No Way to Spell Regulatory Relief

Mark Green
Posted August 24, 2011

The administration is trumpeting a newly released plan it says could save $10 billion over five years by eliminating hundreds of regulations and streamlining the federal bureaucracy. Cass Sunstein, administrator of the White House Office of Information and Regulatory Affairs:

"Today, we are announcing that agencies are releasing their final regulatory reform plans, including hundreds of initiatives that will reduce costs, simplify the system, and eliminate redundancy and inconsistency. As the plans demonstrate, a great deal has been achieved in a short time. Significant burden-reducing rules have been finalized or publicly proposed from the Department of Labor, the Environmental Protection Agency, and the Department of Transportation."

Writing in the Wall Street Journal [subscription required] a day earlier, Sunstein said the administration's goal is harmony between regulators and the regulated:

"The president has directed agencies to give careful consideration to both benefits and costs, to promote public input and listen to stakeholders, to simplify and harmonize rules, to select approaches that promote innovation, and to consider flexible approaches that reduce burdens and maintain freedom of choice."

Sounds worthy enough. Unfortunately, the $10 billion the administration might save by cutting red tape, etc., would be dwarfed by the $1 trillion cost to the economy each year from a new, more stringent ozone standard EPA is pushing. This estimate says the new regulation also would kill as many as 7.3 million jobs by 2020, which would make it the mother of all regulatory burdens. Here's Howard Feldman, API's director of regulatory and scientific affairs, talking to reporters on Tuesday:

"A standard at this level would essentially be incompatible with economic activity that produces any emissions, or with what most Americans do to earn a living. No source of emissions would be exempt. ... The result (of the tighter ozone standard) would be a slow-motion process of job losses and dislocation in communities across America."

Take a second to absorb that. EPA's stricter ozone standard would be "incompatible with economic activity" that produces emissions - that is, nearly everything that uses energy, generates energy, manufacturing, transportation and more. And here's the "more," from Feldman:

"It may be impossible in many places to expand a refinery or drill for more oil and natural gas unless it can be done with no increase in emissions. This could lead to greater imports from foreign suppliers unaffected by U.S. emissions controls."

The potential impact is staggering, considering these points:

• The Energy Information Administration tells us 61 percent of our energy currently comes from oil and natural gas, and that in 2035 those fuels still will supply 55 percent of our energy.

• EPA notes it is relying on still-to-be-invented measures - "estimates assume a particular trajectory of aggressive technological change" is how the agency puts it - that localities would use to reduce emissions sufficiently to meet the new standard.

• EPA's economic impact estimate is $90 billion, but it leaves out costs that would be borne by the Los Angeles basin and San Joaquin Valley - two of the largest areas of non-compliance currently.

In short, the proposed new standard on ozone is exactly the kind of job-killing, economy restricting provision the administration supposedly is trying to avoid - especially in this economy.

It doesn't have to happen. The proposed change is happening out of cycle, meaning EPA is under no requirement under the law or from the judicial system to tighten the ozone standard right now.

A better idea: Let it go. The EPA and the administration should step away from fitting the economy with a new millstone. Regulatory relief was a good idea when the president talked about it in January. It's a good idea now. Fundamental to that goal is resisting ill-conceived, ill-timed proposals - like the one pending on ozone.