Obama’s Regulation-Killing to Save $6 Billion in 5 Years

May 11, 2012

Administration official Cass Sunstein has emphasized cost-benefit analysis in his office’s approach to regulation review.

Copyright 2012 Bloomberg.

By Andrew Zajac

U.S. rule changes involving street signs, train control systems and hospital practices will save consumers and businesses almost $6 billion in the next five years, President Barack Obama’s administration said.

The savings is a large part of the annual cost of rulemaking, said Cass Sunstein, administrator of the White House Office of Information and Regulatory Affairs, in announcing the reforms today at an American Bar Association meeting in Washington.

“That’s a significant chunk of the total costs of rulemaking in any given year and we have on one day taken away that cost,” he said.

Republicans have criticized some regulations Obama issued as too burdensome on business and made a campaign issue of his rule-making approach. Some of today’s changes, including rules for vapor-recovery systems at gasoline stations, a partial exemption from installing railroad crash-avoidance technology, and streamlined health-care reporting, were disclosed last year.

“They’ve already taken credit for this,” said James Gattuso, a senior fellow at the Washington-based Heritage Foundation, which says it advocates conservative political positions.

One change will save hospitals and doctors $5 billion over five years by eliminating some reporting requirements, particularly on Medicare and Medicaid patients, according to a White House statement.

More Changes Pending

Other changes will eliminate rules requiring states to mandate vapor-recovery systems at gasoline stations, exempt railroads from installing crash-avoidance technology on tracks that won’t carry toxic chemicals or passengers, and give states and localities more time to replace street signs and other traffic-control devices.

Obama signed an executive order institutionalizing a periodic look-back on existing rules, and hundreds of more rule changes are at various stages of consideration, Sunstein said.

The order may have broader effects than the regulatory relief announced today, said William Kovacs, senior vice president for regulatory affairs at the U.S. Chamber of Commerce, the largest U.S. business lobbying group.

A process for permanent review of regulations has eluded administrations since 1980, he said. Obama may fare better because his order lays out a blueprint for agencies to follow, Kovacs said. “The executive order actually establishes a schedule for reporting,” Kovacs said in an interview. “That’s very positive.”

‘Americans Need More’

Further action is needed, said John Engler, head of the Washington-based Business Roundtable.

“We are pleased President Obama has taken an important step towards smarter regulation,” Engler said in an e-mailed statement. “Americans need more from the administration, including a formal mechanism for weighing the cumulative economic burden of all federal regulations and a process for reducing that burden.”

The Environmental Protection Agency said last year it would make the changes for gasoline stations announced today, because technology in automobiles made after 2006 already captures smog- forming vapors when refueling. The vapor-recovery systems in pumps capture the fumes pushed out of an empty gasoline tank as the fuel is pumped in.

The systems are now required in 12 northeastern states and more than three dozen other high-ozone areas nationwide. The savings from phasing out the systems will be $91 million a year, according to an EPA fact sheet.

Service Stations Save

“This would mean a lot to the service stations,” Kirk McCauley, director of member relations at the Service Station Dealers Association of America, said in an interview. If the vapor technology is included, “it will cost you $200 more for a nozzle.”

Hospitals will be allowed to replace some staff physicians with nurse-practitioners and physician assistants, saving the industry an estimated $330 million a year, the government said. They will also be able to reorganize supervision of their outpatient departments, saving an estimated $305 million a year.

Dialysis clinics, which treat people suffering kidney failure, won’t be required to build fire-protection structures that are necessary in hospitals, where patients are unconscious or immobilized. The change will provide the industry a one-time savings of $109 million, the government said.

Surgery centers won’t have to maintain a specific list of emergency equipment that was written in 1982 and has since been unchanged. Instead, the government will let facilities and medical staffs decide what emergency equipment, such as ventilators and heart defibrillators, they should have on hand. The centers will save about $19 million from the change.

Rules Cost

Rules approved in the first 32 months of Obama’s presidency cost $19.9 billion with net benefits of more than $91 billion, according to the White House Office of Management and Budget.

Both the expense and benefit of rules surpassed the totals of predecessors Bill Clinton and George W. Bush for comparable periods, OMB figures show.

Sunstein has emphasized cost-benefit analysis in his office’s approach to regulation review. In March, Sunstein issued a memo underscoring the need to consider the cumulative effects and burdens of new rules on business.

Last week, Sunstein announced an executive order calling for U.S. regulations to align more closely with those of major trading partners to reduce costs and promote economic growth.

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