# 2011 Report to Congress

**on the Benefits and Costs of Federal Regulations** 

**and Unfunded Mandates on State, Local, and Tribal Entities** 

**2011**

**Office of Management and Budget**

**Office of Information and Regulatory Affairs**2011 REPORT TO CONGRESS

ON THE BENEFITS AND COSTS OF FEDERAL REGULATIONS AND UNFUNDED MANDATES ON STATE, LOCAL, AND TRIBAL ENTITIES

Executive Summary

........................................................................................................................... 3

PART I : 2011 REPORT TO CONGRESS ON THE BENEFITS AND COSTS OF FEDERAL

REGULATIONS

Introduction

.............................................................................................................................. .......... 8

Chapter I : The Benefits and Costs of Federal Regulations

........................................................... 10

A. Estimates of the Total Benefits an d Costs of Regulations Reviewed by OMB

................ 12

B. Trends in the Annual Benefits and Costs of Regulations Reviewed by OMB

................. 19

C. Estimates of the Benefits and Costs of This Year’s Major Rules

..................................... 22

D. The Impact of Federal Regulation on Stat e, Local, and Tribal Governments, Small Business, Wages, and Economic Growth ...

.. .................................................................. 33

Chapter II : Recommendations for Reform

.................................................................................. 51

A. Executive Order 13563

..................................................................................................... 58

B. Improving Analysis

........................................................................................................... 65

C. E-rulemaking

.............................................................................................................. ....... 73

D. Regulatory Cooperation

.................................................................................................... 75

Chapter III : Update on the Implementati on of Information Quality Initiatives

...................... 78

A. Recent Developments in Information Quality

.................................................................. 78

B. Government-Wide Information Quality Guidelines

......................................................... 79

C. Information Quality Bulletin for Peer Review

.................................................................. 86

PART II : SIXTEENTH ANNUAL REPORT TO CONGRESS ON AGENCY COMPLIANCE

WITH THE UNFUNDED MANDATES REFORM ACT

Introduction

.............................................................................................................................. ....... 92

Chapter IV : Review of Significant Regulatory Mandates

.......................................................... 94

A. Environmental Protection Agency

.................................................................................... 94

B. Department of Energy

....................................................................................................... 95

C. Department of Transportation

........................................................................................... 96

D. Department of Health and Human Services

...................................................................... 97

E. Joint Rulemakings

............................................................................................................. 98

1Appendix A : Benefits and Cost s of Individual Regulations

........................................................ 99

Appendix B : The Benefits and Cost s of Fiscal Year 1999 Major Rules

.................................... 128

Appendix C : Information on the Regu latory Analyses for Major Rules by Independent Agencies

.............................................................................................. 130

Appendix D : The Benefits and Cost s of Major Rules by Administration

................................. 132

Appendix E : Executive Order 13563: Improvi ng Regulation and Regulatory Review

............ 137

Appendix F : Presidential Memorandum: Regulatory Compliance

........................................... 140

Appendix G : Presidential Me morandum: Regulatory Flexibility, Small Business, and Job

Creation

.............................................................................................................................. ............ 142

Appendix H : Presidential Memorandu m: Administrative Flexibility

........................................ 144

Appendix I : Agency Checklist: Regulatory Impact Analysis

..................................................... 147

Appendix J : Information Quality and Peer Review

.................................................................... 152

Appendix K : Response to Peer Reviewers and Public Comments

.............................................. 160

Appendix L : References

................................................................................................................. 164

2E XECUTIVE S UMMARY

In accordance with the Regulatory-Right-to-Know Act, 1 the Office of Management and Budget (OMB) prepared this dr aft Report to Congress on the Be nefits and Costs of Federal Regulations (Report). This is the fourteenth annual Report since OMB began issuing this Report in 1997. The Report summarizes estima tes by Federal regulatory agencies of the quantified and monetized benefits and costs of major Federal re gulations reviewed by OMB over the last ten years (see page 8, below, for the crite ria for identifying “major” regulations for this report).

The principal findings are as follows.

 The estimated annual benefits of major Fe deral regulations reviewed by OMB from October 1, 2000, to September 30, 2010, for wh ich agencies estimat ed and monetized both benefits and costs, are in the aggr egate between $132 billion and $655 billion,

while the estimated annual costs are in the aggregate between $44 billion and $62 billion. These ranges reflect uncertainty in the benefits and costs of each rule at the

time that it was evaluated.

 Some rules are estimated to produce far highe r net benefits than others. Moreover,

there is substantial variati on across agencies in the tota l net benefits produced by rules. For example, the air pollution rules from the Environmental Protection Agency (EPA) produced 62 to 84 percent of the bene fits and 46 to 53 percent of the costs. 2

Most rules have net benefits, but several rules have net costs, typically as a result of statutory requirements.

 During fiscal year 2010, executive agen cies promulgated 66 major rules.

 For 18 rules, the issuing ag encies quantified and mone tized both benefits and

costs. Those 18 rules were estimated to result in a tota l of $18.8 billion to $86.1 billion in annual benefits and $6.5 billion to $12.5 billion in annual

costs.

 For two rules, the issuing agency (the Department of the Interior) quantified and monetized only benefits. Both of these rules involved migratory bird hunting. For these two rules, the agency estimated total one-year benefits of $500 million to $600 million.

 For eight rules, the issuing agencies quantified and monetized only costs. For these rules, the agencies estimated to tal annual costs of $200 million to $300

million.

 For 32 rules, the issuing agencies quantified and m onetized only the budgetary

transfer amounts.

1 Section 624 of the Treasury and General Government Appropriations Act of 2001, Pub. L. No. 106-554, 31 U.S.C. § 1105 note.

2 These estimates do not include the join t EPA/DOT CAFE rule as an “EPA” rule.

3 For six rules, the issuing agencies were able to quantify and monetize neither

benefits nor costs.

 The independent regulatory agencies, w hose regulations are not subject to OMB review under Executive Order 12866, issued 17 major final rules. With the exception of the Nuclear Regulatory Commission’s fee recovery rule, all of these rules were issued to regulate the financial sector. The Government Accountability Office (GAO) reported that none of the 17 rules assessed both anticipated benef its and costs. The Federal Reserve System did not assess benefits and costs for its rules. The joint rule between the Federal Reserve System and the Federal Trade Commission assessed only costs. The Securities and Exchange Commission monetized costs for six of its

nine rules.

It is important to emphasize that the figures here have significan t limitations. When agencies subject to Executive Orders 13563 a nd 12866 have not quantified or monetized the benefits or costs of regulations , or have not quantified or mone tized important variables, it is because of an absence of relevant information. Many rules have benefits or costs that cannot be quantified or monetized in light of existing in formation, and the aggregate estimates presented here do not capture those non-monetized benefits a nd costs. In fulfilling their statutory mandates, agencies must often act in the face of substantia l uncertainty about the likely consequences. In some cases, quantification of vari ous effects is highly speculative. For example, it may not be possible to quantify the benefits of certain disclosure requirements , simply because the impact of some such requirements cannot be specified in advance. In other ca ses, monetization of particular categories of benefits (such as ecologi cal benefits and homeland security benefits) can present significant ch allenges. As Executive Order 13563 recognizes, some rules produce benefits (such as reductions in di scrimination on the basis of disabili ty or prevention of rape) that cannot be easily or adequately captu red in monetary equivalents.

In addition, and significantly, prospective es timates may contain erroneous assumptions, producing inaccurate predictions; retrospective analysis, recently required by Executive Order 13563, can be an important way of increasing ac curacy. While the estimates in this Report provide valuable information abou t the effects of regulations, they should not be taken to be either precise or complete. The increasing interestin retrospective analysis , inside and outside of government, should produce improvements on this count, above all by ensuring careful

evaluation of the actual effects of rules. This process should improve understanding not only of those effects, but also of the accuracy of prosp ective analyses, in a way that can be brought to bear on such analyses when they are written.

OMB emphasizes that careful c onsideration of costs and bene fits is best understood as a way of ensuring that regulations will improve soci al welfare, above all by informing design and development of various options so as to iden tify opportunities for both mi nimizing the costs of achieving social goals (cost-effectiveness) and ma ximizing net social benefits (efficiency). OMB and agencies continue to take steps to improve both quantification and monetization. Consistent with this effort and in compliance with the Re gulatory Right-to-Know Ac t, this Report also

offers a number of recommendations for reform.

4There are two unifying themes. The first is the importance of ensu ring that regulation (including protection of public heal th, welfare, safety, and our e nvironment) is undertaken in a way that promotes the goals of economic grow th, innovation, competitiveness, and job creation. By promoting these goals, agencies will be in a better position to avoid excessive regulation, to eliminate unnecessary burdens, and to choose ap propriate responses. The second unifying theme is the importance of ensu ring that regulation is evidence-bas ed and data-driven, and hence based

on the best available work in both science and so cial science (with full respect for scientific integrity).

To that end, the Report briefly outlines recent steps and best practices that are consistent with OMB’s recent recommendations for flexible, empirically informed approaches; increased openness about costs and bene fits; and the use of disclosure as a regulatory tool. For the future, the Report recommends, among other things, that:

1. consistent with Executive Order 13563, re gulatory decisions a nd priority-setting should be made in a way that is attentiv e to the importance of promoting economic growth, innovation, job creat ion, and competitiveness.

2. consistent with Executive Order 13563, ag encies should promote retrospective analysis of existing significant rules, with careful exploration of their actual effects and, when appropriate, consideration of step s to streamline, modify, expand, or repeal

them.

3. agencies should accompany all economically si gnificant regulations with (1) a tabular presentation, placed prominently and offe ring a clear statement of qualitative and quantitative benefits and costs of the propos ed or planned action, together with (2) a presentation of uncertainties and (3) similar information for reasonable alternatives to the proposed or planned action.

4. agencies should carefully explore how be st to treat nonquantifiable variables and should continue to use “breakeven analysis ” when quantification is not possible, with such analysis defined as the specific ation of how high the unquantified or

unmonetized benefits would have to be in or der for the benefits to justify the costs.

5. consistent with OMB Circular A-4, agenci es should consider the use of costeffectiveness analysis for re gulations intended to reduce mortality risks, and should specifically consider the development of estimat es for the “net cost per life saved.”

6. consistent with Executive Order 13563, and in particular the emphasis on “the open exchange of information and perspectives among State, local, and tribal officials, experts in relevant disciplin es, affected stakeholders in the private se ctor, and the public as a whole,” agencies should bring rulemaking into the tw enty-first century by promoting public participation and transp arency through the use of Regulations.gov and other technological means.

57. in order to promote trade and exports, and thus to increase job creation, agencies should promote regulatory c ooperation initiatives with key trading partners.

To promote the goals of Executive Order 13563, the draft of this Report invited public suggestions on how best to promote retrospect ive analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, with a view toward modifying, streamlining, expanding, or repealing them in accordance with what has been learned. OMB continues to be interested in such suggestions , with the ultimate goal of promoting an improved regulatory culture in which significant rules are periodically evaluated and where appropriate, modified, simplified, expanded, or repealed.

A possible approach to the potential difficulty of adva nce assessment of costs and benefits involves rigorous experimentation with re spect to the likely effect s of regulation; such experimentation, including randomized controlled trials, can comple ment and inform prospective analysis, and perhaps reduce the need for retrospective analysis. To the extent feasible and consistent with law, agencies might, for example, implement a regulation on a trial basis, using a

randomized controlled trial. Perh aps some firms or locations mi ght be subject to a certain requirement while others are not; the agency could learn about the effects of its action from what emerges. Pilot projects of various sorts have info rmed the regulatory process, and they could be used more often for this purpose. More gene rally, OMB recommends careful and continuing steps to reassess existing significant rules.

Chapter III provides an update on agency impl ementation of the Information Quality Act (IQA) (Section 515 of the Treasury and General Government Appropriations Act, 2001 (Pub. L. No. 106-554, 31 U.S.C. § 3516 note)). The chapte r summarizes (a) the current status of correction requests that were received by agencies in FY 2009, along with an update on the status of requests received during FY 2003 th rough FY 2008 and (b) agency annual reports for the Information Quality Bulletin for Peer Revi ew for FY 2009. In FY 2010, Federal agencies received 27 correction requests and completed 193 peer reviews, 31 of which were highly

influential scientific assessments.

This Report is being issued along with OM B’s Sixteenth Annual Report to Congress on Agency Compliance with the Unfunded Mandates Reform Act (UMRA) (Pub. L. No. 104-4, 2

U.S.C. § 1538). OMB reports on agency complian ce with Title II of UMRA, which requires that each agency conduct a cost-benefit analysis and se lect the least costly, most cost-effective, or least burdensome alternative before promulgating any proposed or final rule that may result in expenditures of more than $100 million (adjusted for inflation) in any one year by State, local, and tribal governments, or by the private sector. Each agency must also seek input from State, local, and tribal governments.

6PART I: 2011 REPORT TO CONGRESS

ON THE BENEFITS AND COSTS OF FEDERAL REGULATIONS

7I NTRODUCTION

The Regulatory Right-to-Know Act require s the Office of Management and Budget (OMB) to submit to Congress ea ch year “an accounting statem ent and associated report” including:

(A) an estimate of the total annual benefits and costs (including quantifiable and nonquantifiable effects) of Federal rules and paperwork, to the extent feasible:

(1) in the aggregate; (2) by agency and agency program; and (3) by major rule;

(B) an analysis of impacts of Federal regula tion on State, local, and tribal government, small business, wages, and economic growth; and

(C) recommendations for reform.

The statute does not define “major rule.” For the purposes of this Report, we define major rules to include all final rules promulgate d by an Executive Branch agency that meet any one of the following three conditions:

 Rules designated as “major ” under 5 U.S.C. § 804(2); 3

 Rules designated as meeting the analys is threshold under the Unfunded Mandates Reform Act of 1995 (UMRA); 4 or

 Rules designated as “econo mically significant” under se ction 3(f)(1) of Executive

Order 12866. 5

Chapter I summarizes the benefits and cost s of major regulations issued between September 2000 and September 2010 and examines in more detail the benefits and costs of major Federal regulations issued in fiscal year 2009. It also discusses regulatory impacts on State, local, and tribal governments, small bus iness, wages, and economic growth. Chapter II offers recommendations for reform. Chapter I II provides an update on agency implementation of the Information Quality Act (IQA) (Section 515 of the Treasury and General Government

3 A major rule is defined in Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 as a rule that is likely to result in: “(A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individu al industries, Federal, State, or local government agencies, or geographic regions; or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets.” P.L. 104-121 Sec. 804, 5 U.S.C. § 804(2).

4 A written statement containing a qualitative and quantitative a ssessment of the anticipated benefits and costs of the Federal mandate is required under the Section 202(a) of the Unfunded Mandates Reform Act of 1995 for all rules that may result in: “the expenditure by State, local, and trib al governments, in the aggregat e, or by the private sector, of $100,000,000 or more (adjusted annually for in flation) in any one year.” 2 U.S.C. § 1532(a).

5 A regulatory action is considered “economically significant” under Executive Order 12866 § 3(f)(1) if it is likely to result in a rule that may have: "an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, prod uctivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities."

8Appropriations Act, 2001 (Pub. L. No. 106-554, 31 U.S.C. § 3516 note)). Chapter IV summarizes agency compliance with UMRA.

9C HAPTER I: T HE B ENEFITS AND C OSTS OF F EDERAL R EGULATIONS

This chapter consists of two parts: (A) the accounting statement and (B) a brief report on regulatory impacts on State, local, and tribal governments, small business, and wages. Part A revises the benefit-cost estimates in last yea r’s Report by updating the es timates to the end of fiscal year 2010 (September 30, 2010). As in prev ious Reports, this chapte r uses a ten-year lookback. Estimates are based on the major regulat ions reviewed by OMB from October 1, 2000 to September 30, 2010. 6 For this reason, six rules reviewed from October 1, 1999 to September 30, 2000 (fiscal year 2000) were included in the tota ls for the 2010 Report but are not included in this Report. A list of these fiscal year 2000 ru les can be found in Appendix B (see Table B-1). The removal of the six fiscal year 2000 rules from the ten-year window is accompanied by the addition of 18 fiscal year 2010 rules.

All estimates presented in this chapter are agency estimates of benefits and costs or transparent modifications of agen cy information performed by OMB. 7 This chapter also includes a discussion of major rules issued by independent regulatory agencies, although OMB

does not review these rules under Executive Orders 13563 and 12866. 8 This discussion is based solely on data provided by these agencies to the Government Accountability Office (GAO) under the Congressional Review Act.

Aggregating benefit and cost estimates of indi vidual regulations—to the extent they can be combined—provides potentially valuable inform ation about the effects of regulations. But the resulting estimates are neither precise nor complete. Four poi nts deserve emphasis.

1. Individual regulatory impact analyses vary greatly in rigor and rely on different assumptions, baseline scenarios, methods, and data. To take just one example, agencies offer different monetary valuat ions for mortality reductions. Summing

across estimates involves the a ggregation of analytical resu lts that are not strictly comparable. OMB continues to investigate inconsistencies in how agencies answer central regulatory questions and seeks to identify and to promote best practices. Executive Order 13563 emphasizes the impor tance of such practices and of quantification, directi ng agencies to “use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.”

2. As we have noted, it is not always possible, in light of limits in existing information,

6 All previous Reports are availabl e at: http://www.whitehouse.gov/omb/in foreg_regpol_reports_congress/.

7 OMB used agency estimates where available. The benef it and cost ranges represent lowest and highest agency estimates using both 3 and 7 percent discount rates. If an agency quantified but did not monetize estimates, we used standard assumptions to monetize them, as explained in Appendix A. We adjusted estimates to 2001 dollars, the requested format in OMB Circular A-4, using the latest available Gross Domestic Product (GDP) deflator (e.g., estimates in 2010 dollars are deflated by a factor of 0.819). All amortizations are performed using a discount rate of 7 percent, unless the agency has already presented annualized, monetized results using a different explicit discount rate. OMB did not independently estimate benefits or costs when agencies did not provide quantified estimates.

8 Section 3(b) of Executive Order 1286 6 excludes “independent regulatory ag encies as defined in 44 U.S.C. 3502(10)” from OMB’s regulatory review purview.

10to quantify or monetize relevant benefits or costs of rules. For purposes of policy, non-monetized benefits and costs may be important. Some regulations have significant non-quantified or non-monetized benefits and co sts that are relevant under governing statutes and that may serve as a key factor in an agency’s decision to promulgate a particular rule.

3. Prospective analyses may turn out to overe stimate or underestimate both benefits and costs; retrospective analysis can be important as a corrective mechanism. 9 Executive Order 13563 specifically calls for such anal ysis, with the goal of improving relevant regulations through modification, streamlini ng, expansion, or repeal. The result should be a greatly improved understanding of the accuracy of prospective analyses,

as well as corrections to rules as a result of ex post evaluations. A large priority is the development of methods (perhaps including not merely before-and-after accounts but also randomized trials, to the extent feasible and consistent with law) to obtain a clear

sense of the effects of rule s. In addition, rules should be written and designed, in advance, so as to facilitate re trospective analysis of their effects. In order to promote data-driven regulation, OMB con tinues to be interested in public suggestions on how to use retrospective analysis to impr ove regulations, perhaps by expanding them, perhaps by streamlining them, perhaps by reducing or repealing them, perhaps by redirecting them.

4. While emphasizing the importance of qua ntification, Executive Order 13563 also

refers to “values that are difficult or impossible to qua ntify, including equity, human dignity, fairness, and distributive impact s.” As Executive Order 13563 recognizes, such values may be appropriately considered under relevant law. If, for example, a rule would reduce the incidence of rape, or allow wheelchair-bound workers to have access to bathrooms, a consideration of di gnity is involved, and relevant law may require or authorize agencies to take that consideration in to account. If a regulation would disproportionately help or hurt thos e at the bottom of the economic ladder, or those who are suffering from some kind of acute condition or extreme deprivation, relevant law may require or authorize agencies to take that fact into account. (In the recent past, agencies have referred to huma n dignity, equity, or distributional impacts in the context of proposed or final regulat ions reducing the risk of prison rape; increasing access by wheelchair-bound people to bathrooms; eliminating the ban on entry into the United States of those w ho are HIV-positive; barring lifetime limits on health insurance payments; and preventing deni al of health insurance to children with preexisting conditions.) So fa r as we are aware, there is only limited analysis of the distributional effects of regulation in general or in significant domains; 10 such analysis could prove illuminating.

9 See Greenstone (2009). In its 2009 Report, OMB recomme nded greater use of retrospective analysis; we continue to support that recommendation.

10 See, e.g., Kahn (2001).

11A. Estimates of the Aggregated Annual Bene fits and Costs of Regulations Reviewed by

OMB over the Last Ten Years

1. In General

Between fiscal years 2001 and 2010, Federal agencies published over 38,000 final rules

in the Federal Register

. 11 OMB reviewed 3,325 of these final rules under Executive Order

12866. 12 Of these OMB-reviewed rules, 540 are cons idered major rules, primarily due to their anticipated impact on the economy (i.e., estimated benefits or costs were in excess of $100 million in at least one year). We include in our 10-year aggregate of annual benefits and costs of regulations rules that meet two conditions: 13 (1) each rule was estimated to generate benefits or costs of approximately $100 million in any one year ; and (2) a substantial portion of its benefits and costs were quantified and monetized by the ag ency or, in some cases, monetized by OMB. The estimates are therefore not a complete acco unting of all the benefits and costs of all regulations issued by the Federa l Government during this period. 14 Table 1-1 presents estimates

of the total annual benefits a nd costs of 105 regulations revi ewed by OMB over the ten-year period from October 1, 2000, to Septembe r 30, 2010, broken down by issuing agency.

As discussed in previous Reports, OMB chos e a ten-year period fo r aggregation because pre-regulation estimates prepared for rules adopted more than ten years ago are of questionable relevance today. The estimates of the benefits and costs of Federal re gulations over the period October 1, 2000, to September 30, 2010, are base d on agency analyses conducted prior to issuance of the regulation and subjected to pub lic notice and comments and OMB review under

Executive Order 12866.

In assembling these tables of estimated be nefits and costs, OMB applied a uniform format for the presentation to make agency esti mates more closely comparable with each other (for example, annualizing benefit and cost es timates). OMB monetized quantitative estimates where the agency did not do so. For example, fo r a few rulemakings within the ten-year window

11 This count includes all final and interim final rules from all Federal agencies (including independent agencies).

12 Counts of OMB reviewed rules are available through the “review counts” and “search” tools on OIRA’s regulatory information website ( www.reginfo.gov ). In addition, the underlying data for these counts are available

for download in XML format on the website.

13 OMB discusses, in this Report and in previous Reports, the difficulty of estimating and aggregating the benefits and costs of different regulations over long time periods and across many agencies using different methodologies. Any aggregation involves the assemblage of benefit and cost estimates that are not strictly comparable. In part to address this issue, the 2003 Report included OMB’s new re gulatory analysis guidance, OMB Circular A-4, that took effect on January 1, 2004, for proposed rules and January 1, 2005, for final rules. The guidance recommends what OMB defines as “best practices” in regulatory analysis, with a goal of strengthening the role of science, engineering, and economics in rulemaking. The overall goal of this gu idance is a more transparent, accountable and credible regulatory process and a more consistent regulatory envi ronment. OMB expects that as more agencies adopt our recommended best practices, the benefits and costs we presen t in future reports will beco me more comparable across agencies and programs. OMB continues to work with the agencies to ensure that their impact analyses follow the guidance.

14 In many instances, agencies were unable to quantify all benefits and costs. We have conveyed the essence of these unquantified effects on a rule-by-rule basis in the columns titled “Other Information” in Appendix A of this and previous Reports. The monetized estimates we present necessarily exclude these unquantified effects.

12of this Report, we have converted agency project ions of quantified benefits, such as estimated injuries avoided per year or tons of pollutant re ductions per year, to do llars using the valuation estimates discussed in Appendix A of th is Report and Appendix B of our 2006 Report. 15

Table 1-1: Estimates of the Total Annual Be nefits and Costs of Major Federal Rules by Agency, October 1, 2000 - September 30, 2010 (billions of 2001 dollars)

Agency Number of

Rules Benefits Costs

Department of Agriculture 6 0.9 to 1.3 1.0 to 1.34

Department of Energy 10 8.0 to 10.9 4.5 to 5.1 Department of Health and

Human Services 18 18.0 to 40.5 3.7 to 5.2

Department of Homeland Security 1 < 0.1 < 0.1

Department of Housing and Urban Development 1 2.3 0.9

Department of Justice 4 1.8 to 4.0 0.8 to 1.0

Department of Labor 6 0.4 to 1.5 0.4 to 0.5 Department of Transportation (DOT) 26 14.6 to 25.5 7.5 to 14.3

Environmental Protection Agency (EPA) 16 32 81.8 to 550.7 23.3 to 28.5

15 The 2006 Report is available at http://www.whitehouse.gov/omb/info reg_regpol_reports_congress / . We note that there are ongoing discussions with respect to the scientific assumptions underlying the benefits per ton numbers that

we use to monetize benefits that were not monetized. If , for instance, assumptions similar to those described at http://www.epa.gov/air/benmap/bpt.html were used, these estimates would be higher.

16 This total includes the impacts of EPA’s 2005 Clean Air Interstate Rule. On July 11, 2008, the DC Circuit Court vacated the rule; however, in response to EPA's petition, the court on December 23, 2 008, remanded the rule without vacatur, which keeps this rule in effect while EPA conducts further pro ceedings consistent with the court's July 11 opinion. On August 2, 2010, EPA published in the Federal Register the proposed rule titled “Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone.” This rule, once finalized, will replace the Clean Air Inte rstate Rule. This total also incl udes the impacts of EPA’s 2006 PM NAAQS which was inadvertently dropped from last year’s aggregates.

This total excludes the impacts of two rulemakings we inadvertently neglected to remove from the 10-year aggregates in previous reports. The first rule is EPA’s 2005 “Clean Air Mercury Rule--Electric Utility Steam Generating Units,” On February 8, 2008, the D.C. Circuit vacated a precursor EPA rule removing power plants from

the Clean Air Act list of sources of h azardous air pollutants, and at the same time vacated the Clean Air Mercury

Rule. The second rule is EPA‘s 2004

― National Emission Standards fo r Hazardous Air Pollutants:

Industrial/Commercial/Institutional Boilers and Process Heat ers.” On June 19, 2007, the United States Court of Appeals for the District of Co lumbia Circuit vacated and re manded this rule to EPA.

13Agency Number of

Rules Benefits Costs

Joint DOT and EPA 1 3.9 to 18.2 1.7 to 4.7

Total 105 131.7 to 655.0 43.7 to 61.7

The aggregate benefits reported in Table 1-1 are comparable to those presented in the 2010 Report. As with previous Reports, the re ported monetized benefits continue to be significantly higher than the monetized costs. (In 2009 and 2010, the mone tized benefits were also far higher than the monetized costs, as detailed below.) Thr ee agencies -- the Department of Health and Human Services, the Department of Transportation, and the Environmental Protection Agency -- issued a st rong majority of total rules (77 of 105). In addition, the Environmental Protection Agency is responsible for a large percenta ge of both total benefits and

total costs.

Table 1-2 provides additional information on ag gregate benefits and costs for specific agency programs. A program is included in Tabl e 1-2 only if it finalized three or more major rules in the last ten years with monetized benefits and costs.

Table 1-2: Estimates of Annual Benefits a nd Costs of Major Federa l Rules: Selected Programs and Agencies, October 1, 2000 - Se ptember 30, 2010 (billions of 2001 dollars)

Agency Number of

Rules Benefits Costs

Department of Agriculture Animal and Plant Health Inspection

Service 3 0.9 to 1.2 0.7 to 0.9

Department of Energy Energy Efficiency and Renewa ble Energy 10 8.0 to 10.9 4.5 to 5.1 Department of Health and Human

Services Food and Drug Administration 10 2.6 to 22.3 0.9 to 1.3

Center for Medicare and Medicaid

Services 7 15.4 to 18.1 2.7 to 3.9

Department of Labor Occupational Safety and Health 4 0.4 to 1.5 0.5

We also note that this report does not include an estimate of the costs and benefits of the final 2008 revisions to the National Ambient Air Quality Standards for Ozone. The reas on is that those revisions remain in litigation and on January 19, 2010, EPA published a proposed reconsideration and tightening of the primary and secondary ozone standards. As a result, for the purposes of this particular Report, we did not consider the latest round of ozone rulemakings to be finalized. Of course it remains true that the ozone rule was finalized and for some purposes, it would be reasonable to treat its costs and benefits as part of the total catalogue of rulemaking impacts in FY 2008.

14Agency Number of

Rules Benefits Costs

Administration Department of Transportation National Highway Traffic Safety

Administration 11 11.8 to 21.5 5.2 to 10.8

Federal Aviation Administration 6 0.3 to 1.2 0 to 0.4 Federal Motor Carriers Safety

Administration 4 1.3 to 1.5 1.3

Environmental Protection Agency

Office of Air 20 77.3 to 535.1 19.0 to 24.1

Office of Water 6 1.3 to 3.9 1.1 to 1.2 Office of Chemical Safety and Pollution

Prevention 3 3.2 to 11.4 3.4

Office of Solid Waste and Emergency Response 3 0 to 0.3 (0.2)

( ) indicates negative.

The ranges of benefits and costs reported in Tables 1-1 and 1-2 were calculated by adding the lower bounds of agencies’ estimates for each of the underlying rules to generate an aggregate lower bound, and similarly adding the upper bounds of agencies’ estimates to generate an

aggregate upper bound. 17 The range reported by the agency for each rule reflects the agency’s uncertainty about the likely impact of the rule. In some cases, this range is a confidence interval based on a formal uncertainty analysis. In mo st cases, however, the ra nges are generated using an informal sensitivity analysis in which input parameters are varied across a “plausible” range.

The benefits and costs presented in Tables 1- 1 and 1-2 are not necessa rily correlated. In other words, when interpreting the meaning of these ranges, the reader should not assume that

when benefits are in fact on the low end of thei r range, costs will also tend to be on the low end of their range. This is because, for some rules, th ere are factors that affect costs that have little

correlation with factors that affect benefits (and vice-versa). A ccordingly, to calculate the range of net benefits (i.e., benefits minus costs), one should not simply subtract the lower bound of the benefits range from the lower bound of the cost range, and similarly for the upper bound. It is possible that the true benefits are at the lowe r bound and that the true costs are at the upper bound, as well as vice-versa. Thus, for example, it is possible that the net be nefits of Department of Labor rules, taken together, could range from -$30 million to approximately $1.1 billion per

year.

2. EPA Air Rules

17 The approach of adding ranges likely ov erstates the uncertainty in the total benefits and costs for each agency. The actual ranges are probably somewhat tighter than our estimates.

15It should be clear that the ru les with the highest benefits and the highest costs, by far, come from the Environmental Protection Agency and in particular its Office of Air. More specifically, EPA rules account for 62 to 84 pe rcent of the monetized benefits and 46 to 53 percent of the monetized costs. 18 The rules that aim to improve air quality account for 95 to 97 percent of the benefits of EPA rules.

It is important to emphasize that the large estimated benefits of EPA rules are mostly

attributable to the reduction in public exposure to a single air pollu tant: fine particulate matter. Of its 20 air rules, the rule with the highest es timated benefits is the Clean Air Fine Particle Implementation Rule, with benefits ranging from $19 billion to $167 billion per year. While the
benefits of this rule far exceed the costs, th e cost estimate for the Cl ean Air Fine Particle Implementation Rule is also the highest at $7.3 bi llion per year. Because the estimated benefits and costs associated with the clean air rules provide a majority of the total benefits and costs across the Federal Government, and because some of the scientific and economic questions are not resolved, we provide additional information.

With respect to many of these rules, there remains continuing uncertainty in benefits

estimates. We note that EPA has invested subs tantial resources to quantify and reduce some aspects of that uncertainty over the last few years. Even so, significant uncertainty remains in this domain. For this reason, the ranges of bene fits and costs presented in Table 1-2 should be

treated with caution. If the r easons for uncertainty differ across individual rules, aggregating high-end and low-end estimates can result in totals that may be misleading. In the case of the EPA rules reported here, however, a substantial portion of the uncertainty is similar across several rules, including (1) the uncertainty in th e reduction of premature d eaths associated with reduction in particulate matter and (2) the uncer tainty in the moneta ry value of reducing mortality risk. EPA continues to improve methods to quantify th e degree of technical uncertainty in benefits estimates and to make other improvements to EPA’s Regulatory Impact Analyses.

More research remains to be done on severa l key questions, includ ing analysis of the

health benefits associated with reduction of particulate matter, which, as noted, drive a large percentage of aggregate benef its from air pollution controls. 19 Midway through FY 2009, EPA

18 These estimates do not include the joint EPA/DOT CAFE rule as an “EPA” rule.

19 For example, a committee of the National Research Coun cil/National Academy of Sciences released the study Estimating the Public Health Benefits of Proposed Air Pollution Regulations (2002), which recommends improvements to EPA benefits estimates. In additi on, we continue to work with EPA to incorporate recommendations from recent NRC reports such as Miller, et al (2006) and National Research Council (2008). See also Environmental Protection Agency (2010).

The wide range of benefits estimates for particle control do es not capture the full extent of the scientific uncertainty in measuring the health effects associated with exposure to fine particulate matter and its constituent elements. Six of the key assumptions in the benefits estimates are as follows:

1. Inhalation of fine particles is causally associated with premature death at c oncentrations near those experienced by most Americans on a daily basis. The weight of available epidemiological evidence supports a determination of causality. Biological mechanisms for this effect, while not completely understood, are supportive of this determination.

16made changes to some underlying assumptions as we ll as updates to some of the model inputs. These changes are reflected in EPA’s more recen t Regulatory Impact Analyses. With respect to particulate matter, additional rese arch, to clarify and resolve rele vant scientific issues and to make further progress on the relationship betw een particulate matter and health improvements, would be exceedingly valuable.

3. Rules that Decrease Compliance Costs

We note as well that several regul atory actions have resulted in decreases in compliance costs. The net cost savings generated by these ac tions are included as “negative costs” for those years. In 2004, for example, DOT issued a rule that reduced minimum vertical separation for airspace; this rule resulted in net cost sa vings. Similarly, in 2009, EPA revised its “Spill Prevention Control and Countermeasures” regulati ons, among other things to tailor requirements to particular industry sectors a nd to streamline certain rule requ irements, thus producing net cost savings. Executive Order 13563, with its emphasis on retrospective analys is and streamlining burdensome regulations, is designed to pr omote decreases in compliance costs where appropriate, and many relevant initiatives ha ve been finalized or are in progress.

4. Qualifications

In order for comparisons or aggregations to be meaningful, benefit and cost estimates should correctly account for all s ubstantial effects of regulatory actions, some of which may not

be reflected in the available data. Any comparison or aggreg ation across rules should also

consider a number of factors that our presentation is not yet able to take into account. Agencies have adopted somewhat different methodologies—f or example, different monetized values for

2. All fine particles, regardless of their chemical composition, are equally potent in causing premature mortality. This is an important assumption, because particulate matter (PM) produced via transported precursors emitted from electrical generating utilities (EGUs) may differ significa ntly from direct PM released from diesel engines and othe r industrial sources, but the scientific evidence is not yet sufficient to

allow differentiation of effect estimates by particle type.

3. The impact function for fine particles is approximately linear within the range of ambient concentrations under consideration. Thus, the estimates include health benefits from reducing fine particles in areas with varied concentrations of PM, including both regions that are in attainment with fine particle standard and

those that do not meet the standard.

4. The forecasts for future emissions an d associated air quality modeling ar e valid. Although recognizing the difficulties, assumptions, and inherent uncertainties in the overall enterprise, these analyses are based on peer-reviewed scientific literature and up-to-date asse ssment tools, and we believe the results are highly useful in assessing benefits of air quality regulations..

5. Some rules apply a national dollar benefit-per-ton estimate of the benefits of reducing directly emitted fine particulates from specific source categ ories. Because they are based on national-level analysis, the benefitper-ton estimates used here do not reflect local variability in population density, meteorology, exposure, baseline health incidence rates, or other local factors that might lead to an ove r-estimate or under-estimate of the actual benefits of controlling directly emitted fine particulates.

6. The value of mortality risk reduction is taken largel y from studies of the willingness-to-accept risk in the

labor market.

17effects (such as mortality 20 and morbidity), different baseline s in terms of the regulations and controls already in pla ce, and different treatments of uncertain ty. These differences are reflected in the estimates provided in Tables 1-1 and 1- 2. While we have generally relied on agency estimates in monetizing benefits and costs, and wh ile those estimates have generally been subject both to public and to interagency review, our re liance on those estimates in this Report should

20 Agencies often design health and safe ty regulation to reduce risks to life, and valuation of the resulting benefits can be an important part of the analysis. What is someti mes called the “value of a statistical life” (VSL) is best understood not as the “valuation of life,” but as the valuation of statistical mortality risks . For example, the average person in a population of 50,000 may value a reduction in mortality risk of 1/50,000 at $150. The value of reducing

the risk of 1 statistical (as opposed to known or identified) fatality in this population would be $7.5 million, representing the aggregation of the willingness to pay values held by everyone in the population. Building on an extensive and growing literature, OMB Circular A-4 provides background and discussion of the theory and practice of calculating VSL. It concludes that a substantial majority of the studies of VSL indicate a value that varies “from roughly $1 million to $10 million per statistical life.” Circular A-4 generally reports values in 2001 dollars; if we update these values to 2010 dollars the range would be $1.2-$12.2 million. In practice, agencies have tended to use a value above the mid-point of this range (i.e., greater than $6.7 million in 2010 dollars).

Two agencies, EPA and DOT, have developed official guidance on VSL. In its 2009 update, DOT adopts a value of $6.0 million ($2009), and requires all the components of the Department to use that value in their RIAs. EPA recently changed its VSL to an older value of $6.3 million ($2000) and adjusts this valu e for real income growth post-2000. In its final rule setting a new primary standard for nitrogen dioxide, for example, EPA adjusted this VSL to account for a different currency year ( $2006) and for income growth to 2020, which yields a VSL of $8.9 million. EPA stated in this RIA, however, that it is continuing its efforts to update this guidance, and that it anticipated presenting results from this effort to its Science Advisory Board, with draft guidance following soon thereafter. EPA has also recently published a white paper “to highlight some key topics re lated to the valuation of mortality risks, and to describe several possible approaches for synthesizing the empirical estimates for mortality risk reductions from existing hedonic wage and stated prefer ence studies for the purpose of valuing mortality risk reductions associated with future EPA policies.” Some of these issues include the possibilities of reporting value estimates in terms of risk changes, rather than “statisti cal lives”; adding a “cancer di fferential” to the standard estimates of mortality risk reduction values for policies ex pected to reduce carcinogenic pollutants; examining the role of altruism in valuing risk reductions; and, finally , incorporating alternative appr oaches to benefit transfer techniques. See Environmenta l Protection Agency (2010).

For the agencies that have not developed binding internal guidelines, we have done a brief review of RIAs and other materials to understand how VSLs have been used in prac tice. Although the Department of Homeland Security has no official policy on VSL, it sponsored a report through its U.S. Customs and Border Protection, and has used the recommendations of this report to inform VSL values for several recent rulemakings. This report recommends $6.3 million ($2008) and also recommends that DHS adjust this value upward over time for real income growth (in a manner similar to EPA’s adjustment approach).

Other regulatory agencies that have used a VSL in individual rulemakings include DOL’s Occupational Safety and Health Administration (OSHA) and HHS’ Food and Drug Ad ministration (FDA). In OSHA’s rulemaking setting a Permissible Exposure Limit for Hexavalent Chromium, OSHA specifically referred to EPA guidance to justify a VSL of $7.0 million ($2003), as the types of air exposure risk s regulated in this rulemaking were similar to those in EPA rulemakings. The FDA has consistently used values of $5.0 and $6.5 million ($2002) in several of its rulemakings to monetize mortality risks, but it also uses a monetary value of the remaining life-years saved by alternative policies. This is sometimes referred to as a “Val ue of a Statistical Life Year ” or VSLY. (See Circular A4 for discussion.)

Our review suggests that, in recent year s, actual agency practice has generally avoided significant inconsistencies. In current dollars, we have not found recent values below $6 million or a bove $9.5 million, and hence agency practice suggests a narrower band than that found in the literature review in Circular A-4. For a recent overview by the Congressional Research Servi ce, see Copeland (2010).

18not necessarily be taken as OMB endorsement of all the varied methodologies used by agencies

to estimate benefits and costs.

We have noted that many major rules have important non-quantified benefits and costs that may have been a key factor in an agency’s decision to select a pa rticular approach. In important cases, agencies have been unable to quantify the benefits of rules, simply because existing information does not permit reliable estimat es. These qualitative issues are discussed in Table A-1 of Appendix A, agency rulemaking documen ts, and previous editions of this Report.

Finally, because these estimates exclude non-ma jor rules and rules adopted more than ten years ago, the total benefits a nd costs of all Federal rules now in effect are likely to be significantly larger than the sum of the benefits and costs reported in Table 1-1. More research would be necessary to produce co mprehensive estimates of total benefits and costs by agency and program. And as noted, it is important to consider retrospective, as opposed to ex ante

, estimates of both benefits and costs; this to pic is a continuing theme of this report.

B. Trends in Annual Benefits and Costs of Regulations Reviewed by OMB over the Last

Ten Years

Table 1-3 reports the total be nefits and costs of rules issued from October 1, 2000 to September 30, 2010, by fiscal year for which reasonably complete monetized estimates of both

benefits and costs are available. 21 For the purposes of showing general trends by fiscal year, Figure 1-1 reports the midpoints of the ranges reported in Table 1- 3. As the figure shows, the monetized additional costs of private mandates tend to be around or below $10 billion per year. On average, roughly $5 billion in annual costs ha ve been added each year over this period to the total regulatory burden.

Table 1-3: Total Annual Benefits and Costs of Major Rules by Fiscal Year, (billions of 2001 dollars)

Fiscal Year Number of

Rules Benefits Costs

2001 12 22.5 to 27.8 9.9

2002 2 1.5 to 6.4 0.5 to 2.2

2003 6 1.6 to 4.5 1.9 to 2.0

2004 10 22 8.8 to 69.8 3.0 to 3.2

2005 12 23 27.9 to 178.1 3.8 to 6.1

21 This table includes all rules reported in Table 1-1. Th e ranges will not necessarily match previously reported estimates for a fiscal year in past reports as rules have been dropped over time as described in this and past reports. See Appendix A for a complete list of rules included in these totals.

22 This total excludes the impacts of EPA’s 2004 “Natio nal Emission Standards for Hazardous Air Pollutants:

Industrial/Commercial/Institutional Boilers and Process Heater s,” previously included in our 10-year aggregate. On June 19, 2007, the United States Court of Appeals for the District of Colu mbia Circuit vacated and remanded the

national emission standards for hazardo us air pollutants for industrial/comme rcial/institutional boilers and process heaters. We inadvertently omitted removing this rule from the 10-year aggregat es in previous reports.

19Fiscal Year Number of

Rules Benefits Costs

2006 7 24 6.3 to 44.8 3.7 to 4.3

2007 12 28.6 to 184.2 9.4 to 10.7

2008 11 7.0 to 24.4 1.2 to 1.5

2009 15 8.6 to 28.9 3.7 to 9.5

2010 18 18.8 to 86.1 6.5 to 12.5

Variability appears greater in be nefit estimates than in cost estimates. Note that the three highest years for benefits (2004, 2005, and 2007) ar e mostly explained by three EPA regulations: the 2004 non-road diesel engine ru le, the 2005 interstate air qualit y rule, and the clean air fine particle implementation rule. 25 Note also that the benefits ex ceed the costs in every fiscal year; that the highest benefit year, in terms of point estimates, wa s 2007; that 2007 was also the highest cost year, in those terms; and that the four highest net bene fit years, in those terms, were 2004, 2005, 2007, and 2010.

Figure 1-1: Total Annual Benefits and Co sts of Major Rules by Fiscal Year

23 This total excludes the impacts of EPA’s 2005 “Clean Air Mercury Rule--Electric Utility Steam Generating Units,” previously included in our 10-y ear aggregate. On February 8, 2008 , the D.C. Circuit vacated EPA's rule removing power plants from the Clean Air Act list of sources of hazardous ai r pollutants. At the same time, the Court vacated the Clean Air Mercury Rule. We inadve rtently omitted removing this rule from the 10-year aggregates in previous reports.

24 This total includes the impacts of EPA’s 2006 PM NAAQS which was inadvertently dropped from last year’s

aggregates.

25 This chart includes the impacts of EPA’s 2005 Clean Air Interstate Rule, which (as explained in a previous footnote) was vacated and subsequen tly remanded without vacatur and likely will be replaced by a new rule, “Federal Implementation Plans to Reduce Interstate Transp ort of Fine Particulate Matter and Ozone.” This rule, once finalized, will replace the Clean Air Interstate Rule.

20The estimates we report here are prosp ective ones made by agencies during the rulemaking process. As we have emphasized, it is possible that retrospective studies will show (as they sometimes have) that the benefits and co sts were either overestimated or underestimated.

As discussed elsewhere in this Report (see Appendix A) as well as previous Reports, the aggregate estimates of benefits and costs derive d from estimates by different agencies and over different time periods are subj ect to significant methodological inconsistencies and differing assumptions. 26 In addition, the groundwork for the re gulations issued by one administration is sometimes done in a previous administration. 27

26 This is particularly true for EPA’s air pollution regulations. Caution should be used in comparing benefits and costs over time in light of several factors, including ne w scientific evidence regarding the relationship between pollutants and health endpoints; changes in the EPA’s ch oice of assumptions when uncertainty remains (e.g., regarding the shape of the concentratio n – response function as low levels); and differences in techniques for monetizing benefits (including changes to the value assigned to a statistical life). Aggregate estimates in the report reflect differences in approaches and assumptions over time. Summing across time does not reflect how EPA would calculate the benefits of prior rules today.

27 For example, FDA’s trans fat rule was proposed by the Clinton administration and issued by the Bush Administration, while the groundwork for EPA’s 2004 non-road diesel engine rule was set by the NAAQS rules

issued in 1997.

21C. Estimates of the Benefits and Costs of Major Rules Issued in Fiscal Year 2010

1. Major Rules Issued by Executive Agencies

In this section, we examine in more detail the estimated benefits and costs of the 66 major final rules for which OMB concluded review during the 12-month period beginning October 1, 2009, and ending September 30, 2010. 28 These major rules represent approximately 20 percent of the 328 final rules reviewed by OMB. 29 OMB believes, however, that the benefits and costs of major rules, which have the largest economic effects, account for the majority of the

total benefits and costs of a ll rules subject to OMB review. 30

Agencies reported monetized benefits and co sts of 18 of the 66 regulations in FY2010. These estimates, aggregated by agency in Table 1- 4 and listed in Table 1- 5(a), are included in the ten-year aggregates in Tables 1-1, 1-2, and 1-3. As with previous year s, EPA rules dominate both the benefits and costs of this year’s final ru les. Nine of the 18 rules are primarily intended to protect health or safety. These include rules from DOL, DOT, and EPA, which affect health and safety through improvements in worker safety, pipeline safety, and e nvironmental quality.

28 This count excludes rules that were withdrawn from OMB re view or rules that were rescinded, stayed, or vacated after publication. It also counts joint rules as a single rule, even if they were submitted to OMB separately for

review.

29 Counts of OMB-reviewed rules are available through the “review counts” and “search” tools on OIRA’s regulatory information website ( www.reginfo.gov ).

30 We discussed the relative contribution of major rules to the total impact of Federal regulation in detail in the “response-to-comments” section on pages 26-27 of the 2004 Report. In summary, our evaluation of a few representative agencies found that major rules represented the vast majority of the benefits and costs of all rules promulgated by these agencies and reviewed by OMB.

22Table 1-4: Estimates, by Ag ency, of the Total Annual Benefits and Costs of Major Rules: October 1, 2009 - September 30, 2 010 (Billions of 2001 dollars)

Agency Number of Rules Benefits Costs Department of Energy 3 2.0 to 2.7 1.2 to 1.4

Department of Justice 3 1.5 to 3.7 0.7 to 0.9

Department of Labor 1 0.2 0.1

Department of Transportation 4 0.4 to 0.5 0.9 to 1.8

Environmental Protection Agency 31 6 10.8 to 60.8 1.9 to 3.6

Joint DOT and EPA 1 3.9 to 18.2 1.7 to 4.7

Total 18 18.8 to 86.1 6.5 to 12.5

Thirty-two of the rules implement Federa l budgetary programs, which primarily caused income transfers, usually from taxpayers to progr am beneficiaries. Alth ough rules that affect Federal budget programs are subject to Executi ve Order 12866 and OMB Circular A-4, and are reviewed by OMB, past Reports have focused pr imarily on regulations that have effects largely through private sector mandates. This focus is justified in part on th e ground that agencies typically do not estimate the social costs and benefits of transfer rules. Instead they report the estimated budgetary impacts.

We recognize that markets embed distortions and that the transfer s are not lump-sum. Hence, transfer rules may impose real costs on so ciety to the extent that they cause people to change behavior, either by dire ctly prohibiting or mandating certain activities, or, more often, by altering prices and costs. The costs resulting from these behavior changes are referred to as the “deadweight losses” associated with the transf er. The Regulatory Right -to-Know Act requires OMB to report the social costs and benefits of these rules, and OMB encourages agencies to report these costs and benefits for transfer rules; OMB will consider incorporating these estimates into future Reports.

Table 1-5(a-c) lists each of the 34 “non-budge t” rules and, where available, provides information on their monetized benefits, costs, and transfers. It is worth noting that the aggregate benefits far exceed the aggregate co sts and that with only two exceptions (Positive Train Control, which involved a clear statutory mandate, and Auto matic Dependent Surveillance

– Broadcast (ADS-B)), the estimated benefits of individual rules exceeded the costs in nearly

31 EPA’s Construction and Development Effluent Limitation Guideline published on December 1, 2009, contained estimates of benefits and costs. However, effective January 4, 2011, EPA has stayed the numeric limitation of 280 nephelometric turbidity units (NTU) in the Guideline and will propose a revised limit in a future rulemaking. Therefore, the rule is not included in these estimates.

2332 every case.

Table 1-6 lists each of 32 “budget” rules and provides information on the estimated income transfers. Unless otherwise noted, OMB simply converts to 2001 dollars agencies’ own estimates of annualized impacts. For all 66 ru les, we summarize the information on the nonmonetized impacts, where available, for these regul ations in the “other information” column of

Table A-1.

Overall, HHS promulgated the largest number of rules: nineteen. Ten of these largely transfer income from one group of entities to another withou t imposing significant private mandates; the other nine cont ain private sector mandates. 33 EPA issued the most rules creating or modifying private mandates; all ten of its rule s contain significant priv ate sector impacts.

32 DOT’s primary estimates for benefits and costs of Pos itive Train Control would yield negative net benefits of $711 million while ADS-B would also yield negative net benefits of $51 million. DO T’s primary estimates of benefits and costs for Distribution Integrity Management were nearly equal, essentially resulting in neither net

benefits nor net costs.

33 Six of the nine are joint-rulemaking with Department of Labor and Treasury to implement health insurance

reforms.

24Table 1-5 (a): Major Rules Reviewed with Estimates of Both Annual Benefits and Costs, October 1, 2009 - September 30, 2 010 (billions of 2001 dollars)

Agency RIN 34 Title Benefits Costs

DOJ 1117-AA61 Electronic Prescriptions for Controlled

Substances 0.3-1.3 < 0.1

DOJ 1190-AA44 Nondiscrimination on the Basis of Disability in

Public Accommodations and Commercial

Facilities 1.1 Range: 1.0-2.1 0.6 Range: 0.5-0.7

DOJ 1190-AA46 Nondiscrimination on the Basis of Disability in

State and Local Government Services Range: 0.2-0.3 Range: 0.1-0.2

DOL 1218-AC01 Cranes and Derricks in Construction 0.2 0.1

DOE 1904-AA90 Energy Efficiency Standards for Pool Heaters and Direct Heating Equipment and Water

Heaters 1.4 Range: 1.3-1.8 Range: 1.0-1.1

DOE 1904-AB70 Energy Conservation Standards for Small

Electric Motors Range: 0.7-0.8 0.2

DOE 1904-AB93 Energy Efficiency Standards for Commercial

Clothes Washers Range: 0-0.1 < 0.1

EPA 2050-AG16 Revisions to the Spill Prevention, Control, and Countermeasure (SPCC) Rule 0 (0.1)

EPA 2060-AO15 NESHAP: Portland Cement Notice of

Reconsideration Range: 6.1-16.3 Range: 0.8-0.9

EPA 2060-AO48 Review of the National Ambient Air Quality

Standards for Sulfur Dioxide 35 10.5 Range: 2.8-38.6 0.7 Range: 0.3-2.0

EPA 2060-AP36 National Emission Standards for Hazardous Air Pollutants for Recipr ocating Internal Combustion Engines (Diesel) Range: 0.7-1.9 0.3

EPA 2060-AQ13 National Emission Standards for Hazardous Air Pollutants for Recipr ocating Internal Combustion Engines--Existing Stationary Spark Ignition (Gas-Fired) Range: 0.4-1.0 0.2

34 In 2010, OMB issued a memorandum on “Increasing Openness in the Rulemaking Process – Use of the Regulation Identifier Number (RIN),” available at: http://www.whitehouse.gov/sites/default/files/om b/assets/inforeg/IncreasingOpenness_04072010.pdf . The memorandum provides that agencies should use the RIN on all relevant documents thro ughout the entire “lifecycle” of a rule. We expect that this requirement will help memb ers of the public to find re gulatory information at each stage of the process and will promote informed participation.

35 The agency provided benefit and cost estimates for 2020. In order to annualize, as with previous NAAQS rulemakings, OMB assumed that the benefits and costs would be zero in the first year after the rule is finalized, the benefits and costs would increase linearly until year 2020 , and the benefit and cost es timates would equal the 2020

estimates thereafter.

25Agency RIN 34 Title Benefits Costs

EPA 2070-AJ55 Lead; Amendment to the Opt-out and Recordkeeping Provisions in the Renovation, Repair, and Painting Program Range: 0.8-3.0 0.3

DOT 2120-AI92 Automatic Dependent Surveillance--Broadcast (ADS-B) Equipage Mandate to Support Air

Traffic Control Service Range: 0.1-0.2 0.2

DOT 2126-AA89 Electronic On-Board Recorders for Hours-ofService Compliance 0.2 0.1

DOT 2130-AC03 Positive Train Control <0.1 0.7 Range: 0.5-1.3

DOT 2137-AE15 Pipeline Safety: Distribution Integrity Management 0.1 0.1

DOT &

EPA 2127-AK50;

2060-AP58 Light-Duty Greenhouse Gas Emission Standards and Corpor ate Average Fuel Economy Standards 36 11.9 Range: 3.9-18.2 3.3 Range: 1.7-4.7

( ) indicates negative.

Ten rules partially monetized either benefits or costs and are listed in Table 1-5(b). Two such rules, DOI’s Migratory Bird Hunting regulations, assessed onl y benefits. These regulations are promulgated annually to allow hunting of migr atory game birds. The agency assessed the

consumer welfare increase associ ated with these allowances. Id eally, these benefits should take

into account the value of recreational alternatives. Administrativ e costs are of course relevant and could help inform a full analysis.

Eight rules reported only mone tized costs and relevant transfers, without monetizing benefits. As noted, quantific ation and monetization sometime s present serious challenges, especially in terms of benefits; for some rules, it is not feasible to make projections, because of

an absence of available information. Four of th ese eight rules are joint HHS, DOL, and Treasury rules that implement health insurance reforms un der the Affordable Care Act. (One additional rule by the three departments implements the Ment al Health Parity and Addiction Equity Act.) For these rules, qualitative info rmation with respect to benefits is provided, alongside an explanation of limits in available information. Th e main purpose of health insurance is to spread financial risk arising from medical care. In addition, some of these rules address equity concerns, for example by preventing denial of health insurance coverage to children with preexisting conditions. The potential transfer effects and non-quant ified effects are described in the “other information” column of Table A-1. We continue to work with agencies to improve

36 DOT and EPA estimates differ somewhat due to programma tic differences between the two rules and differences in estimation modeling. The range of cost and benefit are based the total cost and benefits estimates for model years 2012-2016 in DOT’s RIA, annualized ov er the life of those vehicles. The pr imary estimates are based on the total cost and benefits estimates for model years 2012-2016 in EPA’s RIA annualized at 7% over the life of those

vehicles..

26the quantification of the benefits and costs of th ese types of regulations.

Table 1-5(b): Major Rules Reviewed with Part ial Estimates of Annual Benefits or Costs, October 1, 2009 - September 30, 2 010 (billions of 2001 dollars)

Agency RIN Title Benefits Costs

HHS 0920-AA26 Medical Examination of Aliens— Removal of Human Immunodeficiency Virus (HIV) Infection

From Definition of Communicable Disease of Public Health Significance Not

Estimated < 0.1

HHS, DOL

& TREAS 0938-AP65;

1210-AB30 Interim Final Rules Under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 Not

Estimated < 0.1

HHS, DOL

& TREAS 0991-AB66;

1210-AB41 Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Dependent Coverage of Children to Age 26 under the Patient

Protection and Affordable Care Act Not

Estimated < 0.1

HHS, DOL

& TREAS 0991-AB68;

1210-AB42 Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a

Grandfathered Health Plan under the Patient

Protection and Affordable Care Act Not

Estimated < 0.1

HHS, DOL

& TREAS 0991-AB69;

1210-AB43 Patient Protection and Affordable Care Act: Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections Not

Estimated < 0.1

HHS, DOL

& TREAS 0991-AB70;

1210-AB45 Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Internal Claims and Appeals and External Review Processes under

the Patient Protection and Affordable Care Act Not

Estimated < 0.1

DOI 1018-AX06 Migratory Bird Hunting; Final Frameworks for Early-Season Migratory Bird Hunting Regulations Range: 0.2­

0.3 Not

Estimated

DOI 1018-AX06 Migratory Bird Hunting; Final Frameworks for Late Season Migratory Bird Hunting Regulations Range: 0.2­

0.3 Not

Estimated

DOL 1210-AB08 Improved Fee Disclosure for Pension Plans Not

Estimated < 0.1

TREAS 1557-AD23 S.A.F.E. Mortgage Licensing Act Not

Estimated 0.1-0.2

The regulatory analyses of six of the 34 “non-bud get” rules did not provide an estimate of

the incremental benefits or costs of the rule. Th ese rules are described in Table 1-5(c), in which footnotes provide further details on the analysis provided for each rule. The potential transfer

effects and non-monetized effects are described in the “other information” column of Table A-1.

27Table 1-5(c): Additional Non-Budget Major Rules Reviewed, October 1, 2009 - September 30, 2 010 (billions of 2001 dollars)

Agency RIN Title

HHS 0910-AF93 Use of Ozone-Depleting Substances; Removal of Essential Use Designations [Flunisolide, Triamcinolone, Metaproterenol, Pirbuterol, Albuterol and Ipratropium in Combination, Cromolyn, and Nedocromil] 37

HHS 0910-AG33 Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless

Tobacco to Protect Children and Adolescents 38

HHS, DOL

& TREAS 0938-AQ07;

1210-AB44 Interim Final Rules for Group Health Plan s and Health Insurance Issuers Relating to Coverage of Preventive Services under the Patient Protection and Affordable

Care Act 39

EPA 2060-AO38 Control of Emissions From New Marine Compression-Ignition Engines at or Above 30 Liters per Cylinder 40

EPA 2060-AO81 Renewable Fuels Standard Program 41

EPA 2060-AP86 Prevention of Significant Deteri oration/Title V Greenhouse Gas Tailoring Rule 42

37 The rule quantifies but does not monetize potential benefits and costs. However, it provides monetized estimates of the private sector transfers (see Table A-1).

38 This rule reinstates a 1996 final rule (as required by statut e), and points to the original RIA. It does not provide an incremental analysis of the impacts of the rule compared to a baseline that takes into account current levels of compliance with the rule. Thus, the 1996 RIA may well overstate both costs and benefits.

39 The agency provides a discussion of the rule’s potential impact on the use of preventative services and the associated benefits (health improvements), costs (medical costs), an d transfers (health insurance premiums).

40 The agency presents estimated benefits and costs for the entire coordinated strategy, both national and international levels, to control emissi ons from ocean-going vessels. It include s (1) the engine and fuel controls finalizing under the Clean Air Act; (2) the proposal submitted by the United States Government to the International Maritime Organization to amend MARPOL Annex VI to designate U.S. coasts as an Emission Control Area in which all vessels, regardless of flag, would be required to meet the engine and marine fuel sulfur requirements in Annex VI; and (3) the new engine emission and fuel sulfur limits contained in the amendments to Annex VI that are applicable to all vessels regardless of flag under the Act to Prevent Pollution from Ships. The estimates, although informative and illustrative, do not fully reflect the benefits and costs of the rule.

41 Emphasizing the conceptual and empirical challenges in presenting an analysis of benefits and costs, EPA uses a case study approach to assess the consequences of an expa nsion of renewable fuel use, whether caused by the RFS2 program or by market forces. The analytical approach taken by EPA is to predict what the world would be like, in terms of a range of economic and environmental factors, if renewable fuel use increases to the level required by the RFS2 standards. EPA then compares this prediction to two reference cases without the RFS2 program. The estimates, although informative and illustrative, do not reflect the benefits and costs of the rule. In addition, EPA has the statutory authority annually to review and lower the requirements fo r cellulosic ethanol, based on market supply. For both 2010 and 2011, EPA used this authority to lower the requirements significantly. Therefore, the original case study of the gallon mandates no longer represents the current RFS2 requirements.

42 EPA noted that the Greenhouse Gas Tailoring rule would provide significant regulatory relief to state permitting agencies, because without the rule, th e number of permits required (as many as 6 million) would overwhelm the resources of permitting authorities and severely impair the functioning of the programs. EPA estimated illustrative savings of $22.5 billion for permitting authorities and $5 5 billion for sources. These savings estimates are not included in this report because it is no t straightforward to identify the baseline from which to decide whether the rule creates benefits or imposes costs, though to be sure th e rule does significantly redu ce costs as compared with a situation in which permits were required more generally.

28Table 1-6: Major Rules Implementing or Adjusting Federal Budgetary Programs, October 1, 2009 - September 30, 2 010 (billions of 2001 dollars)

Agency RIN Title Budget Effects

USDA 0560-AH90 Supplemental Reve nue Assistance Payments Program (SURE) 0.1

USDA 0560-AI07 Dairy Economic Loss Assistance Payment Program 0.2

USDA 0578-AA43 Conservation Stewardship Program 2.7-3.2

USDA 0584-AD30 SNAP: Eligibility and Ce rtification Provisions of the Farm Security and Rural Investment Act of 2002 2.2

DOC 0660-ZA28 Broadband Technology Opportunities Program 2.1

DOD 0720-AB17 TRICARE: Relationship Between the TRICARE Program and Employer-Sponsored Group Health Coverage > (0.1)

DOD 0790-AI59 Retroactive Stop Loss Special Pay Compensation 0.4

HHS 0938-AP40 Revisions to Payment Policies Under the Physician Fee Schedule For CY 2010 (CMS-1413-FC) (11.0)

HHS 0938-AP41 Changes to the Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System for CY 2010 (CMS-1414-F) 0.4

HHS 0938-AP55 Home Health Prospective Payment System and Rate Update for CY 2010 (CMS-1560-F) (0.1)

HHS 0938-AP57 End Stage Renal Disease Bundled Payment System (CMS-1418-F) (0.2)

HHS 0938-AP72 State Flexibility for Medicaid Benefit Packages (CMS2232-F4) (0.7)

HHS 0938-AP77 Revisions to the Medicare Advantage and Medicare Prescription Drug Benefit Programs for Contract Year 2011 (CMS-4085-F) (0.3)

HHS 0938-AP78 Electronic Health Record (EHR) Incentive Program (CMS-0033-F) 1.0-2.5

HHS 0938-AP80 Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long Term Care Hospital Prospective Payment System and Fiscal Year 2011 Rates (0.2)

HHS 0991-AB64 Early Retiree Reinsurance Program 1.0

HHS 0991-AB71 Pre-Existing Condition Insurance Plan Program 1.0

STATE 1400-AC58 Schedule of Fees for Consular Services, Department of

State and Overseas Embassies and Consulates 0.3-0.4

DHS 1615-AB80 U. S. Citizenship and Immigration Services Fee Schedule 0.2

29Agency RIN Title Budget Effects

DHS 1651-AA83 Electronic System for Travel Authorization (ESTA): Fee for Use of the System 0.1-0.2

DHS 1660-AA44 Special Community Disaster Loans Program 0-1.0

ED 1810-AB04 State Fiscal Stab ilization Fund Program--Notice of Proposed Requirements, Definitions, and Approval

Criteria 9.5

ED 1810-AB06 School Improvement Grants--Notice of Proposed Requirements Under the American Recovery and Reinvestment Act of 2009; Title I of the Elementary and Secondary Education Act of 1965 2.9

ED 1810-AB07 Race to the Top Fund --Notice of Propo sed Priorities, Requirements, Definitions, and Selection Criteria 3.2

ED 1810-AB08 Teacher Incentive Fund--Prior ities, Requirements, Definitions, and Selection Criteria 0.4

ED 1840-AC96 Student Assistance General Provisions; TEACH Grant, Federal Pell Grant, and Academic Competitiveness Grant,

and National Science and Mathematics Access To Retain Talent Grant Programs 0.2

ED 1840-AC99 General and Non-Loan Programmatic Issues 0.2

ED 1840-AD01 Federal TRIO Programs, Gaining Early Awareness and Readiness for Undergraduate Program, and High School Equivalency and College Assistance Migrant Programs 1.0

ED 1855-AA06 Investing in Inno vation--Priorities, Requirements, Definitions, and Selection Criteria 0.5

DOE 1901-AB27 Loan Guarantees fo r Projects That Employ Innovative Technologies 3.5-4.0

DOE 1904-AB97 Weatherization Assi stance Program for Low-Income Persons - Multi-unit Buildings 4.0

VA 2900-AN54 Diseases Associated With Exposure to Certain Herbicide Agents (Hairy Cell Leukemia and Other Chronic B Cell Leukemias, Parkinson’s Disease, and Ischemic Heart Disease) 4.1-5.4

( ) indicates savings from the Federal perspective.

2. Major Rules Issued by Independent Agencies

The Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) 43 requires the Government Accountability Office (GAO) to submit to Congress reports on major rules, including rules issued by ag encies not subject to Executive Order 12866 — the independent regulatory agencies. In prepar ing this Report, we reviewed the information contained in GAO

43 Pub. L. No. 104-121.

30reports on benefits and costs of major rules i ssued by independent agencies for the period of October 1, 2009 to September 30, 2010. 44 GAO reported that three agen cies issued a total of 17 major rules during this period. (Rules by indepe ndent agencies are not subject to OMB review under Executive Order 13563 and Executive Order 12866.)

Table 1-7 lists each of these rules and the extent to whic h GAO reported benefit and cost estimates for the rule. All of the rules, except the Nuclear Regulatory Commission’s fee recovery rule, were issued to regulate the financ ial sector. No rule provided complete monetized

benefit and cost information. The Federal Rese rve System promulgated four rules on electronic fund transfer and two rules on truth-in-lending, and generally did not provide information on benefits and costs. The Federal Reserve Sy stem and the Federal Trade Commission issued a joint rule on fair credit repor ting for which the agencies provided monetized cost information, but no monetized benefit assessment. The SEC conducts some benefit-cost analysis of its rules, but it generally does not quantify and monetize be nefits and costs. OMB does not know whether the rigor of the analyses conducted by these agencies is similar to that of the analyses performed by agencies subject to OMB review.

We emphasize that for the purposes of informing the public and obtaining a full accounting, it would be desirable to obtain better information on th e benefits and costs of the rules issued by independent regula tory agencies. The absence of such information is a continued obstacle to transparency, and it might also ha ve adverse effects on public policy. Executive Order 13563 emphasizes the importa nce of agency use of “the best available techniques to quantify anticipated present and future benefits an d costs as accurately as possible.” While that Executive Order applies only to executive agencies, independent agencies may wish to consider the use of such techniques. In its Februa ry 2, 2011, guidance on Executive Order 13563, OMB encouraged the independent agencies to follow the principles and requirements of the order. 45

OMB provides in Appendix C of this Report a summary of the information available on the regulatory analyses for major rules by the indepe ndent agencies over the past ten years. This summary is similar to the ten-year look-back for regulation included in recent Reports. It examines the number of major rules promulgated by independent agencies as reported to the GAO from 2000 through 2010, which are presented in Table C-1. 46 Information is also presented on the extent to which the independent agencies reported benefit and cost information for these rules in Tables C-2 through C-4.

44 Footnote 3, above, states the criteria for including rules in the report. In practice, a rule was considered “major” for the purposes of the report if (a) it was estimated to have either annual costs or benefits of $100 million or more or (b) it was likely to have a significant impact on the economy.

45 Memorandum for the Heads of Executive Departments and Agencies, and of Indepe ndent Regulatory Agencies, M-11-10, “Executive Order 13563, ‘Improving Regulation and Regulatory Review,’” p. 6, available at http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-10.pdf

46 OMB did not finalize a Report in 1999; OMB reconstructed the estimates for this period based on GAO reports. Prior to the 2003 Report, OMB did not report on independent agency major rules on a fiscal year basis, but rather on an April-March cycle. Similar to last year, OMB is reporting all of the rules from 2000 through 2010 on a fiscal year basis (see Table C-1). The number of rules presente d in earlier Reports may theref ore not match the number of rules presented here.

31Table 1-7: Major Rules Issued by Independent Regulatory Agencies, October 1, 2009 - September 30, 2010

Agency Rule Information on

Benefits or Costs Monetized

Benefits Monetized

Costs

Federal Reserve System Electronic Fund Transfers (74 FR 59,033) Yes No No

Federal Reserve System Electronic Fund Transfers (75 FR 16,580) No No No

Federal Reserve System Electronic Fund Transfers (75 FR 31,665) No No No

Federal Reserve System Electronic Fund Transfers (75 FR 50,683) No No No

Federal Reserve System Truth in Lending (75 FR 7,658) No No No

Federal Reserve System Truth in Lending (75 FR 37,526) No No No

Federal Reserve System and

Federal Trade

Commission Fair Credit Reporting Risk-Based Pricing Regulations Yes No Yes

Nuclear Regulatory

Commission Revision of Fee Sche dules; Fee Recovery for FY 2010 (75 FR 34,220) Yes No Yes

Securities and Exchange

Commission Amendments to Form ADV (75 FR 49,234) Yes No Yes

Securities and Exchange

Commission Amendments to Regulation SHO (75 FR 11,232)* Yes No Yes

Securities and Exchange

Commission Amendments to Rules for Nationally Recognized Stat istical Rating Organizations (74 FR 63,832) Yes No Yes

Securities and Exchange

Commission Custody of Funds or Securities of Clients by Investment Advisers (75 FR 1,456) Yes No Yes

Securities and Exchange

Commission Facilitating Shareholder Director Nominations (75 FR 56,668) Yes No No

Securities and Exchange

Commission Internal Control over Financial Reporting in Exchange Act Periodic Reports of Non-Accelerated Filers (74 FR 53,628) Yes No No

Securities and Exchange

Commission Money Market Fund Reform (75 FR 10,060) Yes No No

Securities and Exchange

Commission Political Contributions by Certain Investment Advisers (75 FR 41,018) Yes No Yes

Securities and Exchange

Commission Proxy Disclosure Enhancements (74 FR 68,334) Yes No Yes

* Final rule to an interim final rule promulgated in FY 2009

32D. The Impact of Federal Regulation on St ate, Local, and Tribal Governments, Small Business, Wages, and Economic Growth

Section 624 (a)(2) of the Regulatory Right-t o-Know Act requires OMB to present an analysis of the impacts of Federal regulation on State, local, and trib al governments, small business, wages, and economic growth. In addi tion, Presidential Memorandum: Administrative Flexibility (attached as Appendix H) calls for a series of measures to promote flexibility for State, local, and tribal governments; these m easures include reduced reporting burdens and streamlined regulation.

1. Impacts on State, Local, and Tribal Governments

Over the past ten years, only four rules ha ve imposed costs of more than $100 million per year ($2001) on State, local, and tribal governments (and thus have been classified as public

sector mandates under the Unfunde d Mandates Reform Act of 1995): 47

 EPA’s National Primary Drinking Water Regul ations; Arsenic and Clarifications to Compliance and New Source Contaminants Monitoring (2001): This rule reduces the

level of arsenic that is allo wed to be in drinking water from 50 ppb to 10 ppb. It also revises current monitoring requirements a nd requires non-trans ient, non-community water systems to come into compliance with the standard. This rule may affect State, local, or tribal governments or the private se ctor at an approximat e annualized cost of $189 million for a 3 percent discount rate, and $216 for a 7 percent discount rate. The monetized benefits of the rule range from $146 million to $206 million per year. 48
Qualitative benefits may include reductions in skin and kidney cancer where the skin cancer endpoints are well-established.

 EPA’s National Primary Drinking Water Regul ations: Long Term 2 Enhanced Surface

Water Treatment (2005): The rule protects against illness due to cr yptosporidium and other microbial pathogens in drinking water and addresses risk-risk trade-offs with the control of disinfection byproducts . It requires the use of tr eatment techniques, along with monitoring, reporting, and public notification requirements, fo r all public water systems

that use surface water sources. The moneti zed benefits of the rule range from approximately $260 million to $1.8 billion. The monetized costs of the rule range from approximately $80 million to $130 million.

47 We note that EPA’s rules setting air quality standards for ozone and particulate matter may ultimately lead to expenditures by State, local, or tribal governments of $100 million or more. However, Title II of the Unfunded Mandates Reform Act provides that agency statements of compliance with Section 202 must be conducted “unless otherwise prohibited by law.” 2 U.S.C. § 1532 (a). The co nference report to this legi slation indicates that this language means that the section “does not require the preparation of any estimate or analysis if the agency is prohibited by law from considering the estimate or analysis in adopting the rule.” H.R. Conf. Rep. No. 104-76 at 39 (1995). EPA has stated, and the courts have affirmed, that under the Clean Air Act, the criteria air pollutant ambient air quality standards are health-based and EPA is not to consider costs in setting the standards.

48 Benefits were estimated to be constant across time and so annualized benefits are equal at 3 and 7 percent

discount rates.

33 EPA’s National Primary Drinking Water Regulat ions: Stage 2 Disinfection Byproducts

Rule (2006): The rule protects against illness due to drinking wate r disinfectants and disinfection byproducts (DBPs). 49 The rule effectively tight ens the existing standards by making them applicable to each point in the drinking water distribution system individually, rather than only on an average basis to the system as a whole. EPA has determined that this rule may contain a Fede ral mandate that results in expenditures by State, local, and tribal governments, and th e private sector, of $100 million or more in any one year. While the annualized costs fall below the $100 million threshold, the costs in some future years may be above the $100 million mark as public drinking water systems make capital investments and fina nce these through bonds, loans, and other

means.

 DHS’s Chemical Facility Anti-Terrorism Standards Rule (2007): This rule establishes risk-based performance standards for the securi ty of our nation’s chemical facilities. It requires covered chemical facilities to prepare Security Vulnerability Assessments (SVAs), which identify facility security vul nerabilities, and to develop and implement Site Security Plans (SSPs), which include meas ures that satisfy the identified risk-based performance standards. The rule also provides DHS with the authority to seek compliance through the issuance of Orders, in cluding Orders Assessing Civil Penalty and Orders for the Cessation of Operations. DHS has determined that this rule constitutes an unfunded mandate on the private sector. In the regulatory impact assessment published with this rule, DHS estimates that there ar e 1,500 to 6,500 covered chemical facilities. DHS also assumes that this rule may requi re certain municipalities that own and/or operate power generating facilities to purch ase security enhancements. Although DHS is unable to determine if this rule will impose an enforceable duty upon State, local, and tribal governments of $100 million (adjusted annually for inflation) or more in any one year, it has been included in this li st for the sake of completeness.

Although these four rules were the only ones over the past ten years to require expenditures by State, local, and tribal gove rnments exceeding $100 million (adjusted for inflation), they were not the only rules with impacts on other levels of governments. For example, many rules have monetary impacts lowe r than the $100 million threshold, and agencies are also required to consider the federalism im plications of rulemakings under Executive Order

13132.

2. Impact on Small Business

The Regulatory Right-to-Know Act calls for an analysis of the eff ects of regulations on

small business. Consistent w ith that direction, Executive Order 12866, “Regulatory Planning and Review,” recognizes the need to attend to such e ffects. That Executive Order, reaffirmed by and incorporated in Executive Order 13563, “Impro ving Regulation and Regulatory Review,” calls

49 While causal links have not been definitively established, a growing body of evidence has found associations between exposure to DBPs and various forms of cancer, as well as several adverse reproductive endpoints (e.g., spontaneous abortion).

34on agencies to tailor their regul ations by business size in orde r to impose the least burden on society, consistent with the achievement of regulatory objectives. It also calls for the development of short forms and other efficient regulatory approaches for small businesses and other entities. In the findings section of SBREFA, C ongress states that “small businesses bear a disproportionate share of regulatory costs and burdens.” 50 When relevant regulations are issued, each firm must determine whether a regulation a pplies, how to comply, and whether it is in compliance. As firms increase in size, fixed costs of regulatory compliance are spread over a larger revenue and employee base, which often results in lower regulat ory costs per unit of

output.

In recognition of these principles, many st atutes and regulations explicitly attempt to reduce burdens on small businesses, in part to promote economic growth, in part to ensure against unnecessary or unjustified costs, in part to avoid adve rse effects on employment and wages. For example, agencies frequently tail or regulations to limit the costs imposed on small business and to offer regulatory relief, including explicit exemptions for small businesses and slower phase-in schedules, allowi ng adequate periods of trans ition. Moreover, the Regulatory Flexibility Act (RFA) requires agencies to assess the effect of regulat ions on small businesses. 51
Under the RFA, whenever an agency conclude s that a particular regulation will have a significant economic effect on a substantial numbe r of small entities, the agency must conduct both an initial and final regulator y flexibility analysis. This an alysis must include (among other things) an assessment of the like ly burden of the rule on sma ll entities and an analysis of alternatives that may afford relief to small entities while achieving the regulatory goals. OMB works closely with agencies to promote compliance with RFA and to tailo r regulations to reduce unjustified costs and to creat e appropriate flexibility.

On January 18, 2011, the President issued a memorandum to underline the requirements of the RFA and to direct agencies to offer an e xplanation of any failure to provide flexibility to small businesses in proposed or final rules. Such flexibility may include delayed compliance dates, simplified reporting requirements, and pa rtial or total exemptions. The President’s memorandum emphasizes the relationship betwee n small and new businesses and economic growth and job creation; he has di rected agencies to ensure, to th e extent feasible and consistent with law, that regulatory initiatives contain flexibility for small businesses. This memorandum is attached as Appendix F.

The empirical evidence of the effects of re gulation on small business remains less than entirely clear. We have cited in previous Re ports research by the Small Business Administration (SBA) Office of Advocacy, suggesting that small entities disproportionate ly shoulder regulatory and paperwork burdens. In a study sponsored by SBA (and cited in our 2010 Report), for example, Dean, et al., concludes th at environmental regulations act as barriers to entry for small

firms. 52

Becker offers a more complex view, focusing on the effect of air pollution regulation on

50 Section 202(2) of Pub. L. No. 104-121.

51 5 U.S.C. §§ 601-612.

52 Dean, et al. (2000).

35small business. 53 He finds that although “progressively larger facilities had progressively higher unit abatement costs, ceteris paribus,” 54 the relationship betwee n firm size and pollution abatement costs varies depending on the regu lated pollutant. For troposphere ozone, the regulatory burden seems to fall substantially on th e smallest three quartiles of plants. For SOx, the relationship between regulatory burden and th e firm size seems to be U-shaped. For total suspended particles, new multi-unit emitting plan ts in the smallest size class had $265 more capital expenditure (per $10,000 of value added) in non-attainment counties than similar plants in attainment counties, while “those in the la rger size classes had an additional $511-687 in expenditure...though the rise was not monotonic.” 55

The evidence in the literature, while sugges tive, remains preliminary, inconclusive, and mixed. OMB continues to investigate the evolving literature on the relevant questions in order to obtain a more precise picture. It is clear, however , that some regulations have significant adverse effects on small business, and that it is appropriate to take steps to create flexibility in the event that those adverse effects cannot be justified by commensurate be nefits. As the President’s 2011 memorandum directs, agencies should specifica lly explain any refusal to take such steps, especially in light of the impor tance of small businesses and st artups for economic growth and job creation.

3. Impact on Wages and Employment

Regulations of many different markets and area s of activity can ultimately affect labor markets, producing changes in wages and employ ment levels. Some regulations can have adverse effects on both dimensions, especially if they significantly increase costs; other regulations might produce benefits, es pecially if they significantly decrease costs. The relevant effects can be quite complex, since in general equilibrium, regulation in one market can have ripple effects across many markets, making it difficult to generalize. In addition, some regulations require or promote activities that may have bene ficial effects on job creation.

We discuss here the effect of labor market regulations, environm ental regulations, and economic regulations on wages and employment. OMB continues to investigate the possibility that certain kinds of regulations can have adverse effects on job creation in particular, and is interested both in empirical work and in taking st eps to reduce or eliminate such adverse effects. Under Executive Order 13563, job creat ion is a relevant considerati on in regulatory review (“Our regulatory system must promote public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation.”).

53 Becker (2005).

54 Id ., p. 163.

55 Id ., p. 165.

36a. Labor market regulations

It is perhaps simplest to analyze the effects of direct regulation of la bor markets, as they can be plausibly analyzed using a relatively simple partial equilibrium framework— i.e., one that focuses exclusively on the labor mark et, ignoring the effects through other markets. There are many different types of labor market re gulations. Perhaps the most obvious are direct price controls, such as minimum wage laws. 56 Another form of labor market regulation consists of regulations that mandate particular employer- provided benefits, such as the requirement under the Family and Medical Leave Act (FMLA) to pr ovide unpaid leave to care for a new child; in the same category are rules that affect working conditions, such as workplace safety regulations under the Occupational Safety and Health Act. Another category of labor market regulation is anti-discrimination law, which protects certain classes of workers from discrimination in hiring and wage-setting decisions. Still another form of labor market regulation governs the ability of workers and firms to bargain collectively; in general, U.S. competition law prohibits collusion among employers and allows collective bargaining by workers.

The effects of these approaches must be analyzed separately. Here we outline the theory

and evidence on the effect of mandated benefits regulations on wages and employment levels.To be concrete, consider a workplace safety regulation. Summers provides the standard pricetheoretic treatment of such regulations. 57 Such a regulation will shift the labor supply curve down by the amount that workers value the increase in safety, so that workers are willing to supply more labor for a given wage than in the absence of the regulation. Because it imposes compliance costs on employers, the regulation al so shifts the labor demand curve down by the amount of the compliance cost.

If workers value the mandated benefit at mo re than it costs employers to provide the benefit, then both the employment level and ne t wages (i.e., monetary compensation plus the value of non-monetary benefits such as safety) will rise. Under standard assumptions, employers have incentives to provide such benefits, but va rious market failures may result in suboptimal provision of such benefits. C onversely, if workers value the ma ndated benefit at less than its cost, then the employment level and net wages will fall. This simple model assumes that wages can indeed perfectly adjust downwards in res ponse to the mandated be nefits—but if wages are sticky, then the regulation could re sult in a decrease in employment levels and an increase in net

wages.

In the case of group-specific mandated benefits , which are targeted at identifiable groups of workers in the population, the theoretical anal ysis is more complicated. Jolls provides the leading account and emphasizes that the inte raction of group-specific mandated benefits regulation with anti-discrimination law determines its consequences for labor markets. 58
Consider, for instance, regulations under the Americans with Disabi lities Act (ADA) that require that employers accommodate the special need s of disabled employees—a group-specific mandated benefit. The law also forbids employers from discriminating against disabled workers

56 Neumark & Wascher (2008).

57 Summers (1989).

58 Jolls (2000).

37in hiring and compensation decisions. To the extent that it is easier to enforce the prohibition of discrimination in wage setting than in hiring d ecisions, Jolls argues that the law will result in no reduction in wages for disabled workers but a re duction in their employment level, because employers will prefer to hire (cheaper) non-disabled workers.

In contrast, group-specific mandates that target women, such as maternity leave mandates, are more likely to have an effect on wages because women are disproportionately represented in a few occupations, and hence thei r wages can more easily be adjusted downward without triggering anti-discrimin ation enforcement. These mandates can be analyzed in the standard framework provided by Summers descri bed above, and because wages adjust down, are less likely to have a negative effect on employment.

The empirical literature does not offer unambiguous conclusions, but some studies provide support for the predictions of these simple partial equilibrium models. Acemoglu and Angrist find that the ADA resulted in no decrease in relative wa ges of disabled people but a decrease in employment levels. 59 In contrast, Gruber finds that regulations that require employers to provide comprehensive coverage for childbirth in health insurance plans result in a decrease in women’s wages but have no effect on their employment levels. 60 Studies examining the effect of the FMLA in the US, however, find litt le effect on either relative employment levels or wages of women, perhaps because the mandated leave is short and unpaid and many employers provided maternit y leave prior to the law. 61 OMB continues to investigate the growing literature on these topics; the references here are meant to be illustrative rather than

exhaustive.

b. Environmental Regulation

The effects of environmental regulation on the labor market can be difficult to assess, in part because they are not easy to disentangle from the effects of other economic changes over time and across industries. The underlying questi ons require careful a nd continuing empirical study. In this section we summarize some of the leading articles that are often cited in the

academic literature.

Surveying the early studies, Goodstein (1994) finds that seven of ni ne relevant studies showed increases in employment as a result of environmental regulation, one showed a decrease,

and one was inconclusive. He states that “on balance, the available studies indicate that environmental spending... has probably led to a ne t increase in the number of jobs in the U.S. economy ... although if it exists, this effect is not large.” A more recent discussion finds that the research thus far has “yielded mixed results” with respect to “the over-all employment effects of environmental regulation” in the short- or medium-term. 62

59 Acemoglu and Angrist (2001).

60 Gruber (1994).

61 Waldfogel (1999) and Baum (2003). Ruhm (1998) examines parental leave mandates in Europe and finds that they are associated with increases in women’s relative employment levels and reductions in their relative wages.

62 Berman and Bui (2001b).

38In an influential treatment, Morgenstern, Pizer, and Shih (2002) explore four highly polluting, regulated industries to examine the effects on employme nt of higher abatement costs from regulation. 63 The authors conclude that increased abatement expenditures generally do not cause a significant change in employment. In reaching this conclusion, they provide a general framework, identifying three sources of potential effects, both beneficial and adverse, that regulation could have on employment:

 Demand effect: higher production costs raise market prices and hence reduce consumption (and production), thus reduci ng demand for output, with potentially negative effects on employment; in the authors’ words, the “extent of this effect depends on the cost increase passed on to consumers as well as the demand elasticity of industry output”

 Cost effect: As costs go up, plants add more capit al and labor (hol ding other factors constant), with potentially positive effects on employment; in the authors’ words, as “production costs rise, more inputs, including labor, are used to produce the same amount of output”

 Factor-shift effect: Post-regulation producti on technologies may be more or less labor intensive (i.e., more/less labor is required pe r dollar of output); in the authors’ words, “environmental activities may be more labo r intensive than conve ntional production,” meaning that “the amount of labor per dol lar of output will ri se,” though it is also possible that “cleaner operat ions could involve automation and less employment, for example”

Isolating these elements, the authors exp ect, and find, positive employment effects in industries (such as petroleum and plastics) where environmental activities are labor-intensive and demand is relatively inelastic. Where the pollu tion abatement activities required or encouraged by regulation are not labor-intensi ve, and where demand is elastic, positive employment effects would not be expected and negativ e effects should be anticipated to occur; in such cases, the

demand effect will dominate the outcome. The au thors find that in thos e industries where labor already represents a larg e share of production costs and where demand is relatively more elastic (such as steel and pulp and paper), there is nonetheless little evidence of any statistically significant employment consequence. They also state that “increased environmental spending generally does not cause a significant change in industry-level employ ment. Our average across all four industries is a net ga in of 1.5 jobs per $1 million in additional environmental spending, with a standard error of 2.2 j obs—an insignificant effect.”

In another study, Berman and Bui (2001) use di rect measures of regulation and plant data

to estimate the employment effects of sharply incr eased air quality regula tion in Los Angeles. They compare changes in employment in affected plants to those in othe r plants in the same industries but in regions not subject to the lo cal regulations. The au thors find that “while regulations do impose large costs, they have a limited effect on employment” – even when exit and dissuaded entry effects are considered. 64 Their conclusion is that local air quality regulation

63 Data include information from 1979, 1980, 1981, 1985, 1988 and 1991.

64 Berman and Bui (2001).

39“probably increased labor demand slightly.” In their view, the limited effects likely arose because (1) the regulations applied disproportionate ly to capital-intensive plants with relatively little employment; (2) the plants sold to local markets where competitors were subject to the same regulations (so that sales were relatively unaffected); and (3) abatement inputs served as complements to employment.

In a related paper, Cole and Elliott ( 2007) study the impact of UK environmental regulations on sectoral employme nt using panel data spanning 27 different industries over 5 years. They find that environmen tal regulation costs did not have a statistically significant effect on employment, regardless of whether such costs were treated as exogenous or endogenous. The authors suggest that regulati on costs could generate “compet ing effects on employment and cancel each other out” or simply have no discernable impact at all.

By contrast, other sectoral studies – generally focusing on the manufacturing sector – have found negative effects on employment. 65 The 2010 Report states that OMB is also exploring the risk that domes tic regulation might lead companies to do business abroad as a result of domestic regulation in the environm ental area, resulting in depressed wages and employment. The economic literature has for some time examined firms’ decisions to locate new plants or relocate existi ng plants in response to e nvironmental regulations.

In this context, the evidence is both sugge stive and mixed. In their review of the

literature on the effect of envir onmental regulation on the manufact uring sector, Jaffe et al. find that “although the long-run social costs of environmental regulation may be significant, including adverse effects on productivity, stud ies attempting to measure the effect of environmental regulation on net e xports, overall trade flows, a nd plant-location decisions have produced estimates that are either small, statistica lly insignificant, or not robust to tests of model specification.” 66

Using 17-year panel data, Keller and Levi nson (2002) find that the stringency of environmental regulation (expressed in terms of pollution abatement costs) has “small deterrent effects” on states competing fo r foreign direct investment. 67 By contrast, Xing and Kolstad state that “using instruments for the unobser ved variables, the statistical re sults show that the laxity of environmental regulations in a host country is a significant dete rminant of F[oreign] D[irect] I[nvestment] from the US for heavily polluting industries and is insigni ficant for less polluting

industries.” 68

A recent study by Hanna (2010) measured the re sponse of the foreign direct investmentdecisions of U.S.-based multinationals to the Clean Air Act Amendments, using a panel of firmlevel data over the period 1966-1999. Consistent with the theory that regulation causes firms to substitute foreign for domestic production, the authors find that in the environmental area, domestic regulation has led US-based multinationa l companies “to increase their foreign assets

65 See, e.g., Greenstone (2002); Kahn (1997). See also Walker (2 011), for a recent finding of negative effects on employment as a result of environmental regulation.

66 Jaffe et al, pp. 157-8.

67 Keller and Levinson (2002), p. 691.

68 Xing and Kolstad (2002), p. 1.

40in polluting industries by 5.3 percent a nd their foreign output by 9 percent.” 69 The authors also

find that these results are more robust for firms that manufactured within an industry for which imports had historically accounted for a larg e percentage of US consumption (see also Greenstone (2002) discussed belo w). Like Hanna (2010), Brunne rmeier and Levinson (2004), using panel data, also find “s tatistically significant pollutio n haven effects of reasonable magnitude.” 70 Levinson and Taylor’s (2008) re sults in examining trade flows and environmental regulation are cons istent with these other studies. 71

c. Economic regulation

Rate regulations and restrictions on entry in product markets—commonly referred to as “economic regulation”—can have important e ffects on labor markets. As emphasized by Peoples, 72 restrictions on entry into an industry can make unionizat ion of the industry easier because as a result the industry is dominated by a few large firms, which lowers the cost of organizing workers. The resul ting high unionization rates give uni ons in the regulated industries substantial bargaining power, and as a result wa ges in regulated industries, which historically include trucking, electricity, and ai rlines, are higher. Moreover, rate regulations that allow firms in these industries to pass co sts on to customers may make it easier for unions to bargain for relatively high wages.

If economic regulation also results in higher prices in the product market, consumers, including workers, will of course have to pay those prices. Blanchar d and Giavazzi show in theoretical terms that the increased markups in the product market caused by widespread economic regulation can result in both lower re al wages of workers, measured in terms of purchasing power, and lower employment levels. 73 The theoretical negative effect of entry regulation on employment was supported empirically by Bertrand and Kramarz, 74 who examine entry restrictions in the French retail industr y and find that they ha ve reduced employment growth in France.

4. Impact on Economic Growth

Measuring the effects of regulation on econom ic growth is a complex task. Some forms of regulation may have a positiv e effect on growth, perhaps by pr omoting stable and efficient operation of financial markets, by improving ed ucational outcomes, by promoting innovation, or by upgrading the operation of the tr ansportation system. Excessive and unnecessary regulations, on the other hand, place undue burdens on companie s, consumers, and workers and may cause growth and overall productivity to slow. As we have noted, there is some evidence that domestic environmental regulation has led some US-based multinationals to invest in other nations

69 Hanna (2010), p. 160.

70 Brunnermeier and Levinson (2004), p. 6.

71 Levinson and Taylor (2008).

72 Peoples (1998).

73 Blanchard and Giavazzi (2003).

74 Bertrand and Kramarz (2002).

41(especially in the domain of manu facturing), and in that sense, such regulation may have an adverse effect on domestic growth. At the sa me time, the direct impacts of particular regulations, or categories of re gulations, on the overall economy may be difficult to establish

because causal chains are uncertain and because it is hard to control re levant variables.

a. Some conceptual challenges and the nature of growth . One difficulty with measuring the relationship between regulati on and economic growth is iden tifying the appropriate measure of output. Economists frequently look at Gro ss Domestic Product (GDP), which is also our principal emphasis here (see below), but GDP ma y not adequately account for the effects of some regulations. For example, GDP does not capt ure directly relevant benefits of regulation, such as environmental protecti on, that do not result in increase s in goods or services produced. 75
Some important benefits, improving people’s act ual welfare, are not adequately captured by GDP. Efforts to expand the national accounts to incorporate omitted factors – such as improvements in environmental quality in sate llite accounts – suggest the incompleteness of existing measures. 76

A detailed literature explores some of the potentially deeper limitations of national income and product accounting. There is a co mplex and not fully understood relationship between GDP growth and subjective well-being (ins ofar as a rapidly grow ing literature suggests that the latter may be measured). 77 Some studies, for example, conclude that, on average, increases in subjective well-being are clearly and consistently associated with rising levels of

GDP across different countries. 78 Studies find that the positive relationship between wealth and subjective well-being is especially clear when comparing the subj ective well-being of richer and poorer people within the same country at a singl e point in time; in br ief, the subjective wellbeing of richer people is higher. 79 Other studies point to cross- country data suggesting that as income per capita increases, subjective well-being increases steeply but only up to a certain threshold. Afterwards, levels of happiness are only weakly correlated with further increases in income per capita; that is, some studies suggest that above some threshold level, GDP growth may have little effect on subjective well-being. 80 The precise relationship between GDP growth and subjective well-being ha s yet to be settled.

A more general observation is that there ma y be a significant difference between selfreported life satisfaction and self-reported day-to-day expe rience; the measure of “life satisfaction” evidently captures judgments that are not captured in day-to-day experience, and

vice-versa. 81 Some studies, for example, find that li fe satisfaction generally increases with

75 See Sen (1999a, 1999b), Krueger (2009), Kahneman, et al. (2004), and Stiglitz, et al. (2010).

76 Nordhaus & Kokkelenberg (1999); Nordhaus (2004).

77 See Krueger (2009) for a discussion of subjective we ll-being and its measurement. See also Stevenson and Wolfers (2008b) showing movements in happiness inequality that do not parallel movements in income inequality.

78 See Deeton (2008); Hagerty & Veenhoven (2003); Stevenson & Wolfers (2008a); Inglehart, Foa, Peterson, & Welzel (2008). For a finding of “a cl ear positive link between average levels of subjective well-being and GDP per capita across countries,” see Stevenson and Wolfers (2008a).

79 Stevenson and Wolfers (2008a) character ize this conclusion as one that has garnered a “clear consensus in the

literature.”

80 See Inglehart et al. (2008). Lane (200 1) claims that once an individual rises above a basic “subsistence level,” the major sources of well-being are not income but rather friends and family life.

81 Diener et al. (2010); Kahneman (1999).

42income but that experienced well-being does not. 82

In this vein, Krueger, et al , offer an alternative measur e of well-being—National Time Accounting—that proposes to measure and an alyze how people spend and experience their

time. 83 One claim is that such measures provide important information that is not fully or adequately captured in GDP or other existing measures. This a pproach provides an extension to regular time use surveys, and uses what the authors call the Day Rec onstruction Method (DRM) to ask respondents what they were doing, and ho w they felt, at different times during the day.

Federal statistical initiatives are currently underway that are influenced by and build upon this approach. The National Institute on Aging (NIA) is supporting the inclusion of well-being measures in a number of large population-based su rveys, both nationally a nd internationally. Specifically, a module of questions , designed by Krueger with fundi ng from NIA, was fielded in the 2010 American Time Use Survey (ATUS). The ATUS, which is conducted by the U.S.

Census Bureau for the Bureau of Labor Statis tics (BLS), is a continuous survey about how individuals age 15 and over spend their time doing various activiti es, such as work, childcare, housework, watching television, volunteering, and socializing. In the module, up to three activities that a respondent reports are randomly selected, an d respondents are asked how happy, tired, sad, stressed, and in pain they felt during ea ch of those activities. Data from this module will become available mid-2011. NIA currently intends to fund this module again in 2012, and OIRA continues to support these efforts.

In November 2010, the NIA and the U.K. Economic and Social Research Council sponsored a workshop that was held at the Natio nal Academy of Sciences on the role of wellbeing measures in public policy. This meeting brought together leading academic and policy experts from the U.S. and U.K to explore rese arch needs and practical challenges surrounding the integration of subjective well-being measures into policy planning and evaluation process of local and national governments and agencies. The NIA has further commissioned a National Academy of Sciences panel on development of nonmarket satellite Na tional Accounts of Wellbeing. In addition, NIA, along with the Nationa l Center for Complementary and Alternative Medicine, is funding a series of research grants on both experienced and evaluative well-being.

Meanwhile, a rapidly developing literature continues to expl ore the relationship between economic growth and well-being, and this litera ture may turn out to have implications for regulatory policy and uses of cost-benefit analysis. 84 For example, a regulatory initiative may have effects on subjective well-be ing, or actual experience, that cost-benefit analysis does not fully capture. Consider, just for purposes of illustration, a few of many examples from the

relevant literature:

 Contributing to the extensive literature on the relevance of relative (as opposed to absolute) economic position, Luttmer reports that higher earnings of neighbors are

82 Krueger & Schkade (2008); Diener et al. (2010).

83 Krueger, et al (2009). Krueger and Schkade (2008) also have examined the reliability of subjective well-being measures. For a general account, see Diener, et al. (2009) . See also Kahneman et al (2004), Kahneman & Krueger (2006), Krueger, ed. (2009).

84 See, e.g., Vitarelli (2010); Adler and Posner (2008).

43associated with lower levels of self-repor ted happiness, suggesting that subjective well-being may be partly a f unction of relative income. 85 Another study suggests that the impact of relative income levels ma tters more at higher levels of income. 86

 Testing for the differences between expe rienced well-being a nd life satisfaction,Kahneman and Deaton analyze more than 450,000 responses to the GallupHealthways Well-Being Index, a daily surv ey of 1,000 US residents conducted by the Gallup Organization They find that income a nd education are more closely related to life satisfaction, but that h ealth, care-giving, loneliness, and smoking are relatively stronger predictors of day-to-day emotions. 87

 Biswas-Diener et al. compare subjective well-being measures from the U.S. and Denmark. They find that although the Danish claim higher life satisfaction, Americans are higher in both positive and ne gative affect; they are more “emotional.” Their study also suggests that poor Dane s are happier than their American

counterparts. 88

 Kahneman et al. use the Day Reconstructi on Method in a study of women conducted concurrently during one day in Columbus, Oh io and Renne, France. The authors find that the specific sources from which the women draw happiness vary between the two cities, “reflecting differing cultura l norms and social arrangements.” 89

 Examining changes over time in the United States and Britain, Blanchflower and Oswald find that in the last quarter-centu ry, reported levels of well-being have

declined in the United States and remained flat in Britain and are affected by such factors as relative income and age. They esti mate the monetary values of events such as unemployment and divorce and find that both impose the welfare equivalent of large losses in monetary terms. 90

 Expanding their investigation to 31 Europ ean countries, Blanchflower and Oswald examine data from the 2007 European Quality of Life Survey and find that the statistical structure of well-being in Europ ean nations looks “almost exactly the same

as in the United States.” 91 That is, the “same variables enter, and in almost identical ways.” They conclude that, across nations, “[h]appy people are disp roportionately the young and old (not middle-aged), rich, educat ed, married, in work, healthy, exercisetakers, with high fruit-and-ve getable diets, and slim.”

 Responding to critics who claim that subjec tive well-being measures fail to provide valid measures of well-being, Oswald and Wu examine reported life satisfaction

85 Luttmer (2005).

86 See Dynan & Ravina (2007).

87 Kahneman & Deaton (2010).

88 Biswas-Diener (2010).

89 Kahneman (2010).

90 See Branchflower & Oswald (2004).

91 See Blanchflower & Oswald (2010).

44among a recent random sample of 1.3 million U.S. inhabitants. They observe a high (0.6) correlation across states between th ese measures of subjective well-being and objective quality-of-life ra nkings (calculated from, among other things, state indicators such as crime, air qua lity, taxes, and cost-of-living). 92 Oswald and Wu conclude that “subjective well-being data contain genuine information about the quality of human lives.”

 Using African data collected from the Gallup World Poll and African Demographic and Healthy Surveys, Deaton et al. show that the death of an immediate family

member has little effect on life evaluati on, but a sizeable impact on measures of emotion, such as depression or sadness. They suggest that the amount of money necessary to compensate for the emotional effects of a death is larger than that required to compensate one’s resulting life evaluation. 93

 Harter and Arora investigat e the relationship between hours worked and perceived job fit, and their impact on both life satis faction and experienced measures of wellbeing. 94 Using data drawn from the Gallup World Poll, they find that perceived job fit was a robust predictor of life satisfaction across various regions, and increased in importance as the hours worked increased. This conclusion adds to prior studies, which show meaningful relationships betw een the subjective experience of work and objective outcomes, such as em ployee productivity and turnover. 95

 Though a random-assignment experiment (suppor ted by General Social Survey data), Ifcher and Zarghamee find that individuals in a happier m ood are less likely to prefer present over future utility. In other words, compared to neutral affect, mild positive affect significantly decreases time preference over money. 96 According to the authors, one practical implication is that individua ls may benefit from awareness that their mood affects their behavior. For exampl e, a new employee may want to postpone pension plan contribution decisions un til he or she is in a happy mood.

 Examining data collected from fifty-eight countries, Engelbrecht finds that natural capital per capita across those countries is correlated with subjective life-satisfaction measures, especially in high-income nations. 97 He concludes that debates about sustainable development – which often seek to ensure that future generations will have a similar level of wealth per capita av ailable to them as current generations do – should incorporate subjective well-being measures.

92 Oswald & Wu (2010). In more technical terms, their paper claims to “offer[] a crosscheck on the spatial compensating-differentials theory of economics and regional science.”

93 Deaton et al (2010).

94 Harter and Arora (2010).

95 Isen (1987); Warr (1999).

96 Ifcher & Zarghamee (2011).

97 Englebrecht (2009).

45OMB continues to investigate the relevant lite rature and to explore, in a preliminary way, its possible implications for im proving regulatory policy in ways that promote the goals of economic growth, innovation, compet itiveness, and job creation.

b. Regulation and economic activity . While iden tifying the appropriate measure of output is a difficult task, debate also continues about how to evaluate the impact of regulations on the

standard indicators of economic act ivity. Exploration of that imp act continues to be centrally important, as Executive Order 13563 makes clear. At the same time, regulatory impacts on economic growth may be difficult to demonstrate because of other simultaneous changes in the

economy.

Many regulations affect economic growth indi rectly through their e ffects on intermediate factors. There is a growing consensus specifying these intermediate driver s of growth, including increased human capital, capital investment, research and development, economic competition, physical infrastructure, and good governance. 98 Some evidence strongly suggests that regulations promoting educatio nal attainment may improve human capital accumulation, thereby increasing economic growth. 99 Other studies show a positiv e link between increased life expectancy and growth. 100

Regulations can also impose significant costs on businesses, dampening economic competition and capital investment. Djankov et. al. (2002) find that increased regulations on entry into markets—such as licensing and fees—c reate higher costs of en try and thus adversely

affect economic outcomes. 101 By contrast, van Stel et. al. (2007) find that entry regulations actually have little impact on entrepreneurship, but that regulations creating greater labor rigidity have a discernible negative impact. 102

Relatively few studies attempt to measure the economic impact of regulations in the aggregate; the literature focuses in stead on particular regulatory arenas. 103 The literature examining the economic impact of environmental regu lations in particular is extensive. Here are a few examples: 104

98 See, e.g., Temple (1999)

99 For a recent empirical analysis using new OECD data to find a strong positive impact of increased education on economic output, see Cohen & Soto (2007).

100 See, e.g., Bloom et al (2004). Bloom et al. survey th e existing literature on health and economic outcomes, and find in their own cross-country analysis that a one year increase in life expectancy generates a 4 percent increase in economic output, controlling for other variables.

101 Djankov et al (2002).

102 van Stel et al (2007). They also find that regulations improving access to credit have a positive impact on entrepreneurship.

103 One of the few such studies is an analysis by Hahn and Hird (1991), which estimates the net costs of regulations on the economy to be $46 billion, with aggregate annual transfer payments between $1 72.1 and $209.5 billion. But the authors note that their estimates have a wide range of uncertainty due to difficulties in estimation methods and available data. Further, this study is likely to be outdated due to major policy and economic developments in the years since its publication.

104 Berman and Bui (2001a) provide a help ful summary of some of this literatu re. It should be recalled that many environmental regulations affect provision of non-market goods that are not explicitly reflected in standard measures of economic activity. Thus, in addition to the direct economic costs imposed by environmental regulations, these same regulations have social welfare and other non-marke t impacts that are not captu red in these studies.

46 Jorgenson and Wilcoxen modeled dynamic simulations with and without environmental regulation on long-term grow th in the US to assess the effects and reported that the long-term cost of regulat ion is a 2.59% reduction in Gross National

Product. 105

 Berman and Bui find that during a period of aggressive environmental regulation, productivity increased among the petroleum refineries located in the Los Angeles from 1987 to 1992, suggesting that “[a]batement costs may severely overstate the true cost of environmental regulation” 106 and that “abatement associated with the SCAQMD regulations was productivity enhancing.” 107

 Greenstone, List, and Syverson (2011) analyze plant-level production data to estimate the effects of environmental regulations on manufacturing plants’ total factor productivity (TFP) levels. Using the Clean Air Act Amendments’ division of counties into pollutant-specific nonattainment and attainment categories, they find that among surviving polluting plants, a nona ttainment designation is associated with a roughly 2.6 percent decline in TFP.

 Gray and Shadbegian examine the investme nt activity of paper mills from 1979 to 1990, 108 and they find that “plants with re latively high pollution abatement capital expenditures over the period invest less in productive capital. The reduction in productive investment is great er than the increase in abat ement investment, leading to lower total investment at high abatement cost plants. The magnitude of this impact is quite large, suggesting that a dollar of pollution abatement investment reduces productive investment by $1.88 at that plant. This seems to reflect both environmental investment crowing out pr oductive investment within a plant, and firms shifting investment towards plants f acing less stringent abatement requirements. Estimates placing less weight on within-firm reallocation of investment indicate approximate dollar-for-do llar ($0.99) crowding out of productive investment.” 109

 Becker and Henderson 110 find that in response to ground-level ozone regulation, in polluting industries the births of plants “fall dramatically in nonattainment counties, compared to attainment counties...This shift in birth patterns indu ces a reallocation of stocks of plants toward attainment areas. Depending on the interpretation of reducedform coefficients, net present value for a typical new plant in a nonattainment area could fall by 13-22 percent.” 111

105 Jorgensen & Wilcoxen (1990).

106 Id, p. 509.

107 Id, p. 499. SCAQMD is South Coast Air Quality Management District.

108 Gray & Shadbegian (1998).

109 Id , at 254-255.

110 Becker & Henderson (2000).

111 Id. , at 414-415.

47 Greenstone 112 finds that “in the first 15 years after the [Clean Air Act Amendments] became law (1972-1987, nonattainment counties (relative to attainment ones) lost approximately 590,000 jobs, $37 billion in capital stock and $75 billion (1987 dollars) of output in polluting industries.” 113 However, Greenstone notes that these impacts remain modest in comparison to the size of the national manufacturing sector. Further, these results indicate statistically significant economic costs associated with carbon monoxide regulations , but not with ozone or sulfur dioxide regulations.

 List, et al., examined the effects of air quality regulation stringency and location decisions of new plants in New York State from1980 to 1990, and found that regulatory stringency and the decision to locate is ne gatively correlated, and the current parametric estimates of this negative correlation may be understated. 114

 As noted above, Hanna 115 finds that domestic enviro nmental regulation has had an effect in increasing the outbound foreign dir ect investment of US -based multinational

firms. The results include an increase in foreign investments in polluting industries by 5.3 percent and in foreign output by 9 per cent; the results ar e concentrated in manufacturing.

 Jaffe and Palmer 116 find that increases in compliance costs generated by environmental regulations l ead to a lagged effect of increases in research and development expenditures, as measured by patents of new environmental technologies. This corroborates other studies 117 with similar findings. These studies suggest that there may be positive econo mic effects related to technological innovation in the years following increased environmental regulatory compliance costs. As Jaffe and Palmer argue, “in the aggregate, the disincentives for R&D attributed to a command-and-control approach to environmental regulation may be overcome by the high returns that regulation creates for new pollution-control technology.” 118 These results, however, are noted to be sensitive to the definitions of the time lag and difficulties in specifyi ng research and development models, coding patent types, and linking re search and development to overall economic growth.

 Chay and Greenstone 119 find that improvements in air quality induced by Clean Air

112 Greenstone (2002).

113 Id , at 1213.

114 List, et al. (2003).

115 Hanna (2010).

116 Jaffe and Plummer (1997).

117 See Lanoie et al (2008).

118 Jaffe & Plumer (1997), at 618.

119 Chay & Greenstone (2005). Fullerton (2011) uses a carbon permit system – specifically, the cap-and-trade legislation that passed the U.S. House of Representatives in 2009 (which then stalled in the Senate) – to illustrate six different types of distributional effects: (1) the higher prices of carbon-intensive products, (2) changes in relative returns to factors like labor, capital, and resources, (3) a llocation of scarcity rents fr om a restricted number of permits, (4) distribution of the benefits from improvement s in environmental quality, (5) temporary effects during the transition, and (6) capitalization of all those effects into prices of land, corporate stock, or house values. He

48Act regulations resulted in increased housi ng values at the count y level between 1970 and 1980. This finding suggests possible econom ic gains in asset values resulting from improved environmental conditions, wh ich may have had longer-term impacts on economic growth. Again, these overall impacts are difficult to quantify.

 Kahn examines census and state data and finds that better educated, wealthier populations experienced cleaner air, but that poorer, less educated populations experienced a greater over all improvement in air quality between 1980 and 1998 in California. During this time period, th e exposure of the Hispanic population to pollution also fell sharply along with exposure differentials between richer and poorer people. The author concludes that, “[g]iv en the overall trend in improvements for certain demographic groups, it appears th at regulation under the Clean Air Act has helped, and not economically harmed, the ‘have nots.’” 120

Outside of the context of environmental re gulation, a number of studies find that some regulations have promoted economic growth. Fo r example, Carpenter (2009) finds that certain approaches to entry regulation – such as the di scretionary approval regimes used by the Food and Drug Administration – can actua lly increase economic activity by establishing credible expectations of fairness and product safety. 121 Similarly, Greenstone et al. (2006) find that disclosure rules in the securities industry can reduce the adverse eff ects of informational asymmetries and increase market confidence. Their study finds that the 1964 Securities Act Amendments generated $3-6 billi on of asset value for shareholde rs as a result of increased investment activity. According to their eviden ce, higher levels of i nvestor protection and disclosure requirements are associated with the higher valuation of equities. 122 Regulations aimed at managing risks can also have signi ficant economic benefits by increasing the willingness of market actors to pa rticipate in market transactions. 123

Another body of work focuses more specifically on behaviorally informed approaches to regulation, including setting appropr iate default rules, using disc losure as a regulatory tool, improving framing, or making relevant information more salient. Such approaches might improve market functioning or reduce the econo mic costs associated with more aggressive regulatory efforts. Such work suggests that wh en examining the economic effects of regulation, analysts should be mindful of the importance of considering flexible re gulatory approaches. Executive Order 13563 refers in particular to the im portance of flexible approaches, stating that with relevant qualifications, “each agency shall id entify and consider regulatory approaches that reduce burdens and that maintain flexibility a nd freedom of choice for the public.” In some cases, carefully chosen forms of regulation may yield the same social benefits as existing regulatory approaches, while imposing lower costs. In other cases, well-designed regulatory

concludes that, in this particular case, many or all effects may be regressive – that is, the net burden as a fraction of income is higher for the poor than for the rich.

120 Kahn (2001).

121 Carpenter (2009). For more historical and formal m odeling approaches to this same argument, see, e.g., Carpenter (2004) and Carpenter & Ting (2007).

122 Id. See also La Porta et al (1999).

123 On the possible social gains from using alternative regulatory approaches, see generally Moss & Cisternino (2009).

49approaches may actually improve market func tioning, increase economic activity, and promote economic growth. 124

OMB continues to investigate the underlyi ng questions; no clear consensus has emerged

on all of the answers. Further wo rk of the sort outlined here mi ght ultimately make it possible to connect regulatory initiatives to changes in GDP and also to changes in subjective well-being

under various measures.

124 Id. See also Balleisen and Moss, eds. (2009).

50C HAPTER II: R ECOMMENDATIONS FOR R EFORM

Careful analysis of benefits and costs has l ong been designed to ensu re that regulations are grounded in the best available evidence about their likely consequences. Such analysis can

reduce the risk that decisions will be made on the basis of intuition, anecdote, or guesswork. Armed with such evidence, regulators will be in a position to increase benefits, reduce burdens,

or both. Careful consideration of benefits and costs is especially important in a period of economic difficulty, in which regulat ory safeguards must be designed so as to be consistent with the central goals of economic growth, innovation, job creation, and competitiveness. If a regulation would cost a great deal, it may well impose significa nt burdens on consumers and employees (including prospective em ployees). It is important to see that even if the immediate incidence of costs is imposed on companies, costly regulations do not merely burden some abstraction called “business”; the ultimate eff ects will frequently be felt by consumers and workers as well. (See the discussion above of the incidence of regulator y burdens.) Of course numerous regulations have signifi cant social benefits as well.

As OMB Circular A-4 suggests, regulati ons often respond to conventional market failures, including asymmetric information, mo nopoly power, and negative externalities from production and consumption (such as pollution); re gulations might also respond to problems of myopia and inertia and to difficulties in unders tanding risks. When properly designed and responsive to a market failure of one or another sort, regulations are likely to make society better off, in some cases as measured by GDP and in other cases as measured by a full accounting of social and economic effects, including those that may not be adequately measured by standard measures (see the discussion in the previous chapter).

Analysis of costs and benefits serves two important roles in this process. 125 First, it can inform the design and considerati on of various options, so that re levant officials and members of the public are able to understa nd the opportunities for both minimi zing the costs of achieving a social goal (cost-effectiveness) and maximizing net social benefits (efficiency). Analysis of costs and benefits may show, for example, that an alternative approach can achieve the social goal at lower cost; that an intu itively preferable approach, or one supported by particular groups or relevant anecdotes, actually has net costs; that an intuitively disfavored approach would actually produce benefits far in excess of costs; or that one of the alternatives has by far the highest net benefits. If so, the relevant analysis can help to reveal and to motivate the choice of the superior option. Second, such analysis can id entify cases in which poor ly defined regulatory choices might substitute government failure for market failure and impos e net costs on society.

125 For a detailed discussion of the relationship between cost-benefit analysis and soci al welfare, see Adler and Posner (2008).

51This analysis can inspire better solutions and ne w approaches by the executive branch or inform proposals for legislative reform.

The Regulatory Right-to-Know Act charge s OMB with making “recommendations for reform.” In its 2009 Report, OMB ma de three principal recommendations. First, OMB recommended consideration of behaviorally informed approaches to regulation. For example, properly designed disclosure policies, appropriate default rules (as in the context of retirement savings), and simplification (as in the context of the Free Application for Federal Student Aid) may have significant and beneficial results. Recent social science research, including work in behavioral economics, provides valuable insight into the design of effective, low-cost methods for achieving regulatory goals. In some contexts, small, inexpensive, seemingly modest steps can produce significant benefits. 126

Second, OMB recommended that significant regulations should be accompanied with clear, tabular presentations of both benefits and costs, including both quantifiable and nonquantifiable variables; that analysis should take account, where re levant, of the effects of the regulation on future generations and the least well-off; and that continuing efforts should be made to meet some difficult challenges posed by regulatory impact analysis, including treatment of variables that are difficult to quantify and monetize. Third, OMB recommended that regulatory impact analysis should be seen and used as a central part of open government.

In its 2010 Report, OMB recommended four additional reforms that might improve regulatory policy and analysis. First, OMB iden tified several measures designed to meet analytical challenges, involvi ng increased transparency. Second, OMB offered a brief discussion of disclosure as a regulatory tool, with partic ular emphasis on the need to attend to how people process information and on the importance of em pirical testing of di sclosure strategies. 127 Third, and with an emphasis on disclosure, OMB reco mmended exploration of certain low-cost approaches to the problem of childhood obesity; those approaches offer potential lessons for other programs and problems. Fourth, OMB drew on principles of open government to invite public suggestions about improveme nts in existing regulations, w ith particular reference to economic growth. With each of these recommenda tions, OMB offered concrete suggestions for possible improvements.

OMB continues to support the recommendations from its 2009 and 2010 reports. In recent years, significant progress has been made with respect to all of them. The 2010 report outlined some of that progress, 128 and in the recent past, far more has occurred, with particular emphasis on sensible disclosure strategies and on simplification. To offer a few examples:

 The U.S. Department of Agriculture (US DA) recently unveiled a new and far simpler food icon, MyPlate , to replace the MyPyramid image as the primary food group symbol. Responding to many complaints about the usefulness of the Food Pyramid, the Department described the new symbol as “an easy-to-understand” visual cue to

126 See Banerjee and Duflo (2011).

127 For recent discussion, s ee Kamenica et al. (2011).

128 See OMB, 2010 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates
on State, Local, and Tribal Entitles (2010)

, pp. 40-47, available at http://www.whitehouse.gov/sites/defa ult/files/omb/legislative/reports/2010_Benefit_Cost_Report.pdf

.

52help consumers adopt healthy eating habits.” 129 One of the advantages of the symbol

is that it has far more cl arity, and far less ambiguity, th an did the Food Pyramid in helping consumers to make healthy choices. In this respect, the new symbol responds to research suggesting that disclosure policies often work poorly when they leave people uncertain about what, exactly, they should act to avoid risks.

 EPA and DOT have issued a joint final rule entitled “Revisions and Additions to Motor Vehicle Fuel Economy Label,” establishing new requirements for a fuel economy and environment label that will be posted on the window sticker of all new

automobiles sold in the United States. 130 The principal goal of the new label is to provide, in clear form, relevant informa tion about the effects of fuel economy – prominently including monetary savings and costs.

Among other things, the labels provide (1) useful estimates of how much consumers will save or spend on fuel over th e next five years with a particular car compared to the average new vehicle; (2) cl ear descriptions of a nnual fuel costs; (3) easy-to-read ratings of how a model compares to others for smog emissions and emissions of pollution that contribute to climate change; (4) estimates of how much fuel or electricity it takes to drive 100 m iles; and (5) information on the driving range and charging time of an electric vehicle. One of the central advantages of the

information on the new label is that it overcomes some of the limitations of the MPG measure, which is subject to the well -known “MPG illusion.” The MPG illusion refers to the fact that many people think that the savings of greater fuel economy increase linearly with MPG, whereas far la rger savings occur with increases from low MPG levels to somewhat higher ones than fr om high MPG levels to still higher ones.

 Illustrating how sensible default rules (inc luding automatic enrollment) can simplify people’s choices and have significant benef its, USDA recently issued an interim final rule entitled, “Direct Certification and Certification of Homeless, Migrant and Runaway Children for Free School Meals.” Unde r this rule, children who are eligible for benefits under certain programs will be ca tegorically eligible for free lunches and free breakfasts, thus reducing paperwork and increasing par ticipation. As a result, as many as 270,000 additional chil dren may qualify for meals.

 An agency checklist for regulatory imp act analysis (see Appendix I), has been produced with the goal of promoting the link between careful analysis and open government. The checklist simplifies and clar ifies the central requirements for such analysis.

129 See USDA News Release, “First Lady, Agriculture S ecretary Vilsack and Surgeon General Benjamin Launch MyPlate Icon as a New Reminder to Help Consumers to Make Healthier Food Choices,” available at http://www.usda.gov/wps/portal/usda/usdahome?cont entid=2011/06/0225.xml&navid=NEWS_RELEASE&navtype =RT&parentnav=LATEST_RELEASES&edeployment_action=retrievecontent

. 130 See Environmental Protection Agency and Department of Transportation, “Revisions and Additions to Motor Vehicle Fuel Economy Label,” RIN 2060- AQ09; RIN 2127-AK73, available at http://www.epa.gov/fueleconomy/label/nprm-label2010.pdf

53Executive Order 13563 underlines and codifies several of the recent recommendations, with its emphasis on careful consideration of costs and benefits, on public participation, on measurement and improvement of “the actual resu lts of regulatory requirements,” and on use of flexible, freedom-preserving appr oaches (including appropriate de fault rules and disclosure) -- and also with its clear direction to each agency “to use the best availabl e techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Presidential Memorandum on Regulatory Compliance, attach ed as Appendix F, also emphasizes the importance of disclosure.

Our principal and most general recommendation in this Chapter is that, consistent with Executive Order 13563, regulatory decisions and prior ity-setting should be made in a way that is attentive to the importance of promoting economic growth, innova tion, job creation, and competitiveness. The simplest method for achieving that goal is to continue to engage in careful analysis of both costs and benefits and as a general rule and to the extent permitted by law, to proceed only if the benefits justify the costs. To achieve that goal, it is important to ensure careful analysis in advance and also to explore the actual effects of sign ificant rules now on the books, to see if their benefits justify their costs, and to explore whether they might be simplified, streamlined, or otherwise improved.

In the past two years, agencies and OMB have worked together to issue a number of rules for which the benefits exceed the costs, and by a large margin. Consider the following figure

and tables:

54Figure 2-1: Annual Net Benefits of Major Rules through the Second Fiscal Ye ar of an Administration 131

131 For the purposes of showing general trends by Administra tion, figure 2-1 reports the total net benefits – benefits minus costs – based on primary agency estimates, or midpoints if only ranges are reported. See Appendix D for a

list of rules included in the totals.

55Table 2-1: Annual Benefits and Costs of Major Rules through the Second Fiscal Year of an Ad ministration (billions of 2001 dollars) 132

Administration Benefits Costs

Obama (1/20/09-09/30/10) $22.7 to $102.2 $8.2 to $16.5

Bush (1/20/01-09/30/02) $1.9 to $7.4 $1.3 to $3.4

Clinton (1/20/93-09/30/ 94) $5.8 to $24.9 $4.5 to $5.0

Table 2-2: Major Rules with the Highest Net Benefits through the Second Fiscal Year of the Obam a Administration (billions of 2001 dollars) 133

Agency Rule Net

Benefits

EPA/AR Review of the National Ambient Ai r Quality Standards for Sulphur

Dioxide $9.9

EPA/AR NESHAP: Portland Cement Notice of Reconsideration $9.4

DOT/NHTSA

& EPA/AR Passenger Car and Light Truck Corporate Average Fuel Economy

Standards MYs 2012 to 2016 $8.6

DOE/EE Energy Efficiency Standards for General Service Fluorescent Lamps and Incandescent Lamps $1.4

HHS/FDA Prevention of Salmonella Enteritidis in Shell Eggs $1.2

132 Estimates are based on a range of values reported in previous Reports. See Appendix D and Table 1-5(a) for a

list of rules included in the totals.

133 Table 2-2 reports the top five rules with highest net benefits – benefits minus costs – based on the primary agency estimates, or midpoints if only ranges are reported.

56Table 2-3: Major Rules with the Highest Benefits through the Second Fiscal Year of the Ob ama Administration (billions of 2001 dollars) 134

Agency Rule Benefits

DOT/NHTSA Passenger Car and Light Truck Corporate Average Fuel Economy

Standards MYs 2012 to 2016 $11.9

EPA/AR Review of the National Ambient Ai r Quality Standards for Sulphur

Dioxide $10.5

EPA/AR NESHAP: Portland Cement Notice of Reconsideration $10.3

DOE/EE Energy Efficiency Standards for General Service Fluorescent Lamps and Incandescent Lamps $1.9

DOT/NHTSA Passenger Car and Light Truck Corporate Average Fuel Economy

Model Year 2011 $1.7

134 Table 2-3 reports the top five rules with highest benefits based on the primary agency estimates, or midpoints if only ranges are reported.

57Table 2-4: Major Rules with the Highest Costs through the Second Fiscal Year of the Ob ama Administration (billions of 2001 dollars) 135

Agency Rule Costs

DOT/NHTSA

& EPA/AR Passenger Car and Light Truck Corporate Average Fuel Economy

Standards MYs 2012 to 2016 $3.3

DOE/EE Energy Efficiency Standards for Pool Heaters and Direct Heating Equipment and Water Heaters $1.1

DOT/NHTSA Passenger Car and Light Truck Corporate Average Fuel Economy

Model Year 2011 $1.0

DOT/NHTSA Roof Crush Resistance $0.9

EPA/AR NESHAP: Portland Cement Notice of Reconsideration $0.9

In the remainder of this Chapter, our main emphasis is on Executive Order 13563, which is designed to reconcile regulat ory goals with objectives associ ated with economic growth in general and the economic recovery in particular. We also offer brief di scussions of (1) three pressing analytic challenges ; (2) e-rulemaking; and (3) regulatory cooperation.

A. Executive Order 13563

On January 18, 2011, President Obama issu ed Executive Order 13563, which emphasizes the importance of protecting “ public health, safety and our environment while promoting economic growth, innovation, compet itiveness, and job creation.” 136 Executive Order 13563 explicitly points to the need for predictabili ty and for certainty, and for use of the least burdensome tools for achieving re gulatory ends. It indicates th at agencies “must take into account benefits and costs, both quantitative an d qualitative.” As note d, it draws explicit attention to the need to measure and to improve “t he actual results of regulatory requirements” – a clear reference to the importa nce of retrospective evaluation.

Executive 13563 reaffirms the principles, structures, and definitions in Executive Order 12866, which has long governed regulatory revi ew. In addition, it endorses, and quotes, a number of provisions of that Executive Order that specifica lly emphasize the importance of considering costs. Importantly, Executive Order 13563 directs agenci es “to use the best available techniques to quantify anticipated present and future benefits and co sts as accurately as possible.” This direction reflects a strong empha sis on quantitative analysis as a means of improving regulatory choices a nd increasing transparency.

135 Table 2-4 reports the top five rules with highest costs based on the primary agency estimates, or midpoints if only ranges are reported.

136 Available at http://www.whitehouse.gov/sites/default/files/omb/inforeg/eo12866/eo13563_01182011.pdf.

58Among other things, Executive Order 13563 elabor ates five new sets of requirements to guide regulatory de cisionmaking:

 Public participation . Agencies are directed to promot e public participation, in part by making supporting documents available on Regulations.gov to promote transparency and public comment. In this way, Executive Order 13563 attempts to move rulemaking into the era of the Internet. It also directs agencies, where feasible and appropriate, to engage the public, including affected stakeholders, before rulemaking

is initiated.

 Integration and innovation . Agencies are directed to attempt to reduce “redundant, inconsistent, or overlapping requirements,” in part by working with one another to simplify and harmonize rules. This impor tant provision is designed to reduce confusion, redundancy, and excessive cost. An important goal of simplification and harmonization is “to promote rather th an to hamper innovation,” which is a foundation of both growth and job creation. Di fferent offices within the same agency might work together to harmonize their rules; different agencies might work together to achieve the same objective. Such step s can also promote predictability and certainty

 Flexible approaches . Agencies are directed to identify and consider flexible approaches to regulatory problems, including warnings, appropriate default rules, and disclosure requirements. Such approach es may “reduce burdens and maintain flexibility and freedom of c hoice for the public.” In certain settings, they may be far preferable to mandates and bans, precisely because they maintain freedom of choice

and reduce costs. 137 Consistent with the recommendati ons in previous Reports, and in particular the recommendation for use of empirically informed, freedom-preserving, low-cost tools, this provision emphasizes the importance of cons idering appropriate default rules and ensuring that disclosure is “clear and intelligible.”

 Science . Agencies are directed to promote sc ientific integrity, and in a way that ensures a clear separation between judgme nts of science and judgments of policy.

 Retrospective analysis of existing rules . Agencies are directed to produce preliminary plans to engage in retrospective analysis of existing significant regulations to determine whether they should be modifie d, streamlined, expanded, or repealed. This provision, calling for careful evaluation of existing practices, fits closely with the suggestion in the first secti on of the Executive Order that our regulatory system “must measure, and seek to improve, the actu al results of regul atory requirements.”

Executive Order 13563 should be seen as addr essing both the “flow” of new regulations and the “stock” of existing re gulations. With respect to th e flow, Executive Order 13563 emphasizes the importance of promoting predicta bility, of carefully considering costs, of choosing the least burdensome approach, and of sel ecting the most flexible, least costly tools.

137 See, e.g., Kamenica, Mullainahtan & Thaler (2011).

59With respect to the stock, Executive Order 13563 calls for careful reassessment, based on empirical analysis. It is unders tood that the purely prospective analysis required by Executive Order 13563 may depend on a degree of speculation and that both costs and benefits may be lower or higher than what was anticipated. Af ter retrospective analys is has been undertaken, agencies will be in a position to reconsider exis ting rules and to streamline, modify, or eliminate

those that do not make se nse in their current form.

Retrospective analysis has l ong been recommended by informed observers. Consider this suggestion from Professor Michael Greenstone (recently Chief Economist at the Council of Economic Advisers): “The single greatest probl em with the current system is that most regulations are subject to a cost-b enefit analysis only in advance of their implementation. This is the point when the least is known and any an alysis must rest on many unverifiable and potentially controversial assumptions.” 138 By contrast, retrospectiv e analysis can help show what works and what does not, and in the process can help to promote repeal or streamlining of less effective rules and strengthening or expansio n of those that turn out to do more good than harm. Greenstone thus urges a series of reforms designed to “instill a cu lture of experimentation

and evaluation.” 139 These reforms include an effort to en sure that regulations are written and implemented in ways that lend themselves to experimental evaluation and creation of independent review to assess the effectiveness of regulations.

One of Greenstone’s principal themes involve s the importance of experimentation with respect to the likely effects of regulation. Such experimentation can take place in advance. It might, where feasible and consistent with law, ta ke the form of advance testing of regulatory alternatives, perhaps th rough pilot projects or randomized co ntrolled trials, followed by study of their consequences. 140 Pilot projects and randomized expe riments may well provide valuable

information about what interventions are likely to be most useful.

For example, the Department of Transpor tation’s National Highway Traffic Safety

Administration has initiated dist racted driving demonstration pr ograms in two communities to test whether a high visibility enforcement (HVE) model could reduce two specific instances of distracted driving – talking or te xting using a hand-held cell phone. 141 Syracuse, New York, and Hartford, Connecticut, (a combination of three contiguous cities – East Hartford, Hartford, and West Hartford) conducted the demonstrations. Be fore and after each enforcement wave, NHTSA

conducted observations of driver cell phone use and collected public awareness surveys at driver licensing offices in each test and comparison site.

According to early analysis, observed cell phone use decreased at both sites by the end of the second wave of the NHTSA’s program. Befo re the distracted driving programs began, observed cell phone use in Syracuse was about half that of the re st of the Nation and Connecticut

138 Greenstone (2009), at 13.

139 Id. , at 118.

140 See, e.g., Banerjee and Duflo (2011).

141 U.S. Department of Transportation, “Traffic Safety Facts: Research Note, High Visibility Enforcement Demonstration Programs in Connecticut and New York Reduce Hand-Held Phone Use,” available at http://www.distraction.gov/files/for-media/2010. 09.17-7268-TSF-RN-HighEnforcementCT-NY.pdf

60was close to average. 142 After the second wave of the high visibility enforcement campaign, hand-held cell phone use decreased 38% in Syracu se (from 3.7% to 2.3%) and 58% in Hartford (from 6.8% to 3.1%).

Consistent with Executive Order 13563, we re commend that agenci es create long-term structures and processes for analyzing the actu al effects of significant rules, with special attention to those that are most expensive or burdensome. OIRA is now working closely with agencies to promote compliance with the retrosp ective analysis requirements of Executive Order 13563. The preliminary plans for retrospective review, released on May 26, 2011, demonstrate that the relevant process is we ll under way. In those plans, agen cies identify hundreds of possible reforms, with immediate savings in the hundreds of millions of dollars and with potential savings

in the billions of dollars. 143 Notably, many of the ideas on the plans are a product of public input, following a request for commen ts on potential reforms.

To offer just a few examples:

 The Occupational Safety and Health Administ ration (OSHA) issued a final rule that will remove over 1.9 million annual hours of redundant reporting burdens on employers and save more than $40 million in annual costs. 144

 Since the 1970s, milk has been defined as an “oil” and subject to costly rules designed to prevent oil spills. In res ponse to objections from the agriculture community and the President’s directive, EPA concluded that the rules placed unjustifiable burdens on dairy farmers a nd exempted them. The projected annual savings are $140 million. 145

 OSHA plans to finalize a proposed rule projected to result in an annualized $585 million in estimated savings for employers. This rule would harmonize U.S. hazard

142 NHTSA observes, however, that both States have had hand-held cell phone bans while driving for some time –

2001 for New York and 2005 for Connecticut. The laws alone may have served to keep these States at or below the national average, but the addition of high visibility enforcement and media emphasizing the enforcement drove the rates down even lower. High levels of national media and ce lebrity attention to distracted driving, such as by the Oprah Winfrey Show, may account for some of the high public awareness of the issue and for the steady declines in observed hand-held cell phone use in the control sites and among women in three of the five sites overall.

143 The preliminary plans can currently all be vi ewed at “Regulation Reform,” available at http://www.whitehouse.gov/21stcenturygov/actions/21st-cent ury-regulatory-system. Many agencies will also publish their preliminary plans online on their Open Government Webpages (www.agency.gov/open).

144 Department of Labor, Preliminary Plan for Retrospective Analysis of Exisiting Rules , p. 8, available at http://www.whitehouse.gov/files/documents/2011-regulatory-action

plans/DepartmentofLaborPreliminaryRegulatoryReformPlan.pdf

145 Environmental Protection Agency, Improving Our Regulations: A Preliminary Plan for Periodic Retrospective Reviews of Existing Regulations , pp. 13-14, available at http://www .whitehouse.gov/files/documents/2011­ regulatory-action-plans/EnvironmentalProtectionAgencyPreliminaryRegulatoryReformPlan.pdf

61classifications and labels w ith those of a number of other nations by requiring the adoption of standardized terms. 146

 To eliminate unjustified economic burde ns on railroads, the Department of Transportation is reconsidering parts of a rule that requires railroads to install equipment on trains. DOT expects initial savings of up to $400 million, with total 20­ year savings of up to $1 billion. 147

 The Environmental Protection Agency will propose to eliminate the obligation for many states to require air pollution vapor re covery systems at local gas stations, on the ground that modern vehicles alrea dy have effective air pollution control technologies. The anticipated a nnual savings are about $67 million. 148

 The Departments of Commerce and State ar e undertaking a seri es of steps to eliminate unnecessary barriers to export s, including duplicative and unnecessary regulatory requirements, thus reducing the cumulative burden and uncertainty faced by American companies and their trading partners. 149

 To reduce administrative burdens and incr ease certainty, the Department of the Interior is reviewing outdated regulati ons under the Endangered Species Act to streamline the process, to reduce requirements for written descriptions, and to clarify and expedite procedures for appr oval of conservation agreements. 150

 To promote flexibility, the Department of Health and Human Services will be reconsidering burdensome regulatory requi rements now placed on hospitals and doctors, to ask whether these requirements are redundant and whether they really benefit patients. 151

146 Department of Labor, Preliminary Plan for Retrospective Analysis of Exisiting Rules , pp. 8-9, available at http://www.whitehouse.gov/files/documents/2011-regulatory-action

plans/DepartmentofLaborPreliminaryRegulatoryReformPlan.pdf

147 Department of Transportation, Draft Preliminary Plan for Implementation of Executive Order 13563: Retrospective Review and Analysis of Exisiting Rules , p. 20, available at http://www.whitehouse.gov/files/documents/2011-regulatory-action

plans/DepartmentofTransportationPreliminaryRegulatoryReformPlan.pdf

148 Environmental Protection Agency, Improving Our Regulations: A Preliminary Plan for Periodic Retrospective Reviews of Existing Regulations , pp. 9, 16, available at http://www.whitehouse.gov/files/documents/2011­ regulatory-action-plans/EnvironmentalProtectionAgencyPreliminaryRegulatoryReformPlan.pdf.

149 Department of Commerce, Preliminary Plan for Retrospective Analysis of Exisiting Rules , available at http://www.whitehouse.gov/files/documents/2011-regulatory-action

plans/DepartmentofCommercePreliminaryRegulatoryReformPlan.pdf

150 Department of the Interior, Preliminary Plan for Retrospective Regulatory Review , pp. 10-114, available at http://www.whitehouse.gov/files/documents/2011-regulatory-action

plans/DepartmentoftheInteriorPreliminaryRegulatoryReformPlan.pdf

151 Department of Health and Human Service, Preliminary Plan for Retrospective Review of Exisiting Rules , pp. 6­ 13, available at http://www.whitehouse. gov/files/documents/2011-regulatory-actionplans/HealthandHumanServicesPre liminaryRegulatoryReformPlan.pdf

62To create a process of retrospe ctive analysis, and a continuing culture of both prospective and retrospective evaluation, OMB recommends that agencies use the best available techniques to assess the consequences of regulation, both as part of retrospective re view and in the initial design of rules. As we have noted, a possible a pproach involves randomized controlled trials, in which regulatory initiatives are us ed in some domains but not in similarly situated others, thus allowing a careful analysis of their effects. 152 Of course there are c onstraints – involving law, resources, and feasibility – in using randomized c ontrol trials in the regul atory context, but in some cases, they may be both appropriate and highly useful.

The preliminary plans offer releva nt discussion. For example, DHS states that it will “build in retrospective revi ew at the earliest stages of regulatory development.” 153 Its plan calls for the Department’s component agencies to “inc orporate a discussion of retrospective analysis goals into their rulemaking project planning” in order “to ensure that the component considers retrospective analysis through the lifespan of the regulation.” 154 The Department of Labor provides that it “is contemplati ng how to incorporate the use of experimental designs to determine the impact of various regulations.” 155 The Department of Interior states that it “will consider” the use of “experimental or quasi-experimental designs, including randomized

controlled trials.” 156 Similarly, the Department of Treas ury states that it will work to “ develop and incorporate experimental designs into retrospective analysis, when appropriate.” 157

More generally, retrospective re view of regulations should be conducted so as to provide a transparent and credible process for evaluati ng both costs and benefits. Agencies might, for example, announce in advance that they are conducting a retrospective evaluation; they might specify the measures of costs and benefits that they will use; they might work with outside experts to promote objectivity. Disc losure policies are an obvious candidate for such evaluations. Consistent with the goals of open government, ag encies might post the materials that underlie and follow the analysis so as to promote assessment and scrutiny by others.

The larger point is that the retrospec tive analysis require d by Executive Order 13563 should by no means be regarded as a one-shot endea vor. It should be seen as an effort to produce a consistent culture of experi mentation and reassessment and careful, objective evaluation of existing requirements.

152 See Greenstone (2009) and, in other contexts, Banerjee and Duflo (2009).

153 Department of Homeland Security, Preliminary Plan for Retrospective Review of Existing Regulations , p. 27, available at http://www.whitehouse.gov/files/documents/2011-regulatory-actionplans/DepartmentofHomelandSecurityPreliminaryRegulatoryReformPlan.pdf

154 Id.

155 Department of Labor, Preliminary Plan for Retrospective Analysis of Existing Rules , p., 20, available at http://www.whitehouse.gov/files/documents/2011-regulatory-action

plans/DepartmentofLaborPreliminaryRegulatoryReformPlan.pdf.

156 Department of the Interior, Preliminary Plan for Retrospective Regulatory Review , p. 19, available at http://www.whitehouse.gov/files/documents/2011-regulatory-action

plans/DepartmentoftheInteriorPreliminaryRegulatoryReformPlan.pdf

157 Department of the Treasury, Preliminary Plan for Retrospective Analysis of Existing Rules , p. 19, available at http://www.whitehouse.gov/files/documents/2011-regulatory-action

plans/DepartmentoftheTreasuryPrelim inaryRegulatoryReformPlan.pdf.

63It is worth observing that there is an inci pient literature on the practice of regulatory “look back.” A recent study by Harrington, building on previous work, explores 61 rules for

which benefit-cost ratios could be compared ex ante and ex post. 158 The author identifies various reasons that agency and OMB estimates coul d leave some benefits and costs uncounted. 159 For the 61 rules analyzed, he finds that both benefits and costs were overestim ated “with about equal frequency.” 160 Specifically, in sixteen of the cases, the ratios were found to be accurate (plus or minus 25%). 161 In twenty-four cases, the rule s showed a better benefit-cost ratio than anticipated. In twenty-one cases, the rules showed a worse be nefit-cost ratio than anticipated. Harrington’s general conclusion is that while both costs and be nefits turn out to be lower than prospective estimates, there is “no bias in estimates of benefit-cost ratios.” 162

While Harrington focuses on benefit-cost ratios (and does not specify the degree to which these costs or benefits were separately misestimat ed), he refers to other studies that offer more disaggregated evaluations, at leas t of regulatory costs. One study, for example, compares ex post costs to ex ante estimates for eleven energy effi ciency standards for household appliances issued

between 1982 and 1995. 163 Of those, the researchers found that ex ante costs were overestimated

for five of the rules and accurate for th e remaining six (using the same 25% range). 164 Another study analyzed 25 environmental and occupational safety regulations for which ex post data

could be located. It found that total costs were ov erestimated for twelve rules; accurate in five; underestimated in two; a nd indeterminate for six. 165 The authors argue that the overestimation of total costs were often due to errors in the qua ntity of emission reductions achieved, driven by both baseline and compliance issues.

A study by the Office of Technology Assessmen t examined six regulations of the Occupational Safety and Health Administration (OSHA) and f ound that four rules had lower actual compliance costs than anti cipated, while two were “reasona bly” accurate. Overall, the report concluded that “the actua l compliance response that was observed included advanced or

innovative control measures that had not been emphasized in the rulemaking analyses, and the actual cost burden proved to be consider ably less than what OSHA had estimated.” 166

158 Harrington (2006).

159 Specifically, Harrington argues that cost estimates are primar ily focused on compliance expenditures, and thus exclude important cost categories such as employee training; management attention; discouraged innovation and investment; tax distortion effects, as well as the costs of rent-seeking (unproductive behavior undertaken by firms and individuals to influence regulatory decisions). Similarly, he contends that measurable benefits “tend to be concentrated types of public goods where the connections fro m the regulation to a physical effect that people value are clear, and where economists have been able to develop valuation methods that approximate individual willingness to pay for changes in those effects.” As such, benefits that fail to meet these criteria often remain uncounted, such as the more-difficult-to-measure benefits of, say, ecological preservation. Id. , at 10. In addition to rules that fail to qualify for the 10-year look-back, Harrington also contends that “nearly 90 percent of the rules that [are] reviewed by OMB do not enter the benefit and cost estimate because they are nonmajor rules, which means primarily that each has an estimated cost and benefit that is less than $100 million per year.”

160 Id. , at 37.

161 Id. , at 22 (“An ex ante estimate was considered accurate if [the benefit-cost ratio la y between 0.75 and 1.25.”).

162 Id

. 163 Dale et al. (2002).

164 Id. (see Table 2, with OMB’s calculations using the 25% accuracy range).

165 Harrington, Morgenstern & Nelson (2010).

166 Office of Technology Assessment (1995).

64In its 2005 Report, OMB provided an overview of various retrospective analyses, based

on an examination of 47 case studies. 167 There were three key conclusions. First, agencies accurately estimated benefits over one-third of the time, and they were more likely to overestimate

benefits than to underestimate them. 168 More particularly, agencies overestimated benefits 40% of the time, whereas they underestimated benefits onl y 2% of the time. Second, agencies tended to overestimate the benefit-cost ratio; agency estimates were accurate 23% of the time, while the ratio was overestimated 47% of the time and underestimated 30% of the time. Third, agencies were slightly more likely to overestimate than to underestimate costs; agencies were accurate 26% of the time, overestimated 34% of the time, and underestimated 26% of the time. At least from this study, it does not appear correct to conclude that agencies have systematically underestimated the ratio of benefits to costs, or that the benefits of rules usually turn out to be higher than anticipated.

Consistent with Executive Order 13563, we beli eve that a great deal more should be done to improve prospective analysis through empirical research, to compare prospective to retrospective estimates, to improve prospectiv e analysis accordingly, and to streamline, expand, modify, or repeal regulations in accordance wi th what was been learned. There are many opportunities for undertaking and improving retrospective analysis. As part of the effort to promote transparency by sharing more data onlin e, agencies could enable external experts to undertake ex post analyses of the benefits and co sts of regulations. For example, a number of agencies have external boards of technical experts. These boar ds could be asked to provide guidance to the regulatory agen cies on how they should collect, compile, and post online data that would enable non-governmental experts to estimate the realized be nefits and costs of regulations. This information co uld be organized and presented so as to facilitate full benefitcost analyses where feasible, and where not feasible, to generate appropriate measures of costeffectiveness.

We have previously observed that on January 18, 2011, President Obama signed a memorandum emphasizing agency obligations under the Regulatory Flexibility Act. 169 Drawing attention to the job-creating f unction of small businesses, a nd their centrality to economic growth, the Memorandum asks agencies to justif y any decision not to provide flexibility for small business – in the form, fo r example, of delayed complian ce dates and partial or total exemptions. A central goal of this Memorandum is to direct agencies to pursue regulatory objectives with careful attention to the risk of imposing excessive or unjustified burdens on small

businesses.

B. Improving Analysis

With its emphasis on accounting for both cost s and benefits and for minimizing costs,

Executive Order 13563 stresses the need for sound analysis. OMB Circular A-4 continues to

167 See OMB, Validating Regulatory Analysis: 2005 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities (2005), pp. 46-47, available at http://www.whitehouse.gov/sites/defa ult/files/omb/assets/omb/inforeg/ 2005_cb/final_2005_cb_report.pdf

168 As in the Harrington (2006) study, OMB’s 2005 report us ed the term “accurate” to mean “that the post-regulation estimate is within +/- 25 percent of the pre-regulation estimate.” Id. , at p. 42.

169 Available at http://www.whitehouse.gov/sites/defa ult/files/omb/inforeg/for-agencies/POTUS-Memo-onRegulatory-Flexibility-Small-Business-a nd-Job-Creation-01-18-2011.pdf.

65provide governing principles. 170 The “Agency Checklist for Regulatory Impact Analysis,” issued on November 3, 2010, and provided as an appendix to this Report, briefly summarizes the central requirements. 171 Executive Order 13563 explicitly highlight s the importance of quantification of both costs and benefits and of using the best av ailable techniques for increasing accuracy. We briefly discuss several issues here.

1. Quantification, nonquantifiable vari ables, and breakeven analysis.

a. Quantification and its limits . A significant goal of Executive Order 13563 is to promote quantification of both benefits and costs and to ensure, to the extent permitted by law, that agencies proceed only after a reasoned determination that the benefits justify the costs. To that end, Section 1(c) states, “each agency is di rected to use the best available techniques to quantify anticipated present and future benefits an d costs as accurately as possible.” Past practice suggests that quantification of th e central benefits and costs is often possible and that such quantification permits a reasoned judgment about the approach that maximizes net benefits. But the same section adds, “Where appropriate and pe rmitted by law, each agency may consider (and discuss qualitatively) values th at are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts.”

It should be clear that such values, where relevant, come in different (if sometimes overlapping) categories.

 The issue may involve specifying the magnitude of relevant effects . An agency may know, for example, that a rule will reduce the risk of a terrorist attack, but it may not be able to quantify the reduction and thus be unable to convey the extent of the

reduced risk. Alternativ ely, a technology-based rule may inhibit innovation and impose unknowably higher costs than an e quivalent performance-based rule. The direction of an effect may be clear, but the magnitude may be difficult or impossible to specify.

 The issue may involve monetization . An agency may know, for example, that a particular rule will have a beneficial e ffect on ecosystems and likely will preserve a known number of a certain species of fish, but it might not be able to translate that effect into monetary equivalents.

 A rule may have significan t beneficial or adverse distributional effects on lower income groups. Those effects may or may not themse lves be quantifiable; perhaps the agency is aware that poor people will be pa rticularly affected, but perhaps it is unable to say to what degree. Even when quantific ation of the relevant effects is possible, they are not easily used as part of a st andard analysis of costs and benefits.

 A rule might be designed to protect human dignity. It might, for example, reduce the incidence of rape, or a llow wheelchair-bound employees to have easier access to bathrooms. Alternatively, an adverse eff ect on human dignity may be an unintended

170 Available at http://www.whitehouse.gov/omb/circulars_a004_a-4/.

171 Available at http://www.whitehouse.gov/sites/defa ult/files/omb/inforeg/regpol/RIA_Checklist.pdf.

66cost of a rule. For example, a security ru le might involve body searches or scans that some might consider to be an i nvasion of dignity or privacy.

 A rule might be designed to protect fairness. It might, for example, prohibit

discrimination on the basis of sexual orientat ion with respect to certain government benefits, or it might ban sexual harassment.

 A rule might be designed to protect equity . It might, for example, prohibit insurance companies from declining health insuran ce to children with preexisting conditions.

An effect might, of course, fall in more th an one category. For example, the line between “fairness” and “equity” is not always simple or sharp. A rule that is meant to protect lower income groups may have relevant distributive imp acts; it might also be an effort to promote equity. A rule that forbids deception may have a standard economic just ification as well as a justification in terms of equity. A rule may also have nonquan tifiable effects that run counter to each other. For example, a rule that is intended to promote fairness of a certain kind may have adverse economic consequences for lower-income individuals. 172

b. Transparency

.

It is not always easy to decide how to treat va riables of this kind as part of the analysis required by Executive Orders 13563 and 12866. The a ppropriate initial step is to promote transparency. OMB has previously recommende d that the best practice is to accompany all significant regulations with (1) a tabular presentation, placed prominently and offering a clear statement of qualitative and quantitative benef its and costs of the proposed or planned action, together with (2) a presentation of uncertainti es and (3) similar information for reasonable alternatives to the proposed or planned action. 173

A key advantage of this approach is that it promotes transp arency for the public. If, for example, it is possible to quantify certain benefits (such as protecti on of water quality) but not to monetize them, then the public should be made awar e of that fact. At the same time, qualitative discussion of nonquantifiable benefits and co sts should help the public, and relevant decisionmakers, to understand the goal of the regulation and how it might achieve that goal.

The focus on transparency should help in the implementation of Section 1(c) of Executive Order 13563. Suppose, for example, that a regulation will have especially high benefits for lower income groups, or will impos e especially high costs on them. It may be appropriate for agencies to offer such informati on in connection with proposed or final rules. And if a rule would promote human dignity – by reducing the incidence of sexual violence or by increasing the independence of disa bled people – and if that effect is relevant under existing law, agencies should so state.

172 Cf. Kaplow and Shavell (2002).

173 See Office of Management and Budget, Office of Information and Regulatory Affairs, 2009 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities , at p. 42, available at http://www.whitehouse.gov /omb/inforeg_regpol_reports_congress/

67Executive Order 13563, echoing Executive Order 12866, specifically states that agencies must “select, in choosing among alternative re gulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity )” (emphasis added). In assessing the approach that maximizes net benefits, quantified benefits and quantified costs are generally the relevant variables. But in some cases, the benefi ts and costs of a rule may include distributive impacts, fairness, equity, and dignity; agencies are en titled to refer to that f act and to consider the

relevant effects.

c. Prioritization and breakeven analysis

.

Transparency is important, but even when it exists, agencies face serious challenges in resolving the question when and how to procee d when important effects cannot be quantified. We have noted that in some cases, various eff ects can be quantified even if they cannot be

monetized. We have also noted th at distributional eff ects can sometimes be quantified even if they are not part of standard an alysis of costs and benefits.

For agencies to know how to weigh the relevant values, the governing law is crucial, and it is important for agencies to try to evaluate and rank such values to give a sense of their relative significance. In terms of the rele vant values, a rule may have si gnificant benefits or relatively small ones. For example, a water pollution ru le might cover a large or small number of ecosystems, and those systems may or may not be ecologically significant. To the extent feasible, and with close reference to governing la w, agencies should give a sense of the relative magnitude and importance of nonquantifiable variables.

When quantification and monetization are not possible, many agencies have found it both useful and informative to engage in “breakeven analysis.” Under this ap proach, agencies specify how high the unquantified or unmonetized benefits w ould have to be in order for the benefits to justify the costs. Suppose, for example, that a regulation that protects water quality costs $105 million annually, and that it also has significant effects in reducing pollution in rivers and

streams. It is clear that the regulation would be ju stified if and only if those effects could reasonably be valued at $105 million or more. Once the nature and extent of the water quality benefits are understood, it might well be easy to s ee whether or not the benefits plausibly justify the costs – and if the question is difficult, at leas t it would be clear why it is difficult. Breakeven analysis is an important tool, and it has analytic al value when quantification is speculative or impossible.

Executive Order 13563 places a strong emphasis on quantification, and it is hoped that it will be increasingly possible to use improving available techniques both to quantify and to

monetize relevant variables. But where this is not possible, breakeven analysis can help to produce both transparency and informed judgment . We also recommend that to the extent feasible, agencies make efforts to rank and pr ioritize nonquantifiable vari ables, so that such variables can be properly evaluated and used to supplement and inform judgment, and not as a freestanding, ex post justification of rules.

682. Cost-per-life-saved of Health and Safety Regulation

For regulations intended to reduce mortality risk s, an important analytic tool that can be used to assess regulations, and to help avoid unjus tified burdens, is cost-effectiveness analysis. Some agencies develop estimates of the “net cost per life saved” for regulations intended to improve public health and safety. To calculate this figure, the costs of the rule minus any monetized benefits other than mortality reducti on are placed in the numerator, and the expected reduction in mortality in terms of total number of lives saved is placed in the denominator. This measure avoids any assignment of monetary valu es to reductions in mortality risk. It does reflects, however, a concern for economic efficiency, insofar as choosing a regulat ory option that reduces a particular mortality risk at a lower net cost to society would conserve scarce resources compared to choosing an option that would re duce the same risk at greater net cost.

Table 2-5 presents the net cost per life saved for twelve recent health and safety rules for which calculation is possible. The net cost per li fe saved is calculated using a 3 percent discount rate and using the agencies' best estimates for costs and expected mortality reduction. As is apparent, there is substantial variation in the net cost per life sa ved by these rules.

Table 2-5: Estimates of the Net Costs per Life Saved of Selected Health and Safety Rules Reviewed by OMB in Fiscal Year 2009-2010 (millions of 2001 dollars)

Agency Rule Net Cost per

Life Saved Notes

HHS/FDA Prevention of Salmonella Enteritidis in Shell Eggs Negative Morbidity benefits exceed costs.

DOL/OSHA Cranes and Derricks in

Construction $4.9 The agency estimates that the rule will prevent 22 fatalities and 175 nonfatal injuries annually. Total costs associated with the rule are $150 million annually

at 3%. The monetized value of the injuries prevented is $11 million and the property damage prevented is valued at $7 million. If we subtract the injury and property benefits from costs, the net cost per life saved is thus approximately $6 million (2010 dollars). Adjusting to 2001 dollars yields roughly $5 million.

DOT/FMCSA New Entrant Safety Assurance

Process Negative Property damage and morbidity benefits

exceed costs.

69Agency Rule Net Cost per

Life Saved Notes

DOT/FRA Positive Train Control $235.1 The agency estimates the present value of fatality reduction benefits is $267 million over 20 years using a VSL of $6 million, implying the prevention of approximately 3 fatalities per year. Theagency also estimates the total nonfatality related benefits over 20 years of $407 million implying annual value of $27.3 million. Total costs associated with the rule are $880 million annually. If we subtract the non-fatality related benefits from costs, the net cost per life saved is roughly $284.2 million in 2009 dollars. Adjusting to 2001 dollars yields $235.1 million per life saved.

DOT/NHTSA Reduced Stopping Distance Requirements for Truck

Tractors Negative Property damage benefits exceed costs.

DOT/NHTSA Roof Crush Resistance $6.4 to $11.0 The agency estimates that the rule will prevent 135 fatalities and 1065 nonfatal injuries annually. These figures translate into 156 equivalent fatalities. The main estimates value equivalent fatalities prevented at $6.1 million. It follows that the value of nonfatal injuries prevented is $6.1 million * (156 - 135) = $128.1 million annually. Total costs associated with the rule range from $875 million to $1400 million annually. If we subtract the injury benefits from costs, the range of net cost per life saved is thus $5.5 million to $9.4 million (2007 dollars). Adjusting to $2001 yields $6.4 million to $11.0 million.

DOT/PHMSA Pipeline Safety: Distribution Integrity Management Negative Benefits from reduced injuries, reduced property damages, and reduced lost gas

exceeds costs.

EPA/AR NESHAP: Portland Cement

Notice of Reconsideration Negative Morbidity benefits exceed costs.

EPA/AR Review of the National Ambient Air Quality Standards for Sulphur Dioxide Negative Morbidity benefits exceed costs.

EPA/AR National Emission Standards

for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines (Diesel) $0.9 to $2.2 The agency estimates that the rule will prevent 110 to 270 fatalities annually.

Total costs associated with the rule are $355 million annually at 3%. The monetized value of the morbidity benefits is $66 million. If we subtract the morbidity benefits from costs, the net cost per life saved is approximately $1.1­ $2.2 million (2008 dollars). Adjusting to 2001 dollars yields roughly $0.9 million to $2.2 million.

70Agency Rule Net Cost per

Life Saved Notes

EPA/AR National Emission Standards

for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines--ExistingStationary Spark Ignition (GasFired) $1.2 to $1.5 The agency estimates that the rule will prevent 56 to 140 fatalities in 2013.

Total costs associated with the rule are $244 million annually at 3%. The monetized value of the morbidity benefits is $36 million. If we subtract the morbidity benefits from costs, the net cost per life saved is approximately $1.5­ $3.1 million (2008 dollars). Adjusting to 2001 dollars yields roughly $1.2 million to $1.5 million.

EPA/OPPTS Lead; Amendment to the Optout and Recordkeeping Provisions in the Renovation, Repair, and Painting Program Negative Morbidity benefits exceed costs.

This table is designed to be illustrative rath er than definitive, and continuing work must

be done to ensure that estimates of this kind are complete and not misleading. For example, some mortality-reducing rules have a range of ot her benefits, including re ductions in morbidity, and it is important to include these benefits in cost-effectiveness analys is. Other rules have benefits that are exceedingly di fficult to quantify but nonetheless essential to cons ider; consider rules that improve water quality or have aesthetic benefits. Noneth eless, it is clear that some rules are far more cost-effective than others, a nd it is valuable to ta ke steps to catalogue

variations and to increase the likelihood that s carce resources will be used as effectively as possible.

In evaluating cost-effectiveness, it is importa nt to note that OMB Circular A-4 observes that the majority of estimates of a value of a statistical lif e (VSL) fall within a $1 million-$10 million range, 174 and that agency practice generally falls within the upper half of that range. 175
While considerable progress has been made si nce 2000, and while some analysts believe that significant narrowing has occurred, the literature has not “settl ed” on any single number. There are, however, recent accounts of the appropriate range. That ra nge includes estimates in the vicinity of $8.86 million from what may well be the most influential meta-analysis, 176 as well as $6.84 million and $6.4 million (all in 2010 dollars ) from two other recent meta-analyses. 177 It is generally agreed, of course, that numbers s hould be updated for annual income growth. The

relevant numbers should be taken into account when considering cost-effectiveness analysis.

Our emphasis on this section is on decreased mortality rates, but we note that some

observers 178 have suggested the importance of analyz ing and reporting lost life expectancy.

174 OMB refers to the meta-analyses by Mrozek and Taylor (2002) and Viscusi and Aldy (2003) as sources of this range: Both examine only the hedonic wage literature.

175 See note 20, supra.

176 Viscusi and Aldy (2003)

177 Kochi (2006) and Bellavance (2009)

178 Including Peer Reviewer Christine Jolls, see Appendix G and her peer report, available at http://www.whitehouse.gov/omb/inf oreg_regpol_reports_congress

.

71Commentators have noted the possibility that fo r some rules, measures of decreased mortality rates may well capture cases in which people have died a few days or a few weeks before they

would have in the absence of re gulatory controls. OMB Circular A- 4 authorizes th e use of lost life-years as one way of analyz ing the effects of regulation.

3. Private vs. social benefits and losses

.

As emphasized by OMB Circular A-4, a standard argument for regulation of private markets points to social benefits that cannot readily be produ ced by such markets. For example, firms may fail to internalize the health damages cau sed by the air pollution that they emit. Many regulations provide such social benefits. Insofar as they reduce air pollution, fuel economy rules and energy efficiency rules are examples.

Such rules also provide private benefits. They may increase the cost of products at the point of purchase, but also reduce costs on balance by, for example, reducing the cost of operating a vehicle. In principle and sometimes in practi ce, the resulting benefits to consumers are substantial. In some cases, the economic benef its to consumers far exceed the costs of the

relevant rule.

As agencies have recognized, however, the ex istence of such “priva te benefits” creates certain puzzles, at least on standard economic assumptions. If consumers are informed, they should, on those assumptions, seek and purchase th e relevant products, simply because it is in

their economic interest to do so. And to the extent that this is so, regulations that require products to have increased levels of (say) energy efficiency may cause consumers to purchase products that they have knowingly rejected. In this case, there is at least a question whether it is appropriate to count fu el or energy savings as a benefit. Such regulations may also reduce consumer welfare by causing individuals to purcha se products that they would otherwise reject. For example, such products may lack features that consumers prefer, or may have features that consumers do not like, in whic h case the regulations impose a welfare loss that should be

counted in the overall assessment. If regulations that produce economic savings through energy efficiency also produce a loss to consumer welfare, that loss should be take n into account in the analysis.

A departure from the standard economic analys is of these problems is appropriate when

consumers lack relevant information or suffer from some kind of bias at the time of decision. It is possible, for example, that energy efficiency, a nd the savings from energy efficient products, are not sufficiently clear or salient to consumers at the time of purchase; a literature on “shrouded attributes” explores this possibility. 179 It is also possible that consumers are focusing unduly on the short-term and that they do not take suffi cient account of long-term gains. And indeed, a growing literature, focusing on the Energy Paradox, 180 attempts to explain why consumers are not purchasing certain goods even though it is in their ec onomic interest to do so. To the extent

that a lack of information or a relevant bias acco unts for consumer behavior, it is appropriate to

179 Gabiax and Laibson (2006).

180 For discussion, see, for example, Ja ffe and Stavins (1994) (examining the factors that influence public adoption of energy-conserving technologies and the potential effects of regulation).

72include private savings as a benefit, and th ere may be little or no accompanying consumer

welfare loss.

The empirical literature on this topic, while s uggestive, remains in its preliminary stages. We recommend continued exploration of these issues, with particular attention to the circumstances in which a lack of information and potential errors or biases on the part of consumers are likely to support regulatory interventions and to just ify an accounting of private savings. We also recommend that agencies should cl early separate social and priv ate savings in their Regulatory Impact Analyses, and that when private savings are included, agencies should give careful attention to the conceptual and empirical issues.

C. E-Rulemaking: Improving the Regulatory Process

Under Executive Order 13563, agencies are dire cted to promote public participation and in particular to provide the public with “ timely online access to the rulemaking docket on Regulations.gov , including relevant scientific and technical findings, in an open format that can be easily searched and downloaded.” OIRA re mains committed to using technology to improve transparency and to increase public participation in the regulatory proces s. Among other things,

OIRA has issued a series of memoranda to provide agencies with practical guidance for improving access to regulatory actions and thei r supporting justifications. These memoranda should be seen as a beginning of more ambitious efforts, consistent with Executive Order 13563, to promote understanding of and participation in rulemaking, with the ultimate goal of improving the substance of rules through ta pping the diverse perspectives and dispersed knowledge of the American people.

 In April 2010, OMB published “Increasing Open ness in the Rulemaking Process – Use of the Regulation Identifier Number (RIN), ” a memorandum that aims to promote greater openness by requiring Federal agencies to use the Regulation Identifier Number (RIN) on all relevant documents throughout the entire “lifecycle” of a rulemaking. 181 By using the RIN as the key identifier on all related docke t materials, the government will be better able to use technology to assemble electronic dockets and will help the public to have easier and more comprehensive access to regulatory information.

 In May 2010, OMB published “Increasing Op enness in the Rulemaking Process – Improving Electronic Dockets,” to improve public access to regulatory information by requiring Federal agencies to compile and ma intain comprehensive electronic regulatory dockets on Regulations.gov. 182 This memorandum states that to the extent that they are part of rulemaking, supporting materials (such as notices, significant guidance documents, environmental impact statements, regulatory impact analyses, and information collections) should be made av ailable during the notice-and-comment period by being uploaded and posted as part of the electronic docket. Thes e materials should be

181 Available at http://www.whitehouse.gov/sites/default/files/om b/assets/inforeg/IncreasingOpenness_04072010.pdf . Executive Order 12866, Sec. 4(b) requires each regulatory actio n in the Unified Regulatory Agenda—a semiannual compendium of all regulations under development or review—to contain, among other things, a RIN.

182 Available at http://www.whitehouse.gov/sites/default/f iles/omb/assets/inforeg/edocket_final_5-28-2010.pdf

73in machine-readable format to enable the public to perform full-te xt searches of the documents and to extract information. (This memorandum is consistent with Executive Order 13563, which specifically emphasizes the importance of providing the public with relevant information, including scientific and technical findings, on Regulations.gov, with an opportunity for comment.)

 In November 2010, OIRA worked with the eRulemaking Program Management Office (PMO) and Federal agencies to publish a best practices document, titled “Improving

Electronic Dockets on Regulations.gov and th e Federal Docket Management System – Best Practices for Federal Agencies.” The document outlines strategic goals and best practices to improve agency use of the Fede ral Docket Management System (FDMS) and Regulations.gov . The document also seeks to establish a common taxonomy and adoption of data protocols for the various rule making and non-rulemaking docket and document

types. 183

The two memoranda and the best practices document establish a new commitment to improving the public’s ability to find regulator y documents and inclusive docket information— thus promoting public participation in the Federa l regulatory process a nd collaboration between the Federal agencies and the public. Efforts to measure compliance with these initiatives continue. An ultimate goal of this emphasis on participation is to improve the content of rules by bringing diverse perspectives to bear. In his Memorandum on Open Government, President Obama noted, “Knowledge is widely dispersed in society, and public officials benefit from having access to that dispersed knowledge.” A central purpose of increased participation is to tap that widely dispersed knowledge in the rulema king process. If, for example, a proposal would create special hardships for small business, or deliver important bene fits to disadvantaged groups, it is important for offici als to obtain that information.

OIRA’s work with the Regulatory Informati on Service Center (RISC) has also led to many recent enhancements to Reginfo.gov , a website that displays regulatory actions and information collections currently at OIRA for review. In February 2010, RISC launched an OIRA “dashboard” and redesigned Reginfo.gov . Th e OIRA dashboard uses an interactive display to present information a bout rulemakings under review and a llows the public to sort rules by agency, length of review, stage of rulema king, and economic significance. During the 2010 calendar year, Reginfo.gov received a cumulative tota l of nearly one million page views; since

the addition of the OIRA dashboar d, the website has seen a 28 per cent increase in the number of site visitors, tota ling 169,549 visitors. 184

As a result of recent improvements, Regulations.gov provides th e public with easier access to regulatory documents and the regulatory process. The improvements include the ability

183 These strategic goals include 1) increasing the pub lic’s access to regulatory content; 2) building a common taxonomy and protocols for managing dockets and regulatory documents; and 3) compiling comprehensive

electronic dockets and increasi ng agency efficiency. The docu ment also details plans for system enhancements to

FDMS and Regulations.gov , as well as new interfaces th e RISC/OIRA Consolidated In formation System (ROCIS) to reduce agency burdens in managing regulatory dockets by pre-populating electronic dockets in FDMS based on existing information in the Unified Agenda.

184 Reginfo.gov site statistics for site visitors were measur ed by comparing March 1-December 31, 2010 data sets to March 1-December 31, 2009 data sets.

74to conduct searches within a doc ket, a regulatory topics index, and posting of public comments, as well as a link to helpful videos on the YouTube channel and other sites. 185 In May 2009, and again in January 2010, the eRulemaking PMO la unched Regulations.gov/Exchange, an on-line forum to promote interaction with the public and to foster open di alogue among all users, including industry, public interest groups, trade associations, and state and local governmental entities. During the 2010 calendar year, Regulat ions.gov received a cumulative total of 123 million page views; since the addition of these new site features and functions, the site has seen a 31 percent increase in the number of site visito rs, totaling 190 million. The site also received approximately 306,000 web form comments in 2010. 186

OMB continues to support these and other e fforts to use technological advances to facilitate transparency and increase public participation in the re gulatory process. We recommend continued efforts to improve them, with the central goal of improving the understanding and substance of rules.

D. Regulatory Cooperation

In the current economic climate, and consistent with the President’s emphasis on promoting exports, the Administra tion recognizes the importance of increased trade and exports to economic growth, job creation, entrepreneursh ip, and innovation. To promote those goals, OIRA is participating in a number of regulatory c ooperation initiatives with key trading partners. For example:

 Since 2005, OIRA has co-chaired the Eu ropean Commission-United States HighLevel Regulatory Cooperation Forum, wh ich reports to the Cabinet-level

Transatlantic Economic Council.

 In May 2010, President Obama and Mexican President Felipe Calderón established a High-Level Regulatory C ooperation Council, which is also cochaired by OIRA and is comprised of seni or-level regulatory, trade, and foreign

affairs officials from th e U.S. and Mexico.

 On February 4, 2011, President Obama and Prime Minister Harper announced the creation of a Regulatory Cooperation Council, which is also co-chaired by OIRA and is comprised of senior-level regulato ry, trade, and foreign affairs officials

from the U.S. and Canada.

These and other collaborative efforts are focused, in significant part, on promoting exports and on discouraging and addressing unnecessary or unjustified restrictions on trade. In addition, such efforts are focused, where feasible and appropriate, on bridging current areas of divergence among relevant regulato rs, as well as preventing unjus tified or harmful divergences

185 In March 2010, the U.S. Department of Agriculture was the first Federal agency to use the homepage link to host an introductory video for the “Let’s Move” Camp aign, featuring First Lady Michelle Obama.

186 Regulations.gov site statistics for site visitors were measured by comparing January 1-December 31, 2010 data sets to January 1-December 31, 2009 data sets.

75from occurring in emerging areas of regulation. Because of the importance of promoting trade and exports, we recommend that serious consideration should be given to preventing such unjustified divergences.

In this regard, OIRA recognizes that an adverse impact on trade is possible when countries apply different standards or technical requirements to address common environmental, health, safety, or other concerns. In some cases , such divergences can lead to additional costs and burdens on U.S. suppliers, particularly sma ll and medium-sized enterprises (SMEs), and, in some cases, can make it difficult or impossible for U.S. suppliers to penetrate foreign markets. Such divergences can also increase regulatory bu rdens for governments and costs for consumers.

Cooperative efforts—including regulator-to-re gulator dialogue, information exchange, mutual recognition arrangements, and similar initiatives—could have significant domestic benefits, including increasing the sa fety and quality of other count ries’ exports to the U.S. and thus helping to protect U.S. consumers. Regul atory cooperation can also help lower costs and burdens for businesses (especially SMEs), as well as for governments and consumers, and stimulate U.S. exports, which can promote job creation and economic gr owth. When regulators in different countries share data, studies, and other information on specific regulatory issues, they may be more likely to reach similar conclusi ons on relevant questions, including the risks associated with a particular pr oduct, appropriate measures to m itigate those risks, and the costs and benefits of alternative regul atory approaches. Such steps can lead regulators to adopt regulations that are more ali gned and allow producers to devel op economies of scale, to reduce costs associated with complying with divergen t regulations, and to pass cost savings on to

consumers.

Of course, it is critical that any alignment in regulatory approaches continues to promote national health, safety, environmental, and othe r legitimate policy objectives. To promote the relevant goals, we recommend that regulatory cooperat ion should be based, to the extent feasible and appropriate, on an open exchange of in formation and perspectives among the U.S. government, foreign governments, affected domestic and foreign stakehol ders in the private sector, and the public at large.

With that objective in mind, the United States Trade Representative and the OIRA issued

a relevant memorandum to heads of execu tive agencies and departments on May 19, 2011. 187
The memorandum is designed to promote exports and trade by ensuring a high degree of openness and public particip ation in the rulemaking process, w ith an emphasis on international cooperation.

E. Public Recommendations on Retrospective Analysis

In its 2009 and 2010 Reports, OMB emphasized the importance of public participation and in particular of obtaining access to “dispersed knowledge” about how to improve regulation.

187 OMB and USTR, Memorandum for the Heads of Executive Departments and Agencies and Independent Regulatory Agencies, M-11-23, “Export and Trade Promotion, Public Participation, and Rulemaking,” available at http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-23.pdf

76The 2009 Report said, “[i]f members of the publ ic have fresh evidence or ideas about improvement of existing regulations – including expansion, redirec tion, modification, or repeal – it is important to learn about that evidence or those ideas. A general goal is to connect the

interest in sound anal ysis with the focus on open government, in part by promoting public engagement and understanding of regulatory alternatives

.

Consistent with Executive Order 13563, OMB is especially interested in how to improve retrospective analysis of existing rules. In the draft of this Report, OMB requested information about published and unpublished studies (both conceptual and empi rical) involving such retrospective analysis. OMB also requested su ggestions about how to improve understanding of the accuracy of prospective analyses of rules a nd how to undertake retrospective analysis. OMB will carefully consider these suggestions.

77C HAPTER III: U PDATE ON THE I MPLEMENTATION OF OMB’ S I NFORMATION Q UALITY
I NITIATIVES

Objective and high-quality analysis can im prove regulatory decisions. OMB and the regulatory agencies have taken a number of st eps to improve the rigor and transparency of analysis supporting their decisi ons. Of particular importance in the context of regulatory analysis is OMB’s Circular A-4, “Regulatory Analysis,” which was issued in 2003 after public comment, interagency review, and peer review. Circular A-4 defines good regulatory analysis

and standardizes how benefits and costs of Federal regulato ry actions are measured and reported. 188

In this chapter of the Report, we highlight recent developments in OMB’s continuing efforts to improve government information quality and transparency, as well as provide a brief update on the 2010 Agency reporting under the Government-Wide Information Quality Guidelines (“IQ Guidelines”) and the Informa tion Quality Bulletin for Peer Review (“Peer Review Bulletin”). The Government-Wide Inform ation Quality Guidelines, issued in 2002 after an extensive public comment process, provide policy and procedural guidance to Federal agencies for ensuring and maximizing the qual ity of the information they disseminate. 189 The Information Quality Bulletin for Peer Review, is sued in 2004 after an extensive public comment process, provides further guidance for pre-di ssemination review of influential scientific

information. 190

A. Recent Developments in Information Quality

The Obama Administration’s strong commitme nt to ensuring information quality has been recently reinforced in a variety of c ontexts. The President’s March 9, 2009 Memorandum on Scientific Integrity 191 refers to the need for each agency to:

 have appropriate rules and procedures to ensu re the integrity of the scientific process within the agency;

 use scientific and technological information that has been subject to well-established scientific processes such as peer review when considered in policy decisions;

 appropriately and accurately reflect scientific and technological information in complying with and applying relevant statutory standards; and

 make available to the public the scientific or technological find ings or conclusions considered or relied upon in policy decisions.

188 This guidance is available at: http://www.whitehouse.gov/omb /circulars/a004/a-4.pdf

. 189 These guidelines are available at: http://www.whitehouse.gov/omb /fedreg/reproducible2.pdf

. 190 This Bulletin is available at: http://www.whitehouse.gov/omb/memoranda/fy2005/m05-03.pdf

. 191 Available at http://www.whitehouse.gov/the-press- office/memorandum-heads-ex ecutive-departments-andagencies-3-9-09.

78Since that time, the Director of the Execu tive Office’s Office of Science and Technology Policy (OSTP) issued a Memorandum to the Heads of Departments and Agencies that provides further guidance to Executive Branch leaders as they implement Ad ministration policies on scientific integrity. 192 The OSTP Director’s December 17, 2010, memorandum emphasizes that “the accurate presentation of scientific and t echnological information is critical to informed decision making by the public and policymaker s.” Several passages in the memorandum specifically reinforce the goals of OMB’s ongoing information quality initi atives. Specifically:

 Consistent with the Bulletin on Peer Revi ew, the OSTP Director’s Memorandum asks that agencies develop policies to ensure th at data and research used to support policy decisions undergo independent peer review by qualified ex perts, where feasible and appropriate, and consistent with law (Sec I.2(b)).

 Consistent with the emphasis on transparency in the Information Quality Guidelines (as well Circular A-4), the OSTP Director’s Memorandum asks ag encies to develop policies

that:

o Expand and promote access to scientific and technical information by making it available online in open formats. Where ap propriate, this should include data and models underlying regulatory proposals and policy decisions (Sec I.3).

o Communicate scientific findings by incl uding a clear expli cation of underlying assumptions; accurate contextu alization of uncertainties; and a description of the probabilities associated with both op timistic and pessimistic projections, including best-case and worst-case s cenarios where appropriate (Sec I.4).

Consistent with this Administration’s current e fforts to ensure the quality of information on which public policy is based, OMB will continue to work with Executive departments and agencies over the next year to ensure that th ey have in place comprehensive processes for predissemination review of information quality, includi ng the independent peer review of scientific information. We note that such efforts may be especially important in agencies where staff turnover may have affected agency familiarity with the types of internal processes necessary to implement the IQ Guidelines a nd the Peer Review Bulletin.

B. Government-Wide Information Quality Guidelines

Section 515 of the Treasury and General Gove rnment Appropriati ons Act, 2001 (Pub.

L. No. 106-554, 44 U.S.C. § 3516 note), commonly known as the “Information Quality Act” (IQA), requires OMB to develop gov ernment-wide standards “for ensuring and maximizing” the quality of information disseminated by Federal agencies.

192 Available at http://www.whitehouse.gov/sites/defa ult/files/microsites/ostp/scientific-integrity-memo12172010.pdf.

79To implement the IQA, OMB issued final government-wide guidelines on February 22, 2002 (67 FR 8452), and each Federal agency is ch arged with promulgating its own Information Quality Guidelines. OMB has facilitated the development of these agency guidelines, working with the agencies to ensure consistency with the principles set forth in the government-wide guidelines. By October 1, 2002, almost all agen cies released their final guidelines, which became effective immediately. The OMB government -wide guidelines require agencies to report annually to OMB providing informa tion on the number and nature of complaints received by the agency and how such complaints were resolved.

In August 2004, the OIRA Administrator i ssued a memorandum to the President's Management Council requesting that agencies po st all Information Quality correspondence on agency web pages to increase th e transparency of the process. 193 In their FY 2004 Information Quality Reports to OMB, agencies provided OMB with the specific links to these web pages and OMB began providing this information to th e public in our 2005 update on Information Quality. 194 This increase in transparency allows the public to view all correction requests, appeal requests, and agency responses to these re quests. The web pages also allow the public to track the status of correction requests that may be of interest. An updated list of agency web pages is provided in Appendix I of this Report.

In our 2003 Report, OMB presented a de tailed discussion of the IQA and its implementation, including a discussion of percepti ons and realities, legal developments, methods for improving transparency, suggestions for impr oving correction requests, and the release of the OMB Information Quality Bulletin for Peer Review. 195

This section of the chapter provides a summ ary of the current status of correction requests received in FY 2010, as well as an update on the status of requests received in FY 2004, FY 2005, FY 2006, FY 2007, FY 2008 and FY 2009. An update on legal developments is also provided. Our discussion of the individual corr ection requests and agency responses is minimal because all correspondence between the public and agencies regarding these requests is publicly available on the agencies’ Information Quality web pages.

193 See OMB, Memorandum for the President’ s Management Council (2004) http://www.whitehouse.gov/omb/infor eg/info_quality_posting_083004.pdf

. 194 See OMB, Validating Regulatory Analysis: 2005 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities (2005)

, available at http://www.whitehouse.gov/omb/inforeg /2005_cb/final_2005_cb_report.pdf

. 195 See OMB, Information Quality, a Report to Congress FY 2003, (2003)

, http://www.whitehouse.gov/omb/inf oreg/fy03_info_quality_rpt.pdf , and OMB, Validating Regulatory Analysis: 2005 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on
State, Local, and Tribal Entities (2005), available at http://www.whitehouse.gov/omb/inforeg /2005_cb/final_2005_cb_report.pdf

.

801. Request for Correction Process

a. New Correction Requests and Appeal Requests Received by the Agencies in FY 2010

Table 3-1 below lists the departments and agen cies that received requests for correction in FY 2010. In FY 2010, a total of 27 requests for correction were se nt to 10 different departments and agencies. FY 2010 was the firs t year correction request s were sent to the Department of Housing and Urban Developmen t (HUD) and the Federal Reserve Board. In addition, four appeals associated with these 27 requests were filed in FY 2010. One appeal was sent to the Environmental Protection Agency (E PA), one appeal was sent to the National Oceanic and Atmospheric Administ ration (NOAA), within the Depa rtment of Commerce (DOC), and two appeals were sent to the Department of the Interior (DOI). Within DOI one appeal was sent to the U.S. Geological Survey (USGS) a nd the other appeal was sent to the Fish and Wildlife Service (FWS). As some of the agencies’ 27 responses to initial correct requests were sent at the end of FY 2010, or we re still pending at the end of FY 2010, there is a possibility that additional appeals may have since been filed or will be filed in the future.

Table 3-1: Departments and Agencies that Received Information Quality Correction Requests in FY 2010

Agency Number of FY10 Correction Requests Department of Agriculture 2 Department of Commerce 1 Department of Health and

Human Services 2

Department of the Interior 4

National Aeronautics and Space Administration 1

Environmental Protection Agency 11

Department of Labor 1 Department of Housing and Urban Development 1

Federal Communications

Commission 3

Federal Reserve Board 1

Total 27

Further, as shown below in Table 3-2, two a dditional appeals were filed in FY 2010 that related to correction requests from FY2009. One was sent to the Bureau of Land Management (BLM), within DOI, regarding a 2009 BLM leasing report. The ot her request was sent to the Environmental Protection Agency (EPA) regardi ng the scientific assessment for oxides of nitrogen. Both appeal responses are being deferr ed until related litigati on is complete; to the

81extent the litigation addresses the information qua lity concerns, a further response to the appeal may not be required from the agencies.

Table 3-2: Departments and Agencies th at Received Information Quality Appeals Requests in FY 2010, Following Responses to Requests Initiated in FY 2009

Agency Number of FY10 Appeals Department of the Interior 1

Environmental Protection Agency 1

Total 2

The correction requests received in FY 2010 we re quite diverse. For instance, the American Coatings Association requested that both EPA and HUD withdraw participation and sponsorship of public service announcements disseminated to rais e awareness of the consequences of lead poisoning; the Center for Regulatory Effectiveness asked the Food and Drug Administration, within the De partment of Health and Human Services (HHS), to correct information relating to presenta tions and statements discussing scientific information on the impacts of smoking menthol cigare ttes; and the US Association of Reptile Keepers and the Pet Industry Joint Advisory Council asked the USGS to correct information in a report relating to the biological and management profiles for nine large species of pythons, anacondas and the boa

constrictor.

Figure 3-1 shows the status of the 27 FY 2010 correction requests and four appeals

. For further details, links to all the correction requests, and the complete agency responses, we encourage readers to visit the agency Information Quality web pages. 196 OMB continues to use the “different processes” categor y to describe responses that we re handled by other pre-existing processes at the agencies. For instance, comm ents sent to the Fish and Wildlife Service regarding information on the Sage Grouse we re handled as public comments under another existing review process related to the listing determination.

196 As mentioned, a listing of webpages for Agency IQ correspondence is available in Appendix I of this report.

82Figure 3-1: Status of IQ Correct ion Requests Received in FY 2010

As noted in previous reports, OMB cauti ons readers against dr awing any conclusions about trends or year-to-year comparisons because agency procedures for classifying correction requests are still evolving. Howe ver, we note that in FY 2003 th ere were 48 corre ction requests; in FY 2004, there were 37 correc tion requests; in FY 2005, there we re 24 correction requests; in FY 2006, there were 22 correction re quests; in FY 2007, there were 21 correction requests; in FY 2008, there were 14 correction requests; and in FY 2009, there were 17 correction requests.

b. Status of Outstanding Co rrection Requests Received by the Agencies in FY 2003-2009

At the close of FY 2009, 11 Information Qu ality correction request responses and 3 appeal responses remained pending from the ag encies. The pending correction requests were initiated in FY 2004, FY 2005, FY 2006, FY 2007 , FY 2008, and FY 2009. Figure 4-2 shows the status of those outstanding correction request responses at the close of FY 2010. Agencies responded to 4 of these correction requests and c ontinued to work on responses to the remaining 7 at the end of FY 2010. Six of the pending re quests are requests to the Army Corps of Engineers, within the Department of Defense, a nd one of the pending requests is to the Centers for Disease Control, within HHS. As is shown be low, there was one appeal that was sent after the agencies responded. This appeal was sent to BLM and the response was handled through another process.

83Figure 3-2: FY 2010 Status of Pendin g Correction Requests from FY 2004, FY 2005, FY 2006, FY 2007, FY 2008, and FY 2009

Figure 3-3 below gives the status of the 4 a ppeal requests pending at the close of FY 2009. The Forest Service, within USDA, denied an outstanding appeal re garding the naming of a location in a draft environmental impact statem ent, and the Bureau of Reclamation, within DOI, denied an appeal regarding information in a biological assessment. In responding to an outstanding appeal regarding sampling at a landfill, in lieu of removing maps, EPA clarified that many of the documents in the file were interi m documents and added clarifying footnotes and disclaimers to the maps. In addition, the Federal Communications Commission continued to work on the appeal it received in FY 2007 rega rding line charges. Co rrespondence showing the agencies’ responses to these requests is publicly available on the agencies’ Information Quality web pages.

84Figure 3-3: FY 2010 Status of Pe nding Appeal Requests from FY 2009

2. Legal update

As discussed in previous reports, there has been litigation under the Information Quality Act (IQA), as well as regarding th e scope of judicial review un der the Administrative Procedure Act (APA) in those challenges. During cal endar year 2010, there were two judicial developments. First, the United States Court of Appeals for the Ninth Circuit affirmed the

district court’s dismissal of the case for lack of jurisdiction under the APA. See Americans for Safe Access v. United States Dep’t of Health and Human Servs. , No. 07-17388, 2010 U.S. App. LEXIS 21282, * 5 (9th Cir. 2010) (holding that HHS’s decision was not a reviewable final agency action). Second, the United States Court of Appeals for the District of Columbia Circuit declined to find that the IQA had been viol ated based on its determination that OMB’s interpretation regarding “dissemination” (and, in particular, the exclusion from the definition of dissemination of documents “prepared and di stributed in the cont ext of adjudicative proceedings”) was a reasonable in terpretation of the statute. Prime Time v. Vilsack , 599 F.3d 678, 685 (D.C. Cir. 2010). These recent decisions follow other cases that have dismissed IQA challenges, including on other grounds. See, e.g., Salt Institute v. Leavitt , 440 F.3d 156, 159 (4th Cir. 2006); In re Operation of the Miss ouri River System Litigation , 363 F. Supp. 2d 1145, 1174­ 75 (D. Minn. 2004), vacated in part and aff'd in part on other grounds, 421 F.3d 618 (8th Cir. 2005).

85C. Information Quality Bulletin for Peer Review

In keeping with the goal of improving th e quality of government information, on December 16, 2004, OMB issued the Final Informati on Quality Bulletin for Peer Review (the “Peer Review Bulletin”). 197 The Peer Review Bulletin requires ex ecutive agencies to ensure that all “influential scientific information” they di sseminate after June 16, 2005, is peer-reviewed.

“Influential scientific information” is defined as “scientific information the agency reasonably can determine will have or does have a clear and substantial impact on important public policies or priv ate sector decisions.” 198 The term “influential” is to be interpreted consistently with OMB's government-wide Inform ation Quality Guidelines and the information quality guidelines of each agency.

One type of scientific information is a scientific assessment. For the purposes of the Peer Review Bulletin, the term “scientific assessment” means an evaluation of a body of scientific or technical knowledge, which typically synthesizes multiple factual inputs, data, models, assumptions, and/or applies best professional judg ment to bridge uncertainties in the available

information. 199

The Peer Review Bulletin describes the factor s that should be consid ered in choosing an appropriate peer review mechanism and stresse s that the rigor of the review should be

commensurate with how the information will be us ed. It directs agencies to choose a peer review mechanism that is adequate, giving due consideration to the novelty and complexity of the science to be reviewed, the relevance of the information to decision making, the extent of prior peer reviews, and the exp ected benefits and costs of a dditional review. When deciding what type of peer review mechanism is approp riate for a specific information product, agencies should consider at least the following issues: indi vidual versus panel review; timing; scope of the review; selection of reviewers; disclosure and at tribution; public participation; disposition of reviewer comments; and adequacy of prior peer review.

The Peer Review Bulletin specifies the mo st rigorous peer review requirements for “highly influential scientific assessments,” which are a subset of “influential scientific information.” To ensure that implementation of the Peer Review Bulletin is not too costly, these requirements for more intensive peer review apply only to the more important scientific assessments disseminated by the Federal Government – those that could have a potential impact of more than $500 million in any one year on either the public or private sector, or are novel, controversial, or preceden t-setting, or have signifi cant interagency interest.

197 See OMB, Memorandum for the Heads of Department s and Agencies, M-05-03, “Issuance of OMB’s ‘Final Information Quality Bulletin for Peer Review,’” available at http://www.whitehouse.gov/omb/memoranda/fy2005/m05-03.pdf

. 198 The Bulletin notes that information dissemination can have a significant economic impact even if it is not part of a rulemaking. For instance, the economic viability of a technology can be influenced by the government’s characterization of its attributes. Alternatively, the Federal Government's assessment of risk can directly or indirectly influence the response actions of st ate and local agencies or international bodies.

199 These assessments include, but are not limited to, stat e-of-science reports; techno logy assessments; weight-ofevidence analyses; meta-analyses; health, safety, or ecologi cal risk assessments; toxico logical characterizations of substances; integrated assessment models; hazar d determinations; or exposure assessments.

86Under the Peer Review Bulletin, agencies are granted broad disc retion to weigh the benefits and costs of using a particular peer review mechanism for a specific information product. In addition to the factors noted above , agencies also have the option of employing “alternative processes” for meeting the peer review requirement (e.g., commissioning a National Academy of Sciences’ panel). Moreover, to en sure that peer review does not unduly delay the release of urgent findings, time-se nsitive health and safety determ inations are exempted from the requirements of the Peer Review Bulletin. Ther e are also specific exemptions for national security, individual agency adjudication or permit proceedings, routine statistical information,

and financial information. The Peer Review Bull etin does not cover information disseminated in

connection with routine rules that materially alter entitlements , grants, user fees, or loan programs, or the rights and obligatio ns of recipients thereof.

The Peer Review Bulletin provides two mech anisms for monitoring the progress of the agencies in meeting these peer-review requirement s: a transparent peer review planning process and annual reporting, described below.

The good science and good government requiremen ts of the Peer Review Bulletin should assist in improving the accuracy and transparency of agency science. Additionally, the peer review planning process described in the Peer Review Bulletin, which includes posting of plans on agency websites, enhances the ability of the government and the public to track influential scientific disseminations made by agencies.

On June 16, 2005, the Peer Review Bulletin becam e effective for all influential scientific information, including highly-influential scien tific assessments. The peer review planning component of the Bulletin, discussed below, became fully effective on December 16, 2005. By the end of FY 2009, the Bulletin had been implemented for four full years.

1. Peer Review Planning

The Peer Review Planning component of the Peer Review Bulletin (Section V) requires agencies to engage in a systematic process of peer review planning for influential scientific information (including highly influential scientific assessments) that the agency plans to

disseminate in the foreseeable future.

A key feature of the agency’s peer review plan is a web-accessible listing (an “agenda”) of forthcoming influential scientific disseminatio ns that is updated on a regular basis. These postings are designed to allow the public to participate in the peer review process by providing data and comments to the sponsoring agencies, as we ll as to external peer reviewers. By making these agendas publicly available, agencies increase the level of transparency in their peer review processes, and also have a mechanism to gauge the extent of public inte rest in their proposed peer reviews.

The agenda is designed to encourage planni ng for peer review early in the informationgeneration process. Thus, the agenda should cove r all information subject to the Peer Review

87Bulletin that the agency plans to disseminate in the foreseeable future

. For instance, once an agency has established a timeline for the genera tion of a scientific re port, the agency should include that report in its agenda. Thus, although the Peer Review Bulletin specifies that agencies should update their peer review agendas every six months, the agenda is not a six-month forecast (i.e., it should not be limited to information (docum ents) that the agency plans to peer review in the next six months).

Readers are encouraged to visit the agendas fo r agencies of interest. OMB asks agencies to ensure that there is an easily identifiable hyperlink to the peer review agenda from the agency’s Information Quality home page. For ca binet-level departments that have a central information quality page but do not have a centr al peer review agenda, OMB requests that a hyperlink to each agency agenda be provided. Section B in Appendix I provides the URLs for most agencies’ peer review agendas.

Cabinet-level departments and agencies th at have institutiona lized processes for proactively identifying documents subject to the Bulletin include the Departments of Agriculture, 200 Commerce, 201 Health and Human Services, 202 Housing and Urban Development, Interior, 203 Labor, Transportation, and the Environmen tal Protection Agency. Other agencies with processes in place for proactively identifying documents subject to the Peer Review Bulletin include the Consumer Product Safety Commission, the Small Business Administration,

and the Federal Communications Commission.

From time to time, other agencies produce or sponsor influential scientific information, but do not identify forthcoming information products subject to the Peer Review Bulletin this fiscal year. OMB reminds these ag encies to ensure that they maintain processes for determining when documents are subject to the Bulletin, and to ensure that the peer review plans for those documents are listed on the agency’s agenda in a timely manner. These agencies include the Departments of Defense, Education, Energy, Home land Security, Justice, State, and Veterans Affairs, as well as the National Aeronautics and Space Administration, the Nuclear Regulatory Commission, the Federal Trade Commissi on, and the Tennessee Valley Authority.

Several agencies have determined that they do not currently produce or sponsor information subject to the Peer Review Bulleti n. Most of these agencies produce primarily financial information or routine statistical information for which the Bulletin provides specific exemptions. Others primarily engage in management, oversight, or granting activities. A list of these agencies can be found in Section C in Appendix I.

Although the Peer Review Planning section of th e Bulletin lays out the specific items that should be included in each peer review plan, OMB does not spec ify the format that agencies

200 The Animal and Plant Health Inspec tion Service and the Food Safety and Inspection Service have strong peer review programs, as do the Economic Research Se rvice and the Agricultural Research Service.

. 201 The National Oceanographic and Atmospheric Administra tion is the only agency within Commerce that has identified documents subject to the Bulletin; NOAA’s peer review process is strong.

202 The Food and Drug Administration, the Center for Disease Control and Prevention, and the National Toxicology Program are complian t with the Bulletin.

203 The Fish and Wildlife Service has an exemplary peer review process. The US Geological Survey and the National Park Service are also compliant with the Bulletin.

88should use, thereby giving agencies the flexibi lity to incorporate their agendas into existing egovernment and science planning initiatives. 204 As such, some agencies house their peer review agendas within a research arm of the agency, whereas others operate out of the office of the chief information officer or the policy and planning of fice. Some departments provide an integrated agenda across the agencies, 205 while other departments have chos en to have individual agencies host their own agendas. 206 Furthermore, some agencies have chosen to provide a single agenda for both influential scientific information and highly influential scientific assessments, 207 while others provide two separate agendas. 208

The Peer Review Bulletin specifically require s that agencies provide a link from the agenda to each document made public pursuant to the Bulletin, including the completed peer review report. Although some agenci es routinely provide such links, 209 agendas at other agencies do not yet have this capability. Agencies have a dvised that provision of these links is not always straightforward when the peer review is nest ed within a more complicated preexisting public

process. 210 OMB is currently working with the agenci es to ensure that the required information is posted, and that the web sites are easy to locate and navigate.

204 An example is the Environmental Protection Agency’s incorporation with its science inventory project.

205 An example is the agenda for the Department of Transportation.

206 An example is the agendas for the Department of Health and Human Services and the Department of the Interior.

207 For instance, the agenda for the Department of Commerce.

208 For instance, the agenda for th e Department of Transportation.

209 For instance, agendas for the Depart ment of Agriculture’s Animal and Pl ant Health Inspection Service, the Department of Health and Human Services’ Center for Di sease Control, and the Envi ronmental Protection Agency (See Appendix for URLs for these agencies’ agendas.).

210 For instance, some National Oceanog raphic and Atmospheric Administration documents that are part of the Endangered Species Act process (e.g., http://www.fakr. noaa.gov/protectedresources/stellers/section7.htm).

89Table 3-3: Peer Reviews Conducted Subject to the Bulletin in FY 2010

Department/ Agency** Total

Peer

Reviews Completed Reviews of Highly

Influential

Scientific

Assessments Waivers, Deferrals, or Exemptions Potential

Reviewer

Conflicts

Department of Agriculture 74 7 None None Department

of Commerce 24 1 None None Department of Energy 1 0 None None Department

of Health and

Human Services 22 17 None None

Department

of the Interior 32 0 7 (Waiver) None Department

of Labor 2 0 None None Department of Transportation 7 2 None None

Environmental

Protection Agency 28 4 None None

Federal Communications

Commission 1 0 None None

Small Business

Administration 2 0 None None

Total 193 31 7 None

While this draft document is available for public comment, OMB is following up on incomplete reports from the Departments of Defense and Education.

Table Details

 The Department of Agriculture agenci es reporting peer reviews in FY 2 010 were the Food Safety Inspection Service, the Agricultural Research Serv ice, the Economic Research Service, and the Forest Service.

 The only Department of Commerce agen cy reporting peer reviews in this fiscal year was the National Oceanic and Atmospheric Administration.

 The only Department of Energy peer review reported in this fiscal year was associated with the Energy Efficiency & Renewable Energy, Vehicle Technologies Program.

 The Department of Health and Human Services agencies reporting peer reviews in FY 2010 were the Centers for Disease Control and Prevention and the National Toxicology Program at the National Institute for

Environmental Health Sciences.

 The Department of the Interior agenci es reporting peer reviews in FY 2010 were the Fish and Wildlife Service, the Geological Survey, and the National Park Service.

 The Department of Labor agencies reporting peer review s in FY 2010 were the Occupational Health and Safety Administration and the Mine Safety and Health Administration.

 The Department of Transportation agencies reporting peer reviews in FY 2010 were the Federal Highway Administration, the Federal Motor Carrier Safety Admi nistration, and the National Highway Traffic Safety

Administration.

90PART II: FIFTEENTH ANNUAL REPORT TO CONGRESS ON

AGENCY COMPLIANCE WITH THE UNFUNDED MANDATE S REFORM ACT

91Introduction

This report represents OMB’s fifteenth annual submission to Congress on agency compliance with the Unfunded Mandates Reform Act of 1995 (UMRA). This report on agency compliance with the Act covers the period of October 2009 through September 2010; the rules published before October 2009 are descri bed in last year’s report.

In recent years, this report has been in cluded along with our fi nal Report to Congress on the Benefits and Costs of Federal Regulations. This is done because the two reports together address many of the same issues, and both highlig ht the need for regulating in a responsible

manner that accounts for the benefits and costs of rules and takes into cons ideration the interests of our intergovernmental partners. This year , OMB is again publishing the UMRA report with the Report to Congress on the Benefits and Costs of Federa l Regulations.

State and local governments have a vital constitutional role in providing government services. They have the major role in providi ng domestic public serv ices, such as public education, law enforcement, road building and main tenance, water supply, and sewage treatment.

The Federal Government contributes to that role by promoting a healthy economy and by providing grants, loans, and tax subsidies to State and local g overnments. However, over the past two decades, State, local, and tribal gove rnments increasingly have expressed concerns about the difficulty of complying with Federal mandates without additional Federal resources.

In response, Congress passed the Unfunded Mandates Reform Act of 1995 (UMRA, or “the Act”). Title I of the Act focuses on th e Legislative Branch, addressing the processes Congress should follow before enactment of any st atutory unfunded mandates. Title II addresses the Executive Branch. It begins with a general directive for agencies to assess, unless otherwise prohibited by law, the effects of their rules on the other levels of govern ment and on the private sector (Section 201). Title II also describes specific analyses a nd consultations that agencies must undertake for rules that may result in e xpenditures of over $100 million (adjusted annually for inflation) in any year by State, local, and tribal governments in the aggregate, or by the private sector.

Specifically, Section 202 requires an agen cy to prepare a written statement for intergovernmental mandates that describes in detail the require d analyses and consultations on

the unfunded mandate. Section 205 requires that for all rules s ubject to Section 202, agencies must identify and consider a reasonable number of regulatory alternatives, and then generally select from among them the least costly, most cost-effective, or least burdensome option that achieves the objectives of the rule. Exceptions re quire the agency head to explain in the final rule why such a selection was not made or why su ch a selection would be inconsistent with law.

Title II requires agencies to “develop an e ffective process” for obtaining “meaningful and timely input” from State, local a nd tribal governments in developing rules that contain significant intergovernmental mandates (Section 204). Ti tle II also singles out small governments for particular attention (Section 203). OMB’s guidelines assist Federa l agencies in complying with the Act and are based upon the following general principles:

92 Intergovernmental consultations should take place as early as possi ble, beginning before issuance of a proposed rule and continuing throu gh the final rule stage, and be integrated explicitly into the rulemaking process;

 Agencies should consult with a wide variety of State, local, a nd tribal officials;

 Agencies should estimate direct benefits a nd costs to assist with these consultations;

 The scope of consultation should reflect the cost and significance of the mandate being considered;

 Effective consultation requires tr ust and significant and sustaine d attention so that all who participate can enjoy frank discussi on and focus on key priorities; and

 Agencies should seek out State, local, and tribal views on costs, benefits, risks, and alternative methods of compliance, and whethe r the Federal rule wi ll harmonize with and not duplicate similar laws in other levels of government.

Federal agencies have been act ively consulting with States, local ities, and tribal governments in order to ensure that regulatory activities were conducted consistent wi th the requirements of

UMRA.

The remainder of this report lists and briefly discusses the regulations meeting the Title II threshold and the specific requirements of S ections 202 and 205 of the Act from October 1, 2009 to September 30 th , 2010.

93C HAPTER IV: REVIEW OF SIGNIFICANT REGULATORY MANDATES

In FY 2010, Federal agencies issued thirteen fi nal rules that were s ubject to Sections 202

and 205 of the Unfunded Mandate Reform Act of 1995 (UMRA), as they require expenditures by State, local or tribal governments, in the aggr egate, or by the private sector, of at least $100 million in any one year (adjusted annually for in flation). The Environmental Protection Agency has five, Department of Energy has three, Departme nt of Transportation has three, Department of Health and Human Services has one, and the En vironmental Protection Agency and Department of Transportation issued one joint rule. 211

OMB worked with the agencies to ensure that the selection of the regulatory options for these rules fully complied with the requirements of Title II of the Act. Descriptions of the rules in addition to agency statements regarding comp liance with the Act are included in the following

section.

A. Environmental Protection Agency

1. Renewable Fuels Standard Program

This final rule implements provisions in title II of the 2007 En ergy Independence and Security Act (EISA) that amend section 211(o) of the Clean Air Act. The amendments revise the National Renewable Fuels Standard Program in the United States, increasing the national requirement to a total of 36 billion gallons of total renewable fuel in 2022.

EPA did not estimates annual costs for this ru le but did determine that this rule was economically significant and would likely create an UMRA mandate . This final rule does not contain mandates under UMRA on State, local, and tribal governments. The overall impact on the private sector does exceed the $100 million th reshold in the aggregate. Consequently, the provisions of this rule constitute a private sector mandate under the UMRA.

2. National Emission Standards for Hazardou s Air Pollutants for Reciprocating Internal Combustion Engines

In this final rule, EPA established na tional emission standards for hazardous air pollutants from existing stat ionary compression igniti on (diesel) engines.

EPA estimates $373 million in annual costs. This final rule does not contain mandates under UMRA on State, local, and tribal governments. The overall impact on the private sector

211 Interim final rules were not included in this chapter since “Section 202 [of the Unfunded Mandates Reform Act] . . . does not apply to interim final rules or non-notice rules issued under the ‘good cause’ exemption in 5 U.S.C. 553(b)(B).” See OMB, Memorandum for the Heads of Ex ecutive Departments and Agen cies, M-95-09, “Guidance for Implementing Title II of S.1,” 1995, available at http://www.whitehouse.gov/sites/defau lt/files/omb/memoranda/m95-09.pdf

.

94does exceed the $100 million threshold in the aggreg ate. Consequently, the provisions of this rule constitute a private s ector mandate under the UMRA.

3. NESHAP: Portland Cement Notice of Reconsideration

In this final rule, EPA established emissions standards for hazardous air pollutants, such as mercury and acid gases, from existing and new Portland cement facilities. EPA also established revised emissions limits for particul ate matter, nitrogen oxide, and sulfur dioxin at

new and reconstructed facilities.

EPA estimates $926 to $950 million in annual costs. This final rule does not contain
mandates under UMRA on State, local, and trib al governments. The overall impact on the private sector does exceed the $100 million thres hold in the aggregate. Consequently, the provisions of this rule constitute a private sector mandate under the UMRA.

4. National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines--Existing Stationary Spark Ignition (Gas-Fired)

In this final rule, EPA established nati onal emission standards for hazardous air pollutants and nitrogen oxides from exis ting stationary gas-fired engines.

EPA estimates $253 million in annual costs. This final rule does not contain mandates under UMRA on State, local, and tribal governments. The overall impact on the private sector does exceed the $100 million threshold in the aggreg ate. Consequently, the provisions of this rule constitute a pr ivate sector mandate under the UMRA.

5. Lead; Amendment to the Opt-out and Recordk eeping Provisions in the Renovation, Repair, and Painting Program

This final rule revised th e 2008 Lead Renovation, Repair, and Painting Program (RRP)

rule that established accreditati on, training, certification, and reco rdkeeping requirements as well as work practice standards on persons performing renovations fo r compensation in most pre1978 housing and child-occ upied facilities.

EPA estimates $320 million in annual costs. This final rule does not contain mandates under UMRA on State, local, and tribal governments. The overall impact on the private sector does exceed the $100 million threshold in the aggreg ate. Consequently, the provisions of this rule constitute a private s ector mandate under the UMRA.

B. Department of Energy

1. Energy Efficiency Standards for Commercial Clothes Washers

This final rule amends existing standards for commercial clothes washers.

95DOE estimates $23 million in annual costs. This final rule does not contain mandates under UMRA on State, local, and tribal governments. The agency believes the overall impact on the private sector likely does not exceed the $100 million threshol d in the aggregate; however, based on the possibility of crossing the threshol d, the agency provided an UMRA analysis.

2. Energy Conservation Standards for Small Electric Motors

This final rule establishes energy conserva tion standards for small electric motors.

DOE estimates $264 million in annual costs. This final rule does not contain mandates under UMRA on State, local, and tribal governments. The overall impact on the private sector does exceed the $100 million threshold in the aggreg ate. Consequently, the provisions of this rule constitute a private s ector mandate under the UMRA.

3. Energy Efficiency Standards for Pool He aters and Direct Heating Equipment and

Water Heaters

This final rule establishes energy conserva tion standards for pool heaters and direct heating equipment and amends standards for water heaters.

DOE estimates $1,285 million in annual costs. This final rule does not contain mandates under UMRA on State, local, and tribal governments. The overall impact on the private sector does exceed the $100 million threshold in the aggreg ate. Consequently, the provisions of this rule constitute a private s ector mandate under the UMRA.

C. Department of Transportation

1. Automatic Dependent Surveillance--Broadcast (ADS-B) Equipage Mandate To Support Air Traffic Control Service

This rulemaking would add requirements a nd performance standards for Automatic Dependent Surveillance-Broadcast (ADS-B) Out equipment on aircraft operating in certain classes of U.S. airspace. This equipment would need to be installed by aircraft owners by 2020. ADS-B Out is an essential piece of a system re quired to move forward with the Next Generation Air system, which will ultimately increase the capac ity and safety of U.S. airspace. ADS-B will allow planes to fly closer toge ther, to have more precise take -offs and landings, and to have

better communications with the FAA’ s Air Traffic Control centers.

FAA estimates $261 million in annual costs. This final rule does not contain mandates under UMRA on State, local, and tribal governments. The overall impact on the private sector does exceed the $100 million threshold in the aggreg ate. Consequently, the provisions of this rule constitute a private s ector mandate under the UMRA.

962. Electronic On-Board Recorders for Hours-of-Service Compliance

With this rule, motor carriers that have demonstrated serious noncompliance with existing FMCSA hours of service rules will be subject to mandatory installation of EOBRs meeting the new performance standards. If FM CSA determines, based on HOS records reviewed during a compliance review, that a motor carrier has a 10 percent or greater violation rate for any HOS regulation listed in the new Appendix C to part 385, FMCSA will issue the carrier an

EOBR remedial directive. The motor carrier will then be required to install EOBRs in all of its commercial motor vehicles regardle ss of their date of manufactu re and use the devices for HOS recordkeeping for a period of 2 years.

FMCSA estimates this rule will lead to $140 m illion in annual costs for the private sector.

This final rule does not contain mandates under UM RA on State, local, and tribal governments. FMCSA does not indentify private sector mandates in this rule; however it is included in this chapter because the agency’s priv ate sector cost estimates may be viewed as crossing the UMRA

threshold. 212

3. Positive Train Control

The final rule, effective March 2010, requi red certain freight and passenger railroad operations to plan for and install systems on lo comotives and on railroad track (among other requirements) – enabling the train to be automa tically controlled in certain circumstances.

FRA estimates that this Congressionally mandated regulation has annualized costs of approximately $901 million with mandates on privat e industry as well as some State and local governments (those that fund and/or operate intercity passenger and commuter rail systems). Consequently, the provisions of this ru le constitute a private sector mandate under the

UMRA.

D. Department of Health and Human Services

1. Use of Ozone-Depleting Substances; Removal of Essential Use Designations [Flunisolide, Triamcinolone, Metaproterenol, Pirbuterol, Albuterol and Ipratropium in Combination, Cromolyn, and Nedocromil]

This final rule would remove the essential use designations after a specified date for metered-dose inhalers (MDIs) c ontaining flunisolide, triamcinolone , metaproterenol, pirbuterol, albuterol and ipratropium in combination, cromolyn, and nedocromil. Under the provisions of this final rule, these MDIs would have to be removed from the market. This final rule is

212 The preamble to the final rule states, “This rule would no t result in the net expenditure by State, local and tribal governments, in the aggregate, or by th e private sector, of $141,300,000 or mo re in any one year, nor would it affect small governments. Therefore, no actions are deemed necessary under the provisions of the Unfunded Mandates

Reform Act of 1995.”

97consistent with obligations under the Clean Air Act and the Montreal Protocol on Substances That Deplete the Ozone Layer.

FDA did not estimate annual costs for this rule but did determine that this rule was economically significant and would likely create an UMRA mandate . This final rule does not contain mandates under UMRA on State, local, and tribal governments. The overall impact on the private sector does exceed the $100 million th reshold in the aggregate. Consequently, the provisions of this rule constitute a private sector mandate under the UMRA.

E. Joint Rulemakings

1. EPA/NHTSA Joint Rulemaking to Establish Light-Duty Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards

EPA and NHTSA issued this joint Final Rule to establish a National Program consisting of new standards for light-duty vehicles that will reduce greenhouse gas emissions and improve fuel economy. This joint Final Rule is consis tent with the National Fuel Efficiency Policy announced by President Obama on May 19, 2009. EP A is finalizing greenhouse gas emissions

standards under the Clean Air Act, and NHTSA is finalizing Corporate Average Fuel Economy standards under the Energy Policy and Conservation Act, as amended. These standards apply to passenger cars, light-duty trucks, and medium-d uty passenger vehicles, covering model years 2012 through 2016, and represent a harmonized and consistent National Program.

EPA and DOT estimate that the 2012-2016 Mo del Year lifetime discounted costs are $51.5 billion assuming $21/ton social cost of carbon value. (Neither DOT nor EPA provided annualized values in their RIAs). This fi nal rule does not contain mandates under UMRA on State, local, and tribal governments. The overa ll impact on the private sector does exceed the $100 million threshold in the aggregate. Conseque ntly, the provisions of this rule constitute a private sector mandate under the UMRA.

98A PPENDIX A: C ALCULATION OF B ENEFITS AND C OSTS

Chapter I presents estimates of the annual be nefits and costs of selected major final regulations reviewed by OMB between October 1, 2000 and September 30, 2010. OMB presents more detailed explanation of these regulations in several documents.

 Rules from April 1, 1999 to Septembe r 30, 2001: Table 19 of the 2002 Report.

 Rules from October 1, 2001 to Septembe r 30, 2002: Table 19 of the 2003 Report.

 Rules from October 1, 2002 to Septembe r 30, 2003: Table 12 of the 2004 Report.

 Rules from October 1, 2003 to Septembe r 30, 2004: Tables 1-4 and A-1 of the 2005 Report.

 Rules from October 1, 2004 to Septembe r 30, 2005: Tables 1-4 and A-1 of the 2006 Report

 Rules from October 1, 2005 to Septembe r 30, 2006: Tables 1-4 and A-1 of the 2007 Report.

 Rules from October 1, 2006 to Septembe r 30, 2007: Tables 1-4 and A-1 of the 2008 Report.

 Rules from October 1, 2007 to Septembe r 30, 2008: Tables 1-4 and A-1 of the 2009 Report.

 Rules from October 1, 2008 to Septembe r 30, 2009: Tables 1-4 and A-1 of the 2010 Report.

 Rules from October 1, 2009 to Septembe r 30, 2010: Tables 1-4 and A-1 of this Report.

In assembling estimates of benefits and costs presente d in Table 1-4, OMB has:

(1) Applied a uniform format for the presen tation of benefit and cost estimates in order to make agency estimates more cl osely comparable with each other (for example, annualizing benefit and cost estimates); and (2) Monetized quantitative estimates where th e agency has not done so (for example, converting agency projections of quantifie d benefits, such as estimated injuries avoided per year or tons of pollutant reductions per year, to dollars using the valuation estimates discussed below).

All benefit and cost estimates are adjusted to 2001 dollars usi ng the latest Gross Domestic Product (GDP) deflator, available from the Bureau of Economic Analysis at the Department of Commerce. 213 In instances where the nominal dollar values the agencies use for their benefits and costs is unclear, we assume the benefits and costs are presented in nominal dollar values of the year before the rule is finaliz ed. In periods of low inflation such as the past few years, this assumption does not affect the ov erall totals. All amortizations are performed using a discount rate of 7 per cent unless the agency has already presented annualized, monetized results using a different e xplicit discount rate.

213 See National Income and Product Accounts

, http://www.bea.gov

.

99OMB discusses, in this Report and in previ ous Reports, the difficulty of estimating and aggregating the benefits and co sts of different regulations ove r long time periods and across many agencies. In addition, where OMB has mone tized quantitative estimates where the agency has not done so, we have attempted to be faith ful to the respective agency approaches. The adoption of a uniform format for annualizing agency estimates allows, at least for purposes of illustration, the aggregation of benefit and cost estimates across rules; however, agencies have used different methodologies and valuations in quantifying and monetizing effects. Thus, an aggregation involves the assemblage of benef it and cost estimates that are not strictly comparable.

To address this issue in part, the 2003 Report included OMB’s new regulatory analysis guidance, also released as OMB Circular A- 4, which took effect on January 1, 2004 for proposed rules and January 1, 2005 for fina l rules. The guidance recommends what OMB considers to be “best practices” in regulatory analysis, with a goal of strengthening th e role of science, engineering, and economics in rulemaking. Th e overall goal of this guidance is a more competent and credible regulatory process, and a more consistent regulatory environment. OMB expects that as more agencies adopt these reco mmended best practices, the benefits and costs presented in future Reports will become more comparable across agencies and programs. The 2006 Report was the first report that included fina l rules subject to OMB Circular A-4. OMB will continue to work with the agencies to en sure that their impact analyses follow the new guidance.

Table A-1 below presents information on the impacts of 66 majo r rules reviewed by OMB from October 1, 2009 through September 30, 2010. Unless otherwise stated, the estimates presented in Table A-1 are unmodified agency estimates of annualized impacts except for an adjustment to 2001 dollars, which is the re quested format in OMB Circular A-4.

Table 1-5(a) in Chapter I of this Report presen ts the estimates for the 18 rules finalized in fiscal year 2010 that were added to the Chapte r I accounting statement totals. Table A-2 below presents the benefits and cost s of previously reported majo r rules reviewed by OMB from October 1, 2000 through September 30, 2009 that are also included in the Chapter I accounting

statement totals.

100Appendix A: Calculation of Benefits and Costs

Chapter I presents estimates of the annual be nefits and costs of selected major final regulations reviewed by OMB between October 1, 2000 and September 30, 2010. OMB presents more detailed explanation of these regulations in several documents.

 Rules from April 1, 1999 to Septembe r 30, 2001: Table 19 of the 2002 Report.

 Rules from October 1, 2001 to Septembe r 30, 2002: Table 19 of the 2003 Report.

 Rules from October 1, 2002 to Septembe r 30, 2003: Table 12 of the 2004 Report.

 Rules from October 1, 2003 to Septembe r 30, 2004: Tables 1-4 and A-1 of the 2005 Report.

 Rules from October 1, 2004 to Septembe r 30, 2005: Tables 1-4 and A-1 of the 2006 Report

 Rules from October 1, 2005 to Septembe r 30, 2006: Tables 1-4 and A-1 of the 2007 Report.

 Rules from October 1, 2006 to Septembe r 30, 2007: Tables 1-4 and A-1 of the 2008 Report.

 Rules from October 1, 2007 to Septembe r 30, 2008: Tables 1-4 and A-1 of the 2009 Report.

 Rules from October 1, 2008 to Septembe r 30, 2009: Tables 1-4 and A-1 of the 2010 Report.

 Rules from October 1, 2009 to Septembe r 30, 2010: Tables 1-4 and A-1 of this Report.

In assembling estimates of benefits and costs presente d in Table 1-4, OMB has:

(1) Applied a uniform format for the presen tation of benefit and cost estimates in order to make agency estimates more cl osely comparable with each other (for example, annualizing benefit and cost estimates); and (2) Monetized quantitative estimates where th e agency has not done so (for example, converting agency projections of quantifie d benefits, such as estimated injuries avoided per year or tons of pollutant reductions per year, to dollars using the valuation estimates discussed below).

All benefit and cost estimates are adjusted to 2001 dollars usi ng the latest Gross Domestic Product (GDP) deflator, available from the Bureau of Economic Analysis at the Department of Commerce. 214 In instances where the nominal dollar values the agencies use for their benefits and costs is unclear, we assume the benefits and costs are presented in nominal dollar values of the year before the rule is finaliz ed. In periods of low inflation such as the past few years, this assumption does not affect the ov erall totals. All amortizations are performed using a discount rate of 7 per cent unless the agency has already presented annualized, monetized results using a different e xplicit discount rate.

214 See National Income and Product Accounts

, http://www.bea.gov

.

101OMB discusses, in this Report and in previ ous Reports, the difficulty of estimating and aggregating the benefits and co sts of different regulations ove r long time periods and across many agencies. In addition, where OMB has mone tized quantitative estimates where the agency has not done so, we have attempted to be faith ful to the respective agency approaches. The adoption of a uniform format for annualizing agency estimates allows, at least for purposes of illustration, the aggregation of benefit and cost estimates across rules; however, agencies have used different methodologies and valuations in quantifying and monetizing effects. Thus, an aggregation involves the assemblage of benef it and cost estimates that are not strictly comparable.

To address this issue in part, the 2003 Report included OMB’s new regulatory analysis guidance, also released as OMB Circular A- 4, which took effect on January 1, 2004 for proposed rules and January 1, 2005 for fina l rules. The guidance recommends what OMB considers to be “best practices” in regulatory analysis, with a goal of strengthening th e role of science, engineering, and economics in rulemaking. Th e overall goal of this guidance is a more competent and credible regulatory process, and a more consistent regulatory environment. OMB expects that as more agencies adopt these reco mmended best practices, the benefits and costs presented in future Reports will become more comparable across agencies and programs. The 2006 Report was the first report that included fina l rules subject to OMB Circular A-4. OMB will continue to work with the agencies to en sure that their impact analyses follow the new guidance.

Table A-1 below presents information on the impacts of 66 majo r rules reviewed by OMB from October 1, 2009 through September 30, 2010. Unless otherwise stated, the estimates presented in Table A-1 are unmodified agency estimates of annualized impacts except for an adjustment to 2001 dollars, which is the re quested format in OMB Circular A-4.

Table 1-5(a) in Chapter I of this Report presen ts the estimates for the 18 rules finalized in fiscal year 2010 that were added to the Chapte r I accounting statement totals. Table A-2 below presents the benefits and cost s of previously reported majo r rules reviewed by OMB from October 1, 2000 through September 30, 2009 that are also included in the Chapter I accounting

statement totals.

102Table A-1: Summary of Agency Estimates for Final RulesOctober 1, 2009 - September 30, 2010 (As ofDate of Completion of OMB Review)RIN TitleBenefits(2001$)Costs(2001$)Other InformationDepartment of Agriculture0560-AH90 Supplemental Revenue Assistance PaymentsProgram (SURE) [74 FR 68480]NotestimatedNotestimatedTransfers: $713-$718 millionThe full RIA is available from agency upon request.0560-AI07 Dairy Economic Loss Assistance PaymentProgram [74 FR 67805]NotestimatedNotestimatedTransfers: $238 millionThe full RIA is available from agency upon request.0578-AA43 Conservation Stewardship Program [75 FR31610]NotestimatedNotestimatedTransfers: $2,710-$3,191 millionThe full RIA is available from agency upon request.0584-AD30 SNAP: Eligibility and CertificationProvisions of the Farm Security and RuralInvestment Act of 2002 [75 FR 4912]NotestimatedNotestimatedTransfers: $2,221-$2,223 millionThe full RIA is included as an appendix in the Federal Registerpublication.Department of Commerce0660-ZA28 Broadband Technology OpportunitiesProgram [75 FR 3792]NotestimatedNotestimatedTransfers: $2,130 millionThe full RIA is available from agency upon request.Department of Defense0720-AB17 TRICARE: Relationship Between theTRICARE Program and EmployerSponsored Group Health Coverage [75 FR18051]NotestimatedNotestimatedTransfers: $59 million (payment reductions)The full RIA is available from agency upon request.0790-AI59 Retroactive Stop Loss Special PayCompensation [75 FR 19878]NotestimatedNotestimatedTransfers: $438 millionThe full RIA is available from agency upon request.Department of Education103RINTitleBenefits(2001$)Costs(2001$)Other Information1810-AB04State Fiscal Stabilization Fund Program-­Notice of Proposed Requirements,Definitions, and Approval Criteria [74 FR58436]Notestimated$31millionRange:$25-$37millionTransfers: $9,510 millionThe RIA is included in the preamble.1810-AB06School Improvement Grants--Notice ofProposed Requirements Under the AmericanRecovery and Reinvestment Act of 2009;Title I of the Elementary and SecondaryEducation Act of 1965[74 FR 65617]NotestimatedNotestimatedTransfers: $2,932 millionThe RIA is included in the preamble.1810-AB07Race to the TopFund--Notice of ProposedPriorities, Requirements, Definitions, andSelection Criteria [74 FR 59688]Notestimated$1 millionTransfers: $3,272 millionThe RIA is included in the preamble.1810-AB08Teacher Incentive Fund--Priorities,Requirements, Definitions, and SelectionCriteria [75 FR 28714]NotestimatedNotestimatedTransfers: $358 millionThe RIA is included in the preamble.1840-AC96Student Assistance General Provisions;TEACH Grant, Federal Pell Grant, andAcademic Competitiveness Grant, andNational Science and Mathematics AccessTo Retain Talent Grant Programs [74 FR61239]NotestimatedNotestimatedTransfers: $185 millionThe RIA is included in the preamble.1840-AC99General and Non-Loan Programmatic Issues[74 FR 55902]NotestimatedNotestimatedTransfers: $229-$232 millionThe RIA is included in the preamble.1840-AD01Federal TRIO Programs, Gaining EarlyAwareness and Readiness for UndergraduateProgram, and High School Equivalency andCollege Assistance Migrant Programs [75 FR65712]NotestimatedNotestimatedTransfers: $1,010 millionThe RIA is included in the preamble.1855-AA06Investing in Innovation--Priorities,Requirements, Definitions, and SelectionCriteria [75 FR 12004]NotestimatedNotestimatedTransfers: $532 millionThe RIA is included in the preamble.104RIN TitleBenefits(2001$)Costs(2001$)Other InformationDepartment of Energy1901-AB27 Loan Guaranteesfor Projects That EmployInnovative Technologies [74 FR 63544]NotestimatedNotestimatedTransfers: $3,457-$3,945 million1904-AA90 Energy Efficiency Standards for PoolHeaters and Direct Heating Equipment andWater Heaters[75 FR 20112]$1,386millionRange:$1,274­$1,817million$1,063millionRange:$975­$1,122millionThe RIA is included in the Technical Support Document as Chapter 15and is available at:http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/reg_impact_direct_heat_standards_tsd.pdf1904-AB70 Energy Conservation Standards for SmallElectric Motors [75 FR 10874]$707millionRange:$688­$827million$218millionThe RIA is included in the Technical Support Document as Chapter 15and is available at:http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/reg_impact_small_motors_nopr_tsd.pdf1904-AB93 Energy Efficiency Standards for CommercialClothes Washers [75 FR 1122]$51millionRange:$46-$67million$20millionRange:$17-$21millionThe RIA is included in the preamble.1904-AB97 Weatherization Assistance Program for LowIncome Persons - Multi-unit Buildings [75FR 3847]NotestimatedNotestimatedTransfers: $4,097 millionThe RIA is included in the preamble.Department of Health and Human Services105RINTitleBenefits(2001$)Costs(2001$)Other Information0910-AF93Use of Ozone-Depleting Substances;Removal of Essential Use Designations[Flunisolide, Triamcinolone, Metaproterenol,Pirbuterol, Albuterol and Ipratropium inCombination, Cromolyn, and Nedocromil][75 FR 19213]QuantifiedNotmonetizedBenefits: Reduction of CFC emissions by 310-365 tons annually.Costs: Possible Change in Use of Asthma and COPD Therapy (0.33-14million days of therapy) per year.Transfers: $13-$83 million per year in 2001 dollars (from PrivatePayers, Medicare and Medicaid to Drug Manufacturers).The RIA is included in the preamble.0910-AG33Regulations Restricting the Sale andDistribution of Cigarettes and SmokelessTobacco to Protect Children and Adolescents[75 FR 13225]NotestimatedNotestimatedThis rule reinstates a 1996 final rule(as required by statute), and pointsto the original RIA (see 61 FR 44395). It does not provide anincremental analysis of the impactsof the rule compared to a baselinethat takes into account current levelsof compliance with the rule. Thus,the 1996 RIA very likely overstates both costs as well as benefits.The RIA is included in the preamble.0920-AA26Medical Examination of Aliens— Removalof Human Immunodeficiency Virus (HIV)Infection From Definition of CommunicableDisease of Public Health Significance [74 FR56547]Quantified$3 millionRange:$11-$21millionQuantified Benefits: 4,000 to 24,000 HIV-positive immigrants presentin the U.S. in Year 5 who would not otherwise be able to immigrate.Qualitative Benefits: 1. Will reduce stigmatization of and discriminationagainst HIV-infected people. 2. Will bring family members togetherwho had been barred from entry, thus strengthening families. 3. Willpermit HIV-infected immigrants with skills in high demand would bepermitted to enter the U.S. to seek employment and contribute asproductive members of U.S. society.4. Compared to those who don’treceive appropriate multi-drug anti-retroviral therapy, those receivingsuch therapy survive an additional13 years, with an average lifeexpectancy of approximately 29 years (to age 49 years). This increasedlife expectancy allows opportunity for longer and improvedproductivity.Transfers: $71-$513 million (from HIV positive immigrants and healthinsurance payers to healthcare providers)The RIA is included in the preamble.106RINTitleBenefits(2001$)Costs(2001$)Other Information0938-AP40Revisions to Payment Policies Under thePhysician Fee Schedule For CY 2010 (CMS1413-FC)[74 FR 61738]NotestimatedNotestimatedTransfers: $10,999 million (payment reductions)The RIA is included in the preamble.0938-AP41Changes to the Hospital OutpatientProspective Payment System andAmbulatory Surgical Center PaymentSystem for CY 2010 (CMS-1414-F)[74 FR 60316]NotestimatedNotestimatedTransfers: $441 millionThe RIA is included in the preamble.0938-AP55Home Health Prospective Payment Systemand Rate Update for CY 2010 (CMS-1560-F)[74 FR 58077]NotestimatedNotestimatedTransfers $116 million (payment reductions)The RIA is included in the preamble.0938-AP57End Stage Renal Disease Bundled PaymentSystem (CMS-1418-F) [75 FR 49030]NotestimatedNotestimatedTransfers: $164 million (payment reductions)The RIA is included in the preamble.0938-AP72State Flexibility for Medicaid BenefitPackages (CMS-2232-F4) [75 FR 23068]NotestimatedNotestimatedTransfers: $692-$730 million (payment reductions)The RIA is included in the preamble.0938-AP77Revisions to the Medicare Advantage andMedicare Prescription Drug BenefitPrograms for Contract Year 2011 (CMS4085-F)[75 FR 19677]Notestimated$232­$233millionTransfers: $261-272 million (payment reductions)The RIA is included in the preamble.0938-AP78Electronic HealthRecord (EHR) IncentiveProgram (CMS-0033-F) [75 FR 44314]Notestimated$524millionRange:$513­$535millionTransfers: $851-$2,542 millionThe RIA is included in the preamble.0938-AP80Medicare Program; Changes to the HospitalInpatient Prospective Payment Systems forAcute Care Hospitals and the Long TermCare Hospital Prospective Payment Systemand Fiscal Year 2011 Rates [75 FR 50042]NotestimatedNotestimatedTransfers: $237 million (payment reductions)The RIA is included in the preamble.107RIN TitleBenefits(2001$)Costs(2001$)Other Information0991-AB64 Early Retiree Reinsurance Program[75 FR 24450]Notestimated$33millionTransfers: $1,024 million (Federal government to sponsors/contractors)The RIA is included in the preamble.0991-AB71 Pre-Existing Condition Insurance PlanProgram[75 FR 45010]Notestimated$2 million Transfers: $1,009-$1,018 million (from Federal Government tocontractors to administer the program)The agency reports $5 billion in transfers for the period from July 1,2010 to December 31, 2013. We assumed a uniform distribution offunds over the time period and annualized over the four calendar years,and then converted the estimate to 2001 dollars.The RIA is included in the preamble.Department of Health and Human Services, Department of Labor and Department of the Treasury0938­AP65;1210-AB30Interim Final Rules Under the PaulWellstone and Pete Domenici Mental HealthParity and Addiction Equity Act of 2008 [75FR 5410]Notestimated$10-$12millionQualitative Benefits: Benefits of the rule include a possible increase inaccess to mental health and substanceabuse disorder benefits that couldlead to improved health, a reduction in overall health expenditures forthose with mental health or substance abuse disorders and increasedworker productivity and earnings. Paritycould also lead to reduced visitlimitations and lower cost-sharing and out-of-pocket expendituresproviding financial protection.Transfers: $2.2 billion in 2001 dollars (private transfers from those whodo not utilize mental health or substance abuse disorder benefits tothose that do).The RIA is included in the preamble.108RIN TitleBenefitsCostsOther Information(2001$) (2001$)0938-Interim Final Rules for Group Health PlansNot NotAQ07;and Health Insurance Issuers Relating toestimated estimated1210-AB44Coverage of Preventive Services under thePatient Protection and Affordable Care Act[75 FR 41726]Qualitative Benefits: By expanding coverage and eliminating costsharing for the required preventiveservices, the Departments expectaccess and utilization of these services to increase. To the extent thatindividuals increase their use of these services the Departmentsanticipate several benefits: (1) prevention and reduction in transmissionof illnesses as a result of immunization and screening of transmissiblediseases; (2) delayed onset, earlier treatment, and reduction in morbidityand mortality as a result of early detection, screening, and counseling;(3)increased productivity and fewer sick days; and (4) savings fromlower health care costs. Another benefit of these interim finalregulations will be to distribute the cost of preventive services moreequitably across the broad insured population.Qualitative Costs: New costs to the health care system result whenbeneficiaries increase their use of preventive services in response to thechanges in coverage and cost-sharing requirements of preventiveservices. The magnitude of this effect on utilization depends on theprice elasticity of demand and the percentage change in prices facingthose with reduced cost sharing or newly gaining coverage.Qualitative Transfers: Transfers will occur to the extent that costs thatwere previously paid out-of-pocketfor certain preventive services willnow be covered by group health plans and issuers under these interimfinal regulations. Risk pooling in the group market will result in sharingexpected cost increases across anplan or employee group as higheraverage premiums for all enrollees. However, not all of those coveredwill utilize preventive services to an equivalent extent. As a result, theseinterim final regulations create a small transfer from those payingpremiums in the group market utilizing less than the average volume ofpreventive services in their risk pool to those whose utilization isgreater than average. To the extent there is risk pooling in the individualmarket, a similar transfer will occur.The RIA is included in the preamble.109RINTitleBenefitsCostsOther Information(2001$)(2001$)0991­Interim Final Rules for Group Health PlansQuantified$9 millionQuantified Benefits: 190,000 to 1.6 million previously uninsuredAB66;and Health Insurance Issuers Relating toindividuals who gain coverage in 2011.1210-AB41Dependent Coverage of Children to Age 26under the Patient Protection and AffordableQualitative Benefits: Expanding coverage options of the 19-25Care Act [75 FR 27122]population should decrease the number uninsured, which in turn shoulddecrease the cost-shifting of uncompensated care onto those withinsurance, increase the receipt ofpreventive healthcare and providemore timely access to high quality care, resulting in a healthierpopulation. Allowing extended dependent coverage will also permitgreater job mobility for this population as their insurance coverage willno longer be tied to their own jobs or student status. Dependants aged19-25 that have chronic or other serious health conditions would still beable to continue their current coverage through a parent’s plan. To theextent there is an increase in beneficial utilization of healthcare, healthcould improve.Transfers: $2.8-$5.7 billion (if the rule causes family health insurancepremiums to increase, there will bea transfer from individuals withfamily health insurance coverage who do not have dependents aged 19­25 to those individuals with family health insurance coverage that havedependents aged 19-25).The RIA is included in the preamble.110RIN TitleBenefitsCostsOther Information(2001$) (2001$)0991-Interim Final Rules for Group Health PlansNot$21AB68;and Health Insurance Coverage Relating toestimatedmillion1210-AB42Status as a Grandfathered Health Plan underthe Patient Protection and Affordable CareRange:Act [75 FR 34538]$17-$23millionQualitative Benefits: These interim final regulations allow plans thechoice or retaining or relinquishing grandfather status. Nongrandfathered plans are required to offer coverage with minimumbenefit standards and patient protections as required by the AffordableCare Act, while grandfathered plansare only required to comply withcertain provisions. The existence of grandfathered health plans couldprovide individuals with the benefits of plan continuity, which may behave a high value to some. It could potentially prevent premiums fromincreasing, depending on the extent to which their current plan does notinclude the benefits and protections of the new law. It also couldprevent the employer from dropping of coverage which would reducenew Medicaid enrollment and spending and lower the number ofuninsured individuals.Qualitative costs: Limits on the changes to cost-sharing ingrandfathered plans and the elimination of cost-sharing for someservices in non-grandfathered plans,leads to transfers of wealth frompremiums payers overall to individuals using covered services. Oncepre-existing conditions are fully prohibited and other insurance reformstake effect, the extent to which individuals are enrolled in grandfatheredplans could affect adverse selection, as higher risk plans relinquishgrandfather status to gain new protections while lower risk grandfatherplans retain their grandfather status.This could result in a transfer ofwealth from non-grandfathered plans to grandfathered health plans.The RIA is included in the preamble.111RINTitleBenefitsCostsOther Information(2001$)(2001$)0991­AB69;1210–AB43Patient Protection and Affordable Care Act:Preexisting Condition Exclusions, Lifetimeand Annual Limits, Rescissions, and PatientProtections [75 FR 43330]Notestimated$4 millionQualitative Benefits: These patient protections are expected to expandcoverage for children with preexisting conditions and individuals whoface rescissions, lifetime limits, and annual limits as a result of highhealth care costs. Expanded coverage is likely to increase access tohealth care, improve health outcomes, improve worker productivity, andreduce family financial strain and "job lock". Many of these benefitshave a distributional component and promote equity in the sense thatthey will be enjoyed by those who are especially vulnerable as a resultof health problems and financial status. Choice of physician will likelylead to better, sustained patient-provider relationships, resulting indecreased malpractice claims andimproved medication adherence andhealth promotion. Removing referrals and prior authorizations forprimary care, OB/GYN, and emergency services is likely to reduceadministrative and time burdens on both patients and physicians.Qualitative Costs: To the extent these patient protections increaseaccess to health care services, increased health care utilization and costswill result due to increased uptake. Expanding coverage to children withpreexisting conditions and individuals subject to rescissions will likelyincrease overall health care costs, given that these groups tend to havehigh cost conditions and require more costly care than average.Qualitative Transfers: These patientprotections create a transfer ofwealth from those paying premiums in the group market to thoseobtaining the increased patient protections. To the extent there is riskpooling in the individual market, a similar transfer will occur.The RIA is included in the preamble.112RIN TitleBenefits(2001$)Costs(2001$)Other Information0991­AB70;1210–AB45Interim Final Rules for Group Health Plansand Health Insurance Issuers Relating toInternal Claims and Appeals and ExternalReview Processes under the PatientProtection and Affordable Care Act[75 FR 43330]Notestimated$42millionQualitative Benefits: A more uniform, rigorous, and consumer friendlysystem of claims and appeals processing will provide a broad range ofdirect and indirect benefits that will accrue to varying degrees to all ofthe affected parties. These interim final regulations could improve theextent to which employee benefit plans provide benefits consistent withthe established terms of individual plans. While payment of thesebenefits will largely constitute transfers, the transfers will be welfareimproving, because incorrectly denied benefits will be paid. Greatercertainty and consistency in the handling of benefit claims and appealsand improved access to information about the manner in which claimsand appeals are adjudicated shouldlead to efficiency gains in thesystem, both in terms of the allocation of spending across plans andenrollees as well as operational efficiencies among individual plans.This certainty and consistency can also be expected to benefit, tovarying degrees, all parties withinthe system, particularly consumers,and to lead to broader social welfare gains. Transfers: $20 million.Qualitative transfers: The Departments estimated the dollar amount ofclaim denials reversed in the external review process. While thisamount is a cost to plans, it represents a payment of benefits that shouldhave previously been paid to participants, but was denied. Part of thisamount is a transfer from plans and issuers to those now receivingpayment for denied benefits. These transfers will improve equity,because incorrectly denied benefitswill be paid. Part of the amountcould also be a cost if the reversalleads to services and hence resourcesbeing utilized now that had been denied previously. The Departmentsare not able to distinguish between the two types, but believe that mostreversals are associated with a transfer.The RIA is included in the preamble.Department of Homeland Security1615-AB80 U. S. Citizenshipand Immigration ServicesFee Schedule [75 FR 58961]NotestimatedNotestimatedTransfers: $173 millionThe RIA is included in the preamble.113RIN TitleBenefits(2001$)Costs(2001$)Other Information1651-AA83 Electronic System for Travel Authorization(ESTA): Fee for Use of the System [75 FR47701]NotestimatedNotestimatedTransfers: $121-$206 millionThe full RIA is available at:http://www.regulations.govDocument ID:USCBP-2010-0025-00021660-AA44 Special Community Disaster Loans Program[75 FR 2800]Notestimated< $1millionTransfers: $0-$1,075 millionThe RIA is included in the preamble.Department of the Interior1018-AX06 Migratory Bird Hunting; Final Frameworksfor Early-Season Migratory Bird HuntingRegulations [75 FR 52873]$271millionRange:$234­$309millionNotestimatedEstimates based on the RIA for the 2008-2009 season. The full RIA isavailable at:http://www.fws.gov/migratorybirds/NewReportsPublications/SpecialTopics/HuntingRegulations/Mig%20bird%20Regs%20analysis%202008.pdf1018-AX06 Migratory Bird Hunting; Final Frameworksfor Late Season Migratory Bird HuntingRegulations[75 FR 58249]$271millionRange:$234­$309millionNotestimatedEstimates based on the RIA for the 2008-2009 season. The full RIA isavailable at:http://www.fws.gov/migratorybirds/NewReportsPublications/SpecialTopics/HuntingRegulations/Mig%20bird%20Regs%20analysis%202008.pdfDepartment of Justice1117-AA61 Electronic Prescriptions for ControlledSubstances [75 FR 16236]$348­$1,320million$35-$36millionThe RIA is available at:http://www.deadiversion.usdoj.gov/ecomm/e_rx/eia_dea_218.pdf114RIN TitleBenefits(2001$)Costs(2001$)Other Information1190-AA44 Nondiscrimination on the Basis of Disabilityin Public Accommodations and CommercialFacilities [75 FR 56164]$1,123millionRange:$980­$2,056million$611millionRange:$549­$719millionThe RIA is available at:http://www.ada.gov/regs2010/ADAregs2010.htm1190-AA46 Nondiscrimination on the Basis of Disabilityin State and Local Government Services[75 FR 56236]$173millionRange:$151­$304million$138millionRange:$122­$172millionThe RIA is available at:http://www.ada.gov/regs2010/ADAregs2010.htmDepartment of Labor1210-AB08 Improved Fee Disclosure for Pension Plans[75 FR 41599]Notestimated$44-$48millionQualitative Benefits: Qualitative: The final regulation will increase theamount of information that service providers disclose to planfiduciaries. Non-quantified benefitsinclude information cost savings,discouraging harmful conflicts of interest, service value improvementsthrough improved decisions and value, better enforcement tools toredress abuse, and harmonization with other EBSA rules and programs.The RIA is included in the preamble.1218-AC01 Cranes and Derricks in Construction [75 FR47906]$172million$123­$126millionThe RIA is included in the preamble.Department of State1400-AC58 Schedule of Fees for Consular Services,Department of State and Overseas Embassiesand Consulates[75 FR 36522]NotestimatedNotestimatedTransfers: $322-$394 millionThe RIA is included in the preamble.Department of Transportation115RIN TitleBenefits(2001$)Costs(2001$)Other Information2120-AI92 Automatic Dependent Surveillance-­Broadcast (ADS-B) Equipage Mandate toSupport Air Traffic Control Service [75 FR30160]$172millionRange:$149­$195million$233millionRange:$153­$292millionThe RIA is available at:http://www.regulations.govDocument ID:FAA-2007-29305-0288.12126-AA89 Electronic On-Board Recorders for Hoursof-Service Compliance [75 FR 17208]$165­$170million$126­$129millionThe RIA is available at:http://www.regulations.govDocument ID:FMCSA-2004-18940-11572130-AC03 Positive Train Control [75 FR 2597]$34millionRange:$34-$37million$745millionRange:$519­$1,264millionThe RIA is available at:http://www.fra.dot.gov/downloads/safety/PTCRSIAfinalRIA120809.pdf2137-AE15 Pipeline Safety: Distribution IntegrityManagement [74 FR 63906]$97-$145million$92-$97millionThe RIA is available at:http://www.regulations.govDocument ID:PHMSA-RSPA-2004-19854-0255Department of Transportation and Environmental Protection Agency116RIN TitleBenefits(2001$)Costs(2001$)Other Information2060­AP58;2127-AK50Light-Duty Greenhouse Gas EmissionStandards and Corporate Average FuelEconomy Standards [75 FR 25323]$11.9billionRange:$3.9­$18.2billion$3.3billionRange:$1.7-$4.9billionThe primary estimates are based on the total cost and benefits estimatesfor model years 2012-2016 in EPA’s RIA and the range of total costand benefit estimates in DOT’s RIA,annualized over the life of thevehicles covered by the rule. DOT and EPA estimates differ somewhatdue to programmatic differences between the two rules and differencesin estimation modeling.DOT’s RIA is available at:http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/CAFE_2012­2016_FRIA_04012010.pdfEPA’s RIA is available at:http://www.epa.gov/otaq/climate/regulations/420r10009.pdfDepartment of the Treasury1557-AD23 S.A.F.E. Mortgage Licensing Act [75 FR44656]Notestimated$148millionRange:$86-$157millionQualitative Benefits: Rule enhancesbank oversight/OCC supervision ofmortgage origination through writtenpolicies/procedures and regulatoryrequirements on national banks and employee loan originators.Qualitative Costs: OCC monetized the cost of compensation but did notattempt to account for any possiblereduction in banks' fee or otherincome due to lower loan originator productivity due to theimplementation of the joint interagency Rule.The RIA is available at:http://www.regulations.govDocument ID: OCC-2010-0007-0002Department of Veterans Affairs2900-AN54 Diseases Associated With Exposure toCertain Herbicide Agents (Hairy CellLeukemia and Other Chronic B CellLeukemias, Parkinson’s Disease, andIschemic Heart Disease) [75 FR 53202]NotestimatedNotestimatedTransfers: $4,101-$5,408 millionThe RIA is available at:http://www.va.gov/ORPM/FY_2010_Published_VA_Regulations.asp(scroll to number 37)Environmental Protection Agency117RINTitleBenefits(2001$)Costs(2001$)Other Information2050-AG16Revisions to the Spill Prevention, Control,and Countermeasure (SPCC) Rule [74 FR58784]$0($81million)Range($78-$85million)Cost savings.The RIA is available at: http://www.Regulations.govDocket ID:EPA-HQ-OPA-2007-05842060-AO15NESHAP: Portland Cement Notice ofReconsideration [75 FR 54970]$6.1­$16.3billion$0.8-$0.9billionThe RIA is available at:http://www.epa.gov/ttn/atw/pcem/ria_cement.doc2060-AO38Control of Emissions From New MarineCompression-Ignition Engines at or Above30 Liters per Cylinder [75 FR 22897]NotestimatedNotestimatedThe agency presents estimated benefits and costs for the coordinatedstrategy, both national and international levels, to control emissionsfrom ocean-going vessels. It includes: (1) the engine and fuel controlsfinalizing under the Clean Air Act; (2) the proposal submitted by theUnited States Government to the International Maritime Organization toamend MARPOL Annex VI to designate U.S. coasts as an EmissionControl Area in which all vessels, regardless of flag, would be requiredto meet the engine and marine fuelsulfur requirements in Annex VI;and (3) the new engine emission and fuel sulfur limits contained in theamendments to Annex VI that are applicable to all vessels regardless offlag under the Act to Prevent Pollution from Ships. The estimates,although illustrative, do not represent the benefits and costs of the rule.The RIA available at:http://www.epa.gov/otaq/regs/nonroad/marine/ci/420r09019.pdf2060-AO48Review of the National Ambient Air QualityStandards for Sulfur Dioxide [75 FR 35519]$10.5billionRange:$2.9­$38.6billion$0.7billionRange:$0.3-$2.0billionThe agency provided benefit and costestimates for 2020. In order toannualize, as with previous NAAQS rulemakings, OMB assumed thatthe benefits and costs would be zeroin the first year after the rule isfinalized, the benefits and costs would increase linearly until year 2020,and the benefit and cost estimateswould equal the 2020 estimatesthereafter.EPA’s RIA is available at:http://www.epa.gov/ttn/ecas/regdata/RIAs/fso2ria100602full.pdf118RINTitleBenefits(2001$)Costs(2001$)Other Information2060-AO81Renewable Fuels Standard Program [75 FR14670]NotestimatedNotestimatedEPA utilizes a case study approach to assess the consequences of anexpansion of renewable fuel use, whether caused by the RFS2 programor by market force. The analytical approach taken by EPA is to predictwhat the world would be like, in terms of a range of economic andenvironmental factors, if renewable fuel use increases to the levelrequired by the RFS2 standards.EPA then compares this to tworeference cases without the RFS2 program. The estimates, althoughillustrative, do not represent the benefits and costs of the rule.EPA’s RIA is available at:http://www.epa.gov/otaq/renewablefuels/420r10006.pdf2060-AP36National Emission Standards for HazardousAir Pollutants for Reciprocating InternalCombustion Engines (Diesel) [75 FR 9647]Range:$709­$1,920million$311millionRange:$296­$311millionEPA’s RIA is available at:http://www.epa.gov/ttn/atw/rice/rice_neshap_ria2-17-10.pdf119RINTitleBenefits(2001$)Costs(2001$)Other Information2060-AP86Prevention of Significant Deterioration/TitleV Greenhouse Gas Tailoring Rule [75 FR31514]NotestimatedNotestimatedEPA estimated that the Tailoring rule would provide significantregulatory relief to state permittingagencies, becausewithout the rule,the number of permits required would overwhelm the resources ofpermitting authorities, and severely impair the functioning of theprograms. Although EPA estimated savings of $1.5 billion topermitting authorities and $21 billion for facilities, these savingsestimates are not included in this report for two reasons. First, in orderto count these cost savings, one would have to assume that the jointEPA/DOT greenhouse gas and fuel economy rules imposed an extra$22.5 billion in costs. In such a case, the inclusion of these impactsaffects the total net benefits of FY 2010 rulemaking. Furthermore, EPAargued in the Tailoring rule that this level of permitting would beadministratively impossible. For example, EPA estimated processingthe over 6 million permits needed in the absence this rule may take aslong as 10 years, and indicated eventhis may be an underestimate.Inother words, these savings estimates, although illustrative, do notrepresent a cost that would be imposed in the absence of this rule.EPA’s RIA is available at:http://www.epa.gov/ttnecas1/regdata/RIAs/riaghgtailoring092109.pdf2060-AQ13National Emission Standards for HazardousAir Pollutants for Reciprocating InternalCombustion Engines--Existing StationarySpark Ignition (Gas-Fired) [75 FR 51569]$380­$992million$202­$209millionEPA’s RIA is available at:http://www.epa.gov/ttn/atw/rice/fnl_si_rice_ria.pdf2070-AJ55Lead; Amendment to the Opt-out andRecordkeeping Provisions in the Renovation,Repair, and Painting Program [75 FR 24802]$785­$2,953million$267­$290millionThe RIA is available at:http://www.regulations.govDocument ID:EPA-HQ-OPPT-2005-0049-1076.6120Table A-2: Estimates of Annual Benefits and Costs of Major Final RulesOctober 1, 2000 - September 30, 2009215(Millions of 2001 Dollars)RIN TitleCompletedPublishedBenefitsCostsSource ofEstimateDepartment of Agriculture0579-AB73 Bovine Spongiform Encephalopathy: Minimal Risk Regions andImportation of Commodities12/29/041/4/05572-639557-6232006 Report:Table 1-40579-AB81 Mexican Hass Avocado Import Program11/23/0411/30/04122-18471-1142006 Report:Table 1-40579-AC01 Bovine Spongiform Encephalopathy; Minimal-Risk Regions andImportation of Commodities9/14/079/18/07169-34098-1942008 Report:Table 1-40583-AC46 Performance Standards for Ready-To-Eat Meat and PoultryProducts5/30/036/6/0343-152172004 Report:Table 120583-AC88 Prohibition of the Use of Specified Risk Materials for Human Foodand Requirements for the Disposition of Non-Ambulatory DisabledCattle6/29/077/13/07087-2212008 Report:Table 1-40596-AB77 Special Areas; Roadless Area Conservation -- 36 CFR Part 2941/5/011/12/0101842002 Report:Table 19Department of Energy1904-AA67 Energy Efficiency Standards for Clothes Washers1/2/011/12/012,1509402002 Report:Table 191904-AA76 Energy Efficiency Standards for Water Heaters1/9/011/17/016805102002 Report:Table 191904-AA77 Energy Efficiency Standardsfor Central Air Conditioners and HeatPumps1/17/011/22/011,2331,1322003 Report:Table 19(adjusted)216215Based on date of completion of OMB review.216On January 22, 2001, DOE promulgated a regulation that would have raised the energy efficiency of new central air conditionersby 30 percent. On May 23,2002, DOE withdrew the 2001 rule and issued this final rule raising the minimum energy efficiency levels by 20 percent. The latter action was the subject of alitigation that concluded in 2004, with the court holding thatDOE must implement the regulation promulgated on January 22, 2001. On August 17, 2004, DOEpublished revisions to the Code of Federal Regulations that reflected the energy efficiency increase of 30 percent that will take effect in 2006 (69 FR 50997).Thus, in our current 10-year aggregate we have replaced the benefits and costs of the 2002 final rule (originally reported in the 2003 report) with the benefits andcosts of the original 2001 final rule.121RIN TitleCompletedPublishedBenefitsCostsSource ofEstimate1904-AA78 Energy EfficiencyStandards for Residential Furnaces and Boilers11/6/0711/19/07120-18233-382009 Report:Table 1-41904-AA92 Energy Efficiency Standards for General Service Fluorescent Lampsand Incandescent Lamps6/26/097/14/091,111-2,886192-6572010 Report:Table 1-41904-AB08 Energy Efficiency Standards for Electric Distribution Transformers9/27/0710/12/07490-865381-4262008 Report:Table 1-41904-AB59 Energy Efficiency Standards for Commercial RefrigerationEquipment12/18/081/9/09186-22469-812010 Report:Table 1-4Department of Health and Human Services0910-AA43 Hazard Analysisand Critical Control Point (HACCP); Proceduresfor the Safe and Sanitary Processing and Importing of Juice1/10/011/19/01150302002 Report:Table 190910-AB30 Food Labeling: Safe Handling Statements, Labeling of Shell Eggs;Refrigeration of Shell Eggs Held for Retail Distribution11/29/0012/5/00261152002 Report:Table 190910-AB66 Food Labeling: Trans FattyAcids in Nutrition Labeling, NutrientContent Claims, and Health Claims7/2/037/11/03230-2,8399-262004 Report:Table 120910-AB76 CGMPs for Blood and Blood Components: Notification ofConsignees and Transfusion Recipients Receiving Blood and BloodComponents at Increased Risk of Transmitting HCV Infection(Lookback)8/14/078/24/0728-130112008 Report:Table 1-40910-AB88 Current Good Manufacturing Practice in Manufacturing, Packing, orHolding Dietary Ingredients and Dietary Supplements5/8/076/25/0710-7987-2932008 Report:Table 1-40910-AC14 Prevention of Salmonella Enteritidis in Shell Eggs7/2/097/9/09206-8,58348-1062010 Report:Table 1-40910-AC26 Bar Code Label Requirements for Human Drug Products and BloodProducts2/17/042/26/041,352-7,3426472005 Report:Table 1-40910-AC34 Amendments to the Performance Standard for Diagnostic X-RaySystems and Their Major Components5/27/056/10/0587-2,549302006 Report:Table 1-40910-AC48 Applications for FDA Approval To Market a New Drug PatentListing Requirements and Application of 30-Month Stays onApproval of Abbreviated New Drug Applications Certifying That aPatent...6/9/036/18/03226102004 Report:Table 120910-AF19 Declaring Dietary Supplements Containing Ephedrine AlkaloidsAdulterated Because They Presentan Unreasonable Risk of Illnessor Injury (Final Rule)2/5/042/11/040-1307-892005 Report:Table 1-40919-AA01 Patient Safety and Quality Improvement Act of2005 Rules11/14/0811/21/0869-13687-1212010 Report:Table 1-4122RIN TitleCompletedPublishedBenefitsCostsSource ofEstimate0938-AH99 Health Insurance Reform: Standard Unique Health Care ProviderIdentifier -- CMS-0045-F1/13/041/23/042141582005 Report:Table 1-40938-AM50 Updates to Electronic Transactions (Version 5010) (CMS-0009-F)1/9/091/16/091,114-3,194661-1,4492010 Report:Table 1-40938-AN25 Revisions to HIPAA Code Sets (CMS-0013-F)1/9/091/16/0977-26144-2382010 Report:Table 1-40938-AN49 Electronic Prescribing Standards(CMS-0011-F)11/1/0511/7/05196-66082-2742007 Report:Table 1-40938-AN79 Fire Safety Requirements for Long-Term Care Facilities: SprinklerSystems (CMS-3191-F)8/6/088/13/0853-5645-562009 Report:Table 1-40938-AN95 Immunization Standard for Long Term Care Facilities (CMS-3198­P)9/30/0510/7/0511,00062006 Report:Table 1-40991-AB08 Standards for Privacy of Individually Identifiable HealthInformation12/19/0012/28/002,7001,6802002 Report:Table 19Department of Homeland Security1651-AA72 Changes to the Visa WaiverProgram To Implement the ElectronicSystem for Travel Authorization (ESTA) Program5/30/086/9/0820-2913-992009 Report:Table 1-4Department of Housing and Urban Development2502-AI61 Real Estate Settlement Procedures Act (RESPA);To Simplify andImprove the Process of Obtaining Mortgages and Reduce ConsumerCosts (FR-5180)11/7/0811/17/082,3038842010 Report:Table 1-4Department of Justice1117-AA60 Electronic Orders for Schedule I and II Controlled Substances3/18/054/1/05275108-1182006 Report:Table 1-4Department of Labor1210-AB06 Revision of the Form 5500 Series and Implementing Regulations8/30/0711/16/070(83)2008 Report:Table 1-41218-AA65 Safety Standards for Steel Erection1/8/011/18/01167782002 Report:Table 191218-AB45 Occupational Exposure to Hexavalent Chromium (PreventingOccupational Illness: Chromium)2/17/062/28/0635-862263-2712007 Report:Table 1-41218-AB77 Employer Payment for Personal Protective Equipment11/2/0711/15/0740-3362-202009 Report:Table 1-41219-AB46 Emergency Mine Evacuation12/5/0612/8/0610412008 Report:Table 1-4Department of Transportation123RINTitleCompletedPublishedBenefitsCostsSource ofEstimate2120-AH68Reduced Vertical Separation Minimum in Domestic United StatesAirspace (RVSM)10/8/0310/27/03(60)(320)2005 Report:Table 1-42120-AI17Washington, DC, Metropolitan Area Special FlightRules Area12/3/0812/16/0810-83989-3822010 Report:Table 1-42120-AI23Transport Airplane Fuel Tank Flammability Reduction7/9/087/21/0821-6660-672009 Report:Table 1-42120-AI51Congestion and Delay Reduction at Chicago O'Hare InternationalAirport8/18/068/29/06153-16402007 Report:Table 1-42120-AJ01Part 121 Pilot Age Limit6/8/097/15/0930-3542010 Report:Table 1-42126-AA23Hours of Service Drivers; Driver Rest and Sleep for Safe Operation4/9/034/28/036901,3182004 Report:Table 122126-AA59New Entrant Safety Assurance Process11/26/0812/16/08472-60260-722010 Report:Table 1-42126-AA90Hours of Service of Drivers8/16/058/25/0519(235)2006 Report:Table 1-42126-AB14Hours of Service of Drivers21711/13/0811/19/08NotincludedNotincluded2010 Report:Table 1-42127-AG51Roof Crush Resistance4/30/095/12/09374-1,160748-1,1892010 Report:Table 1-42127-AH09Upgrade of Head Restraints11/23/0412/14/04111-139832006 Report:Table 1-42127-AI10Advanced Air Bags: Response to Petitions Federal Motor VehicleSafety Standards; Occupant Crash Protection12/5/0112/18/01140-1,600400-2,0002002 Report:Table 192127-AI33Tire Pressure Monitoring Systems2185/29/026/5/02NotIncludedNotIncluded2003 Report:Table 19217As explained in the 2010 Report, the benefits and costs of this rule are not included in the benefit and cost totals for the 10-year aggregate. This interim finalrule reestablished policies on the maximum time truck drivers were able to drive per day and per week, and the minimum period before which truck drivers couldrestart the count of their weekly drivingtime. These policies were put in place through previous rulemakings on the same subject, but were vacated in 2007 bythe United States Court of Appeals for the DC Circuit, which held that the Agency had failed to provide an opportunity for public comment on certain aspects oftheir Regulatory Impact Analysis. Furthermore, the analysis accompanyingthis interim final rule analyzed the impact of maintaining these policies relative tothe disruptive impact of their prompt removal, not relative to previous fully-implemented policies. Since OMB already reportedand attributed the benefits andcosts of the Hours of Service Regulations to other rulemakings, and those policies were maintained by this interim final rule,we felt that including the benefitsand costs of this rulemaking in the ten-year totals would constitute double counting.218Superseded by the 2005 final rule (RIN 2127-AJ23).124RIN TitleCompletedPublishedBenefitsCostsSource ofEstimate2127-AI70 Light Truck Average Fuel Economy Standards, Model Years 2005­20073/31/034/7/032552202004 Report:Table 122127-AI91 Rear Center Lap/Shoulder Belt Requirement--Standard 20811/30/0412/8/04188-236162-2022006 Report:Table 1-42127-AJ10 Side Impact Protection Upgrade--FMVSS No. 2148/28/079/11/07736-1,058401-1,0512008 Report:Table 1-42127-AJ23 Tire Pressure Monitoring Systems3/31/054/8/051,012-1,316938-2,2822006 Report:Table 1-42127-AJ37 Reduced Stopping Distance Requirements for Truck Tractors7/16/097/27/091,250-1,52023-1642010 Report:Table 1-42127-AJ61 Light Truck Average Fuel Economy Standards, Model Year 2008and Possibly Beyond3/28/064/6/06847-1,035666-7542007 Report:Table 1-42127-AJ77 Electronic Stability Control (ESC)3/23/074/6/075,987­11,282913-9172008 Report:Table 1-42127-AK29 Passenger Car and Light Truck Corporate Average Fuel EconomyModel Year 20113/24/093/30/09857-1,905650-1,9102010 Report:Table 1-42137-AD54 Pipeline Integrity Management in High Consequence Areas (GasTransmission Pipelines)11/26/0312/15/031542882005 Report:Table 1-42137-AE25 Pipeline Safety: Standards for Increasing the Maximum AllowableOperating Pressure for Gas Transmission Pipelines10/2/0810/17/0885-8913-142010 Report:Table 1-42130-AB84 Regulatory Relief for Electronically Controlled Pneumatic BrakeSystem Implementation8/29/0810/16/08828-884130-1452009 Report:Table 1-4Environmental Protection Agency2040-AB75 National Primary Drinking Water Regulations, Arsenic, andClarifications to Complianceand New Source ContaminantsMonitoring1/10/011/22/01140-198206-2062002 Report:Table 192040-AD19National Pollutant Discharge Elimination System Permit Regulationand Effluent Guidelines and Standards for Concentrated AnimalFeeding Operations (CAFOs)12/14/022/12/03204-3553602004 Report:Table 122040-AD37 National Primary Drinking Water Regulations: Long Term 2Enhanced Surface Water Treatment Rule6/22/051/5/06262-1,78580-1322006 Report:Table 1-42040-AD38 National Primary Drinking Water Regulations: Stage 2 DisinfectionByproducts Rule11/23/051/4/06598-1,47374-762007 Report:Table 1-42040-AD56 Effluent Guidelines and Standards for the Meat and PoultryProducts Point Source Category (Revisions)2/26/049/8/040-1041-562005 Report:Table 1-4125RINTitleCompletedPublishedBenefitsCostsSource ofEstimate2040-AD62Establishing Location, Design, Construction, and CapacityStandards for Cooling Water Intake Structures at Large ExistingPower Plants (Final Rule)2/16/047/9/04723832005 Report:Table 1-42050-AG23Oil Pollution Prevention; Spill Prevention, Control, andCountermeasure (SPCC) Requirements--Amendments11/15/0612/26/060(86-148)2008 Report:Table 1-42050-AG31Definition of Solid Wastes Revisions9/17/0810/30/0816-285142009 Report:Table 1-42060-AG52Plywood and Composite Wood Products2/26/047/30/04152-1,437155-2912005 Report:Table 1-42060-AG63National Emission Standards for Hazardous Air Pollutants forStationary Reciprocating Internal Combustion Engines2/26/046/15/04105-1,0702702005 Report:Table 1-42060-AG69National Emission Standards for Hazardous Air Pollutants:Industrial/Commercial/Institutional Boilers and Process Heaters2192/26/049/13/04NotIncludedNotIncluded2005 Report:Table 1-42060-AI11Emissions From Nonroad Spark-Ignition Engines and Standards forRecreational Spark-Ignition Engines9/13/0211/8/021,330-4,8181922003 Report:Table 192060-AI34National Emission Standards for Hazardous Air Pollutants forChemical Recovery Combustion Sources at Kraft, Soda, Sulfite, andStand-Alone Semichemical Pulp Mills12/15/001/12/01293-393322002 Report:Table 192060-AI44Review of the National Ambient Air Quality Standards forParticulate Matter9/21/0610/17/063,837­39,8792,590-2,8332007 Report:Table 1-42060-AI69Heavy-Duty Engine Emission Standards and Diesel Fuel SulfurControl Requirements 200712/21/001/18/0113,0002,4002002 Report:Table 192060-AJ31Clean Air Visibility Rule6/15/057/6/052,302-8,153314-8462006 Report:Table 1-42060-AJ65Clean Air Mercury Rule--Electric Utility Steam Generating Units2203/15/055/18/05NotIncludedNotIncluded2006 Report:Table 1-42060-AK27Control of Emissions of Air Pollution From Nonroad DieselEngines and Fuel (Final Rule)5/7/046/29/046,853­59,4011,3362005 Report:Table 1-42060-AK70Control of Hazardous Air Pollutants From Mobile Sources2/8/072/26/072,310-2,983298-3462008 Report:Table 1-4219On June 19, 2007, the United States Court of Appeals for the District of ColumbiaCircuit vacated and remanded the national emission standards forhazardous air pollutants for industrial/commercial/institutional boilers and process heaters. Thus, we exclude this rule from the 10-year aggregates in previousreports. (Benefits: $3,752-$38,714 million; Costs: $876 million)220On February 8, 2008, the D.C. Circuit vacated EPA's rule removing power plants fromthe Clean Air Act list of sources of hazardous air pollutants. At thesame time, the Court vacated the Clean Air Mercury Rule. Thus, we exclude this rulefrom the 10-year aggregates. (Benefits: $1-2 million; Costs: $500 million)126RINTitleCompletedPublishedBenefitsCostsSource ofEstimate2060-AK74Clean Air Fine Particle Implementation Rule3/28/074/25/0718,833­167,4087,3242008 Report:Table 1-42060-AL76Clean Air Interstate Rule Formerly Titled: Interstate Air QualityRule2213/10/055/12/0511,947­151,7691,716-1,8942006 Report:Table 1-42060-AM06Control of Emissions from New Locomotives and New MarineDiesel Engines Less Than 30 Liters per Cylinder2/14/085/6/084,145­14,550295-3922009 Report:Table 1-42060-AM34Control of Emissions From Nonroad Spark-Ignition Engines andEquipment8/18/0810/8/08899-4,762196-2002009 Report:Table 1-42060-AM82Standards of Performance for Stationary Compression Ignition6/28/067/11/06679-757562007 Report:Internal Combustion EnginesTable 1-42060-AN24Review of the National Ambient Air Quality Standards for Ozone2223/12/083/27/08NotIncludedNotIncluded2009 Report:Table 1-42060-AN72Petroleum Refineries--New Source Performance Standards (NSPS)­-Subpart J4/30/086/24/08176-1,669272009 Report:Table 1-42060-AN83Review of the National Ambient Air Quality Standards for Lead10/15/0811/12/08455-5,203113-2,2412010 Report:Table 1-42070-AC83Lead-Based Paint; Amendments for Renovation, Repair andPainting3/28/084/22/08657-1,611383-4172009 Report:Table 1-42070-AD38Lead and Lead Compounds; Lowering of Reporting Thresholds;Community Right-to-Know ToxicChemical Release Reporting1/8/011/17/011,750-6,8402,7002002 Report:Table 19( ) indicates negative.221On July 11, 2008, the DCCircuit Court vacated the rule; however, in response to EPA's petition, the Court on December 23, 2008, remanded the rule withoutvacatur, which keeps this rule in effect while EPA conducts further proceedings consistent withthe Court's July 11 opinion. On August 2, 2010, EPA publishedin the Federal Register the proposed rule titled “Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone.” This rule,once finalized, will replace the Clean Air Interstate Rule.222Even though this rule was finalized and has not been overturned by a court, on January 19, 2010, EPA published a proposed reconsideration and tightening ofthe primary and secondary ozone standards. Therefore, for the purposes of this Report, we did not consider the latest round of ozone rulemakings finalized.(Benefits: $1,581-$14,934 million; Costs: $6,676-$7,730 million)127A PPENDIX B: T HE B ENEFITS AND C OSTS OF 1999-2000 M AJOR R ULES

Table B-1 lists the rules that were omitted fr om the ten-year running totals presented in Chapter I of our Report to Congre ss. It consists of the annuali zed and monetized benefits and

costs of rules for which OMB concluded revi ew between October 1, 1999 and September 30, 2000. These rules were included in Chapter I of the 2010 Report as part of the ten-year totals, but are not included in the 2011 Report.

While we limit the Chapter I accounting statemen t to regulations issued over the previous ten years, we have included in this Appendix th e benefits and cost estimates provided for the economically significant rulemakings that have b een covered in previous Reports in order to provide transparency. These estimates were first included in the 2002 Report (see table 19 in that report).

128Table B-1: Estimates of Annual Benefits and Costs of Six Major Federal Rules October 1, 1999 - September 30, 2000 (millions of 2001 dollars)

Agency RIN Title OMB Review Completed Benefits Costs

HHS/CMS 0938-AI58 Health Insurance Reform:

Standards for Electronic

Transactions 8/11/00 2,720 700

DOE/EE 1904-AA75 Energy Conservations

Standards for Fluorescent Lamp Ballasts 8/31/00 280 70

EPA/Water 2040-AC82 National Pollutant Discharge Elimination System: Regulations for Revision of

the Water Pollution Control Program Addressing Storm Water Discharges 10/15/99 700-1,700 900-1,100

EPA/AR 2060-AE29 Phase 2 Emission Standards for New Nonroad Small Spark Ignition Handheld Engines At

or Below 19 Kilowatts and

Minor Amendments to Emission Requirements Applicable to Small Spark Ignition Engines 3/1/00 170-890 190-250

EPA/AR 2060-AI12 Control of Emissions of Air

Pollution from 2004 and LaterModel Year Highway HeavyDuty Engines; Revision of Light-Duty Truck Definition 7/28/00 1,840-12,650 482

EPA/AR 2060-AI23 Control of Air Pollution from

New Motor Vehicle Emissions

Standards and Gasoline Sulfur Control Requirements 12/21/99 7,300-13,400 4,000

129A PPENDIX C: INFORMATION ON THE REGULATORY ANALYSES FOR MAJOR RULES BY

INDEPENDENT AGENCIES

Table C-1: Total Number of Rules Pr omulgated by Independent Agencies October 1, 2000 – September 30, 2010

Agency 200

1 2002 2003 2004 2005 2006 2007 2008 2009 2010

Consumer Product Safety Commission (CPSC) 0 0 0 0 0 1 0 0

-- --

Federal Communications Commission (FCC) 2 4 0 1 4 2 2 4

-- --

Federal Energy Regulatory Commission (FERC) 0 0 0 0 0 0 0 1

-- --

Federal Reserve System 0 0 1 1 0 0 0 0 3 7

Federal Trade Commission (FTC) 0 0 0 0 1 0 0 0

-- 1

National Credit Union Administration (NCUA) 0 0 0 0 0 0 0 0

-- --

Nuclear Regulatory Commission (NRC) 1 1 1 1 1 1 1 2 2 1

Pension Benefit Guaranty Corporation (PBGC) 0 0 0 0 0 0 0 0

-- --

Securities and Exchange Commission (SEC) 3 3 5 1 5 0 7 4 8 9

Total 6 8 7 4 11 4 10 11 13 17

130Table C-2: Total Number of Rules with Some Information on Benefits or Costs 223
Promulgated by Independent Agencies

October 1, 2000- September 30, 2010

Agency 2001 200

2 2003 2004 2005 2006 2007 2008 2009 2010

Consumer Product Safety Commission (CPSC) -- -- -- -- -- 1

-- -- -- --

Federal Communications Commission (FCC) 0 0 0 1 0 0 0 0

-- --

Federal Energy Regulatory Commission (FERC) -- -- -- -- -- -- -- 1

-- --

Federal Reserve System

-- -- 0 1

-- -- -- -- 0 2

Federal Trade Commission (FTC) -- -- -- -- 0

-- -- -- -- 1

National Credit Union Administration (NCUA) -- -- -- -- -- -- -- -- -- --

Nuclear Regulatory Commission (NRC) -- -- -- -- -- -- -- 1 1

--

Pension Benefit Guaranty Corporation (PBGC) -- -- -- -- -- -- -- -- -- --

Securities and Exchange Commission (SEC) 3 3 5 1 5

-- 7 4 8 9

Total 3 3 5 3 5 1 7 6 8 11

223 Table C-2 excludes all fee assessment rules promulgated by independent agencies. FCC promulgated six fee assessment rules from 1997 through 2002. NRC promulgated 13 statutorily mandated fee assessment rules from 1997 through 2010.

131A PPENDIX D: T HE B ENEFITS AND C OSTS OF M AJOR R ULES B Y A DMINISTRATION

Chapter II presents estimates of the annual be nefits and costs of ma jor final regulations reviewed by OMB during the first two fiscal years of three Administrations. The totals presented in chapter 2 are based on aggregation of estimat es presented in previ ous reports. Table D-1 includes major final rules OMB completed revi ew between January 20, 1993 to September 30,

1994 where both benefit and cost estimates were previously reported. Table D-2 includes major final rules OMB completed review between January 20, 2001 to September 30, 2002 where both benefit and cost estimates were previously re ported. Table D-3 includes major final rules OMB completed review between January 20, 2009 to September 30, 2009 where both benefit and cost estimates were previously reported. The tables a nd figure presented in chapter II also include the benefits and costs of 18 major final rules we report in table 1-5(a). OMB presents more detailed explanation of these regulations in several prev ious documents as noted in the “source” column

of the tables.

132Table D-1: Estimates of Annual Benefitsand Costs of Major Federal RulesJanuary 20, 1993 to September 30, 1994224(millions of 2001 dollars per year)AgencyRINTitleOMBReviewCompletedPublishedBenefitsCostsSourceHUD2502-AE66Manufactured Housing Construction and SafetyStandards9/21/9310/21/93$103$632004 Report:Table 13DOL1218-AB25Occupational Exposure to Asbestos7/1/948/10/94$92$4482005 Report:Table C-1DOT2105-AE43Prevention of Alcohol Misuse in the Aviation,Transit, Motor Carrier, Railroad, and PipelineIndustries, Common Preamble1/25/942/15/94$107$372005 Report:Table C-1DOT2125-AC85Controlled Substances and Alcohol Use andTesting1/25/942/15/94$1,539$1142005 Report:Table C-1EPA2050-AD89Land Disposal Restrictions Phase II, UniversalTreatment Standards and Treatment Standardsfor Organic Toxicity, Characteristic Wastes, andNewly Listed Wastes7/29/949/19/94$26$240-$2722005 Report:Table C-1EPA2060-AC19Hazardous Organic NESHAP (HON) for theSynthetic Organic Chemical ManufacturingIndustry (SOCMI) and Other Processes Subjectto the Negotiated Regulation for EquipmentLeaks2/28/944/22/94$593-$2,628$295-$3332005 Report:Table C-1EPA2060-AC64Control of Air Pollution from New MotorVehicles and New Motor Vehicle Engines,Refueling Emission Regulations for Light-DutyVehicles and Trucks and Heavy-Duty Vehicles1/22/944/6/94$167-$760$332003 Report:Table 18224Based on date of completion of OMB review.133AgencyRINTitleOMBReviewCompletedPublishedBenefitsCostsSourceEPA2060-AC65Control of Air Pollution from New MotorVehicles and New Motor Vehicle Engines,Regulations Requiring on-Board DiagnosticSystems on 1994 and Later Model Year LightDuty Vehicles1/28/932/19/93$702-$3,423$2262004 Report:Table 13EPA2060-AD27Fuel and Fuel Additives: Standards forReformulated Gasoline12/15/932/16/94$122-$947$1,085­$1,3952005 Report:Table C-1EPA2060-AD45Acid Rain NOX Regulations under Title IV ofthe Clean Air Act Amendments of 19902/25/943/22/94$433-$4,446$2972005 Report:Table C-1EPA2060-AD54Determination of Significance for NonroadSources and Emission Standards for NewNonroad Compression Ignition Engines At orAbove 37 Kilowatts, Control of Air Pollution --SAN 31125/26/946/17/94$647-$6,821$29-$702005 Report:Table C-1EPA2060-AD91Accelerated Phaseout of Ozone DepletingChemicals and Listing and Phaseout of MethylBromide11/29/9312/10/93$1,260­$3,993$1,6812005 Report:Table C-1$5,791-$24,885$4,548-$4,969134Table D-2: Estimates of Annual Benefitsand Costs of Major Federal RulesJanuary 20, 2001 to September 30, 2002225(millions of 2001 dollars per year)AgencyRINTitleOMBPublishedBenefitsCostsSourceReviewCompletedDOE1904-AA77Energy Efficiency Standards for Central Air1/31/025/23/02Not IncludedNot Included2003 Report:Conditioners and Heat PumpsTable 19 withAdjustments226DOT2127-AI10Advanced Air Bags: Response to Petitions12/5/0112/18/01$140-$1,600$400-$2,0002002 Report:Federal Motor Vehicle Safety Standards;Table 19Occupant Crash ProtectionDOT2127-AI33Tire Pressure Monitoring Systems5/29/026/5/02$409-$944$749-$1,2062003 Report:Table 19EPA2060-AI11Emissions From Nonroad Spark-Ignition9/13/0211/8/02$1,330­$1922003 Report:Engines and Standards for Recreational$4,818Table 19227Spark-Ignition Engines$1,879-$1,341-$7,362$3,398225Based on date of completion of OMB review.226On January 22, 2001, DOE promulgated a regulation that would have raised the energy efficiency of new central air conditionersby 30 percent. On May 23,2002, DOE withdrew the 2001 rule and issued this final rule raising the minimum energy efficiency levels by 20 percent. The latter action was the subject of alitigation that concluded in 2004, with the court holding thatDOE must implement the regulation promulgated on January 22, 2001. On August 17, 2004, DOEpublished revisions to the Code of Federal Regulations that reflected the energy efficiency increase of 30 percent that will take effect in 2006 (69 FR 50997).Thus, in our current 10-year aggregate we have replaced the benefits and costs of the 2002 final rule (originally reported in the 2003 report) with the benefits andcosts of the original 2001 final rule.227The original table included a typographical error; the low end of the benefits estimate was reported as $1,250 million.135Table D-3: Estimates of Annual Benefitsand Costs of Major Federal RulesJanuary 20, 2009 to September 30, 2009228(millions of 2001 dollars per year)AgencyRINTitleOMBPublishedBenefitsCostsSourceReviewCompletedHHS0910-AC14Prevention of Salmonella Enteritidis in ShellEggs7/2/097/9/09$206-$8,583$48-$1062010 Report:Table 1-4DOE1904-AA92Energy Efficiency Standards for General ServiceFluorescent Lamps and Incandescent Lamps6/26/097/14/09$1,111­$2,886$192-$6572010 Report:Table 1-4DOT2120-AJ01Part 121 Pilot Age Limit6/8/097/15/09$30-$35$42010 Report:Table 1-4DOT2127-AG51Roof Crush Resistance4/30/095/12/09$374-$1,160$748-$1,1892010 Report:Table 1-4DOT2127-AJ37Reduced Stopping Distance Requirements forTruck Tractors7/16/097/27/09$1,250­$1,520$23-$1642010 Report:Table 1-4DOT2127-AK29Passenger Car and Light Truck CorporateAverage Fuel Economy Model Year 20113/24/093/30/09$857-$1,905$650-$1,9102010 Report:Table 1-4$3,828-$1,665-$16,089$4,030228Based on date of completion of OMB review.136A PPENDIX E: E XECUTIVE O RDER 13563: I MPROVING R EGULATION AND R EGULATORY
R EVIEW

Executive Order 13563 of January 18, 2011

Improving Regulation and Regulatory Review

By the authority vested in me as President by th e Constitution and the laws of the United States of America, and in order to improve regulation and regulatory review, it is hereby ordered as

follows:

Section 1. General Principles of Regulation. (a) Our regulatory system must protect public health, welfare, safety, and our environmen t while promoting economic growth, innovation, competitiveness, and job creation. It must be base d on the best available sc ience. It must allow for public participation and an open exchange of ideas. It must promote predictability and reduce uncertainty. It must identify and use the best, most innovative, and leas t burdensome tools for achieving regulatory ends. It must take into acco unt benefits and costs, both quantitative and qualitative. It must ensure that regulations are accessible, cons istent, written in plain language, and easy to understand. It must measure, and seek to improve, the actual results of regulatory requirements. (b) This order is supplemental to and reaffi rms the principles, stru ctures, and definitions governing contemporary regulatory review that were established in Executive Order 12866 of September 30, 1993. As stated in that Executive Order and to the extent permitted by law, each agency must, among other things: (1) propose or adopt a regulation only upon a reasoned

determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectiv es, taking into account, among othe r things, and to the extent practicable, the costs of cumu lative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safe ty, and other advantages ; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rath er than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess

available alternatives to dire ct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public. (c) In applying these principles, each agency is directed to use the best available techniques to quantify anticipated present and future benefi ts and costs as accurately as possible. Where appropriate and permitted by law, each agency ma y consider (and discuss qualitatively) values that are difficult or impossible to quantify, in cluding equity, human dignity, fairness, and distributive impacts.

Sec. 2. Public Participation. (a) Regulations shall be adopted through a process that involves public participation. To that end, regulations shall be based, to the extent feasible and consistent with law, on the open exchange of information and perspectives among State, local, and tribal officials, experts in relevant di sciplines, affected stakeholders in the private sector, and the public

as a whole.

137(b) To promote that open exchange, each agency, consistent with Executive Order 12866 and other applicable legal requirement s, shall endeavor to provide the public with an opportunity to participate in the regulatory process. To the extent feasible and permitted by law, each agency shall afford the public a meaningful opportuni ty to comment through the Internet on any proposed regulation, with a comment period that should generally be at least 60 days. To the extent feasible and permitted by law, each agency shall also provide, for both proposed and final rules, timely online access to the rulemaking docket on Regul ations.gov, including relevant scientific and technical findings, in an open form at that can be easily searched and downloaded. For proposed rules, such access shall include, to the extent feasible and permitted by law, an opportunity for public comment on all pertinen t parts of the rulema king docket, including

relevant scientific a nd technical findings. (c) Before issuing a notice of proposed rulemaking, each agency, where feasible and appropriate, shall seek the views of those who are likely to be affected, including those who are likely to benefit from and those who are potentially subject to such rulemaking.

Sec. 3. Integration and Innovation. Some sectors and industries face a signifi cant number of regulatory requirements, some of which may be redundant, inconsistent, or overlapping. Greater coordination across agencies could reduce th ese requirements, thus reducing costs and simplifying and harmonizing rules. In developing regulatory actions and id entifying appropriate approaches, each agency shall attempt to pr omote such coordination, simplification, and harmonization. Each agency shall also seek to identify, as appropriat e, means to achieve regulatory goals that are de signed to promote innovation.

Sec. 4. Flexible Approaches. Where relevant, feasible, and cons istent with regulatory objectives, and to the extent permitted by law, each agency shall identify and consider regulatory approaches that reduce burdens and maintain fl exibility and freedom of choice for the public. These approaches include warnings, appropriate de fault rules, and disclosure requirements as well as provision of information to the public in a form that is clear and intelligible.

Sec. 5. Science. Consistent with the President’s Me morandum for the Heads of Executive Departments and Agencies, ‘‘Scientific Inte grity’’ (March 9, 2009), and its implementing guidance, each agency shall ensure the obj ectivity of any scientific and technological information and processes used to su pport the agency’s regulatory actions.

Sec. 6. Retrospective Analyses of Existing Rules. (a) To facilitate the periodic review of existing significant regulations, agencies sh all consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insuffici ent, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned. Such retrospective analyses, including supporting data, should be released on line whenever possible. (b) Within 120 days of the date of this orde r, each agency shall develop and submit to the Office of Information and Regulat ory Affairs a preliminary plan, consistent with law and its resources and regulatory priorities, under which th e agency will periodically review its existing significant regulations to dete rmine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency’s regulatory program more effective

or less burdensome in achievi ng the regulatory objectives.

138VerDate Mar<15>2010 21:18 JOB#1.EPS</GPH> Emcdonald

on DSK2BSOYB1PROD with NOTICES Sec. 7. General Provisions. (a) For purposes of this order, ‘‘agency’’ shall have the meaning set forth in section 3(b) of Executive Order 12866. (b) Nothing in this order shall be cons trued to impair or otherwise affect: (i) authority granted by law to a department or agency, or the head thereof; or (ii) functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals. (c) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(d) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officer s, employees, or agents , or any other person.

139A PPENDIX F: P RESIDENTIAL M EMORANDUM : R EGULATORY C OMPLIANCE

Memorandum of January 18, 2011

Regulatory Compliance

Memorandum for the Heads of Execu tive Departments and Agencies

My Administration is committed to enhancing e ffectiveness and efficiency in Government. Pursuant to the Memorandum on Transparency and Open Government, issued on January 21, 2009, executive departments and agencies (agencie s) have been working steadily to promote accountability, encourage collabor ation, and provide informati on to Americans about their

Government’s activities.

To that end, much progress ha s been made toward strengthen ing our democracy and improving how Government operates. In the regulatory area, several agencies, such as the Department of Labor and the Environmental Protection Agency, have begun to post online (at ogesdw.dol.gov

and www.epa-echo.gov ), and to make readily accessi ble to the public, information concerning their regulatory compliance and enforcement activities, such as information with respect to administrative inspections, examinations, review s, warnings, citations, and revocations (but excluding law enforcement or otherwise sens itive information about ongoing enforcement actions).

Greater disclosure of regulatory compliance information fosters fair and consistent enforcement of important regulatory obligations. Such disclosure is a critical st ep in encouraging the public to hold the Government and regulated entities acco untable. Sound regulatory enforcement promotes the welfare of Americans in many ways, by increasing public safety, improving working conditions, and protecting the air we breathe and the water we drink. Consistent regulatory enforcement also levels the playi ng field among regulated entities, en suring that those that fail to comply with the law do not have an unfair adva ntage over their law-abiding competitors. Greater agency disclosure of compliance and enforcement data will provide Americans with information they need to make informed decisions. Such di sclosure can lead the Government to hold itself more accountable, encouraging agencies to identify and address enforcement gaps.

Accordingly, I direct the following:

First, agencies with broad regulatory comp liance and administrative enforcement responsibilities, within 120 days of this memo randum, to the extent feasible and permitted by law, shall develop plans to ma ke public information concerning their regulatory compliance and enforcement activities accessible, downloadable, and searchable online. In so doing, agencies should prioritize making accessible information that is most useful to the general public and should consider the use of new technologies to a llow the public to have access to real-time data. The independent agencies are encouraged to comply with this directive.

Second, the Federal Chief Information Officer and th e Chief Technology Officer shall work with appropriate counterparts in each agency to make such data available online in searchable form, including on centralized platforms such as da ta.gov, in a manner that facilitates easy access,

140encourages cross-agency comparisons, and engage s the public in new and creative ways of using

the information.

Third , the Federal Chief Information Officer and the Chief Technology Officer, in coordination with the Director of the Office of Management and Budget (OMB) and thei r counterparts in each agency, shall work to explore how best to generate and share enforcement and compliance information across the Government, consistent w ith law. Such data sharing can assist with agencies’ risk-based approaches to enforcement: A lack of compliance in one area by a regulated entity may indicate a need for examination and closer attention by anot her agency. Efforts to share data across agencies, where appropriate and permitted by law, may help to promote flexible and coordinated enforcement regimes.

This memorandum is not intended to, and does not, create any right or bene fit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. Nothing

in this memorandum shall be constr ued to impair or othe rwise affect the functi ons of the Director of the Office of Management a nd Budget relating to budg etary, administrative, or legislative proposals.

The Director of OMB is authorized and di rected to publish this memorandum in the Federal Register

.

141A PPENDIX G: P RESIDENTIAL M EMORANDUM : R EGULATORY F LEXIBILITY , S MALL B USINESS , AND J OB C REATION

Memorandum of January 18, 2011

Regulatory Flexibility, Small Business, and Job Creation

Memorandum for the Heads of Executi ve Departments and Agencies

Small businesses play an essential role in the Am erican economy; they help to fuel productivity, economic growth, and job creation. More than ha lf of all Americans working in the private sector either are employed by a small business or own one. During a recent 15-year period, small businesses created more than 60 percen t of all new jobs in the Nation. Although small businesses and new companies provi de the foundations for economic growth and job creation, they have faced severe challenges as a result of the recession. One consequence has been the loss of significant numbers of jobs.

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601–612, establishes a deep national commitment to achieving statutory goals without imposing unnecessary burdens on the public. The RFA emphasizes the importance of recognizing ‘‘differences in the scale and resources of regulated entities’’ and of considering ‘‘alternative regulato ry approaches . . . which minimize the significant economic impact of rules on sma ll businesses, small organizations, and small governmental jurisdictions.’’ 5 U.S.C. 601 note.

To promote its central goals, the RFA imposes a series of requirements de signed to ensure that agencies produce regulatory flexibility analyses th at give careful consider ation to the effects of their regulations on small businesses and explore si gnificant alternatives in order to minimize any significant economic impact on small businesse s. Among other things, the RFA requires that when an agency proposing a rule with such imp act is required to provide notice of the proposed rule, it must also produce an initial regulatory flexibility analysis that includes discussion of significant alternatives. Significant alternatives include the use of performance rather than design standards; simplification of compliance and reporting requirements for small businesses;

establishment of different timetab les that take into account the re sources of small businesses; and exemption from coverage for small businesses.

Consistent with the goal of open government, th e RFA also encourages public participation in and transparency about the rulemaking process. Among other things, the statute requires agencies proposing rules with a significant eco nomic impact on small businesses to provide an opportunity for public comment on any required initial regulatory flex ibility analysis, and generally requires agencies prom ulgating final rules with such significant economic impact to respond, in a final regulatory flexibility analysis, to comments filed by the Chief Counsel for Advocacy of the Small Business Administration.

My Administration is firmly committed to eliminating excessive and unjustified burdens on small businesses, and to ensuring that regulations are designed with careful consideration of their effects, including their cumulative effects, on small businesses. Ex ecutive Order 12866 of

142VerDate Mar<15>2010 21:19 Jan 20, 2011 Jkt 223001 PO 00000 Frm 00003 Fmt 4790 Sfmt 4790 E:\FR\FM\21JAO1.SGM 21JAO1 OB#1.E September 30, 1993, as amended, states, ‘‘Each agency shall tailor its regu lations to impose the least burden on society, including individuals, businesses of diffe ring sizes, and other entities (including small communities and governmental entities), consistent with obtaining the regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations."

In the current economic environment, it is especi ally important for agencies to design regulations

in a cost-effective manner cons istent with the goals of prom oting economic growth, innovation, competitiveness, and job creation.

Accordingly, I hereby direct executive depart ments and agencies and request independent agencies, when initiating rulemaking that will have a significant economic impact on a substantial number of small entities, to give serious consideration to whether and how it is appropriate, consistent with law and regulatory objectives, to re duce regulatory burdens on small businesses, through increased flexibility. As the RFA recognizes, such flexibility may take many forms, including:

• extended compliance dates that take into account the resources available to small entities;

• performance standards rather than design standards;

• simplification of reporting and compliance requirements (as, for example, through streamlined forms and electronic filing options);

• different requirements for large and small firms; and

• partial or total exemptions.

I further direct that whenever an executive agency chooses, for reasons other than legal limitations, not to provide such flexibility in a pr oposed or final rule thatis likely to have a significant economic impact on a substantial number of small entities, it s hould explicitly justify

its decision not to do so in th e explanation that accompanies that proposed or final rule. Adherence to these requirements is designed to ensure that regulatory actions do not place unjustified economic burdens on small business owne rs and other small enti ties. If regulations are preceded by careful analysis, and subjected to public comment, they are less likely to be based on intuition and guesswork and more likely to be justified in light of a clear understanding of the likely consequences of alternative course s of action. With that understanding, agencies will be in a better position to protect the public while avoiding excessive costs and paperwork. This memorandum is not intended to, and does not, create any right or bene fit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. Nothing

in this memorandum shall be constr ued to impair or othe rwise affect the functi ons of the Director of the Office of Management a nd Budget relating to budg etary, administrative, or legislative proposals. among other things, and to the ex tent practicable, the costs of cumulative regulations.’’

The Director of the Office of Management and B udget is authorized and di rected to publish this

memorandum in the Federal Register

.

143A PPENDIX H: P RESIDENTIAL M EMORANDUM : A DMINISTRATIVE F LEXIBILITY

MEMORANDUM FOR THE HEADS OF EXEC UTIVE DEPARTMENTS AND AGENCIES

SUBJECT: Administrative Flex ibility, Lower Costs, and Better Results for State, Local, and

Tribal Governments

Over the last 2 years, my Administration ha s worked with State, local, and tribal governments through the Recovery Act and other m eans to create jobs, build infrastructure, and protect critical program s and services in the face of declining revenues. But through smarter government we can do even more to improve outcomes and lower costs for the American

taxpayer.

Federal program requirements over the past seve ral decades have sometimes been onerous, and they have not always contributed to better outcomes. With input from our State, local, and tribal partners, we can, consistent with law, reduce unnecessary regulatory and administrative burdens

and redirect resources to services that are esse ntial to achieving better outcomes at lower cost. This is especially urgent at a time when St ate, local, and tribal governments face large budget shortfalls and American taxpaye rs deserve to know that their funds are being spent wisely.

On January 18, 2011, I signed Executive Order 13563, which, among other things, calls for careful analysis of regulati ons by executive departments and agencies (agencies), including

consideration of costs and bene fits. Executive Order 13563 also re quires retrospe ctive analysis of existing significant rules and greater coordi nation across agencies to simplify and harmonize redundant, inconsistent, or overlapping requirements, thus reducing costs.

Executive Order 13563 applies to regulations involv ing and affecting State, local, and tribal governments. In particular, my Administration ha s heard from these governments that the array of rules and requirements imposed by various Federal programs and agencies may at times undermine their efforts to modernize and integrate program delivery. While appropriate data collection requirements are importa nt to program accountability, so me of these requirements are unduly burdensome, may not properly align complia nce requirements with outcomes, are not synchronized across programs, and fail to gi ve governments and taxpayers meaningful

information about what works and what needs to be improved or be stopped. I believe that working together, State, local, and tribal gove rnments and Federal agencies can distinguish between rules and requirements that support impor tant goals -- such as promoting public health and welfare; protecting the righ ts of individuals, organizations , and private businesses; and assuring that programs produce intended outcome s -- from rules and requirements that are excessively burdensome or may not serve their intended purpose.

Through this memorandum, I am instructing agencies to work closely with St ate, local, and tribal governments to identify administra tive, regulatory, and legislative barriers in Federally funded

144programs that currently prevent States, localities, and tribes, from efficiently using tax dollars to

achieve the best results for their constituents.

Section 1. Coordination and Co llaboration. To facilitate coor dination across Federal agencies and State, local, and tribal govern ments, I direct the Director of the Office of Management and Budget (OMB) to lead a process, in consultation with State, lo cal, and tribal governments, and agencies, to: (1) provide input to multiple agencies on State-specific, regional, or multistate strategies for eliminating unnecessary administra tive, regulatory, and legi slative burdens; (2) enable State, local, and tribal governments to request increased fl exibility, as appropriate, from multiple agencies simultaneously and receive expeditious and judicious consideration of those requests; (3) establish consistent criteria, where appropriate, for evaluating the potential benefits, costs, and programmatic effects of relaxing, simplifying, or eliminating administrative, regulatory, and legislative require ments; and (4) facilitate cons ensus among State, local, and tribal governments and agencies on matte rs that require coordinated action.

The Director of the OMB shall also take the following actions:

 Review and where appropriate revise gui dance concerning cost principles, burden minimizations, and audits for State, local, and tribal governments in order to eliminate, tothe extent permitted by law, unnecessary, unduly burdensome, duplicative, or lowpriority recordkeeping require ments and effectively tie such requirements to achievement

of outcomes.

 With agencies that administer overlapping pr ograms, collaborate with State, local, and tribal governments to standardize, str eamline, and reduce reporting and planning requirements in accordance with the Paperwor k Reduction Act. The OMB should play a lead role, with appropriate agen cies, in helping to develop e fficient, low-cost mechanisms for collecting and reporting data that can support multiple programs and agencies.

 Facilitate cost-efficient modern ization of State, local, and tribal information systems, drawing upon the collaboration of the Chie f Information Officer in the OMB and the Chief Technology Officer in the Office of Science and Technology Policy.

 Provide written guidance to ag encies on implementation of this memorandum within 60 days of the date of this memorandum.

Sec. 2. Streamlining Agency Requirements. W ithin 180 days of the date of this memorandum, agencies shall take the following actions to iden tify regulatory and administrative requirements that can be streamlined, reduced, or eliminat ed, and to specify where and how increased flexibility could be provided to produce the sa me or better program outcomes at lower cost.

 Work with State, local, and tr ibal governments to identify th e best opportuniti es to realize efficiency, promote program integrity, and improve program outcomes, including opportunities, consistent with law, that reduce or str eamline duplicative paperwork, reporting, and regulatory burdens and those that more effectively use Federal resources across multiple programs or States. Agencies should invite State, local, and tribal governments to identify not only administra tive impediments, but also significant statutory barriers, to efficiency and effectiveness in program implementation.

145 Establish preliminary plans to (1) consolidate or streamline processes that State, local, and tribal governments must use to obtain in creased flexibility to promote the same or better outcomes at lower cost; (2) establish tran sparent criteria or pr inciples for granting such increased flexibility, including those that are generally available and those that may be granted conditionally; and (3) ensure continued achievement of program results while allowing for such increased flexibility.

 Identify areas where cross-agency collabora tion would further reduce administrative and regulatory barriers and improve outcomes. This should include identifying requirements for State planning documents that are prere quisites for awards from individual Federal programs that could be consolidated into one plan serving a numb er of agencies and

programs.

 Report the results of these actions to the Director of the OMB.

Sec. 3. General Provisions. (a) This memorandum shall be implemented consistent with applicable law and subject to the availa bility of any necessary appropriations.

(b) Nothing in this memorandum shall be construe d to impair or otherwise affect the functions of the Director of the OMB relating to budgeta ry, administrative, or legislative proposals.

(c) This memorandum is not intended to, and does not, create any right or be nefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officer s, employees, or agents , or any other person.

146A PPENDIX I: A GENCY C HECKLIST : R EGULATORY I MPACT A NALYSIS

With this document, the Office of Inform ation and Regulatory Af fairs is providing a checklist to assist agencies in producing regulatory impact an alyses (RIAs), as required for economically significant rules by Executiv e Order 12866 and OMB Circular A-4.

Nothing herein alters, adds to, or reformulates existing requirements in any way. Moreover, this checklist is limited to the requirements of Executive Order 12866 (available at: http://www.reginfo.gov/public /jsp/Utilities/EO_12866.pdf ) and Circular A-4 (available at: http://www.whitehouse.gov/OMB/circulars/a004/a-4.pdf ); it does not address requirements imposed by other authorities, such as the National Environmental Policy Act, the Regulatory Flexibility Act, the Unfunded Mandates Reform Act, the Paperwork Reduction Act, and various Executive Orders that require analysis. Execu tive Order 12866 and Circ ular A-4, as well as those other authorities, should be consulted for further information.

Checklist for Regulatory Impact Analysis:

 Does the RIA include a reasonabl y detailed description of the need for the regulatory

action ? 229

, 230

 Does the RIA include an explanatio n of how the regulatory action will meet that need ? 231

 Does the RIA use an appropriate baseline (i.e., best assessment of how the world would look in the absence of the proposed action)? 232

 Is the information in the RIA based on the best reasonably obtainable scientific, technical,

and economic information and is it presented in an accurate, clear, complete, and

unbiased manner ? 233

229 Required under Executive Order 12866, Section 6(a)(3)(B)(i): “The text of the draft regulatory action, together with a reasonably detailed description of the need for the regulatory action and an explanation of how the regulatory

action will meet that need.”

230 Circular A-4 states: “If the regulation is designed to correct a significant market failure, you should describe the failure both qualitatively and (where feasible) quantitatively.” (P. 4)

231 See note 1 above.

232 Circular A-4 states: “You need to measure the benefits a nd costs of a rule against a baseline. This baseline should be the best assessment of the way the world would look absent the proposed action... In some cases, substantial portions of a rule may simply restate st atutory requirements that would be sel f-implementing, even in the absence of the regulatory action. In these cases, you sh ould use a pre-statute baseline.” (P. 15-16)

233 Circular A-4 states: “Because of its influential nature and its special role in the rulemaking process, it is appropriate to set minimum quality standards for regulatory analysis. You should provide documentation that the analysis is based on the best reasonably obtainable scientific, technical, and economic information available... you should assure compliance with the Information Quality Guidelines for your agency and OMB’s Guidelines for Ensuring and Maximizing the Quality, Objectivity, Utility, and Integrity of Informati on Disseminated by Federal Agencies...” (P. 17). The IQ Guidelin es (paragraph V.3.a) define objectivity to include “whether disseminated information is being presented in an accura te, clear, complete, and unbiased manner.” http://www.whitehouse.gov/omb/assets/omb/fedreg/reproducible2.pdf

147 Are the data, sources, and methods us ed in the RIA provided to the public on the Internet so that a qualified person can reproduce the analysis? 234

 To the extent feasible, does the RI A quantify and monetize the anticipated benefits from the regulatory action? 235

, 236

 To the extent feasible, does the RI A quantify and monetize the anticipated costs ? 237

 Does the RIA explain and support a reasoned determination that the benefits of the intended regulation justify its costs (recognizing that some benef its and costs are difficult to quantify)? 238

 Does the RIA assess the potentially effective and reaso nably feasible alternatives ? 239

o Does the RIA assess the benefits and costs of different regulatory provi sions separately if

the rule includes a number of distinct provisions? 240

234 Circular A-4 states: “A good analysis should be transparent and your results must be reproducible. You should clearly set out the basic assumptions, methods, and data underlying the analysis and discuss the uncertainties associated with the estimates. A qualified third party reading the analysis should be able to understand the basic elements of your analysis and the wa y in which you developed your estimates. To provide greater access to your analysis, you should generally post it, with all the supporting documents, on the internet so the public can review the findings.” (P. 17). OMB IQ Guidelines (paragraph V.3. b.ii) further states: “If an agency is responsible for disseminating influential scientific, financial, or statistical information, agency guidelines shall include a high degree of transparency about data and me thods to facilitate the reproducibility of such information by qualified third parties.”

235 Required under Executive Order 12866, Section 6(a)(3)(C) (i): “An assessment, including the underlying analysis, of benefits anticipated from the regulatory action (such as, but not limited to, the promotion of the efficient functioning of the economy and private markets, the enhancement of health an d safety, the protection of the natural environment, and the elimination or reduction of discrimi nation or bias) together with, to the extent feasible, a quantification of those benefits.”

236 Circular A-4 states: “You should monetize quantitative es timates whenever possible. Use sound and defensible values or procedures to monetize benefits and costs, and ensure that key analytical assumptions are defensible. If monetization is impossible, explain why and present all av ailable quantitative information.” (P. 19). Circular A-4 also offers a discussion of appropriate methods for monetizing benefits that might not easily be turned into monetary equivalents.

237 Required under Executive Order 12866, Section 6(a)(3 )(C)(ii): “An assessment, including the underlying analysis, of costs anticipated from th e regulatory action (such as, but not limited to, the direct cost both to the government in administering the regulation and to businesses and others in complying with the regulation, and any adverse effects on the efficient functioning of the economy, private markets (including productivity, employment, and competitiveness), health, safety, and the natural envi ronment), together with, to the extent feasible, a quantification of those costs;” See also note 6 above.

238 Executive Order 12866, Section 1(b)(6) states that to the extent permitted by law, “[e]ach agency shall assess both the costs and the benefits of the intended regulation an d, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” As Executive Order 12866 reco gnizes, a statute may require an agency to proceed with a regulation even if the benefits do not justify the costs; in such a case, the agency’s analysis may not show any such justification.

239 Required under Executive Order 12866, Section 6(a)(3 )(C)(iii): “An assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, identified by the agencies or the public (including improving the current regulation and reasonably viable nonregulatory actions)...”

148o Does the RIA assess at least one alternative that is less stringent and at least one alternative that is more stringent? 241

o Does the RIA consider setting different requirements for large and small firms? 242

 Does the preferred option have the highest net benefits (including potential economic, environmental, public health and safety, and other advantages; dist ributive impacts; and equity), unless a statute re quires a different approach? 243

 Does the RIA include an explanation of why the planned regulatory action is preferable to the identified potential alternatives? 244

 Does the RIA use appropriate discount rates for benefits and costs th at are expected to occur

in the future? 245

 Does the RIA include, if and where relevant, an appropriate uncertainty analysis ? 246

240 Circular A-4 states: “You should analyze the benefits and costs of different regulatory provisions separately when

a rule includes a nu mber of distinct provisions.” (P. 17)

241 Circular A-4 states: “you generally sh ould analyze at least three options: th e preferred option; a more stringent option that achieves additional benefits (and presumably costs more) beyond th ose realized by the preferred option; and a less stringent option that costs less (and presumably generates fewer benefits) than the preferred option.” (P. 16)

242 Circular A-4 states: “You should consider setting different requirements for large and small firms, basing the requirements on estimated diff erences in the expected costs of compliance or in the expected benefits. The balance of benefits and costs can shift depending on the size of the firms being regulated. Small firms may find it more costly to comply with regulation, esp ecially if there are large fixed costs re quired for regulatory compliance. On the other hand, it is not efficient to place a heavier burden on one segment of a regulated industry solely because it can better afford the higher cost. This has the potential to load costs on the most productive firms, costs that are disproportionate to the damages they create. You should also remember that a rule with a significant impact on a substantial number of small entities will trigger the requirements set forth in the Regulatory Flexibility Act. (5

U.S.C. 603(c), 604).” (P. 8)

243 Executive Order 12866, Section 1(a) states: “agencies s hould select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity) unless a statute requires another regulatory approach.”

244 Required under Executive Order 12866, Section 6(a)(3 )(C)(iii): “An assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, identified by the agencies or the public (including improving the current regulation and reasonably viable nonregulatory actions), and an explanation why the planned re gulatory action is preferable to the identified potential

alternatives.”

245 Circular A-4 contains a detailed discussion, generally calling for discount rates of 7 percent and 3 percent for

both benefits and costs. It states: “Benefits and costs do no t always take place in the same time period. When they do not, it is incorrect simply to add all of the expected net benefits or costs without taking account of when they actually occur. If benefits or costs ar e delayed or otherwise separated in time from each other, the difference in timing should be reflected in your analysis.... For regulatory analysis, you should provide estimates of net benefits using both 3 percent and 7 percent.... If your rule will have important intergenerational benefits or costs you might consider a further sensitivity analysis using a lower but po sitive discount rate in addition to calculating net benefits using discount rates of 3 and 7 percent.” (PP. 31, 34, 36)

246 Circular A-4 provides a detailed di scussion. Among other things, it states: “Examples of quantitative analysis, broadly defined, would include formal estimates of the probabilities of environmental damage to soil or water, the possible loss of habitat, or risks to endangered species as well as probabilities of harm to human health and safety.

There are also uncertainties associated with estimates of economic benefits and costs, such as the cost savings associated with increased energy efficiency. Thus, your analysis should include two fundamental components: a

149 Does the RIA include, if and where relevant, a separate description of distributive impacts

and equity ? 247

o Does the RIA provide a descriptio n/accounting of transfer payments? 248

o Does the RIA analyze relevant effects on disa dvantaged or vulnerab le populations (e.g., disabled or poor)? 249

 Does the analysis include a clear, plain-language executive summary , including an accounting statement that summarizes the benefit and cost estimates for the regulatory action under consideration, in cluding the qualitative and non-monetized benefits and

costs? 250

quantitative analysis characterizing the probabilities of the relevant outcomes and an assignment of economic value to the projected outcomes.” (P. 40). Circular A-4 also states: “You should clearly set out the basic assumptions, methods, and data underlying the analysis and discuss the uncertainties associated with the estimates.” (P. 17)

247 Executive Order 12866, Section 1(b)(5) states; “When an ag ency determines that a regulation is the best available method of achieving the regulatory objective, it shall design its regulations in the most cost-effective manner to achieve the regulatory object ive. In doing so, each agency shall consider incentives for innovation, consistency, predictability, the costs of enforcement and compliance (to the government, regulated entities, and the public), flexibility, distributive impacts , and equity ” (emphasis added).

Circular A-4 states: “The term ‘distributional effect’ refers to the impact of a regulatory action across the population and economy, divided up in various ways (e.g., income groups, race, sex, industrial sector, geography)... Your regulatory analysis should provide a separate description of distributional effects (i.e., how both benefits and costs are distributed among sub-populations of particular concern) so that decision makers can properly consider them along with the effects on economic effi ciency... Where distributive ef fects are thought to be important, the effects of various regulatory alternatives should be described quantitatively to the extent possible, including the magnitude, likelihood, and severity of impacts on particular groups.” (P. 14)

248 Circular A-4 states: “Distinguishing between real costs and transfer payments is an important, but sometimes difficult, problem in cost estimation. . . . Transfer payments are monetary payments from one group to another that

do not affect total resources available to society. . . . You should not include tran sfers in the estimates of the benefits and costs of a regulation. Instead, address them in a separate discussion of the regulation's distributional effects.” (P. 14)

249 Circular A-4 states: “Your regulatory analysis should provide a separate description of distributional effects (i.e., how both benefits and costs are distributed among sub-populati ons of particular concern) so that decision makers can properly consider them along with the effects on economic efficiency. Executive Order 12866 authorizes this approach. Where distributive effects are thought to be important, the effects of various regulatory alternatives should be described quantitatively to the extent possible, including the magnitude, likelihood, and severity of impacts on particular groups.” (P. 14)

250 Circular A-4 states: “Your analysis should also have an executive summary, includ ing a standardized accounting statement.” (P. 3). OMB recommends tha t: “Regulatory analysis should be ma de as transparent as possible by a prominent and accessible executive summ ary—written in a “plain language” ma nner designed to be understandable to the public—that outlines the central judgments that suppor t regulations, including the key findings of the analysis (such as central assumptions and uncertainties)...If an ag ency has analyzed the costs and benefits of regulatory alternatives to the planned action (as is required for economically significant regulatory actions), the summary

should include such information.” See 2010 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities (2010), p. 51, available at: http://www.whitehouse.gov/sites/defa ult/files/omb/legislative/reports/2010_Benefit_Cost_Report.pdf

150 Does the analysis include a clear and transparent table presenting (to the extent feasible) anticipated benefits and costs (quantitative and qualitative)? 251

251 Circular A-4 states: “You need to provide an accounting statement with tables reporting benefit and cost estimates for each major final rule for your agency.” (P. 44). Circular A-4 includes an example of a format for agency consideration. OMB recommends “t hat agencies should clearly and prom inently present, in the preamble and in the executive summary of the regulato ry impact analysis, one or more tabl es summarizing the assessment of costs and benefits required under Executive Order 12866 Sec tion 6(a)(3)(C)(i)-(iii). The tables should provide a transparent statement of both quantitative and qualitative be nefits and costs of the proposed or planned action as well as of reasonable alternatives. The tables should include all relevant information that can be quantified and monetized, along with relevant information that can be desc ribed only in qualitative terms. It will often be useful to accompany a simple, clear table of aggregated costs and benefits with a separate table offering disaggregated figures, showing the components of the ag gregate figures. To the extent feasible in light of the nature of the issue and the relevant data, all benefits and costs should be quantified and monetized. To communicate any uncertainties, we recommend that the table should offer a range of valu es, in addition to best estimates, and it should clearly indicate impacts that cannot be quantified or monetized. If nonquantifiable variables are involved, they should be clearly identified. Agencies should attempt, to the extent feasible, not merely to identify such variables but also to signify their importance.” See 2010 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities , p. 51, available at: http://www.whitehouse.gov/sites/defa ult/files/omb/legislative/reports/2010_Benefit_Cost_Report.pdf

151A PPENDIX J: I NFORMATION Q UALITY A ND P EER R EVIEW

A. Links for Agency Information Quality Correspondence

Links to Agencies that Receive d Correction Requests in FY 2010:

Department of Agriculture : http://www.ocio.usda.gov/qi_guide Department of Commerce : http://ocio.os.doc.gov/ITPolicyandProgr ams/Information_Quality/index.htm Department of Health and Human Services : http://aspe.hhs.gov/inf oquality/requests.shtml Department of the Interior, Fish and Wildlife Service: http://www.fws.gov/informationquality Department of the Interior, US Geological Survey: http://www.usgs.gov/info_qual National Aeronautics and Space Administration : http://www.sti.nasa.gov/qualinfo.html Department of Housing and Urban Development : http://www.hud.gov/offices/adm/grant s/qualityinfo/qualityinfo.cfm Department of Labor : http://www.dol.gov/cio/programs/InfoGuidelines/IQCR.htm Environmental Protection Agency : http://epa.gov/quality/infor mationguidelines/iqg-list.html

Federal Communications Commission : http://www.fcc.gov/omd/dataquality/welcome.html

Federal Reserve Board : http://www.federalreser ve.gov/iq_correction.htm

152Links to All Agencies’ IQ Correspondence Web Pages:

Access Board : http://www.access-board.gov/abou t/policies/infoquality.htm Chemical Safety and Hazard Investigation Board : http://www.csb.gov/UserFiles/file/legal/FinalDataQualityGuidelines.pdf Commodity Futures Trading Commission : http://www.cftc.gov/About/CFTCRe ports/bulletinpeerreview.html Consumer Product Safety Commission : http://www.cpsc.gov/library/c orrection/correction.html Corporation for National and Community Service : http://www.nationalservice.gov/hom e/site_information/quality.asp Defense Nuclear Facilities Safety Board : http://www.dnfsb.gov/about/information_quality.php Department of Agriculture : http://www.ocio.usda.gov/qi_guide Department of Agriculture, Forest Service: http://www.fs.fed.us/qoi Department of Commerce : http://ocio.os.doc.gov/ITPolicyandProgr ams/Information_Quality/index.htm Department of Defense : http://www.defenselink.mil/pubs/dodiqguidelines.html Department of Defense, Army Corps of Engineers: http://www.usace.army.mil/ceci/iqa/pages/mission.aspx Department of Education : http://www.ed.gov/policy/gen/guid/infoqualguide.html Department of Energy : http://www.cio.energy.gov/infoquality.htm Department of Health and Human Services : http://aspe.hhs.gov/inf oquality/requests.shtml Department of Housing and Urban Development : http://www.hud.gov/offices/adm/grant s/qualityinfo/qualityinfo.cfm Department of Homeland Security : http://www.dhs.gov/xabout/compliance / Department of Justice : http://www.usdoj.gov/iqpr/iqpr_disclaimer.html Department of Labor : http://www.dol.gov/cio/programs/InfoGuidelines/IQCR.htm Department of State : http://www.state.gov/misc/49492.htm Department of the Interior : http://www.doi.gov/ocio/iq Department of the Interior, Bureau of Land Management: http://www.blm.gov/wo/st/en/National_Page /Notices_used_in_Foot er/data_quality.html Department of the Interior, Fish and Wildlife Service: http://www.fws.gov/informationquality

153Department of the Interior, National Park Service: http://www.nps.gov/policy/infoqualcorrect.htm Department of Transportation, Surface Transportation Board: http://www.stb.dot.gov/stb/Infor mationQualityGuidelines.htm Department of Transportation : http://docketsinfo.dot.gov/Dataquality.cfm Department of Veteran Affairs : http://www.rms.oit.va.gov/Information_Quality.asp Environmental Protection Agency : http://epa.gov/quality/infor mationguidelines/iqg-list.html Equal Employment Opportunity Commission : http://www.eeoc.gov/eeoc/plan/informationquality/index.cfm

Farm Credit Administration : http://www.fca.gov/FCA-Web/fca%20new%20site/home/info_quality.html

Federal Communications Commission : http://www.fcc.gov/omd/dataquality/welcome.html Federal Deposit Insurance Corporation : http://www.fdic.gov/about/policies/#information Federal Energy Regulatory Commission : http://www.ferc.gov/help/filing-guide/file-correct.asp

Federal Maritime Commission : http://www.fmc.gov/about/informati on_quality_guideline_details.aspx

Federal Reserve Board : http://www.federalreser ve.gov/iq_correction.htm

Federal Trade Commission : http://www.ftc.gov/ogc/sec515/index.htm

General Services Administration : http://www.gsa.gov/ portal/content/104725 Institute of Museum and Library Services : http://www.imls.gov/about/guidelines.shtm

Internal Revenue Service : http://www.irs.gov/irs/ article/0,,id=131585,00.html Merit Systems Protection Board : http://www.mspb.gov/netsearch/viewdocs.as px?docnumber=251846&version=252119&appli

cation=ACROBAT National Aeronautics and Space Administration : http://www.sti.nasa.gov/qualinfo.html

National Archives : http://www.archives.gov/about/in fo-qual/requests/index.html

National Credit Union Administration : http://www.ncua.gov/resources/RegulationsOpinionsLaws/ProposedRegulations.aspx

National Endowment for the Arts : http://www.arts.gov/about/infoquality.html

National Endowment for the Humanities : http://www.neh.gov/whoweare/dissemination.html

154National Labor Relations Board : http://www.nlrb.gov/about_us/public_notic es/information_on_quality_guidelines.aspx

National Science Foundation : http://www.nsf.gov/policies/infoqual.jsp National Transportation Safety Board : http://www.ntsb.gov/info/quality.htm Nuclear Regulatory Commission : http://www.nrc.gov/public-involve/info-quality.html

Nuclear Waste Technical Review Board : http://www.nwtrb.gov/plans/plans.html Occupational Safety & Health Review Commission : http://www.oshrc.gov/infoquality/infoquality.html Office of Federal Housing Enterprise Oversight : http://www.fhfa.gov/Default.aspx?Page=56

Office of Government Ethics : http://www.usoge.gov/management/info_quality.aspx Office of Management and Budget : http://www.whitehouse.gov/omb/inforeg/info_quality/information_quality.html Office of Personnel Management : http://www.opm.gov/policy/webpolicy/index.asp Office of Special Counsel : http://www.osc.gov/InfoQuality.htm Overseas Private Investment Corporation : http://www.opic.gov/publications/quality-guidelines Peace Corps : http://www.peacecorps.gov/index.cfm?shell=pchq.policies.docs Pension Benefit Guaranty Corporation : http://www.pbgc.gov/res/other-guidance/information-quality-guidelines.html

Small Business Administration : http://www.sba.gov/information/index.html Social Security Administration : http://www.ssa.gov/515/requests.htm Tennessee Valley Authority : http://www.tva.gov/infoquality /

US International Trade Commission : www.usitc.gov/documents/infoqualgdl.pdf

USAID : http://www.usaid.gov/policy/info_quality /

155B. Links for Agency Peer Review Agendas

Cabinet-Level Departments

Department of Agriculture : http://www.ocio.usda.gov/qi_gu ide/qoi_officer_lst.html http://www.ocio.usda.gov/qi_guide /scientific_research.html Agricultural Research Service: http://www.ars.usda.gov//docs.htm?docid =19203&dropcache=true&mode=preview Animal and Plant Health Inspection Service: http://www.aphis.usda.gov/peer_r eview/peer_review_agenda.shtml

Economic Research Service: http://www.ers.usda.gov/AboutERS/peerreview.htm Food Safety Inspection Service: http://www.fsis.usda.gov/Informa tion_Quality/Peer_Review/index.asp

Forest Service: http://www.fs.fed.us/qoi/peerreview.shtml Grain Inspection, Packers, and Stoc kyard Inspection Administration: http://www.gipsa.usda.gov/GIPSA/web app?area=home&subject=iq&topic=pr

Office of the Chief Economist: http://www.usda.gov/oce/peer_review Department of Commerce : http://ocio.os.doc.gov/ITPolicyandProgr ams/Information_Quality/index.htm

National Oceanic and Atmos pheric Administration: http://www.cio.noaa.gov/Policy_Progr ams/prplans/PRsummaries.html

Department of Defense : http://www.defenselink.mil/pubs/dodiqguidelines.html Department of Education : http://www.ed.gov/policy/gen/ guid/iq/peerreview.html Department of Energy: http://cio.energy.gov/infoquality.htm Department of Health and Human Services : http://aspe.hhs.gov/infoquality/peer.shtml

Center for Disease Control: http://www2a.cdc.gov/od/peer/peer.asp Food and Drug Administration:

http://www.fda.gov/ScienceResearch/Speci alTopics/PeerReviewofScientificInfo rmationandAssessme nts/default.htm National Toxicology Program: http://fmp-8.cit.nih.gov/sif/agenda.php

Office of Public Health and Science: http://aspe.hhs.gov/infoquality/guidelines/ophspeer.html Department of Homeland Security: http://www.dhs.gov/xabout/comp liance/editor ial_0633.shtm Department of Housing and Urban Development : http://www.huduser.org/abou t/pdr_peer_review.html Department of the Interior :

156http://www.doi.gov/ocio/iq_1.html Bureau of Land Management: http://www.blm.gov/wo/st/en/National_Page /Notices_used_in_Foot er/data_quality.html

Bureau of Reclamation: http://www.usbr.gov/main/qoi/peeragenda.html

Fish and Wildlife Service: http://www.fws.gov/informationquality/peer_review/index.html Bureau of Ocean Energy Management, Regulation and Enforcement: http://www.boemre.gov/qualityinfo/PeerReviewAgenda.htm

National Park Service: http://www.nps.gov/policy/peerreview.htm Office of Surface Mining: http://www.osmre.gov/guidance/osm_info_quality.shtm US Geological Society: http://www.usgs.gov/peer_review Department of Justice : http://www.usdoj.gov/iqpr/iqpr_disclaimer.html Department of Labor : http://www.dol.gov/asp/peer-review/index.htm Employee Benefits Security Administration: http://www.dol.gov/ebsa/regs/peerreview.html Occupational Safety and Health Administration: http://www.osha.gov/dsg/peer _review/peer_agenda.html Mine Safety and Health Administration http://www.msha.gov/REGS/PEERReview/PEERreview.asp Department of State : http://www.state.gov/misc/49492.htm Department of Transportation : http://www.dot.gov/peerreview / Department of Veterans Affairs : http://www.rms.oit.va.gov/Peer_Review.asp

Other Agencies

Consumer Product Safety Commission : http://www.cpsc.gov/ library/peer.html Environmental Protection Agency : http://cfpub.epa.gov/si/s i_public_pr_agenda.cfm

Federal Communications Commission : http://www.fcc.gov/omd/dataquality/peer-agenda.html Federal Energy Regulatory Commission : http://www.ferc.gov/help/filing-guide/file-correct.asp

Federal Trade Commission : http://www.ftc.gov/ogc/sec515 / National Aeronautics and Space Administration :

157http://www.sti.nasa.gov/peer_review.html Nuclear Regulatory Commission : http://www.nrc.gov/public-involve/info-quality/peer-review.html Office of Management and Budget : http://www.whitehouse.gov/omb/inforeg/info_quality/information_quality.html

Small Business Administration : http://www.sba.gov/content/sba-infor mation-quality-peer-review-agenda

Tennessee Valley Authority : http://www.tva.gov/infoquality

158C. Agencies that Do Not Produce or Sponsor Information Subject to the Bulletin

See website links in sect ion A of this Appendix.

Agency for International Development Corporation for National and Community Service Council on Environmental Quality Defense Nuclear Facilities Safety Board Department of the Treasury Equal Employment Opportunity Commission

Farm Credit Association

Federal Maritime Commission

Federal Reserve

General Services Administration Institute of Museum and Library Services

International Trade Commission Merit Systems Protection Board

National Archives

National Credit Union Administration

National Endowment for the Arts

National Endowment for the Humanities

National Labor Relations Board

National Science Foundation

Nuclear Waste Technical Review Board Office of Federal Housing Enterprise Oversight

Office of Government Ethics Office of Personnel Management Overseas Private Investment Corporation

Patent and Trade Office Peace Corps Pension Benefit Guaranty Corporation

Railroad Board Securities and Exchange Commission Selective Services System Social Security Administration Surface Transportation Board US Occupational Safety a nd Health Review Commission

159A PPENDIX K : R ESPONSE T O P EER R EVIEWS A ND P UBLIC C OMMENTS

We would like to express our sincere thanks and appreciation for the extremely helpful peer review and public comments that we received on the draf t 2011 report. In particular, we would like to thank our invited peer reviewer s, Joseph Aldy (Harvard Kennedy School), Michael Greenstone (Massachusetts Institu te of Technology), and Christine Jolls (Yale Law School). We are grateful for the time and effort they devoted to providing us with useful comments. We have made numerous changes in response to these comments.

We have read all comments carefully; we summarize here only a few of the major comments received and our responses. Full texts of the comments are available at OMB’s

website at http://whitehouse.gov/omb/inforeg_reports_congress /

.

Peer reviewer Aldy comments that it is important to remind readers that public policy is intended to make society better off and that benefit-cost analysis can help to promote that goal. We have provided this reminder. Specifically, we emphasize that “careful consideration of costs and benefits is best understood as a way of ensuri ng that regulations will imp rove social welfare, above all by informing design and development of various options so as to identify opportunities for both minimizing the costs of achieving social goals (cost-effectiveness) and maximizing net social benefits (efficiency).”

Peer reviewers Aldy and Greenst one both support the use of re trospective analysis, with Aldy suggesting that such analyses address not only the “top line” be nefits and costs, but also the net social benefits of specific components of the rules. Greenstone proposes a number of measures designed to implement retrospective analys is in a way that produces credible results. These include systematic reporting of ex post benefits and costs; advance announcements of retrospective review and the date the results will be published; the funding of contractors or academics to conduct retrospective analysis; and the public posting of data. Greenstone also suggests designing the implementation of new regul ations to allow for credible evaluations, including the use of randomized control trials or quasi-experimental approaches. Jolls similarly encourages agency experimentation to examin e the effects of regula tion and suggests that agencies can play a valuable role in experime ntally implementing alternatives, to the extent permitted by law, and then studying their consequences.

We believe that these comments are extr emely useful. To create a process of retrospective analysis, and a continuing culture of evaluation, OMB recommends that agencies use the best available technique s to assess the consequences of regulation, both as part of retrospective review and in the initial design of rules. As Gree nstone and Jolls suggest and as we have noted, an especially promis ing approach involves randomized controlled trials, in which regulatory initiatives are used in some domains but not in similarly situated others, thus allowing a careful analysis of their effects. 252 Of course there are constraint s – involving law, resources, and feasibility – in using randomized controlled tr ials in the regulatory context, but in some cases, they may be both appr opriate and highly useful.

252 See Greenstone (2009) and, in other contexts, Banerjee and Duflo (2011).

160OIRA is now working closely with agencies to improve evaluation and to create a culture of retrospective analysis. The preliminary pl ans for retrospective review, released under Executive Order 13563, demonstrate that thes e improvements are well under way. The preliminary plans offer relevant discussion. For example, DHS states that it will “build in retrospective review at the earliest stages of regulatory development.” 253 Its plan calls for the Department’s component agencies to “incorporate a discussion of retrospective analysis goals into their rulemaking project planning” in or der “to ensure that the component considers retrospective analysis through the lifespan of the regulation.” 254 The Department of Labor states that it “is contemplating how to incorporate the use of experime ntal designs to determine the impact of various regulations.” 255 The Department of Interior states that it “will consider” the use of “experimental or quasi-experimental de signs, including randomi zed controlled trials.” 256
Similarly, the Department of Tr easury states that it will work to “develop and incorporate experimental designs into retrospe ctive analysis, when appropriate.” 257

Such experimentation might, where feasible and consistent with law, also take the form of advance testing of regulatory alternatives , perhaps through pilot projects or randomized controlled trials, followed by study of their consequences. 258 Pilot projects and randomized experiments – such as DOT’s National Highway Traffic Safety Administration’s distracted driving demonstration programs discussed in the report – are likely to provide valuable

information about what interventions are likely to be most useful.

With regard to retrospective analysis, Jolls also points out that, in some circumstances, altering an existing rule may be inefficient even if a retrospective analysis provides evidence that the rule should not have been adopted in the first place. Once private-s ector actors have made long-term investments and adjustments in respon se to a rule, the disr uption and uncertainty associated with a change may simply be too larg e. OMB agrees with this point and has noted it in chapter 1.

Both Aldy and Greenstone support the involveme nt of external expe rts to undertake ex post analysis of the benefits and costs of Fe deral regulations, with Greenstone suggesting a “Regulatory Review Board” that would have the power to re quest evaluations of existing regulations, to judge the quality of evidence with respect to a re gulation, and possibly to fund an evaluation from its own resources. OMB appreci ates these suggestions and acknowledges the importance of objective evaluation; it will take the suggestions into consideration in the future.

253 Department of Homeland Security, Preliminary Plan fo r Retrospective Review of Existing Regulations, p. 27, available at http://www.whitehouse.gov/files/documents/2011-regulatory-actionplans/DepartmentofHomelandSecurityPreliminaryRegulatoryReformPlan.pdf.

254 Id.

255 Department of Labor, Preliminary Plan for Retrospec tive Analysis of Existing Rules, p., 20, available at http://www.whitehouse.gov/files/documents/2011-regulatory-action

plans/DepartmentofLaborPreliminaryRegulatoryReformPlan.pdf.

256 Department of the Interior, Preliminary Plan for Retrospective Regulatory review, p. 19, available at http://www.whitehouse.gov/files/documents/2011-regulatory-action

plans/DepartmentoftheInteriorPreliminaryRegulatoryReformPlan.pdf

257 Department of the Treasury, Prelimin ary Plan for Retrospective Analysis of Existing Rules, p. 19, available at http://www.whitehouse.gov/files/documents/2011-regulatory-action

plans/DepartmentoftheTreasuryPrelim inaryRegulatoryReformPlan.pdf.

258 See, e.g., Banerjee and Duflo (2011).

161Aldy asks why 2001 dollars were used for all ta bles and figures. Ci rcular A-4 currently states: “Please report all moneti zed effects in 2001 dollars. You should convert dollars expressed in different years to 2001 dollars using the GDP deflator.” In the alte rnative, Aldy suggested providing a deflator in a footnote to allow the reader to conver t to 2010 dollars. We have done so (footnote 2).

Aldy suggests making explicit that the definition of the value of a statistical life is a population-based measure. We have accepted his suggestion and included a footnote that reads “the average person in a population of 50,000 may value a reduction of mo rtality risk of 1/50,000 at $150. The value for reducing the risk of 1 statistical (as opposed to known or identified) fatality in this population would be $7.5 million, representing the aggregation of the willingness to pay values held by ev eryone in the population.”

Aldy also points out that given the lumpy timing of i nvestments to comply with regulations, benefit-cost analysis should present not simply a fu ture year’s benefits and costs (e.g., in 2020) but also the stream of annual be nefits and costs. While OMB acknowledges the value of this suggestion, this report generally re lies on agency estimates in monetizing benefits and costs and is limited by the da ta provided; OMB continues to encourage agencies to provide

the stream of annual benefits and costs in their RIAs.

Jolls points out that the statement that “U .S competition law prohibits collusion among employers but allows collective bargaining by wo rkers” appears misplaced given that it seems somewhat unnatural to suggest a tension betw een prohibiting companies from price-fixing, on the one hand, and permitting individuals to e ngage in collective action through unions, on the other. She also suggests revising the statement that “economic regulation . . . results in higher prices in the product market” given that economis ts often assume that economic regulation will lower product prices below what they would be in the absence of economic regulation. The report has been edited to reflect both concerns.

Jolls also suggests that Figure 2-1 would be more illuminating if it contained a second bar for each administration showing the number of major rules promulgated during the

Administration. OMB notes that the number of major rules is stat ed on page 20 of this report.

Greenstone recommends that OIRA develop a checklist to determine the credibility of evidence in regulatory impact analyses in order to make clearer the quality of evidence that underlies the case for the regulati on. He also suggests the impor tance of clearly distinguishing between private and social benefits. He urges th at agencies and OIRA undertake a systematic study and offer resulting judgments about when cons umer biases are likely to be a problem that requires regulation (e.g., in the co ntext of energy efficiency).

OIRA appreciates these suggestions, and will consider them going forward. Several revisions have been made in this report, including a new discussion of soci al and private benefits in chapter 2, to reflect Green stone’s points. We recommend c ontinued exploration of these issues, with particular attention to the circumstances in which a lack of information and potential biases on the part of consumers are likely to support regulatory interventions and to justify

162counting private savings as benefits. We also re commend that agencies should clearly separate social and private savings in th eir Regulatory Impact Analyses, a nd that when private savings are included, agencies should give careful attention to the con ceptual and empirical issues.

Greenstone states that a complete analysis of the benefits of ai r pollution regulations requires an estimate of the loss of life expectancy associated with premature deaths. He suggests that the resulting information shou ld be reported as a regular matter in estimating the benefit of reductions in air pollution. While this report generall y relies on agency estimates in monetizing benefits and costs, OMB continues to encourage agencies (consistent with Circular A-4) to report results with multiple measures of effectiveness.

Aldy suggests that cost-effectiveness should be evaluated across agen cies and that the report could present estimates for all rules with a primary or significant mortality risk reduction benefit. We agree that such an evaluation would be valuable and we will consider the suggestion in the future. Jolls notes that Table 2-5 presents the net cost per life saved for twelve recent health and safety rules for which calculation is po ssible; she suggests also including a description of whether monetizing morbidity costs is signi ficantly less controversia l or difficult than monetizing mortality costs. We acknowledge the poi nt but in light of existing information, the only consistent metric that we are able to use ac ross health and safety rule s is “lives saved.”

In line with the report’s emphasis on transp arency and disclosure, OMB continues to support Circular A-4’s statement that “agencies should use their web site to provide OMB and the public with the underlying data, including mort ality and morbidity data, the age distribution of the affected populations, and the severity a nd duration of disease conditions and trauma, so that OMB and the public can construct apples-to- apples comparisons betw een rulemakings that employ different measures.” Increasing transparency would allow the public to draw meaningful comparisons between rulemakings that em ploy different effectiveness measures.

The Mercatus Center at George Mas on University submitted comments supporting OMB’s suggestion that agencies undertake retrospective analysis and encourages independent organizations to perform the analyses. OMB ag rees and has made edits to further emphasize these points. The Mercatus Center also stat es that the research on “happiness” should be approached with a great deal of caution and s uggests that growth and employment may be much better indicators of human well-being. OMB agrees – as stated in the re port – that the precise relationship between GDP growth and subjective well-being has yet to be settled, and presents

the literature as nas cent and exploratory.

In response to OMB’s request last year fo r suggestions about regulatory changes that might increase employment, innovation, and compet itiveness, the HR Po licy Association has resubmitted its comments focusing on FLSA regulat ions to the Department of Labor, and has copied OMB. OMB appreciates the time and thought put into this proposal and will continue to

consider the recommended reforms.

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