* Measures come as Obama seeks to placate business
* White House sees future savings of billions of dollars
* Business group says plan makes progress, is not enough (Adds Chamber of Commerce comment)
By Alister Bull
WASHINGTON, May 26 (Reuters) - The White House on Thursday announced steps to cut federal red tape it said would save billions of dollars over time, seeking to placate businesses complaining about what they see as an undue regulatory burden.
The reforms, which scrutinized everything the federal government regulates from worker safety rules to safeguards on milk and eggs, follow a request from President Barack Obama in January to improve or remove any rules that were out of date.
"As a result of that review, agencies have identified initiatives with the potential to eliminate tens of millions of hours in reporting burdens, and billions of dollars in regulatory costs," the White House said in a statement.
The president's decision to streamline federal rules as he sought to improve relations with the business community, followed a drubbing for his Democrats in November elections.
The Chamber of Commerce business group said it appeared the administration had made "some commonsense recommendations that will save businesses some time, money, headaches, and resources," but needed to go much further.
"What we need is a plan to make our flawed regulatory system smarter, less intrusive, and more accountable," Chamber Senior Vice President Bill Kovacs said in a statement.
He said such a plan would require more congressional oversight, analysis by independent third parties and more judicial access so those involved can hold the government accountable.
Obama's re-election hopes in 2012 could rest in large part on his ability to get U.S. unemployment levels down from current high levels of 9 percent.
Meanwhile, the president's Republican opponents are fighting him over measures like Obama's reforms of healthcare and the financial services industry, which they say burden business at the cost of jobs and growth.
"Paperwork and reporting burdens are a serious problem," White House budget chief Jacob Lew told reporters on a conference call. "This is not a one time project. This is the beginning of what will become a new way of doing business."
Savings outlined from the red tape review released by the White House include a plan being considered by the Transportation Department that would yield an immediate ${esc.dollar}400 million from "refinements to railroad safety standards, and up to ${esc.dollar}1 billion over 20 years," the White House said.
In addition, the Environmental Protection Agency will propose savings of ${esc.dollar}670 million over the next decade by ending the rule for many states requiring vapor recovery systems at some local gas stations.
This was seen as no longer necessary "because modern vehicles already have effective air pollution control technologies," the White House said.
The Occupational Safety and Health Administration will remove 1.9 million annual hours of "redundant reporting burdens" on employers, which the Obama administration estimates will save ${esc.dollar}40 million a year.
The agency was also planning to finalize a proposal to harmonize U.S. hazard classifications and labels with those used by other nations, yielding an "annualized ${esc.dollar}585 million in estimated savings for employers," the White House said. (Additional reporting by Patricia Zengerle, editing by Vicki Allen and Eric Beech)
Our Standards: The Thomson Reuters Trust Principles.
