Every major government agency is responsible for setting regulations that often times cause Americans and American businesses to incur unnecessary costs. But two federal agencies stand out about the rest for their regulatory might: the Environmental Protection Agency (EPA) and the Federal Communications Commission (FCC).
Between the EPA and the FCC, government regulations are costing Americans close to the tune of $495 billion, according to a new report from the Competitive Enterprise Institute (CEI). CEI ranks the EPA as by far the most costly rulemaking agencies at $353 billion. The the Department of Health and Human Services comes in second with $184 billion, and the FCC in third with $142 billion.
The term for these monetary mishaps is “compliance costs.” It refers to the time or money it takes to comply with government regulations. For example, to comply with environmental regulations, businesses often have to spend money and time to ‘go green.’ That often hampers innovation and drives up prices for consumers.
The EPA is historically one of the most active regulatory agencies. According to CEI’s report, “Title 40 of the Code of Federal Regulations, which covers environmental protection, has at least 88,852 specific regulatory restrictions.”
The EPA recently passed one of the most expensive regulations in history. The MACT rule, designed to lower emissions from coal fire plants, has an estimated annual cost of $9.6 billion. That’s more than the total compliance costs wrought by the U.S. Department of Agriculture.
The FCC has similar problems.
Lack of a mechanism for effectively evaluating regulations leads to a constantly expanding number of regulations. This means, according to the report, that “the FCC’s total regulatory burden tends to increase from year to year.” Between 2000 and 2012, the cumulative number of FCC rules has grown more than five-fold, from less than 500 to slightly more than 2,500.
There are also “economically significant” regulation issues that impose at least $100 million in economic impact in a given year. “Net neutrality” policies and possible restrictions on “wireless spectrum auctions” are two of the FCC’s most damaging regulations, the report says.
Calculating compliance costs is not easy, though, nor are the numbers accurate down to the dollar. Ryan Young, the report’s author relates a maxim, “All regulatory estimates are wrong.”
In fact, very little research has been done to analyze agencies on this topic. But Young is hopeful his report will get start a discussion with the EPA, FCC, and other analysts. “If all these estimates are wrong,” he says, “then somebody give me the numbers that are right.”
While Washington’s eyes are trained on the coming sequester deadline, Young and his colleagues will continue to look into the cost of government agencies. Next they’ll be digging into the HHS, which is responsible for the implementation of Obamacare – a policy expected to significantly increase heath related compliance costs.