Regulation Review: Interior Fracking Rule, Part II
Yesterday, the Bureau of Land Management (BLM) released the second version of its proposed fracking rule. AAF reviewed the first iteration here, and noted that in some cases, the first proposal’s costs exceeded benefits by a factor of five. The most recent version drastically cuts costs “while providing the same benefits,” according to the proposed rule.
Cost Comparison
- First Proposal: $376 million in costs over ten years
- This Proposal: $166 million in costs over ten years
- First Proposal: $11,833 in costs per well
- This Proposal: $5,110 in costs per well
- First Proposal: 28,560 paperwork burden hours
- This Proposal: 32,904 paperwork burden hours
Analysis
The proposal essentially keeps three of the core regulatory components of the original regulation: 1) requiring disclosure of chemicals used during fracking, 2) ensuring that wells do not contaminate local groundwater, and 3) confirming that fracking operators have a water management plan for flow back to the surface.
As far as business impacts, BLM noted that 99 percent of fracking operators have fewer than 500 employees, but this proposed rule would raise operating costs by less than one percent of a company’s net income. The affected industries are Crude Petroleum and Natural Gas Extraction, and Drilling Oil and Gas Wells.
Unlike the initial proposal, this version did not provide a quantified figure on employment impacts. Instead, it noted, “Firms in support services for oil and gas drilling industry are likely to benefit from the rule, since they would likely carry out the operational requirements of the rule.”
On benefits, BLM did not monetize all potential figures, but noted the proposal could reduce risks associated with fracking. The analysis continued, “[T]he likelihood of an incident resulting from hydraulic fracturing operations could be between 0.03 and 2.70 percent. Damage from an incident could cost between $15,000 and $1 million for remediation plus any lost revenue from unrecoverable resources, including spilled or stranded sources.”
The public will have 30 days to comment on the 171-page proposal once it’s published in the Federal Register.
The Week in Regulation: May 13-17
This week regulators added $284 million in costs and 3.8 million paperwork burden hours. The largest measure was a proposed rule from the Consumer Product Safety Commission (CPSC) amending existing regulations on certificates of compliance.
Regulatory Toplines
- New Proposed Rules: 68
- New Final Rules: 71
- 2013 Significant Documents: 163
- 2013 Total Pages of Regulation: 29,232
- 2013 Proposed Rules: $7.5 Billion
- 2013 Final Rules: $13 Billion
AAF has catalogued regulations according to their likely codification in the Code of Federal Regulations (CFR). The CFR is organized by title, 1-50, with each title corresponding to an industry or part of government. This tool will help to determine which sectors of the economy receive the highest number of regulatory actions.
Regulation by Industry in 2013
|
CFR Title-Industry |
Regulations |
Cost (in millions) |
Hours |
|
7-Agriculture |
5 |
$180 |
32,585,476 |
|
8-Aliens and Nationality |
1 |
$180 |
585,200 |
|
9-Animals |
1 |
$47 |
|
|
10-Energy |
1 |
$5,220 |
58,320 |
|
12-Banking |
16 |
$62 |
2,235,240 |
|
13-Business Assistance |
1 |
$-0.7 |
-26,402 |
|
14-Aeronautics |
113 |
$618 |
|
|
15-Commerce, Trade |
2 |
47,116 |
|
|
16-Commercial Practices |
2 |
$22 |
86,442 |
|
17-Commodities, Securities |
5 |
$734 |
2,214,595 |
|
18-Conservation |
5 |
$61 |
2,426,217 |
|
20-Employees’ Benefits |
1 |
$1 |
6,360 |
|
21-Food and Drugs |
7 |
$6,603 |
10,167,266 |
|
22-Foreign Relations |
2 |
-59,700 |
|
|
23-Highways |
1 |
$1 |
25,080 |
|
24-Housing |
5 |
$-19 |
244,018 |
|
26-Internal Revenue |
4 |
400 |
|
|
28-Judicial Administration |
1 |
||
|
29-Labor |
5 |
$435 |
20,809 |
|
30-Mineral Resources |
2 |
$55 |
683,600 |
|
31-Treasury |
1 |
5,500 |
|
|
33-Navigable Waters |
1 |
$186 |
42,126 |
|
34-Education |
1 |
$-59 |
17,530 |
|
37-Patents, Copyright |
2 |
$931 |
779,960 |
|
40-Environment |
13 |
$2,394 |
1,486,849 |
|
42-Public Health |
6 |
$-1,357 |
8,217,813 |
|
43-Interior |
1 |
||
|
45-Public Welfare |
9 |
$1,080 |
4,576,549 |
|
47-Telecommunication |
8 |
$23 |
863,827 |
|
48-Federal Acquisition |
1 |
$0.4 |
11,277 |
|
49-Transportation |
9 |
$42 |
-133,164 |
|
Multiple Titles |
4 |
$2,572 |
177,432 |
The CPSC’s proposed rule on certificates of compliance amends “requirements for the form, content, and availability” of certificates. There are substantial costs and paperwork requirements due to the retention of records for an assortment of consumer product manufacturers, everything from bike helmets to lawn darts. Combined, the proposed rule costs $207 million, with 3.1 million associated paperwork burden hours.
Affordable Care Act
There was one ACA rulemaking this week, Medicaid Hospital Allotment Reduction, which actually reduces $548 million in Medicaid funding to states. This reduction assumes fewer uninsured patients will seek Medicaid coverage. The proposed rule imposes just 1,071 paperwork burden hours.
Since passage, based on total lifetime costs of the regulations, the Affordable Care Act has imposed an estimated $21.7 billion in private-sector burdens, approximately $9.8 billion in costs to the states, and 110.8 million annual paperwork hours.
Dodd-Frank
There were no Dodd-Frank rulemakings this week. Click here to view the total estimated compliance costs from Dodd-Frank; since passage, the legislation has produced more than 59.1 million paperwork burden hours and imposed $15.1 billion in direct compliance costs. Based on calculations from the Financial Services Roundtable, Dodd-Frank regulations would require 29,577 employees to file federal paperwork.
A Note on Notices
This week federal agencies published 498 notices. In these notices, agencies typically request new or revised paperwork burdens from the Office of Management and Budget. These notices are generally not final, merely requests with a comment period.
Agencies requested 53 million paperwork burden hours, the equivalent of forcing 26,850 employees into red tape compliance. The associated costs of these burdens: $40.4 million, or $0.75 per hour.
Total Burdens
Since January 1, the federal government has published $20.5 billion in compliance costs, and 70.7 million annual paperwork burden hours. At the current pace, regulators will publish $54 billion in regulations this year. Click here for our comprehensive database of regulations and rulemakings promulgated in 2013.
House on Regulation: The SEC Regulatory Accountability Act
Later this week, the House of Representatives will take up H.R. 1062, or “The SEC Regulatory Accountability Act.” The bill, authored by Representative Scott Garrett (R-NJ), would require the Securities and Exchange Commission (SEC) to provide more comprehensive cost-benefit analyses in its regulations and to undergo a retrospective review of regulations already on the books. The bill currently has 23 co-sponsors.
Since 2009, SEC final regulations have imposed more than $7 billion in costs, according to the American Action Forum’s (AAF) regulatory database. However, a third of SEC rulemakings during that period did not provide quantified estimates, and $7 billion is likely a conservative estimate of the Commission’s total costs.
Since SEC is an independent agency, it does not face the same evaluations as executive agencies. Generally, the only specifically monetized estimates of regulatory burdens imposed by the Commission come from its estimated paperwork hours under the Paperwork Reduction Act. Since 2009, only five SEC rules with paperwork burden estimates failed to provide a cost estimate.
Currently, SEC’s total regulatory portfolio is responsible for more than 234 million hours of paperwork. Among all agencies, that’s the fourth largest. Assuming a 2,000-hour work-year, SEC paperwork requires the equivalent of 117,000 workers annually. That paperwork burden brings roughly $17.5 billion in costs, representing a per-hour rate of $74. Dodd-Frank implementation and other SEC actions in the wake of the financial crisis likely explains the dramatic spike in recent years.
Representative Garrett’s bill merely codifies many of the same principles as President Obama’s Executive Orders (EO) 13,563 and 13,579. The former directs executive agencies to implement greater cost-benefit analysis and retrospective review, the latter requests independent agencies to follow suit.
As noted above, SEC currently faces no statutory requirement to comply with rigorous cost-benefit analysis. The only notable SEC action in response to EO 13,579 was a largely perfunctory “Request for Information.” Furthermore, AAF has yet to record a single SEC rulemaking that has reduced either costs or paperwork burdens in the wake of the President’s order.
The Week in Regulation: May 6-10
Aggregate regulatory costs were once again stagnant this week, although the administration did publish three Affordable Care Act (ACA) proposed rules. Paperwork hours actually declined by 612,000 hours because of two proposals to end and consolidate collections.
Regulatory Toplines
- New Proposed Rules: 69
- New Final Rules: 64
- 2013 Significant Documents: 156
- 2013 Total Pages of Regulation: 27,852
- 2013 Proposed Rules: $7.3 Billion
- 2013 Final Rules: $12.9 Billion
AAF has catalogued regulations according to their likely codification in the Code of Federal Regulations (CFR). The CFR is organized by title, 1-50, with each title corresponding to an industry or part of government. This tool will help to determine which sectors of the economy receive the highest number of regulatory actions.
Regulation by Industry in 2013
|
CFR Title-Industry |
Regulations |
Cost (in millions) |
Hours |
|
7-Agriculture |
5 |
$180 |
32,585,476 |
|
8-Aliens and Nationality |
1 |
$180 |
585,200 |
|
9-Animals |
1 |
$47 |
|
|
10-Energy |
1 |
$5,220 |
58,320 |
|
12-Banking |
16 |
$62 |
2,235,240 |
|
13-Business Assistance |
1 |
$-0.7 |
-26,402 |
|
14-Aeronautics |
113 |
$618 |
|
|
15-Commerce, Trade |
2 |
47,116 |
|
|
16-Commercial Practices |
2 |
$22 |
86,442 |
|
17-Commodities, Securities |
5 |
$734 |
2,214,595 |
|
18-Conservation |
5 |
$61 |
2,426,217 |
|
20-Employees’ Benefits |
1 |
$1 |
6,360 |
|
21-Food and Drugs |
7 |
$6,603 |
10,167,266 |
|
22-Foreign Relations |
2 |
-59,700 |
|
|
23-Highways |
1 |
$1 |
25,080 |
|
24-Housing |
5 |
$-19 |
244,018 |
|
26-Internal Revenue |
4 |
400 |
|
|
28-Judicial Administration |
1 |
||
|
29-Labor |
5 |
$435 |
20,809 |
|
30-Mineral Resources |
2 |
$55 |
683,600 |
|
31-Treasury |
1 |
5,500 |
|
|
33-Navigable Waters |
1 |
$186 |
42,126 |
|
34-Education |
1 |
$-59 |
17,530 |
|
37-Patents, Copyright |
2 |
$931 |
779,960 |
|
40-Environment |
13 |
$2,394 |
1,486,849 |
|
42-Public Health |
6 |
$-1,357 |
8,217,813 |
|
43-Interior |
1 |
||
|
45-Public Welfare |
9 |
$1,080 |
4,576,549 |
|
47-Telecommunication |
8 |
$23 |
863,827 |
|
48-Federal Acquisition |
1 |
$0.4 |
11,277 |
|
49-Transportation |
9 |
$42 |
-133,164 |
|
Multiple Titles |
4 |
$2,572 |
177,432 |
Outside of ACA actions, the EPA published a notice denying Earthjustice’s petition to regulate emissions from coal mines. If parties contest the ruling, the D.C. Court of Appeals will likely decide the outcome.
The Department of Transportation published a proposal to cut more than 400,000 paperwork burden hours. Its “Medical Examiner’s Certification Integration” proposed rule regulates the physical examination of drivers of commercial motor vehicles. There are some new costs, but on net, the regulation could drastically reduce the current collection of information.
Affordable Care Act
There were three ACA rulemakings this week, and they could reduce more than 200,000 hours of paperwork. One notable proposal, “Hospital Inpatient Prospective Payment System,” consumes 339 pages in the Federal Register, but it does help to cut hospital paperwork by reducing the number of patient charts per quarter. Because this rulemaking is associated with the ACA, it also results in a slight decline for the law’s aggregate paperwork burden.
Since passage, based on total lifetime costs of the regulations, the Affordable Care Act has imposed an estimated $21.7 billion in private-sector burdens, approximately $9.8 billion in costs to the states, and 110.8 million annual paperwork hours.
Dodd-Frank
There were no Dodd-Frank rulemakings this week. Click here to view the total estimated compliance costs from Dodd-Frank; since passage, the legislation has produced more than 59.1 million paperwork burden hours and imposed $15.1 billion in direct compliance costs. Based on calculations from the Financial Services Roundtable, Dodd-Frank regulations would require 29,577 employees to file federal paperwork.
A Note on Notices
This week federal agencies published 478 notices. In these notices, agencies typically request new or revised paperwork burdens from the Office of Management and Budget. These notices are generally not final, merely requests with a comment period.
Agencies requested 80 million paperwork burden hours, the equivalent of forcing 39,397 employees into red tape compliance. The associated costs of these burdens: $75.2 million, or $0.94 per hour.
Total Burdens
Since January 1, the federal government has published $20.2 billion in compliance costs, and 66.8 million annual paperwork burden hours. At the current pace, regulators will publish $56 billion in regulations this year. Click here for our comprehensive database of regulations and rulemakings promulgated in 2013.
Publication Dates of the Unified Agenda of Federal Regulation
Publication Dates of the Unified Agenda of Federal Regulation
|
Year |
Spring Edition |
Fall Edition |
|
1996 |
April 25, 1996 |
November 18, 1996 |
|
1997 |
April 4, 1997 |
October 1, 1997 |
|
1998 |
April 15, 1998 |
October 27, 1998 |
|
1999 |
April 12, 1999 |
November 9, 1999 |
|
2000 |
April 13, 2000 |
October 30, 2000 |
|
2001 |
April 25, 2001 |
November 5, 2001 |
|
2002 |
April 30, 2002 |
October 30, 2002 |
|
2003 |
May 7, 2003 |
December 5, 2003 |
|
2004 |
June 17, 2004 |
November 22, 2004 |
|
2005 |
April 27, 2005 |
October 7, 2005 |
|
2006 |
April 24, 2006 |
December 1, 2006 |
|
2007 |
March 29, 2007 |
November 21, 2007 |
|
2008 |
April 24, 2008 |
November 12, 2008 |
|
2009 |
April 22, 2009 |
November 18, 2009 |
|
2010 |
April 7, 2010 |
November 29, 2010 |
|
2011 |
June 1, 2011 |
December 19, 2011 |
|
2012 |
X |
December 21, 2012 |
|
2013 |


