I was struck by The New York Times article on Okla. Attorney General Scott Pruitt, the nominee to be Environmental Protection Agency (EPA) administrator, and the settlement of a long-simmering Arkansas poultry runoff case. I encourage you to take a look at a very different side of the story and its impact here.
It’s fascinating to see the nature of the criticism being leveled against Mr. Pruitt by environmental groups, former EPA administrators and other opponents—and here’s why: he doesn’t view the EPA’s role, and his potential role as administrator, the same way they do. He’s different. And they don’t like it.
But shouldn’t he be different? Shouldn’t he represent change from the status quo? Voters just elected Donald Trump president, in large part, because he pledged to be a disruptor, to dramatically change the way the federal government interacts with—well, everyone. The EPA is no exception.
Here’s the side of the story you don’t hear in The New York Times: manufacturers have and continue to face a barrage of regulations large and small for the bulk of the past decade. These regulations have come at a substantial cost, individually and in terms of the cumulative burden with no real analysis of cost benefit. Manufacturers care deeply about our environment and work hard to be good stewards, but the EPA consistently has turned its back on balanced, transparent regulations.
Let me just give you some specific examples of the costs of several EPA regulations detailed by a recent Congressional Research Service report.
- Mercury standards on power plants will cost $9.6 billion per year.
- The Clean Power Plan will cost at least $5 billion to $8 billion per year.
- Methane standards on oil and gas facilities will cost $530 million per year.
- New ozone standards will cost $1.4 billion (we think they could be much, much higher).
- Particulate matter standards finished in 2012 will cost as much as $350 million.
- Sulfur dioxide standards from 2011 will cost $1.5 billion annually.
- The Cross-State Air Pollution Rule will cost $2.6 billion, and an update adds another $68 million.
- The Boiler MACT and related standards will cost just shy of $2 billion.
- Tier 3 standards on emissions from automobiles will cost around $1.5 billion. Emissions standards for stationary combustion engines cost more than $600 million.
- Effluent limitations guidelines on steam electric generators will cost $340 million. Disposal standards for coal combustion residuals exceed $500 million.
- Greenhouse gas emission standards for heavy-duty trucks cost $8.1 billion and were quickly followed up by a successor rule that will cost $29 billion to $31 billion.
- Light-duty vehicle greenhouse gas standards issued in 2010 raised the cost of an average vehicle by $1,100 and were followed by a second set of greenhouse gas standards in 2012, adding another $1,800 per vehicle.
All of these were issued with the argument that it didn’t matter the cost; they would improve the environment. But in the vast majority of these cases, the EPA selected winners and losers in the marketplace, decimated the coal industry and put real costs on the back of manufacturers. The National Association of Manufacturers (NAM) estimates the average manufacturer spends $10,497 per employee per year to comply with environmental regulations, five and a half times the amount spent on environmental regulations by the average business. Manufacturers with fewer than 50 employees must spend $20,361 per employee per year on environmental regulations.
Regulations must be balanced, and for each of these regulations, the EPA performed a cost-benefit analysis. In a few cases, even the EPA admits the costs outweighed the benefits. The EPA generally claims its rules have high benefits and low costs, but it has been wrong (as in the mercury example above, where 10 times more power plants shut down than the EPA estimated), or it has used very questionable benefit estimation methods that undermine its credibility (like the controversial “Social Cost of Carbon,” a metric that inexplicably calculates benefits out to the year 2300).
From our perspective, there is a better way to ensure that the regulations put in place are balanced with the appropriate cost-benefit analysis to make sure we are not killing jobs, investment and economic growth along the way.
The NAM is running ads in support of Pruitt’s nomination because we’re ready for a change. We hope a Pruitt-led EPA can bring that change, and we look forward to his confirmation hearing this week.
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