The Official Online Weekly Newspaper of NAHB
Recent steps by the Obama Administration to reduce unnecessary regulatory burdens on the nation’s industries will help promote economic growth and job creation while providing welcome relief from regulations that add costs but do not achieve intended results, according to NAHB.
“NAHB applauds the Administration’s plan and is pleased to see that both the Administration and the U.S. Congress are increasingly aware of the costs of excessively burdensome regulations,” said Jerry Howard, NAHB’s chief executive officer. “And these aren’t just monetary costs. Unnecessary regulatory burdens stifle innovation and slow the job growth that our economy desperately needs right now.”
An executive order on “Improving Regulation and Regulatory Review” signed by the President on Jan. 18. states, “Our regulatory system must protect public health, welfare, safety and our environment while promoting economic growth, innovation, competitiveness and job creation.”
According to a study by the Small Business Administration (SBA), the annual cost of federal regulations in the U.S. reached $1.75 trillion in 2008 — the equivalent of $15,586 per household.
Particularly troubling is that the compliance burden is much greater for small employers. The SBA found that firms with 20 or fewer employees pay 40% more in compliance costs per employee than firms with more than 500 workers.
The new executive order calls for regulations to be cost-effective and cost-justified, transparent, coordinated, flexible and science-driven.
NAHB is already working on identifying existing regulations that are excessively burdensome and costly but do not deliver the intended benefit, Howard said.
One example is the U.S. Environmental Protection Agency's rulemaking governing the treatment of lead in homes during remodeling projects. The EPA has continued to raise the cost and complexity of its Lead: Renovation, Repair and Painting rule through additional rulemakings and failure to approve an affordable lead test kit that can be used by contractors.
NAHB has asked the EPA to consider reinstating the opt-out provision, which would maintain the current lead hazard definition while allowing home owners with no young children or pregnant women in residence to waive certain requirements when remodeling their home.
NAHB has also asked the EPA not to add clearance testing to the lead rule, which would essentially force remodelers to become abatement specialists and eliminate congressional authorization for the EPA to regulate renovation and abatement activities separately under the statute.
Other areas where the compliance burden of a federal rule cannot be justified by the purported benefit include:
- EPA’s Construction & Development Effluent Limitation Guidelines (C&D ELG). This rule demands that the vast majority of developers ensure that storm water leaving their sites does not exceed a turbidity (essentially a measure of the water clarity) limit that is virtually impossible to meet. NAHB told the EPA that the numeric limit was unattainable on most construction sites and the costs would be exorbitant, but the agency finalized the rule anyway. According to the Small Business Administration, the C&D ELG will cost the construction industry $10 billion annually, or up to an additional $15,000 per developed acre.
- Regulation of Greenhouse Gas Emissions. Last year, the EPA issued the “Auto Rule,” its first regulation setting limits on greenhouse gas (GHG) emissions from cars. Although the rule applies to mobile sources (cars), the EPA intends to extend its reach to trigger requirements for stationary sources, which could include single-family and multifamily dwellings. According to the EPA, 6,400 new multifamily dwellings would exceed the statutory 250 ton-per-year threshold triggering pre-construction permitting under the Clean Air Act. Requiring federal permitting for these new developments could impede the housing recovery and would do nothing to address emissions from older, less-efficient housing stock, which is the biggest source of greenhouse gas in the residential sector.
- Proposed Rule for Coal Ash Residuals (CCR). The EPA last year proposed a rule to reverse a long-standing “beneficial use” policy exempting electric utilities that generate vast quantities of coal ash residuals (CCR) from strict permitting and disposal requirements under the Resource Conservation and Recovery Act (RCRA). The agency previously recognized that labeling CCR as a “hazardous waste” under the RCRA could halt the emerging “beneficial use” of CCR in such products as drywall, concrete, soil conditioners and road material aggregates. An EPA proposal would regulate CCR wastes for many applications, even though the agency recognizes that using CCR waste in construction materials such as wallboard and cement actually reduces greenhouse gas emissions — by the equivalent of between 12.5-25 million metric tons of carbon dioxide annually.
“Residential construction is one of the most heavily regulated industries in America,” Howard said. “We welcome the opportunity to work with the Administration and Congress to identify opportunities to make regulations more cost-effective without undermining their intent.”
The new executive order supplements Executive Order 12866, which was signed by President Clinton in September 1993.
Almost two years ago, President Obama signed Executive Order 13497, which repealed two provisions of the Clinton order entitled “Regulatory Planning and Review.”
The first provision required federal agencies to submit regulatory guidance documents likely to result in an annual economic impact of $100 million or more to the Office of Information and Regulatory Affairs (OIRA) for review and provide the public an opportunity to comment.
The second provision required each federal agency to identify a coordinator who would work directly with OIRA’s staff during the pre-publication stage of an economically “significant” rule or guidance document.
Repealing these two provisions significantly weakened OIRA’s role in assessing costly federal regulations, according to NAHB. It also made it easier for special interests to promote onerous regulations that are burdensome to industry and often do not achieve their stated goals.
“More than 80,000 pages of regulations were published in the Federal Register last year,” Howard said. “It is critical that regulations be developed in a transparent process, and that they are based on sound science and assess both costs and benefits.”
Many federal regulations — including new rules coming out of the Dodd-Frank Wall Street Reform and Consumer Protection Act — are not covered by these executive orders on regulatory review.
Also, in recent memorandums to the heads of executive agencies and departments, President Obama has called for more transparency and accountability in regulatory compliance and has emphasized the need to reduce burdens on small businesses whenever possible.