Sen. Lankford: Regulatory Compliance Costs Americans $2T Per Year

Rudy Takala | March 24, 2015 | 1:36pm EDT
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Sen. James Lankford (R-OK). (Twitter)

( – Sen. James Lankford (R-OK), voiced his concern about the burden of federal regulatory compliance, which he said costs Americans $2 trillion annually, or the equivalent of 12 percent of the nation’s Gross Domestic Product (GDP).

“With over 25,000 pages of proposed rules published annually in the Federal Register by many of the federal government’s 430-plus agencies, federal regulations today place a $2 trillion burden on the United States economy,” Lankford said in his opening statement before a hearing of the Senate Subcommittee on Regulatory Affairs and Federal Management last week.

(See Lankford opening statement.pdf)

“At some point individuals cannot make reasonable day to day decisions to advance their own family or business because they spend their time and treasure completing forms and federal requirements,” Lankford said.

But the head of the White House’s Office of Information and Regulatory Affairs (OIRA) told the subcommittee that he is “proud of the progress” that the Obama administration has made in reducing the costs of regulatory compliance since 2011.

OIRA Administrator Howard Shelanski said he hoped the reduction would amount to a total of $20 billion and a decrease in 100 million hours of paperwork by 2016.

According to the most recent report issued by OIRA, a division of the Office of Management and Budget (OMB), the public spent about 9.45 billion hours on federal regulatory compliance in FY 2013. Tax collection by the Department of Treasury accounted for 7 billion hours, or 75 percent of the total.

(See Information Collection Budget OIRA)

Time spent on compliance has increased 17 percent since 2003, when an estimated 8.1 billion hours were spent on paperwork.

Howard Shelanski, head of the Office of Information and Regulatory Affairs. (Georgetown Law)

If Shelanski’s projection holds, the burden required for annual compliance will decline by slightly more than one-fifth of one percent by 2016.

Similar progress was made between 2012 and 2013, when the hours required for compliance decreased from 9.47 billion to 9.45 billion – or a little less than one-tenth of one percent.

Shelanski published his assessment shortly before the subcommittee hearing, which was held last Thursday to examine the efficiency of the federal rulemaking process.

In a blog post Shelanksi wrote prior to the hearing, he noted that a number of federal agencies have released their bi-annual “retrospective review” plans, which were required by an executive order issued by President Obama in 2011 aimed at eliminating “outdated requirements or unjustified costs.”

report published by the Competitive Enterprise Institute’s Wayne Crews estimated the cost of complying with federal regulations will reach $1.882 trillion in 2015.

“Regulation today is a hidden tax,” Crews wrote, “equivalent to at least half the amount of the fiscal budget itself.”

After the Department of Treasury, agencies imposing the most burdensome requirements include the Department of Health and Human Services (HHS); the Department of Transportation (DOT); the Securities and Exchange Commission (SEC); the Department of Homeland Security (DHS); the Environmental Protection Agency (EPA); and the Department of Labor (DOL), according to the OIRA report.

In 2013, the SEC accounted for the largest reduction in regulatory paperwork (140 million hours), followed by new statutory requirements, mostly affecting the Internal Revenue Service, that further decreased the compliance burden by 13 million hours, the report noted.

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