Regulatory Burden

Measurement Challenges and Concerns Raised by Selected Companies Gao ID: GGD-97-2 November 18, 1996

Measuring the effects of federal regulation on the economy is often imprecise and controversial. Some analysts claim that federal regulations cost the economy hundreds of billions of dollars annually, while others argue that regulations yield even greater benefits. Working with a small group of companies, GAO sought to investigate the cumulative impact of federal regulations on those businesses. GAO asked the companies to identify which regulations applied to them, the costs and other impacts of those regulations, and the regulations that were most problematic. GAO also gathered information from regulatory agencies. GAO found that comprehensive data on the cost of regulatory compliance were hard to obtain and that any attempt to measure the incremental impact of all federal regulations is extremely difficult.

GAO found that: (1) most of the businesses contacted declined to participate in the study; (2) none of the 15 participating companies developed a complete list of regulations that were applicable to them or provided comprehensive data on the cost of regulatory compliance; (3) time and resource constraints and the difficulty of disentangling federal regulatory requirements from those of other jurisdictions and other nonregulatory procedures proved to be major obstacles for the companies; (4) most federal regulatory agencies said that they could not detail which regulations applied to a particular company without a great deal of company-specific information and the expenditure of a substantial amount of resources; (5) measuring the incremental impact of all federal regulations on individual companies is extremely difficult and, therefore, decisionmakers need to be aware of the conceptual and methodological underpinnings of studies that attempt to measure total current regulatory costs; (6) many of the 15 participating companies recognized that regulations provide benefits to society and their own businesses, but all of them provided GAO with a varied list of concerns about regulatory costs and the regulatory process; (7) these concerns included perceptions of high compliance costs, unreasonable, unclear, and inflexible demands, excessive paperwork, and a tendency of regulators to focus on deficiencies; (8) the agencies responsible for the regulations the companies viewed as problematic often said that the companies misinterpreted regulatory requirements; (9) the agencies and some congressional members do not always agree on the extent to which problematic regulations are statutorily driven; and (10) the agencies said that they were aware of and were responding to a number of the companies' concerns.

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