Environmental & Safety Issues: Changes to Environmental Rules are Not Hard to Believe
Some things are hard to believe. In a recent White House Office of Management and Budget (OMB) report on international regulatory accounting, the United States was ranked among the least regulated nations around the globe. According to the report, when comparing 145 developed countries, "the ten least regulated economies are New Zealand, the United States, Singapore, Hong Kong, Australia, Norway, the United Kingdom, Canada, Sweden, and Japan." These same countries also have rather stable economies and respected governments, providing credence to the philosophy that less is often better.
Perhaps this auspicious conviction is partially responsible for why OMB is already beginning to act on the findings from the report by reviewing 93 environment-related rules using a cost-benefit analysis. The rules to be reviewed were selected from comments made by 41 separate, but mostly industrial groups, including the U.S. chamber of Commerce, the American Iron and Steel Institute, the National Association of Manufacturers and the Alliance of Automobile Manufacturers.
Throughout the regulatory review process, the efficacy of the cost-benefit analysis will be critically scrutinized. Since the 1970s, cost-benefit analyses of laws and regulations have been performed to evaluate a number of Federal agency programs, including those relating to health, safety and the environment. The examination of the outcomes and role of cost-benefit analysis has increased of late in the public policy arena, with the domain of environmental regulation receiving a substantial amount of this attention.
Few would argue that the cost-benefit analysis for an environmental rule is a panacea. There is an ongoing debate regarding the role such an analysis should have in the regulatory decision-making process, particularly in the area of environmental policy. A primary concern with the cost-benefit analysis process is that it is highly quantitative, leaving little room or no method to assign value to things that are difficult to quantify-beauty, joy, love, appreciation, solitude, etc. What's odd is that these are the attributes that people describe as most essential for a quality life. By not comprehensively accounting for these attributes, the cost benefit analysis, in effect, devalues them. For example, how does one comprehensively assess the aesthetic value of the Grand Canyon into a regional haze cost-benefit analysis? After all, beauty is in the eyes of a beholder and some would say the natural environment is priceless.
One answer to this conundrum has been to quantify the unquantifiable by using tangible indicators. For example, assessing the value of the Grand Canyon through tourist dollars and determining what the monetary impact would be if regional haze impeded the vista. Using the indicator approach, the cost-benefit analysis has emerged as not only standard practice, but required under both executive order and legislative mandate when reviewing significant regulations.
To a large degree, even environmentalists are finding it hard to argue with many of the OMB cost-benefit results. For example, while programs like the National Pollutant Discharge Permits covering Concentrated Animal Feeding Operations has shown meager to no benefits related to the costs, other programs such as the regional haze program requiring retrofit technology and costing $1 billion to $4 billion, shows a potentially strong benefit-between $1 billion and $19 billion. Furthermore, the OMB report clearly indicates that the costs over the past decade of the 93 regulations under review ranged from $35 billion to $40 billion, but had a much greater return on investment-estimated between $63 billion to $169 billion.
If the rules are working, why is the OMB proposing a change? Contrary to a minority extreme view, it is not because Federal rules of law, and those that make them, are somehow demons in disguise waiting to corrupt our capitalistic souls. The real reasons are more intelligible. First off, statistics can be manipulated and therefore must be looked at carefully. There is no doubt that at a minimum, there are at least a few, and probably more than a few, of the 93 rules that are in dire need of change. Secondly, and even more obvious, is that as situations change and we learn more about what works and what doesn't-our regulatory system must reflect this new knowledge. Otherwise it risks becoming unsuitably archaic and costly in more ways than one. Change, although uncomfortable at times, is often necessary and beneficial-and this isn't too hard to believe. IH
 Progress in Regulatory Reform: 2004 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities. Available at: http://www.whitehouse.gov/omb/inforeg/2004_cb_execsumm.pdf.