Environmental Protection

For more than 30 years, the Environmental Protection Agency (EPA) has issued and enforced regulations to enhance environmental quality. These regulations impose costs but yield substantial benefits. The Office of Management and Budget has estimated that federal environmental regulations cost about $144 billion annually and generate benefits of about $162 billion. Concerns have been raised, however, that agencies have made only limited attempts to assess the actual impacts of federal regulations. GAO found that assessments of the costs and benefits of EPA's regulations after they have been issued have rarely been done. Only five of 101 economically significant regulations that EPA issued from 1981 through 1998 were the subject of retrospective studies. Retrospective studies have been or can be useful but also pose several problems for researchers. A systematic approach by EPA would foster retrospective studies in the future.

GAO noted that: (1) assessments of the costs and the benefits of EPA's regulations after they have been issued have rarely been done; (2) of the 101 economically significant regulations issued by EPA from 1981 through 1998, only five were the subject of retrospective studies; (3) various sources--including Congress, EPA, and academia--have provided the impetus for these studies, which were all completed from 1997 through 1999; (4) these studies covered regulations designed to, among other purposes, control acid rain, phase out chlorofluorocarbons, and reduce air pollution through improved vehicle inspection and maintenance; (5) authors of retrospective studies, EPA officials, and other experts told GAO that these studies have been or can be useful but also pose a number of difficulties for researchers; (6) in terms of usefulness, retrospective studies have provided insights into a new, market-based regulatory approach to reduce emissions that cause acid rain; (7) these studies found that the actual costs of reducing emissions were lower than initially estimated; (8) based on these findings, a legislative proposal to further limit emissions has been introduced; (9) retrospective studies are viewed as difficult to do because, among other reasons, it is difficult to obtain valid cost data from regulated entities; (10) it is extremely difficult to quantify actual benefits; (11) one reason is that a significant time lag usually exists between the elimination or major reduction of pollutants and any corresponding change in illness rates; (12) GAO found that a systematic approach by EPA would foster retrospective studies in the future; (13) while all economically significant regulations, by executive order, are subject to a prospective economic assessment, EPA is not expected to calculate the actual costs and benefits for all of these regulations; (14) accordingly, EPA officials told GAO that they have used the agency's limited resources on prospective economic assessments--which EPA must perform--rather than on retrospective studies; and (15) based on discussions with study authors, EPA officials, and other experts, GAO found that the resource constraints and the difficulties in conducting retrospective studies could be better addressed if EPA were to develop a plan to foster studies of the actual costs and benefits of environmental regulations.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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