Topics: Barack Obama

Op-Ed: Is Obama really reducing regulatory burdens?

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Opinion,Op-Eds,Barack Obama,Big Government

According to President Obama's 2014 budget, reducing regulatory burdens is an administration priority, and he has issued several executive orders requiring agencies to examine their existing rules systematically for opportunities to reduce regulatory burdens on the public.

The budget claims that the president's "historic government-wide review, or 'look-back,' of existing rules" has "produced over 500 reform proposals across all executive agencies" and will "save more than $10 billion in the near term, with more savings to come."

However, upcoming research from the George Washington Regulatory Studies Center suggests that it is doubtful whether the savings that agencies claim from these reforms will materialize at all.

One of these reforms, featured prominently in the Environmental Protection Agency's January 2013 progress report on its look-back initiative, is the Tier 3 vehicle and fuel standard that EPA announced last month and is expected to publish soon.

The results of this particular review should give pause to anyone hoping to see real burden reductions emerge from the president's look-back initiative.

In its search for ways to "reduce burden on industry with no expected adverse environmental impact," EPA instead decided to impose new regulations that it estimates will cost Americans $3.4 billion per year when fully implemented.

The Tier 3 rule would establish more stringent automobile tailpipe emission standards and reduce allowable sulfur content in gasoline below the already low levels currently mandated.

According to EPA's analysis, the vehicle portion of the standards alone will cost car buyers between $17.3 billion and $35.1 billion through 2050.

Depending on how EPA implements the proposal to reduce sulfur content in gasoline, the agency estimates that portion could cost refiners $2.5 billion upfront in capital investments and $580 million annually thereafter.

EPA estimates this would increase the price of a gallon of gasoline by between 1 cent and 6.5 cents (and studies by the petroleum industry put the increase at up to 9 cents per gallon).

Combined, EPA's best estimate of the annual cost of the regulations when fully implemented is $3.4 billion per year.

The Obama administration optimistically claims burden reductions from this review, however, because as part of the rulemaking process "EPA intends to review ... areas where recordkeeping and reporting obligations can be modified to reduce burden."

In other words, the new standards will add billions of dollars to the cost of cars and gasoline, but the silver lining is that energy companies may have to keep fewer records and report less information.

Unfortunately, this kind of burden in the guise of "reform" is not an anomaly. Additional upcoming research from GWU's Regulatory Studies Center indicates that very few of EPA's much-lauded look-back actions will actually result in reduced burdens, as the president's budget claims.

In fact, some -- like Tier 3 -- will increase burdens, and for the majority, EPA provides no cost or savings estimate at all, leaving the American public in the dark about the ultimate effect of the look-back actions.

The "Reducing Regulatory Burdens" section of the Obama budget concludes by promising that "in the coming year, agencies will continue to pursue the regulatory reforms identified in the review process, producing more in savings by simplifying rules, eliminating redundancies, and identifying more cost-effective ways of completing their mission and serving the American people."

If the Tier 3 rule is any indicator of what the administration means by "regulatory reforms," the American people are in for an expensive surprise.

Susan Dudley is director of the George Washington University Regulatory Studies Center and research professor in the Trachtenberg School of Public Policy and Public Administration. Sofie Miller is a policy analyst in the GWU Regulatory Studies Center and editor of its Regulation Digest.

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