EPA climate rules could harm job growth effort

As Congress and the administration move ahead with a job creation agenda and continue working on climate and energy legislation, policymakers need to ensure that other actions don’t undo their efforts. One of the most damaging candidates is right around the corner: As early as March, the U.S. Environmental Protection Agency (EPA) plans to issue rules regulating greenhouse gases (GHGs) from new cars and light trucks. Under the Clean Air Act, that step would lead to regulation of GHGs at as many as six million of America’s industrial facilities, power plants, hospitals and commercial establishments. EPA regulation of these “stationary sources” would be harmful to two of the nation’s top priorities: environmental improvement and economic recovery. Congress and the administration must postpone EPA regulation of stationary sources.

Lawmakers belong in the driver’s seat when it comes to developing policies of all kinds, including one of the most sweeping and significant policies in decades. Congress risks having EPA’s regulatory deadlines overtake the legislative process. Both President Obama and Administrator Lisa Jackson have “repeatedly indicated their preference for comprehensive legislation to address this issue and create the framework for a clean energy economy,” and the agency has called the scope and cost of regulating GHGs at vast numbers of stationary sources an “absurd result.”

Consider what will happen if EPA begins to regulate greenhouse gas emissions from stationary sources before Congress has had a chance to develop a sound policy. EPA and states would be required to issue permits to each new regulated source, or for modifications at existing sources. Since rules for regulating GHG emissions at stationary sources don’t exist, investment in American manufacturing would be stopped dead in its tracks while EPA and the states figure out what to do next. Jobs that depend on that new investment would be hurt, too — including those supporting new and emerging energy efficiency technologies. The very investments and jobs the administration wants to expand would be delayed, curtailed, or cancelled because of permitting requirements that do not exist. U.S. industrial and business development would grind to a halt as millions of permits flood the system and regulatory gridlock sets in.

The impacts would be staggering: EPA estimates that in the U.S. as many as 41,000 new and modified facilities per year will require permits under the Prevention of Significant Deterioration (PSD) Program. Meanwhile, the Title V program, a general operating permit, could apply to six million new facilities. While EPA has proposed to “tailor” the applicability of the rules to larger facilities only, it is unclear whether this legal authority will be upheld. If EPA’s effort fails, virtually all U.S. sources of greenhouse gas emissions would be subject to the new permitting requirements.

American manufacturers have already been struggling with the economic downturn and high U.S. energy prices. The U.S. chemistry industry has lost more than 57,000 jobs since the recession began, and 180,000 jobs in the last decade.

Premature EPA regulation will make it difficult to attract new manufacturing capacity to the United States and raises questions about the viability of existing facilities and jobs. That’s particularly important because American chemistry is closely linked to economic recovery and improvement, particularly job creation. Chemistry touches 96 percent of U.S. manufactured goods and represents $663 billion in production, and every industry job creates 5.5 others. It also drives innovation in energy technologies.

We believe that the economic recovery package enacted earlier this year has helped to create or save more than a million U.S. jobs. It may have saved us from heading into a depression, but we remain in a deep jobs hole. During a period when the economy needed to add two million jobs just to match population growth, the U.S. lost more than eight million jobs. America is short 10 million jobs since the recession started in 2007. To create and save millions of jobs, we need smart policies that don’t grow jobs with one hand and take them away with the other.

U.S. energy markets and prices could also be significantly affected by EPA regulation of GHGs from stationary sources. That’s because the PSD program would require businesses to apply the “Best Available Control Technology” (BACT) for GHG emissions for new construction or major modifications of facilities. BACT standards do not currently exist for controlling GHG emissions from stationary sources. If EPA interprets BACT to require coal-fired utilities to use natural gas or biomass for electricity generation, then utilities could be forced to “fuel switch” from coal to natural gas in coal-intensive states, creating even greater economic upheaval. This type of “winners and losers” outcome that has pitted state against state and industry against industry has clearly frustrated Congress’s attempt to reach a policy consensus. EPA’s regulations should not exacerbate an already difficult policy debate.

The best solution is for Congress to postpone the stationary source rule. A postponement will allow Congress enough time to look at the proper role of stationary source regulation in a comprehensive national climate and energy policy. In the meantime, EPA’s other greenhouse gas regulations should move forward. At the same time, Congress should redouble its efforts to develop effective climate and energy legislation. Only Congress can avoid the “absurd result” created by EPA’s pending regulatory effort.

Cal Dooley is president and CEO of the American Chemistry Council.

Joe Hunt is general president of the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers.