01 Jan 2002 Earth Day 2002 Fact Sheet: The Rising Cost of Regulations Since the First Earth Day

• The cost of federal regulations, which was $843 billion in 2000, is equal to eight percent of the national gross domestic product.1

• Between April 1, 1996 and March 13, 2001 alone, federal regulatory agencies issued 21,653 final rules. Of those, 335 were defined as “major” rules. Those “major” rules have an annual effect on the economy of more than $100 million each.2

• The regulatory costs of building a house in three major metropolitan areas – Cincinnati, Ohio, Pittsburgh, Pennsylvania and Santa Fe, New Mexico – tripled between 1974 and 1994 due largely to environmentally-related regulations, such as sewer and water fees, storm water runoff controls, and soil sedimentation and erosion controls.3

• The Environmental Protection Agency’s May 1999 final clean air regulation used to regulate the natural airborne movement of nitrogen oxide from state to state is estimated to have a potential annual compliance cost to states of $1.7 billion.4

• In fiscal year 2001, the administrative costs to write and enforce federal regulations were estimated to reach an all-time high of $19.8 billion in current dollars. Staffing at the 54 federal regulatory agencies was estimated to be at 131,983 in 2001. These growth rates far exceed the rate of inflation.5

• “To comply with federal regulations, Americans spent $843 billion in 2000. Had every household received a bill for an equal share, each would have owed $8,164. That bill would be in addition to the $19, 613 share each household contributes (directly or indirectly) to federal revenues.”6

• “Ninety percent of all firms in the U.S. employ fewer than 20 employees. Considering all federal regulations and all business sectors, regulations cost these firms nearly $7,000 per employee per year.”7

Footnotes1 W. Mark Crain and Thomas D. Hopkins, “The Impact of Regulatory Cost on Small Firms,” Office of Advocacy, Small Business Administration, Washington, DC, downloaded from http://www.sba.gov/advo/research/rs207tot.pdf on April 2, 2002.
2 “Key Regulatory Facts & Figures,” The Regulation Home Page, The Heritage Foundation, Washington, DC, downloaded from http://www.regulation.org/keyfacts.html on April 1, 2002.
3 “The Truth About Regulations and the Cost of Housing,” National Association of Homebuilders, Washington, DC, 1995.
4 Letter to the Honorable John H. Chafee and the Honorable Max Baucus from John Murphy, General Counsel, United States General Accounting Office, June 9, 1999, downloaded from http://www.gao.gov/decisions/majrule/og99049.htm on April 3, 2002.
5 Melinda Warren, “Federal Regulatory Spending Reaches a New Height: An Analysis of the Budget of the U.S. Government for the Year 2001,” Center for the Study of American Business, St. Louis, MO, 2000, p. 6, downloaded from http://wc.wustl.edu/csab/CSAB%20pubs-pdf%20files/RBR/RBR%2023.pdf on April 2, 2002.
6 Crane and Hopkins.