Amid a tide of Republican complaints over regulations’ impact on economic growth, two new government reports show that the economic benefits of rules outstrip compliance costs by billions of dollars every year.

An annual report released March 1 by the White House Office of Management and Budget (OMB) finds that the annual benefits of major rules finalized in fiscal years 2001 through 2010 ranged from $136 billion to $651 billion, while compliance costs amounted to somewhere between $44 billion and $62 billion per year.

OMB prepares the report by aggregating agencies' cost-benefit analyses – notoriously inaccurate tools that ignore benefits that don't have easily attachable price tags, such as environmental preservation, and awkwardly account for others whose values surpass mere economics, such as lives saved and injuries or illnesses avoided. Cost-benefit analyses also typically misrepresent compliance costs by assuming a static business model and ignoring innovations that allow regulated entities to operate more efficiently while complying with government requirements.

While the specific numbers and vast dollar ranges presented in the OMB report are imperfect, the report highlights the value of regulation and undermines the notion that government standards that impose requirements on businesses and other entities hurt the economy.

Among the beneficial rules contributing to the lopsided ledger are several U.S. Environmental Protection Agency (EPA) air quality standards. "It should be clear that the rules with the highest benefits and the highest costs, by far, come from the Environmental Protection Agency and in particular its Office of Air," the report states. "More specifically, EPA rules account for 60 to 85 percent of the monetized benefits and 47 to 54 percent of the monetized costs."

EPA's effort to reduce human exposure to fine particulate matter is perhaps the most economically significant, according to the report. The agency's Clean Air Fine Particle Implementation rule generates benefits between $19 billion and $167 billion per year while imposing compliance costs of $7.3 billion per year, the report says.

The monetary benefits of environmental, health, and safety regulations often stem from health care cost savings, increases in worker productivity, and lives saved. When preparing a cost-benefit analysis, agencies assign a value, typically between $5 million and $10 million, to a human life.

The OMB report is the draft version of the 14th annual Report to Congress on the Benefits and Costs of Federal Regulations. A final version of the report is expected later in 2011.

EPA released a report March 1 that draws similar conclusions. The agency found that rules written under the Clean Air Act yielded significant annual benefits. In 2010, those benefits totaled approximately $1.3 trillion; compliance costs that year were approximately $53 billion. The value of annual benefits could reach an estimated $2 trillion in 2020, the report says. Specifically, the report examines rules written as a result of the 1990 Clean Air Act amendments. It compares current and projected conditions against a baseline that assumes only 1970s Clean Air Act controls to be in effect.

"In 2010 alone, the reductions in fine particle and ozone pollution from the 1990 Clean Air Act amendments prevented more than: 160,000 cases of premature mortality; 130,000 heart attacks; 13 million lost work days; 1.7 million asthma attacks," EPA says. "These benefits lead to a more productive workforce, and enable consumers and businesses to spend less on health care – all of which help strengthen the economy."

Clean air advocates are holding up the EPA report as proof that the agency serves the public's best interest and that its detractors are misguided. "By limiting our exposure to air pollution, the Clean Air Act has not only saved lives but also vastly reduced cases of heart attacks, asthma attacks, bronchitis and other illnesses, thus cutting our medical bills – a huge drag on the economy," John Walke, clean air director at the Natural Resources Defense Council, said in a statement. "The study also exposes big industry's decades-long habit of crying wolf whenever the government has sought to strengthen health protections."

The report comes on the heels of an agency white paper showing that EPA clean air standards have created new jobs, particularly in the environmental technologies industry.

Despite the evidence, Congress continues to consider options restricting EPA's ability to protect the public under the Clean Air Act. The House-passed spending bill that would have funded the government for the remainder of the fiscal year contains at least 80 non-budget policy riders, many of which target the EPA's regulatory authority. The bill would prohibit the EPA from spending money to work on standards that would cut mercury pollution from cement kilns and set new limits on particulate matter. The bill would also forbid the agency from curbing climate-altering carbon pollution under the Clean Air Act. The bill has not passed in the Senate.

UPDATE (3/9/2011): Isaac Shapiro, a scholar at the Economic Policy Institute, examined the OMB report and notes that the trend of benefits outweighing costs holds up even when the statistics are not considered in the aggregate. "Consistent with the general finding, the value of the annual benefits of the major rules reviewed in each individual year by OMB exceeded their annual costs," Shapiro wrote. "On average, the value of the estimated annual benefits of the major regulations reviewed each year was seven times their cost."