NCPA - National Center for Policy Analysis

Private Sector to Pay For its Own Regulation

February 4, 2003

The Bush administration plans to expand the application of "user fees" to get companies to fund the costs of federal regulatory mandates. The White House told the Department of Agriculture, the Federal Communications Commission and the Food and Drug Administration, among others, to generate more of their funding from the industries they regulate.

The aim is to add an additional $2.1 billion to the roughly $170.4 billion in fees collected last year.

  • The food industry has repeatedly persuaded Congress to block user fees for USDA inspections of meat, dairy and egg products -- but the new budget calls for increasing spending on inspections from $858 million this year to $899 million in 2004, with user fees footing the bill.
  • At the Federal Communications Commission, reliance on user fees would increase sharply after 2007, when the agency would raise an additional $500 million a year from television broadcasters.
  • At the Food and Drug Administration, $307 million of its $1.71 billion budget will come from food and drug makers seeking approval of their products.
  • User fees on telemarketers will also offset the entire $18 million cost of the Federal Trade Commission's politically popular "do not call list" intended to block telemarketing solicitations.

Among regulatory agencies, one of the big winners is the Securities and Exchange Commission, which will see its budget rise to $842 million in 2004 from the $650 million the commission is likely to get from Congress this year. The increase -- which will be used for staff enlargement and pay raises -- won't be dependent on user fees.

Some companies are sure to fight the higher levies -- and critics question the wisdom of making the agencies dependent for funds on the industries and companies they are charged with regulating.

Source: Yochi J. Dreazen and Deborah Solomon, "Paying for Regulation," Wall Street Journal, February 4, 2003.

For text (WSJ subscription required)

http://online.wsj.com/article/0,,SB1044310010302363344-search,00.html

 

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