The high cost of EPA regulations
Transparency is the lifeblood of democracy. Washington needs more of it, especially in the all-too-opaque world of regulation. The Environmental Protection Agency (EPA), for example, is the most expensive federal regulatory agency. Its annual budget is fairly modest in Beltway terms, at a little less than $11 billion, but that’s not where the vast majority of its costs come from. Complying with EPA regulations costs the U.S. economy $353 billion per year — more than 30 times its budget — according to the best available estimate. By way of comparison, that is more than the entire 2011 national GDPs of Denmark ($332 billion) and Thailand ($345 billion).The EPA has been polluting the economy with rules and regulations that don't don't meet traditional cost benefit analysis test. Instead the agency makes off the wall claims about purported life savings from cleaner air. But as the post recently on Fairbanks, Alaska shows they can be totally unrealistic and leave people with no alternative but to freeze to death rather than take their chances with things floating in the air. Clearly, the people of Fairbanks would be better off warm and wearing a dusk mask when outside, rather than complying with EPA rules that would cause them to freeze to death in the winter.
That figure doesn’t come from the EPA, which last released such an estimate in 1990, but from the Competitive Enterprise Institute’s Wayne Crews, who parsed through publicly available documents, cost estimates of economically significant regulations, and whatever else he could find. That so much effort was required is part of the problem.
The agency should be much more open about the burdens it imposes. It can accomplish this by releasing its own annual estimate of the total cost of all its rules currently in effect. Better yet, given that agencies have an incentive to lowball their costs and highball their benefits, an independent auditor with no skin in the game should perform the estimate every year.
Another important question is the size of the EPA’s regulatory maze. Just how many of its regulations are there? It’s a tricky question, and you won’t find the answer from the agency.