EPA’s expensive mid life crisis offers diminishing “green” returns

Whether or not the agency’s top-down regulatory approaches work is not in question. The problem, you see, is not the end but the means. In fact, many analyses of the agency’s regulatory impacts have revealed they could have been achieved at lower cost to society.

Today EPA proceeds much as it has over the past 4 decades, relying on command and control approaches that rarely recognize geographic and regional differences or the implications of compliance requirements. The result? Researchers estimate that environmental regulations cost $236 billion annually -- approximately two percent of our GDP.

With 2010 pollution levels being so much lower than those of 1970, these ever growing costs are coming with diminishing returns. At some point, someone needs to ask, how clean is clean enough. This may seem as heresy, but our society has multiple objectives. And it is important to consider how pursuing one impacts our ability to achieve others.

Case in point, EPA’s plan to lower the ozone standard from the current level of 75 parts per billion (ppb) -- set just two years ago -- to 60 ppb. To justify this additional 20% reduction, it relies on dated science published on exposure levels well above the current standard. At very low levels of exposure, like the kind we currently enjoy, alleged health effects are speculative or theoretical. The economic impact of the proposed standard, however, would be real and devastating.

At 60 ppb, virtually the entire nation would be in non-attainment. This would impose costly emission controls and essentially shut down new industrial construction in a number of states. The Manufacturers Alliance/MAPI has published a study that found this new standard would add $1 trillion to regulatory costs and destroy more than 7 million jobs over the next decade. Even if these impacts are off by a factor of 2 or 3, which is doubtful, the effect on the economy would be significant.

EPA’s ozone regulation could be the most regulation ever issued by the agency.

Regulators are not stopping with ozone. They are also planning to require the Maximum Available Control Technology (MACT) to be installed on industrial boilers and all coal fired power plants. In contrast to EPA’s claim that the draft boiler regulation replace the 6,000 jobs it destroys with as many as 12,000 “green” jobs, the Department of Commerce estimates the regulation would obliterate 40,000 to 60,000 jobs and cost $100 billion even using the agency’s own “low ball” cost estimates.

The burdens threatened by its ozone and MACT proposals are made even worse by EPA’s stationary source rule. These actions and others that would significantly increase the cost of new investment and essentially put a moratorium on new industrial development are simply wrong headed, especially at a time when unemployment is hovering close to 10 percent and the economy -- to quote President Obama -- is struggling to “get out of the ditch.”

Perhaps EPA losing sight of its purpose while redoubling its efforts is just a symptom of the agency’s midlife crisis. Whether the agency is worse for the wear or simply besieged by new problems invented by green zealots, it’s time for a “time out.”

Instead of proceeding blindly with an onslaught of new regulations, federal regulators should face a two-year moratorium on new regulations, except for those required to meet a court deadline or environmental emergency. Public health is well protected under existing rules, protests to the contrary notwithstanding.

In that two-year period, lawmakers could at least modify the National Environmental Protection Act (NEPA) to mandate cost-benefit and risk versus risk comparisons and take steps to persuade the administration to restructure EPA to more appropriately address the environmental issues of the future. For its birthday, consider this a much-needed facelift. There should be little disagreement that an EPA created today would look a lot different from the one created 40 years ago.

William O’Keefe, chief executive officer of the George C. Marshall Institute, is president of Solutions Consulting Inc.