Report
to Congress on the Costs and Benefits
of Federal Regulations
Chapter
III. Estimates of Benefits and Costs
of "Economically Significant" Rules
- Scope
- Overview
- Benefits
and Costs of Economically Significant Final Rules
- Table
9: Transfer Rules
1.
Scope
In
this chapter, we examine the benefits and costs of "each rule that
is likely to have a gross annual effect on the economy of $100,000,000
or more in increased costs," as required by Section 645(a)(2). We
have included in our review those final regulations on which OIRA
concluded review during the 12-month period April 1, 1996, through
March 31, 1997. We chose this time period to ensure that we covered
a full year's regulatory actions as close as practicable to the
date our report is due, given the need to compile and analyze data
and publish the report for public comment. In addition, we thought
it would be useful to adopt a time period close to that used for
the annual OMB report required by the Unfunded Mandates Reform Act
of 1995.
The
statutory language categorizing the rules we are to consider for
this report is somewhat different from the definition of "economically
significant" rules in Executive Order 12866 (Section 3(f)(1)). It
also differs from similar statutory definitions in the Unfunded
Mandates Reform Act and Subtitle E of the Small Business Regulatory
Enforcement Fairness Act of 1996 -- Congressional Review of Agency
Rulemaking. Given these varying definitions, we interpreted Section
645(a)(2) broadly to include all final rules promulgated by an Executive
branch agency that meet any one of the following three measures:
- rules
designated as "economically significant" under Section 3(f)(1)
of Executive Order 12866;
- rules
designated as "major" under 5 U.S.C. 804(2) (Congressional Review
Act); and
- rules
designated as meeting the threshold under Title II of the Unfunded
Mandates Reform Act (2 U.S.C. 1531 - 1538).
We
did not include rules issued by independent regulatory agencies
because we do not review their rules under Executive Order 12866.
In any case, we believe that few of their individual regulations
meet the statutory criteria of Section 645(a)(2).
During
the time period selected, OIRA reviewed 41 final rules that met
these criteria. (Table 6) For 9 of
these 41 final rules, OIRA also reviewed a proposed rule during
the time period. (OIRA reviewed 13 additional proposed rules
that met one or more of the three criteria listed above.(1)
) Of the 41 final rules, USDA submitted 12; HHS submitted 8; EPA
submitted 7; and the remainder were from the Departments of the
Commerce (1), Housing and Urban Development (2) Interior (2),
Justice (1), Labor (2), and Transportation (3) and the Social
Security Administration (2). Also included is one multi-agency
rule from HHS, DOL, and Treasury. These 41 rules represent about
15% of the final rules reviewed by OIRA during this period, and
less than 1% of all final rules published in the Federal Register between
April 1, 1996, and March 31, 1997. Nevertheless, because of their
greater scale and scope, we believe that they represent the vast
majority of the costs and benefits of new Federal regulations
during this period.
2. Overview
As noted in Chapter I, Executive Order 12866 "reaffirms the primacy
of Federal agencies in the regulatory decision-making process" because
agencies are given the legal authority and responsibility for rulemaking
under both their organic statutes and certain process-oriented statutes,
such as the Administrative Procedure Act, the Unfunded Mandates
Reform Act, and the Small Business Regulatory Enforcement Fairness
Act. The Executive Order also reaffirms the legitimacy of centralized
review generally and in particular review of the agencies' benefit-cost
analyses that are to accompany their proposals. The Executive Order
recognizes that in some instances the consideration of benefits
or costs is precluded by law. For example, the National Ambient
Air Quality Standards under the Clean Air Act are to be health-based
standards set by EPA solely on the basis of the scientific evidence.
A variation is the Occupational Safety and Health Act, where health
standards must be based on significant risks to the extent they
are economically and technologically feasible. However, the Executive
Order requires agencies to prepare and submit benefit-cost analysis
even if those considerations are not a factor in the decision-making
process. Again, it is the agencies that have the responsibility
to prepare these analyses, and it is expected that OIRA will review
(but not redo) this work. And, as noted above, the costs and benefits
identified may be attributable solely to the regulation in question
or they may in fact be attributable just as much to the Act of Congress
that they are implementing.
Reviewing
for this report the benefit-cost analyses accompanying the 41 final
rules listed in Table 6, we found a
wide variety in the type, form, and format of the data generated
and used by the agencies. For example, agencies developed estimates
of benefits, costs, and transfers that were sometimes monetized,
sometimes quantified but not monetized, sometimes qualitative, and,
most often, some combination of the three. Generally, the boundaries
between these types of estimates are relatively well-defined.
As
discussed above, all monetized estimates are, by definition,
given in dollars and permit ready comparison and aggregation. Monetized
estimates of effects are what is most generally thought of as the
basis of benefit-cost analysis. Even when such figures are available,
however, care must be taken when interpreting them because they
depend for comparability on a number of distinct elements. Specifically,
monetized estimates consist of: (1) the dollar value itself; (2)
the base year of the dollar used; (3) the initial year in which
the effects occur; (4) the final year after which the effects disappear;
(5) the discount rate used (whether explicitly or implicitly) to
convert future into current values (or vice versa); and (6) the
format in which the monetized value is represented.
"Format"
means the characterization of the monetized or quantified effects
over time. In the rules on which we are reporting, we found that
agencies used a variety of formats:
- Annualized
values, which spread out variable effects into yearly sums that
are financially equivalent to the actual temporal schedule,
regardless of how "lumpy" it might be;
- Present
values, which convert over time into an immediate lump-sum;
- Constant
annual values, in which effects have been estimated (or
are assumed) to be fixed each year over the time horizon in
which the regulation applies;
- Other
formats, such as varying annual values or values reported only
for selected years, which can be converted into annualized or
present value format under certain specified conditions and
assumptions; and
- Unknown
formats, which cannot be interpreted without additional information.
From
the perspective of benefit-cost analysis, annualized and present
value formats are always preferred because they permit aggregation
and comparisons within and across regulatory actions. Constant annual
values are slightly less desirable insofar as they require the additional
step of discounting to permit such aggregation and comparison. Constant
annual values are typically found in monetized cost estimates involving
federal budget outlays, and in quantified benefit estimates where
agencies have chosen not to discount; aggregation and comparison
within and across regulations generally cannot be performed without
a common discounting methodology. Where an agency's estimation methodology
follows an unknown format, further research needs to be performed
to ascertain how to convert or reconstruct annualized or present
value estimates.
Quantified
estimates may take the form of a variety of different units, but
they share in common a numeric measure. Generally, quantified estimates
of benefits, costs, and transfers must be interpreted with the same
elements noted above in mind. The most important difference, of
course, is that quantified estimates are expressed in units other
than dollars. Such estimates may be aggregated only if they are
presented in the same or similar units. Also, a quantified estimate
should identify the applicable time period (e.g., tons of pollution
controlled per year, number of endangered species protected
from extinction per decade). Quantified estimates that
lack reference to the time periods to which they apply may be highly
misleading, and should be converted to similar time periods to be
comparable. Indeed, even when estimates of similar type include
explicit reference to their underlying time periods, care must be
taken when aggregating or comparing them because of the risk of
summing estimates based on different time periods or inconsistent
base years.
In
contrast, qualitative estimates may not have any units
at all, or they may be expressed in units that do not lend themselves
to simple comparisons. As has often been observed, it is more frequently
the case that costs are monetized and benefits are more often quantified
or presented in qualitative form. Qualitative effects should be
evaluated in terms of their uniqueness, reversibility, timing, and
geographic scope and severity. These effects are the most difficult
to interpret, and this may lead some to give them short shrift.
The fact that an effect has not been monetized or quantified does
not, however, necessarily mean that it is small or unimportant.
In discussing agencies' descriptions of qualitative effects, we
use the first year in which such effects are expected to occur where
it can be determined.
Qualitative
effects must be used with care for other reasons as well. Because
they tend to be general and descriptive, they may be broader than
the incremental effects of the particular regulation being analyzed.
For example, in developing a rule designed to address a particular
safety problem, an agency may describe the extent of the problem
-- that is, so many persons injured per year from this particular
cause. While important in estimating the benefits of the rule, this
figure itself is not a benefit estimate unless and until it is linked
to the likely effectiveness of the proposed rule. Finally, qualitative
estimates cannot be aggregated at all because they do not contain
units that permit arithmetic operations. In addition, not infrequently
they fail to contain relevant information about the period of time
during which they apply.
Cost-effectiveness
measures and break-even analyses, which are frequently used in regulatory
analyses, are not equivalent to either monetized or quantified estimates.
Unlike benefits and costs, which are expressed with time as the
explicit or implicit denominator, cost-effectiveness estimates (e.g.,
dollars per ton of pollution controlled) are expressed
in terms of cost per unit of benefit -- that is, as ratios
in which "cost" is the numerator and "benefit" is the denominator.
Frequently, such estimates are quite useful, particularly when comparing
alternative methods of achieving a predetermined objective. Nevertheless,
cost-effectiveness estimates cannot be compared with either cost
or benefit estimates, nor can they themselves be aggregated in any
manner.
Similarly,
break-even analyses reveal the minimum level of benefits necessary
for net benefits to be positive. For example, if a regulation is estimated
to prolong one "statistical life" at a cost of $X million, break-even
analysis reveals that if society's willingness-to-pay to prolong one
statistical life is greater than $X million, then the benefit of the
regulation exceeds its cost. Likewise, if we know that society's willingness-to-pay
to prolong one statistical life is $X million, and that the regulation
will cost $X million then break-even analysis reveals that benefits
exceed costs if more than one statistical life is saved. While this
form of analysis is often useful to decision makers, it does not address
either the absolute or marginal magnitude of benefits and costs.
3. Benefits and
Costs of Economically Significant Final Rules
Social Regulation. Of the 41 rules reviewed by OIRA, 21 are
regulations requiring substantial additional private expenditures
and/or providing new social benefits. (See Table 7). EPA issued 7 of these rules; USDA issued 4;
HHS and DOT each issued 3; and the remaining 5 were spread among DOC,
DOI, and DOL. Agency estimates and discussion are presented in a variety
of ways, ranging from an extensive qualitative discussion of benefits,
e.g., USDA's rules implementing the 1996 Farm Bill, to a more complete
benefit-cost analysis, e.g., the HHS rule on the Sale and Distribution
of Tobacco.
Benefits
Analysis. Of the 21 rules listed in Table
7, agencies provided monetized benefit estimates in eight cases.
Monetized benefit estimates included items such as: (1) FDA's estimated
$275 to $360 million per year in annualized cost savings from its
deregulatory food labeling rule (these are savings in the costs
associated with compliance with labeling requirements on low-volume
products that FDA estimated would be enjoyed by small businesses);
(2) FDA's estimated $9.2 to $10.4 billion per year reduced incidence
of morbidity and mortality from its rule restricting cigarette sales
and marketing; (3) EPA's estimated $174 million per year in reduced
damage to chemical and other facilities from its accidental release
prevention rule; and (4) USDA's estimated $2 billion per year in
the value of improved soil productivity, water quality, and wildlife
from rules implementing its Conservation Reserve Program.
An
innovative feature of FDA's estimate for monetized benefits from
the tobacco rule is explicit recognition of the increases in longevity,
the timing of these increases, and their value. In part of its benefits
analysis, FDA estimated more than 900,000 years of life would be
gained by each cohort (about four years per would-be smoker). FDA
discounted these life-years to account for the delay associated
with smoking related health effects, and then monetized the life-years
gained at $117,000 per life-year, an estimate derived from academic
literature.
In
six cases, agencies provided benefit estimates that were quantified
but not monetized. These included: (1) OSHA's estimated 31 cancer
cases per year avoided and three deaths per year avoided from acute
central nervous system and carboxyhemoglobinemia effects from its
methylene chloride rule; (2) NHTSA's estimated 83 to 101 fatalities
prevented and 5,100 to 8,800 fewer serious injuries (primarily to
children) over the lifetime of one model year's vehicles from its
airbag depowering rule; and (3) EPA's estimated number of tons of
hydrocarbons, carbon monoxide, and nitrogen oxide emissions which
it expected would be reduced annually from several of its rules.
In one case, the medical device rule, FDA provided some of its benefit
estimates in monetized form; other benefits were quantified.
In
a number of cases where agencies reported monetized or quantified
benefit estimates, they also provided a qualitative description
of unquantified effects. For example, DOT discussed the possibility
that its railroad worker protection rule could increase the carrying
capacity of the nation's railroads and boost railroad employee morale.
OSHA reported that its methylene chloride rule would lower exposure
for as many as 30,000 to 54,000 workers, reducing the risk of adverse
central nervous system effects (other than death) of carboxyhemoglobinemia
every year. FDA reported that its medical device rule would yield
additional benefits in the form of fewer injuries in other less
severe categories (that were not quantified by the FDA), reduced
inconvenience to users and/or patients, and reduced burden on medical
personnel in terms of having to repeat treatments, replace devices,
and complete the paperwork and reporting associated with medical
device failures. EPA reported that the accidental release prevention
rule would result in efficiency gains by providing the public with
additional information on accident prevention plans for manufacturing
facilities and by improving the transfer and adoption of new technologies
between industries.
Finally,
in seven cases, agencies reported neither monetized nor quantified
benefit estimates. In some (but not all) of these cases, the agency
provided a qualitative description of benefits. For example, USDA's
analysis of the 1996 Farm Bill program rules included a qualitative
discussion of the benefits of increased efficiency due to the additional
flexibility the rule provided for farmers to decide which crops
to plant. In its rule establishing training requirements for lead
abatement contractors, workers, etc., EPA discussed in qualitative
terms the value to consumers of being able to purchase abatement
services of reliable quality.
Cost
Analysis. In 16 of the 21 cases, agencies provided monetized
cost estimates. These include such items as: (1) USDA's estimated
$900 million per year in consumer "deadweight" losses from restrictions
on farm output under its Conservation Reserve Program; (2) EPA's
estimated $138 million per year for gasoline detergent additives
under its deposit control gasoline rule; and (3) OSHA's estimated
$101 million per year to reduce occupational exposures to methylene
chloride. For 2 deregulatory rules -- FDA's food labeling rule and
EPA's municipal solid waste landfill financial assurance rule --
agencies' monetized cost estimates were very small or zero.
In
four of the 21 cases, agencies provided estimates of non-monetized,
quantitative effects that were intended to better inform decision
makers, but which were not identified as benefit or cost estimates
per se. For example, NHTSA estimated that its airbag depowering
rule would result in 50 to 431 more fatalities and an increase of
171 to 553 serious chest injuries (primarily to adults not wearing
seatbelts) over the lifetime of one full model-year of vehicles,
and DOI estimated that duck hunters spend over $400 million per
year on duck-hunting activities.
Seven
(7) of these 21 rules have positive net monetized benefits -- that
is, the estimated monetized benefits exceed the estimated monetized
costs of the rules. For example, FDA estimated its tobacco rule
would result in $9 to 10.2 billion per year in net monetized benefits
(benefits minus costs). EPA estimated its Accidental Release Prevention
rule would generate $77 million per year in net monetized benefits.
For the remaining 15 rules, agency analysis did not provide enough
information to allow an estimate of net monetized benefits. Five
(5) of the rules provided quantified estimates of the expected benefits
in terms of tons of emissions reduced or injuries avoided; but in
those cases, the agencies did not assign values to these effects.
Five (5) additional rules identified qualitative benefits associated
with the rule; but in these cases, the agencies did not develop
any quantified estimates of the likely magnitude of these effects.
Finally, in five cases, we classified a rule as economically significant
although little economic data on the effects of the rule existed.
These deserve comment:
USDA
Karnal Bunt: Karnal bunt is a fungal disease that infects
wheat, and during the past year was closely controlled to prevent
potential losses in wheat exports. Fear of widespread Karnal
bunt infestation led USDA's Animal and Plant Health Inspection
Service (APHIS) to take several emergency quarantine actions
beginning in March 1996. The quarantine severely restricted
the movement of wheat grown in Arizona, two counties in Southern
California, New Mexico, and portions of west Texas. It also
directed the plowing under of several thousand acres of wheat
and instituted mandatory disinfection procedures for combines
and wheat handling equipment. APHIS instituted these procedures
on an emergency basis to prevent the spread of the disease.
These restrictions were known to be expensive, but estimates
of how expensive were not developed at the time the actions
were taken.
In
October 1996, APHIS issued the rule included on Table
7, which continued the quarantine and its restrictions,
and established provisions for compensating wheat farmers and
handlers who suffered losses. The rule was designated economically
significant because, although economic data were not then available,
both agency and OIRA staff agreed that the impacts associated
with the rule were significant. For the same reason, it was
designated "major" under SBREFA. It was important to issue
this rule promptly, so APHIS agreed that it would conduct a
Regulatory Flexibility Analysis and an economic analysis after
the rule was published. In an analysis developed after the
time period of our report, USDA estimated one-year costs totaling
about $42 million. The Federal government paid $24 million
to affected parties to compensate for their losses. However,
the Department acknowledged that other potentially significant
costs had not been formally estimated. The Department estimated
the benefits of the rule to be approximately $2 billion --
based upon the potential loss of export markets if our trading
partners chose not to buy U.S. wheat -- clearly making it an
economically significant rule.
DOI Migratory Bird Hunting (2 rules): These are unusual rules
in that they are permissive rather than restrictive -- that
is, migratory bird hunting is prohibited absent these annual
regulations which allow hunting, setting bag limits and other
controls on both early and late season hunts. Thus the rules
permit spending rather than requiring the expenditure of private
resources. DOI reports that the National Survey of Fishing,
Hunting, and Wildlife Associated Recreation indicated that expenditures
by migratory bird hunters (exclusive of licenses, tags, permits,
etc.) totaled $686 million in 1991. Based on this estimate,
DOI estimated expenditures by duck hunters would be over $400
million per year in 1995. However, this figure is not a social
benefit in the commonly used sense of the term. DOT Light
Truck CAFE: Each year DOT must establish a Corporate Average
Fuel Economy (CAFE) standard for light trucks, including sport-utility
vehicles and minivans, (DOT also sets a separate standard for
passenger cars). For the past two years, however, appropriations
language has prohibited NHTSA from spending any funds to change
the standards. In effect, Congress has frozen the light truck
standard at its existing level of 20.7 miles per gallon (mpg)
and has prohibited NHTSA from analyzing effects at either 20.7
mpg or alternative levels. Although benefits and costs are not
estimated, DOT's experience in previous years indicates that
they may be substantial. Over 5 million new light trucks are
subject to these standards each year, and the standard, at 20.7mpg,
is binding on several manufacturers; some are just above the
standard and at least one is currently below 20.7 mpg. Because
of these likely substantial effects, the rule was designated
as economically significant even though analysis of the effects
was prohibited by law. DOC Encryption: Commerce's encryption
rule allows the exportation of more effective encryption products,
subject to certain conditions such as the development of a key
management infrastructure. Although quantitative estimates are
not available, the rule is economically significant, because,
as Commerce's analysis notes:
"The
initiative addresses important foreign policy and national
security concerns identified by the President. Export controls
on cryptographic items are essential to controlling the spread
abroad of powerful encryption products which could be harmful
to critical U.S. national security, foreign policy and law
enforcement interests. This initiative will preserve such
controls and foster the development of a key management infrastructure
necessary to protect important national security, foreign
policy and law enforcement concerns." (61 FR 68573).
Aggregate
Effects. As noted above in chapter II, the substantial limitations
of the available data on the benefits and costs of this set of rules
make it virtually impossible to develop an aggregate estimate of
benefits and costs for even a single year's regulations. First,
there are no quantified or monetized estimates for five of the rules.
In addition, since many effects are not expressed in monetized terms,
there is a problem of apples and oranges in aggregating estimates.
Eight (8) of the rules listed in Table 7
have quantified estimates of significant effects. Some of the quantified
effects -- premature deaths and serious injuries avoided -- are
not unique to these rules but rather are frequently identified in
the RIAs for a variety of rules, and other agencies have assigned
monetized estimates to these outcomes. In any event, the different
quantitative effects cannot be summed because they are not expressed
in common units. Finally, when effects are only described in a qualitative
way, the aggregation problem becomes all the more problematic.
Because
of the substantial variation in the presentation of agency estimates
and the differences in their discussion of benefits and costs, Table
8 takes some initial steps in presenting agency estimates in
a more consistent way. This presentation re-formats the monetized
benefit and cost information on a rule-by-rule basis to enhance
their comparability. One key factor involves discounting where the
timing of effects matters. In order to make the agency estimates
more consistent, we performed some basic adjustments to agency estimates.
For example, the FRA presented monetized benefit and cost numbers
in the form of a present value over ten years ($240 million in benefits
and $229 million in costs). We converted these to equal annual payments
of $33 million and $32 million respectively, using the seven percent
discount rate FRA used to generate the present value estimates.
We performed a similar procedure for EPA's Lead-Based Paint rule,
using the three percent discount rate the agency used in calculating
the rule's $1.114 billion present value cost over 50 years. In the
case of EPA's Federal Test Procedure rule, the agency reported emission
reductions for only four specific years (2005, 2010, 2015, and 2010);
in order to facilitate comparisons with other emission-reducing
rules, we used a linear interpolation procedure to infer emission
reductions in the interim years, and then generated an equivalent
annual stream of emission reductions.
Any
comparison or aggregation across rules must also consider a number
of factors which the presentation in Table
8 does not address. First, for example, these rules may use
different baselines in terms of the regulations and controls already
in place, the initial year for the rule, and the time period over
which the rule was considered to be effective. In addition, these
rules may well treat uncertainty in different ways. In some cases,
agencies may have developed alternative estimates reflecting upper
and lower bound estimates. In other cases, the agencies may offer
a mid-point estimate of benefits and costs, and in some cases the
agency estimates may reflect only upper bound estimates of the likely
benefits and costs. Also, in order for comparisons or aggregation
to be meaningful, benefit and cost estimates should correctly account
for all substantial effects of regulatory actions, including potentially
offsetting effects, which may or may not be reflected in the available
data.
A
final reason that any regulatory accounting effort has limits is
the treatment of the effects of regulations on distribution or equity.
None of the analyses addressed in this report provides quantitative
information on the distribution of benefits or costs by income category,
region, or any other factor. As a result, there is no basis for
quantifying distributional or equity impacts.
Transfer Regulations. Of the 41 rules listed in Table 6, 20 were rules necessary to implement Federal
budgetary programs. (See Table 9.) The budget outlays associated
with these rules generally provided "transfers" or reduced "transfers"
to program beneficiaries, although one rule, the DOJ rule on expedited
removal of aliens, required the expenditure not the "transfer" of
additional Federal dollars. Of the remaining 19, 8 are USDA rules
that implement federal appropriations regarding agricultural and
food stamp policies; 7 are HHS and SSA rules that implement Medicare,
Medicaid, and Social Security policy; 2 are HUD rules associated
with Federal mortgage protections; 1 is a DOL rule associated with
Federal service contracts; and 1 is a joint HHS, Treasury, and DOL
action setting standards for health insurance portability group
health plans.
Table 9: Transfer
Rules
Department
of Agriculture |
|
Commodity
Credit Corporation Supplier Credit Guarantee Program
Dairy Tariff-Rate Import Quota Licensing
1995-Crop Sugar Cane and Sugar Beet Price-Support Loan Program
Peanut Poundage Quota Regulations
Catastrophic Risk Protection Endorsement
General Administrative Regulations...Subpart T
Food Stamp Program Certification Provisions
Child and Adult Care Food Program: Day Care Home Reimbursements |
Housing
and Urban Development |
|
Single-Family
Mortgage Insurance
Sale of HUD-Held Single-Family Mortgages |
Justice |
|
Inspection
and Expedited Removal of Aliens |
Labor |
|
Service
Contract Act Standards for Federal Service Contracts |
Health
and Human Services |
|
Limits
on Aggregate Payment to Disproportionate Share Hospitals
Hospital Inpatient Prospective Payment Systems (FY 1997)
Medicare Revisions to Policies Under Physician Fee schedule
1997
Requirements for Physician Incentive Plans in Prepaid Health
Care Organizations
Individual Market Health Insurance Reform: Portability from
Group to Individual Coverage |
Social
Security Administration |
|
Cycling
Payment of Social Security Benefits
Determining Disability for Individuals Under Age 18 |
Multi-Agency
Common Rule -- HHS/TREASURY/LABOR |
|
Interim
Rules for Health Insurance Portability for Group Health
Plans |
|
|
The
transfers arising from these programs (with the exception of the
DOJ rule) represent payments from one group to another (often from
the Federal government to program beneficiaries, but also within
beneficiary groups and from recipients back to taxpayers) that redistribute
wealth; they are not social costs (or social benefits) and do not
directly reflect the "opportunity cost" of resources used or benefits
foregone. Social costs may arise indirectly from these transfers,
however, because they must be financed through mechanisms -- for
example, income and payroll taxes -- that affect the use of real
resources. Similarly, social benefits may arise from these transfers
if the beneficiaries realize marginal benefits from the payments
that are greater than the loss for those who finance the payments
(i.e., taxpayers).
Estimates
of the magnitude of the social costs and benefits associated with
these rules are typically not available. As a practical matter,
the transfers arising from these rules are a product of the Federal
program authorization and budget appropriations processes, and the
social costs involved are generally viewed as subsidiary to the
transfers involved. For these reasons, the Best Practices
document specifically notes that instead of a complete benefit-cost
analysis, a different form of regulatory analysis may be appropriate
for regulations implementing these Federal programs.
Chapter
3 Note
1. These proposals include several particularly
significant proposals reviewed by OIRA: EPA's two proposals in November
1996 to revise the National Ambient Air Quality Standards for Particulate
Matter and Ozone; EPA's proposal in the summer of 1996 expanding
the industries covered by the Toxic Release Inventory; and FDA's
January 1997 proposal regarding Animal Proteins Prohibited in Ruminant
Feed. These proposals are not discussed because they were not yet
final during the time frame on which we are reporting.
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