GAO Study Reveals that Regulatory 'Burden' Might be Overstated

November 31, 1996 A recent investigation by the General Accounting Office into the regulatory costs of 15 businesses failed to produce any evidence of significant burden -- or even slight burden for that matter -- despite the fact that participating companies were largely critical of federal regulation and had a vested interest in proving their case. Not surprisingly, the companies offered the usual array of complaints about regulation: the cost of compliance is excessive, regulations are unreasonable, etc. But when it came time to provide supporting evidence, not one company delivered, though all had promised GAO they would. As a result, the study -- entitled "REGULATORY BURDEN: Measurement Challenges and Concerns Raised by Selected Companies" -- could not come close to pinpointing even one company's annual regulatory costs, and instead turned into an extensive explanation of why honest regulatory assessment might not be possible. The only conclusive information contained in the report is that companies simply have no clue what their regulatory costs actually are. This, of course, calls into question claims that regulation is too burdensome: Where is their evidence? It turns out that most is anecdotal -- often unfounded, unreasonable, or just plain ridiculous. Take for example Roadway Services, Inc., a transportation and logistics company. Representatives there told GAO that the business had to fork over an excessive $750,000 in order to meet requirements under the Americans with Disabilities Act. This claim, however, is refuted by the Equal Employment Opportunity Commission and Department of Justice, who both say that practical experience proves the cost of ADA compliance is limited; the EEOC cited a study commissioned by Sears, Roebuck and Co. that shows costs of ADA compliance seldom exceed $1,000. In several other cases, agencies said costs incurred by the companies might be a function of the way that they complied with regulations. For example, one company said that it had to replace certain electrical receptacle boxes with more expensive ones in order to meet OSHA requirements. OSHA officials, however, disagree with this interpretation. They say the company only had to fix the electrical hazard, but it was up to the company to decide how to accomplish that goal. According to OSHA officials, the company could have found other ways to power its equipment or used other, less expensive receptacle boxes available for indoor use. Despite concerns expressed about compliance costs, most company officials did acknowledge the indisputable benefits of regulation. Company officials told GAO that federal regulations helped protect air and water quality, created safer workplaces, promoted fair competition, and improved both the manufacturing process and product quality. GAO's investigation did not aim to assess these benefits, but it does make clear that the benefits of regulation -- often forgotten in the rush to complain about costs -- are a vital part of the equation in determining regulatory effectiveness.
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