization and emergency room visits, premature deaths and lost workdays resulting from improved air quality were estimated between $120 billion and $193 billion from October 1992 to September 2002.

By comparison, industry, states and municipalities spent an estimated $23 billion to $26 billion to retrofit plants and facilities and make other changes to comply with new clean-air standards, which are designed to sharply reduce sulfur dioxide, fine-particle emissions and other health-threatening pollutants.
While the report focuses primarily on environmental regulation, it also looked at OSHA's Confined Space standard where the benefits of $540 million were found to outweight the costs of $92 million. The total benefits of OSHA regulations were estimated between $1.8 billion and $4.2 billion from October 1992 to September 2002, with costs estimated to be just over $1 billion.

The report did not consider OSHA's assassinated ergonomics standard because it was repealed in 2001 by the Bush Administration and Republican Congress. Oh, well.

The report is particularly surprising because the appointment of John Graham, head of OMB's Office of Information and Regulatory Affairs was fiercely opposed by labor and environmental organizations because
Graham, founder of a Harvard University-based risk analysis institute, would lead a Bush administration assault on regulatory safeguards. But Graham has sided with environmentalists on several key issues, including new rules to sharply reduce diesel engine emissions and the fine airborne particles that contribute to asthma and other serious respiratory ailments.
Democratic Senator Dick Durbin (D-IL) suspected that the Bush Administration's supporters would not be amused
"I'm sure the true believers in the Bush administration will brand this report as true heresy because it defies the stereotype of burdensome, worthless regulations," Sen. Richard J. Durbin (D-Ill.) said yesterday. "They clearly don't understand that the government regulations are there to protect you -- and they work."
Sure enough
An industry official said the report may have greatly understated the costs associated with environmental regulations. Jeffrey Marks, a clean-air policy expert with the National Association of Manufacturers, said EPA "has traditionally underestimated the costs of regulations on industry. . . . The tendency to choose benefit numbers to correspond to favorable policy choices is strong within the agency."
More commentary on the report by Calpundithere.