Proposed EPA rules could hurt job growth

In his first floor speech as House Majority Leader, Rep. Eric Cantor (R-Va.) proclaimed, “We are going to cut spending and job-killing government regulations, and grow the economy and private-sector jobs.”

Sen. Mark Warner (D-Va.) has proposed a regulatory “pay as you go” system, drafting legislation to require federal agencies to identify and eliminate one regulation for each new regulation they want to add.

Congress’ new emphasis comes in response to the Obama Administration’s aggressive agenda of regulatory expansion. Federal agencies, the Environmental Protection Agency (EPA) most prominent among them, continue proposing new rules that drive up business costs and discourage employers from putting Americans back to work.

A recent Heritage Foundation analysis reported that federal agencies issued 43 major new rules increasing regulatory burdens in Fiscal Year 2010. The total costs of these rules – as estimated by the regulators –exceeded $26.5 billion. That’s the highest single-year cost recorded since 1981, the first year for which records are available.

Many of these new regulations would dramatically increase compliance costs, assuming the proposed new standards are even technically attainable. Such new requirements would encourage many businesses, including small businesses with millions of high-wage employees, to curtail operations rather than make investments that could offer no economic return.

Investment capital would then naturally migrate to lower-cost locations where regulations are less burdensome. The American worker gets left behind.

{mosads}Financial regulation represented the bulk of the regulatory proposals in 2010, but the greatest and most immediate threats are posed by the EPA’s unrestrained rulemaking. Ten of the Obama Administration’s major regulatory measures in the latest fiscal year come from the EPA, with an estimated cost of more than $23 billion.

These proposals would affect virtually all manufacturing, industrial and power generating facilities in this country – those industries that drive the nation’s economic growth. From a policy standpoint, it’s troubling that these billions of dollars in new costs come without – or despite – guidance from the elected branch of government, Congress.

Strong bipartisan opposition blocked the Administration’s cap and trade legislation because of the program’s enormous cost, uncertainty and dubious benefits. Nevertheless, the EPA is proceeding with its own grandiose scheme of regulating greenhouse emissions under dubious legal authority.

Manufacturers have also been alarmed by two proposals that have generated less public attention but could still wreak economic damage: lower limits on ground-level ozone and emissions controls on industrial boilers.

New rules for ozone would supersede lower emission limits adopted just two years ago, with compliance costs that EPA acknowledges could near $90 billion annually by 2020. Democratic and Republican senators and governors from industrial states have criticized this rulemaking as a “financial and regulatory burden” that would “create additional barriers to job creation and industry growth.”

Industrial boilers play a critical role in our economy, generating power for companies large and small, as well as municipalities and universities. The EPA has proposed dramatic new rules that skirt cost-benefit analysis and would be impossible for many existing facilities even to meet. The forest products industry, which makes extensive use of boiler-generated energy, would be hit especially hard, facing estimated costs of $7 billion.

None of our international competitors confronts standards such as these, which will only drive more jobs offshore. Industry studies demonstrate that hundreds of thousands of jobs may be at risk if this rule is adopted. The Administration’s own Commerce Department has produced a study that concludes the draft rule could cost the United States 40,000 to 60,000 jobs a year.

On Tuesday, Jan. 18, President Obama announced what he called “A 21st-century regulatory system,” in which his Executive Branch agencies would seek “affordable, less intrusive means to achieve the same ends-giving careful consideration to benefits and costs.”

Some observers saw political maneuvering or “triangulation” behind the President’s announcement, signaling his intention to draw closer to business or preempt the House Republicans’ focus on the economic costs of over-regulation.

The President needs to follow through. He issued an executive order, “Improving Regulation and Regulatory Review,” that instructed the agencies to begin a retrospective analysis of their existing regulations. Such an analysis is welcome, but we also like to see burdensome regulations actually repealed as a result.

Ultimately, the seriousness of the President’s commitment to regulatory reform is easily measured: Will he stop allowing the agencies to issue new regulation that harm our manufacturing economy and jobs creation?

If the Obama Administration will not restrain itself, then it’s up to Congress to rein in the Executive Branch’s regulatory excess. Thankfully, Congress appears increasingly willing to do so.

Jay Timmons is the president and CEO of the National Association of Manufacturers (NAM). Bon McDonnell is the governor of Virginia.