NC Chamber Tells OMB: Cost-Benefit Analysis is Common Sense

As the exclusive state affiliate for the National Association of Manufacturers (NAM) in North Carolina, your NC Chamber is always seeking ways to advocate for our manufacturing industry in Raleigh and Washington. Recently, we joined trade associations, state and local chambers, and allied organizations from across the country in delivering a letter to the Office of Management and Budget (OMB) about the process for new rules and regulations.

Currently, the Environmental Protection Agency (EPA) is considering a proposal that would compel agencies to conduct a cost-benefit analysis before imposing new regulations, and to reject new regulations unless the benefits outweigh the costs. It seems like common sense—if a new service cost your business more than the profits it would bring in, you wouldn’t introduce it. So why would the federal government?

Too often, regulations that are intended to protect workers and support a clean environment place an undue burden on manufacturers without a correspondingly large beneficial result. Weighing both the costs and benefits, or taking a serious look at the actual numbers behind an idea, would help ensure that federal agencies are using common sense when implementing rules that affect businesses large and small.

You can read the full letter below.

Letter to the Office of Management and Budget on Increasing Consistency and Transparency in Considering Costs and Benefits in the Rulemaking Process; RIN 2010-AA12

The Hon. Neomi Rao
The Office of Management and Budget
725 17th Street, Northwest
Washington, DC  20503

Dear Administrator Rao,

The public relies on smart regulations to set clear rules that support a clean environment, safe workplaces, and a better quality of life. At the same time, every regulation comes with a price tag, and those costs matter – especially to small businesses and local communities. Cost-benefit analysis, although not perfect, is the best tool agencies have available to them to ensure that regulations promote the public good and do more good than harm.

We believe the time has come for EPA to reexamine its statutory interpretations, and unless prohibited by statute, implement its regulatory statutes through cost-benefit balancing. Agencies must prepare cost-benefit analyses to support their most significant regulations, and to the extent permitted by law, not regulate unless the benefits justify the costs and the selected regulatory option maximizes net benefits to society.

In our view, agencies also should apply the basic tenets of good government process when they create new regulations, or amend or even rescind old ones. First, the regulatory process must be transparent and inclusive of public input. Second, agencies should use the best available science and should clearly identify areas in which meaningful uncertainties remain. Third, agencies should be accountable to Congress and the public for the quality of their rulemaking.

The benefits of regulation are often diffuse to society while the burdens of regulation are concentrated. It is therefore critical that the parties who are impacted by regulations – in particular small and medium-sized businesses – have a seat at the table when agencies write them. It is equally important that agencies develop meaningful cost estimates, based on solid and unbiased scientific information, to help the agency and the public understand the trade-offs being considered and to identify smarter alternatives where available.

Reliance on balanced peer review and scientific advisory panels when evaluating rules helps agencies ensure that outdated, partial, or flawed studies do not influence our public policies. This approach leverages public accountability to prevent backroom negotiations, partisan rulemaking, and overly bureaucratic decisions that may otherwise lead to confusion and distrust of government. Open and honest regulatory processes are easy for public stakeholders to understand and engage with.

We encourage you to implement good government practices that improve the lives of Americans without leaving anyone behind. Demanding transparency, applying the best available science and analysis, and promoting accountability will make our regulatory process fairer while acting as a safeguard against political agendas. Businesses are more likely to hire when they know what to expect, and these basic principles strengthen certainty in the marketplace. These principles also help ensure that an administration of either party does not abuse its authority by issuing poorly-considered rules or gutting necessary protections.

In the days ahead, we look forward to working with you to do the right thing for Americans—and for the future of the most dynamic, innovative economy in the word.

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