Crazy Federal Rules Cost Business $1.75T a Year
Business + Economy

Crazy Federal Rules Cost Business $1.75T a Year


Since Gerald Ford in the mid 1970s, American presidents have routinely vowed to cut government red tape during tough economic times in response to outcries from the business community, but few have produced tangible results. The Obama administration is vowing that things will be different this time around, but many skeptical business leaders are saying, “Don’t hold your breath.”

The White House late last week unveiled  more than 500 pages of plans by 30 federal departments and agencies  to implement Obama’s January  executive order to begin rewriting or weeding out regulations that unnecessarily hamper – or enrage – the nation’s business community. Case in point:  The Environmental Protection Agency classifies milk as an oil because of its animal fat content. It therefore subjects dairy producers to the same costly rules that are designed to prevent oil spills. As part of the new Obama administration initiative, the EPA is moving to exempt the dairy industry from the federal Spill, Prevention, Control and Countermeasures regulations.

“The exemption does give a whole new meaning to the phrase, ‘Don’t cry over spilled milk,’” quipped Cass Sunstein, a Harvard Law School professor and the administration’s regulatory reform czar. He told reporters late last week, “We are taking immediate steps to eliminate hundreds of millions of dollars in annual regulatory burdens,” adding, “Over the next several years, the steps in these plans have the potential to eliminate billions.”

The key word in Sunstein’s comments:  “potential.” It costs business and industry an estimated $1.75 trillion a year to comply with federal regulations, according to two economists whose work was commissioned last year by the Small Business Administration. The proposed regulatory rollbacks unveiled late last week by the White House appear to total just over $1 billion in annual cost savings.

Less Paperwork, Fewer Redundancies?
The proposals, the latest effort by the administration to patch up its ruptured relations with business, will affect workplace safety, environmental protection, endangered species programs and a number of other areas. Many of the changes involve reducing paperwork or eliminating redundancies in the law.

The Occupational Safety and Health Administrationh (OSHA) is finalizing regulations to save nearly $600 million per year by better coordinating its system of classification and labeling of hazardous chemicals with those of other countries. Another OSHA rule that has been finalized would save $40 million annually by eliminating an estimated 1.9 million hours of “redundant reporting burdens. Said Sunstein, “Businesses are not any longer going to be saddled with the obligation to fill out unnecessary government forms, which means their employees will have more time to be productive and do their real work.”

Another reform, by the Environmental Protection Agency, would relieve states of a requirement to install a system to protect against fuel polluting the air at gas stations. That one would save up to $67 million a year, according to the administration.

Not surprisingly, major business groups and Republican critics signaled they were underwhelmed by what Sunstein described as an “historic” moment. They contend that the White House failed to focus on “economically significant” regulations – rules with an annual cost impact on the economy of more than $100 million.

While acknowledging that the White House announcement represented some “progress,” House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif, complained that the announcement “does not address the 35 new regulations that the utility sector must contend with between 2009 and 2017. . .  or other major regulatory efforts that are hampering job creation.”

Earlier this year, when Issa asked business groups to identify regulations that hamper trade growth, he received more than 200 responses.

At least one major issue identified in those responses – U.S. export controls – is targeted by the the Commerce Department’s Bureau of Industry and Security, which  has agreed to revise the licensing and screening process for firms that are seeking to export sensitive technologies.

While the Commerce Department document does not offer a projected cost-savings, the National Association of Manufacturers has cited estimates that a “modernization” of export control requirements could create 350,000 jobs and increase the value of U.S. goods sent overseas by $60 billion. Meanwhile, the Business Roundtable, an association of chief executive officers of leading corporations, said it was “encouraged” by the latest administration moves. “Much more work needs to be done to create a balanced regulatory system that promotes economic growth and job creation,” the group added.

Last April, the Business Roundtable forwarded a list of 24 of the “most problematic regulations” to Obama. One of those regulations, involving emission standards for industrial boilers, was shelved by the White House in mid-May after heavy lobbying by industry groups.

Straddling the Political Fence
The White House is straddling the fence in trying to placate business without alienating Obama’s liberal and labor political base. In a speech before the conservative American Enterprise Institute last week, Sunstein stressed what he regarded as the administration’s regulatory accomplishments over the past two years in the face of unrelenting criticism from congressional Republicans and business groups.

“We’ve launched initiatives that have helped drive highway deaths to their lowest levels in 16 years,” he said. “We’ve promoted airline safety as well, while protecting passengers from tarmac delays, overbooking, and hidden charges. We’ve sharply reduced the risk of salmonella from eggs. We’ve dramatically increased the fuel economy of the fleet, thus promoting energy independence while saving consumers a lot of money.” But in an obvious sop to the business community, the administration targeted two favorite bête noires of business: the Environmental Protection Agency and the Labor Department, home to the often-criticized Occupational Safety and Health Administration.

The EPA said it will undertake 31 “priority” regulatory reviews as part of the initiative, with a goal of completing 16 before the end of the year. A priority is revamping a regulation dealing with training requirements for lead paint removal – another sore point among groups that responded to Issa’s call-out for burdensome federal regulations earlier this year. The EPA said it is reviewing and reconsidering the “efficacy” of additional training regulations proposed in 2008, at an estimated cost to industry of nearly $300 million.

Related Links:
Obama Administration Slashes Red Tape Tangling Car Fumes to Spilled Milk (Bloomberg)
Obama The DeRegulator? (The Heritage Foundation)
Obama to Scale Back Regulations in Effort to Spur Economic Growth (