EPA costs US economy $353 billion per year

Transparency is the lifeblood of democracy. Washington needs more of it, especially in the all-too-opaque world of regulation. The Environmental Protection Agency (EPA), for example, is the most expensive federal regulatory agency. Its annual budget is fairly modest in Beltway terms, at a little less than $11 billion, but that’s not where the vast majority of its costs come from. Complying with EPA regulations costs the U.S. economy $353 billion per year — more than 30 times its budget — according to the best available estimate. By way of comparison, that is more than the entire 2011 national GDPs of Denmark ($332 billion) and Thailand ($345 billion).

That figure doesn’t come from the EPA, which last released such an estimate in 1990, but from the Competitive Enterprise Institute’s Wayne Crews, who parsed through publicly available documents, cost estimates of economically significant regulations, and whatever else he could find. That so much effort was required is part of the problem.

The agency should be much more open about the burdens it imposes. It can accomplish this by releasing its own annual estimate of the total cost of all its rules currently in effect. Better yet, given that agencies have an incentive to lowball their costs and highball their benefits, an independent auditor with no skin in the game should perform the estimate every year.

Another important question is the size of the EPA’s regulatory maze. Just how many of its regulations are there? It’s a tricky question, and you won’t find the answer from the agency.

Twice per year, a document called the Unified Agenda is published in the Federal Register. In it, all rulemaking agencies disclose what rules they have in the pipeline or are likely to propose in the near future. It’s a good transparency tool. The trouble is that it doesn’t keep up with agency rulemaking in a timely manner. Its most recent edition is the one for fall 2011. The spring 2012 edition was never published and the fall 2012 edition is now overdue.

In the last edition of the Unified Agenda, the fall 2011 edition, the EPA had 318 rules at various stages of the regulatory process. Nobody outside the agency knows how many rules it currently has in the pipeline. All in all, 4,995 EPA rules appeared in the Winter Unified Agenda from 1999-2011. Over the same period, 7,161 EPA final rules were published in the Federal Register. That means more than 2,000 final rules, which have the force of law, came into effect without first appearing in the Unified Agenda. This could indicate an important transparency problem.

That’s just the EPA’s annual flow of regulations. The agency has existed for more than 40 years. How many total rules does it currently have in effect? Again, the answer doesn’t come from the agency. Earlier this year, the Mercatus Center’s Omar Al-Ubaydli and Patrick A. McLaughlin ran text searches through the entire Code of Federal Regulations (CFR) for terms such as “shall,” “must,” “prohibited,” and the like. The CFR Title covering environmental protection alone contains at least 88,852 specific regulatory restrictions. The number could be as high as 154,350.

This is important information. The public, policy makers, journalists, and the EPA itself would have a better idea of how effectively it is pursuing its mission if this information were available.

Now, while it may seem that I have been singling out the EPA for its transparency shortcomings, the agency is not unique. Other agencies have similar problems. That’s why every rulemaking agency should release an annual report card-style document collecting widely dispersed information about compliance costs, the number of regulatory restrictions, and upcoming significant rules into a single, publicly accessible document. The Competitive Enterprise Institute recently published a report card for the EPA that could serve as a starting point for agencies’ own report cards. (We have more planned for other agencies.)

Justice Louis Brandeis correctly believed that sunshine is the best disinfectant. With high regulatory costs contributing to a stagnant economic recovery, it is well past time to shine more light on regulatory agencies. Annual agency report cards would make a good start.

Ryan Young is Fellow in Regulatory Studies at the Competitive Enterprise Institute.