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Consolidated Appropriations Act, 2001 (“Regulatory Right-to-Know Act”)

Original Text (See Section 624)

Effective Dates
12/21/2000 - Present

Reform Goals
Provide the public with information on the total annual costs and benefits of federal regulations to ensure efficiency in rule making (e.g. that citizens receive the highest level of protection per dollar spent).  

Requirements (What of whom?)
Section 624, known as the “Regulatory Right-to-Know Act”, required the Office of Management and Budget to report the annual 2002 costs and benefits of federal regulations to Congress, analyze the impact of rules on small business and local governments, and recommend reforms.  OMB was also to issue guidelines for to standardize agency cost-benefit analyses. The act built upon the 1997, 1998, and 2000 appropriations acts that instructed the OMB to prepare aggregate annual cost-benefit reports. [1]

Oversight for rule compliance
The OMB makes the initial annual report available for public comment, and Congress receives the final report. 

Reform “Teeth”
In a diagnosis of why the ‘97 and ‘98 overstated benefits and failed to submit any significant reform recommendations, the Government Accountability Office concluded that “OMB was politically constrained … because providing independent assessments would have required OMB to criticize positions approved by the administration.” [2] The 2000 act addressed the problem by mandating third party peer review of the OMB report. [3] However, the 2001 version dropped this external review requirement. [4] This omission stripped the analysis of meaningful oversight. While Congress has oversight over the final report, there is no mandate to strike down rules where the benefits outweigh the costs.

Outcomes
OMB reports of federal regulatory costs are consistently 20-30x lower than the costs reported by third party experts (presented in 2016 dollars below). This is because the OMB reports only include “major” rules (those with expected economic impact > $100mm) passed within the last 10 years of the report. This typically represents less than 1% of the final rules published every year in the Federal Register and an even smaller slice of all existing federal regulations.

2004
$47.19 billion to $53.43 billion (OMB) versus $1.41 trillion (3rd party) [5,6]

2008
$69.15 - $81.36 billion (OMB) versus $1.95 trillion (3rd party) [7,8]

2012
$58.71- $91.26 billion (OMB) versus $2.06 trillion (3rd party) [9,10]

Commentary
The “Regulatory-Right-to-Know-Act” represented a marginal improvement in regulatory transparency, but the lack of third party review and partial rule coverage leave the American public with an incomplete picture of the costs and benefits of federal regulations.

References

  1. Section 645, Omnibus Consolidated Appropriations Act, 1997. Passed 9/30/1996, 104th Congress. Link ; Section 625, Treasury and General Government Appropriations Act, 1998. Passed 10/10/1997, 105th Congress Link
  2. United States General Accounting Office. Report to Congressional Requesters. "Regulatory Accounting Analysis of OMB’s Reports on the Costs and Benefits of Federal Regulation." April 1999. Link , PDF
  3. Section 628, Treasury and General Government Appropriations Act, 2000. Passed 9/29/1999, 106th Congress. Link
  4. Section 624, Treasury and General Government Appropriations Act, 2001. Passed 12/21/2000, 106th Congress. Link
  5. Obama White House. "Draft 2005 Report to Congress on the Costs and Benefits of Federal Regulations." Link , PDF
  6. W. Mark Crain, “The Impact of Regulatory Costs on Small Firms,” report prepared for the Small Business Administration." Offie of Advocacy, Contract no. SBHQ-03-M-0522, September 2005. Link , PDF 
  7. Office of Management and Budget. "Informing Regulatory Decisions: 2009 Report to Congress on the Cost and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities." September 2003. Link , PDF
  8. Executive Office of the President. Office of Management and Budget. Office of Information and Regulatory Affairs. "2010 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities." 2010. Link , PDF
  9. See Page 13. Draft 2012 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Trial Entities." 2012.  Link , PDF
  10. National Association of Manufacturers, “The Cost of Federal Regulation to the U.S. Economy, Manufacturing and Small Business,” W. Mark Crain and Nicole V. Crain, September 10, 2014. Link , PDF

Additional Reading