As officials in Washington continue to pen new regulation, frustration among small business owners across the country has grown. The high tensions have created a rift between regulators and the public, largely leaving commonsense in the lurch.

Recently, some outspoken critics have called on government leaders to abolish any future regulations or dismantle agencies responsible for protecting consumers, workers and the environment. Such appeals are unreasonable and unrealistic. But by the same token, US small businesses, which are responsible for creating about two-thirds of new jobs annually and produce half of the nation’s GDP, are facing growing barriers to success because of more and more burdensome federal regulations. \We need to restore sensibility, transparency and balance to the system.

Over the past five years, the number of proposed “major regulations” – those costing $100 million or more to the economy – have increased by more than 60 percent. Today, there are over 160,000 pages of federal regulations on the books, and more than 4,200 new rules are awaiting approval. Over 800 of those pending would directly affect small businesses.

Small businesses bear a disproportional share of government regulation. A study by the Small Business Administration found that firms with fewer than 20 workers incur an average cost of $2,830 more to comply with regulations than companies with 500 or more employees, which is about one-third more per worker.

The significant increase in regulations being handed down by Washington is having real consequences. A recently released Gallup poll found that compliance with government regulations is now the single biggest problem facing small business owners. The same report indicated that about one in three small companies is concerned about going out of business in 2012. Similarly, earlier this year the rate of new startup businesses reached a 25 year low largely due to the uncertainty created by the government’s regulatory agenda.

We all share a common goal of putting Americans back to work and stabilizing the economy and leaders from all political walks of life agree on the importance of empowering small businesses. To that end President Obama issued Executive Order 13563 in January. It states:

My Administration is firmly committed to eliminating excessive and justified burdens on small businesses, and to ensuring that regulations are designed with careful consideration of their effects, including their cumulative effects, on small businesses.

Unfortunately, the current administration has done little to implement that directive, and it’s become evident. The disconnect could not be more clear than in testimony before Congress earlier this year in which an Environmental Protection Agency (EPA) assistant administrator noted that his agency had not “directly taken a look at jobs” when evaluating policy.

On November 1^st, I introduced an open letter to the President calling for a hold on all new regulations until five commonsense principles are incorporated into the regulatory process. Implementing and uniformly applying the following steps across federal agencies would give small businesses the certainty they need to help stabilize our economy.

· Increase small business’s voice in the regulatory process. Too often regulators create rules with little consideration of those who will be affected. Requiring an “open exchange of ideas,” as the President called for earlier this year, would help ensure all parties’ interests are included in new regulations.

· Help small businesses comply with complex regulations before assessing fines. Small businesses typically do not have the resources to perfectly comply with complex or new regulations. Assessing fines when small companies have made a good-faith effort to comply only add to the problem increasing costs and leaving business in the lurch. Instead, agencies should offer waivers for first time offenses, and provide resources to help small businesses navigate complicated bureaucracy.

· Require regulations to undergo rigorous benefit-cost analysis. Regulators must weigh the long-term benefits of new regulations against both the direct and indirect costs they will have, particularly on small businesses and on US jobs and competitiveness. Using the best economic modeling, lawmakers should adopt only those rules that impose the least burden on the economy.

· Ensure regulatory actions are based on objective data and hard science. To prevent polarized policy, regulation must be based off of empirical evidence and validated science. Federal agencies should follow uniform practices and rely on standardized analysis and modeling.

· Increase transparency and accountability in the federal regulatory process. All the data, methods and models used to formulate regulatory policy should be shared with the public. Congress and the courts should oversee the process so agencies are held accountable for following these principles.

These standards are straightforward and reach beyond political boundaries. They offer long-term solutions instead of band-aids to inherent problems that exist. Most importantly, they encourage small business participation, and balance and illuminate the rulemaking process.

Reforming the federal regulatory process will help alleviate the largest burden on small businesses at a time when our economy needs it most. A sensible balance between job creation and regulation is achievable, and it’s a goal we can all get behind.

Considered collectively, President Obama’s clean air rules will have relatively small negative impact on the economy and a major positive impact on health and the environment. Those claiming otherwise are likely looking only at the costs of these clean air regulations and not considering the benefits.

These regulations go through strict cost-benefit analyses before they are implemented. Very rarely does a rule come out that is not justified in these terms, and often they are skewed far to the side of benefits, outweighing the costs. The recent interstate air pollution rule, which the Senate voted not to nullify in a moment of at least partial bipartisan sanity, will generate as much as $100 billion per year in benefits, representing an amount nearly 25 times the cost of compliance.

Many of President Obama’s new environmental rules are being implemented under the authority of the Clean Air Act. That law was enacted four decades ago with cross-aisle support and has since been successful in reducing harmful power plant emissions and motor vehicle pollution among other heath threatening problems.

Over the past forty years, we have seen a familiar story play out when EPA regulates under the Clean Air Act. Very often, when new regulations are proposed, a cry goes out from industry and aligned politicians. There are complaints over compliance costs, discussions of decreased consumer demand for products, and threats of layoffs. Experts associated with regulated entities explain how clean air controls would have severe negative impacts on the economy.

But these threats and concerns have never amounted to much. Until the deep recession of 2008, GDP has grown and the economy had been generally robust. And not even the most desperate ideologue would argue that the crash of three years ago was caused by overly strict environmental regulation.

Far from being the cause of strain on the economy, cleaner air produces massive net benefits. The 1990 Clean Air Act amendments have generated hundreds of billions of dollars in annual benefit to the American public per year since 2000, once again dwarfing the costs of complying.

Many of the Obama-era regulations being questioned are strongly cost-benefit justified—some, many times over. Judging from history, and the rigorous study of the economics of regulation, the sky will not fall when these rules will go into effect. Indeed, the sky will get a little cleaner, and the economy will, over the long run, keep growing (and if it doesn’t, it will be for a different reason).

If anything, the discrepancy in benefits over costs of some of these regulations might suggest that the balance has been struck in favor of too much pollution, and tighter controls would make economic sense.

Opponents seeking to nullify these rules seem to be only looking at the cost side of the equation. Ignoring the benefits can make these seem expensive. But if one acknowledges the copious scientific evidence that says dirty air leads to disease and early death, then one is compelled to weigh the benefits of clean air as well.

If there is one thing that everyone in our country can agree on right now, it’s the American economy is in bad shape. And as of yet, we’re not seeing many promising signs of improvement. It doesn’t make sense, then, that some in the government are trying to pass measures that will only contribute to all of our mounting problems. The EPA is doing just that.

Proposed regulations such as Utility MACT and the Cross-State Air Pollution Rule would burden the already delicate economy by driving up costs for consumers, diminishing reliable energy sources, and eliminating both current and potential jobs. In fact, Utility MACT alone is estimated to result in a cumulative loss of 1.65 million jobs and cost the electricity industry over $127 billion by 2020. At a time when the unemployment rate is over 9% and national debt tops $14 trillion, imposing these types of rules is both careless and counterproductive. The EPA needs to act responsibly and put the needs of the economy before its own stubborn agenda; as a government agency, it should be helping - not adding to - the country’s problems.

The U.S. Senate had an opportunity this week to overturn CSAPR, but unfortunately the effort fell victim to the partisan banter that is currently the status quo on Capitol Hill. One of the biggest challenges of CSAPR and similar EPA rules is the time frame companies are given to implement the regulations and make required changes. Many of the agency’s proposals would be feasible for the energy industry if they were given more time to adopt the rules. Because the option is now to either change or shut down, most companies are forced to do the latter even though they would be willing to abide by the new rules if they had a reasonable amount of time to do so. The EPA has to realize that the effects of its inflexible regulations not only hurt companies and their employees, but also every business and individual who uses electrical power.

Evan Bayh, former U.S. Senator from Indiana, recently wrote an opinion piece for The Indianapolis Star addressing the harmful repercussions that Utility MACT will have on his state’s economy if it is implemented. He writes, “We need to avoid the regulatory uncertainty that has slowed investment and job creation over the last three years. Measures that threaten the balance of supply and demand, and the cost, of our electricity do just that. The administration should take these significant concerns into consideration before going forward with the rule by the end of the year. EPA should ensure that, at minimum, the rule is revised to provide adequate time for cost-effective compliance in ways that do not threaten the reliability of… electricity.”

The EPA should be held accountable for its actions. If the EPA really wants to put its rules into effect without doing unwarranted damage to the economy, it needs to be open to productive debate and making compromises. Otherwise the agency will, literally and figuratively, be turning off the lights for the economy and the millions of Americans who rely on affordable electricity.

We’ve all heard the talking point many times. From 1990 to 2020, the annual dollar value of Clean Air Act benefits will grow to $2 trillion, with benefits exceeding costs by more than 30 to 1 (EPA, Benefit-Cost Report, pp. 7-1, 7-3). Consequently, EPA’s allies contend, nothing could be more penny-wise and pound-foolish than congressional efforts to block or delay Clean Air Act rules, which make us wealthier by making us healthier.

This line of argument is dubious for the following reasons:

1.) As EPA admits, the 30 to 1 benefit-cost estimate assumes that states, communities, and private organizations would do nothing to control air pollution if the Clean Air Act did not exist (Benefit-Cost Report, p. 1-6). History suggests otherwise. Due to technological innovation, state and local action, and common law litigation, U.S. air quality improved about as rapidly before Congress enacted the Clean Air Act as afterwards (Goklany, Schwartz and Hayward, pp. 13-19).

2)None of the bills Congress is debating would repeal air quality rules dating from 1990 to 2010 – two thirds of the study period. The low hanging fruit would stay picked. Compared to the rules that would not be repealed, new EPA rules would likely have bigger marginal costs and smaller marginal benefits.
3) The $2 trillion estimate assumes that fine particles (PM2.5) at current levels kill tens of thousands of Americans annually. That is speculative. No coroner’s report lists PM2.5 as cause of death. The observational (non-experimental) studies on which EPA relies find only weak and uncertain correlations between PM2.5 and mortality (Schwartz and Hayward, pp. 119-136).

Note also that the same form of argument used to defend EPA’s new rules can be used justify almost any agency’s bid for more power or more of our tax dollars.

EPA calculates the benefits of its rules based on people’s willingness to pay (WTP) to avoid increases in premature mortality risk. The $2 trillion figure is largely extrapolated from “dollars per mortality avoided” or “value of a statistical life” (VSL) multiplied by the projected number of premature deaths averted. EPA estimates that, compared to a scenario in which no new air rules are adopted after 1989, the Clean Air Act will avert 230,000 deaths in 2020. Assuming a VSL of $7.8 million, that works out to $1.8 trillion in public health benefits (Benefit Cost Report, p. 5-24).

Okay, consider how many premature deaths the U.S. Armed Forces averted in any given year during the Cold War and beyond compared to a scenario in which the United States essentially decommissioned its defense forces after the end of WWII. In this scenario, we would quickly have become vulnerable to large-scale, even nuclear, attack. In addition to potentially millions of lost lives, military conquest of the United States would likely have crashed the global economy, destabilized friendly governments, and triggered or intensified regional conflicts across the globe.

The social benefit of the U.S. Armed Forces, compared to a token defense force scenario, might have to be measured in the gazillions of dollars. Thus, one might contend, the benefit-cost ratio of every dollar spent on defense far exceeds 30 to 1.

From which what follows? If we argue along the lines of EPA’s boosters, then every additional dollar spent on defense more than pays for itself, the more we spend the richer we’ll get, and any Member of Congress who votes otherwise is penny-wise and pound-foolish.

Personally, I would not be persuaded by this sort of argument for increasing military spending. For the same reason, EPA’s 30 to 1 talking point doesn’t persuade me that more regulation is always better. Nor should it persuade anyone else.

(These comments were submitted by Ann Weeks, Senior Counsel, Clean Air Task Force.)

Hats off to those of our colleagues who already have submitted postings pointing out that EPA’s air toxics and interstate transport rules, when implemented, will have significant human health and environmental benefits. EPA’s assessment is that for the air toxics rules alone, the benefits will exceed the costs thirteen times over, per year, once the rules are implemented. The EPA-calculated benefits significantly underestimate the true value of the rules, because EPA doesn’t have the means to monetize improvements to ecosystems, wildlife, mammals, and the recreational fishing industry that we know will accrue just from the mercury and acid deposition reductions to be had from these rules.

If the benefits of the rules when fully implemented will outweigh the costs (at a minimum) by 13 to 1, that also means right now the costs of failing to regulate are being felt -- prematurely lost life, hospitalizations, illnesses, and decreased productivity – the measures of human health costs that EPA actually can monetize. These rules, moreover, are nearly a decade overdue (conservatively). So Americans already have been bearing the costs of EPA’s failure to issue these rules, far longer than would have been the case had the Clean Air Act’s provisions been implemented as intended.

Every day of delay towards implementation of the rules continues this burden. As it is, the statute provides that existing sources have three or even four years to come into compliance with the air toxics rules. So Americans are already being asked to hold tight and wait to reap the health and environmental benefits of air toxics clean up.

These rules in fact can be implemented rationally – those throwing around threats about the lights going out completely ignore the statute’s built in implementation mechanisms for ensuring a considered approach to the requirement to install pollution controls. However the industry chooses to meet the new emissions limits – whether by installing controls or replacing old, inefficient units with cleaner generation (and that is for the industry to decide), they can proceed over the next three to four years in a rational manner that protects public health to the maximum extent possible.

Unfortunately, the discourse over these rules – thankfully not on this page – has devolved into a mudfest. That is clearly not in the public interest, anymore than is additional delay in issuing and implementing the rules. Kudos to this EPA for rising above the mud, moving forward to implement these rules, and getting the job done.

We keep talking past each other about the EPA, so I think we should refocus the discussion: With 9% unemployment and 2.5% economic growth, is the pace of EPA regulation appropriate today?

Sam Batkins, Director of Regulatory Issues at the American Action Forum, keeps a running tally of the costs – in both dollars and man hours – of every piece of legislation the administration has proposed or implemented in 2011. The math isn’t great: By EPA’s own estimates, 2011 will cost industry $37 billion, 6.3 million paperwork burden hours, and 60,100 jobs.

To defend their actions in the current environment, the administration and others on the left are touting a sort of “regulatory Keynesianism,” in which new regulations create good, high-paying compliance jobs. Though it may be a fashionable and timely claim, the idea that the EPA is some engine of economic stimulus is utterly laughable. They can use whatever favorable assumptions they like, but each new rule is an additional cost borne by domestic industry - the very businesses we need to grow and provide jobs to 13.9 million unemployed Americans.

Well-designed, market-based environmental policies improve economic efficiency by making industry acknowledge the full societal cost of their activities with minimal compliance costs. The 1990 Clean Air Act Amendments created the Acid Rain Program, a trading program for sulfur dioxide that resulted in dramatic cuts in both emissions and instances of acid rain, while industry selectively reduced emissions at the least cost.

What we’re seeing out of EPA now is a series of command-and-control regulations that make each polluter reduce emissions according to the administration’s preferred, prescribed solution, regardless of cost. The regulations also carry high a burden in terms of paperwork and person hours borne both by industry and the state-based regulatory entities. This type of regulation, and the pace at which it’s flying out of the EPA, is damaging to job creation in the immediate term, and handicaps our ability as a nation to spawn economic growth.

One of the more controversial pieces of pending regulation out of the EPA is their first move to regulate hydraulic fracturing, or fracking. As this technology is creating jobs and has the potential to transform the geopolitics of fossil energy, EPA is proposing stiff new VOC and methane emissions limits and reporting requirements during each of the roughly 20,000 instances of well completions annually. Interestingly, EPA has a successful voluntary program in place that has already helped the oil and gas industry reduce methane emissions by 904 billion cubic feet since 1993. Natural Gas STAR unites EPA with industry partners to identify, implement, and monitor innovative technologies and best practices, and uses the results to help educate the broader industry. Instead of expanding this successful and popular program, EPA is strong arming a vibrant and growing sector into regulations that will cost them $738 million per year.

We’re also seeing a flurry of regulation out of EPA that will impact our ability to provide electric power. In total, nine regulations are expected to be promulgated over 18 months that will directly target coal-fired baseload power. These rules together are expected to result in the retirement of 3.5%-7% of generating capacity. During a recession, with electricity demand held low, this hit might not be too noticeable. Industry is reasonably concerned that our electric power supply will be insufficient to reliably support a recovering economy in the coming years. That’s no way to provide industry with the predictability they need to invest in their businesses.

What’s more, even the EPA’s analysis suggests that the increase in costs to industry of these regulations will be passed on to American families in the form of higher prices. Higher prices will depress domestic exports and replace domestic production with imports. These regulations tip the balance of trade, benefit international competitors, and rob domestic industry and workers of opportunities for growth.

The EPA may be largely acting in response to court orders and legislation, and cleaner air and water is a clear benefit to the American people, but the agency needs to do a much better job of assessing what the regulatory costs really are, and whether they’re worth it right now.

(These comments were submitted by Dan Yates, CEO of Opower, an energy efficiency technology company.)

Americans have benefited from the Environmental Protection Agency’s 40-year effort to make our water safer to drink and our air safer to breathe.

But upcoming EPA regulations intended to reduce air pollution have ignited a heated debate in Washington.

While I do not agree with those who have called the EPA a “job-killing machine,” I do think there ought to be more flexible paths made available for electrical utilities to comply with regulations – particularly when it comes to energy efficiency.

The “Cross-State Air Pollution Rule” is one of the most contested EPA clean air rules. To comply with the rule, 27 states will need to implement plans to reduce pollution from existing power plants.

In order to provide utilities and states with more flexibility, the rule should be amended to allow energy efficiency to compete on a level playing field with new sources of electrical generation.

As the Cross-State rule is written now, if a utility shuts down a coal plant and switches to natural gas, it can keep some or all of the pollution credits from the old coal plant. But, a utility that chooses instead to shut down a plant and run efficiency programs would lose those credits and the opportunity to apply them to other facilities. This is a missed opportunity.

By running energy efficiency programs that reduce overall demand and pollution, we can protect both the environment and the economy, and save much-needed jobs.

Energy efficiency is the cheapest and cleanest domestic resource. Efficiency costs roughly 3 cents per kWh, while new generation costs 6 cents or more, depending on the type of energy resource. And, efficiency has a proven track record at the state level.

In Colorado, for example, as Mark Jaffe noted in a recent Denver Post column, one of the leading utilities, Xcel, has cut the need for additional generation from 1,000 megawatts to 292 megawatts by 2020, largely because of energy efficiency programs.

Utilities like Xcel are encouraged to run efficiency programs through state-level standards and incentives, typically called an Energy Efficiency Resource Standard (or EERS). Currently, almost 90% of states with standards are meeting or exceeding those targets because efficiency programs are cost-effective to implement and provide immediate benefits for consumers.

With the states already leading the way in bringing efficiency programs to scale, the EPA ought to acknowledge that progress and complement it at the national level. The Cross-State rule should be restructured to allow utilities to count energy efficiency as a compliance mechanism towards meeting the rule’s regulations.

Last month, the House voted to completely derail the Cross-State rule, and the Senate is now poised to vote on a similar measure.

Congress does not need to make a false choice between clean air and a healthy economy.

Instead of voting to completely undo EPA regulations, the Senate should push the EPA to modify the rule to give utilities more paths to compliance – by encouraging energy efficiency programs that protect both the environment and the economy.

(These comments were submitted by Susan Dudley, who served as administrator of the Office of Information and Regulatory Affairs from 2007 to 2009 during the George W. Bush administration. She now directs the George Washington University Regulatory Studies Center.)

The United States has made tremendous progress in improving air quality over the last few decades. According to EPA data, concentrations of major air pollutants have declined by between 30 percent (ozone) to 93 percent (lead) since 1980. Regulations issued pursuant to the Clean Air Act, as well as increased demand for environmental quality that comes with increased wealth have contributed to these air quality gains.

But, looking at the ambitious agenda of very costly new air quality rules, it is time to ask whether we have reached a point of diminishing returns. As Justice Steven Breyer observed in his 1993 book Breaking the Vicious Circle, “well-meaning, intelligent regulators, trying to carry out their regulatory tasks sensibly, can nonetheless bring about counterproductive results,” by single-mindedly pursuing a particular goal to a point that “the regulatory action imposes high costs without achieving significant additional safety benefits.”

The regulations EPA is issuing today were authorized by legislation passed decades ago by different congresses focused on different concerns. For over a century, legislators have delegated authority to executive branch agencies, and the volume and reach of regulation has grown. Like government spending programs, funded by taxes and deficits, regulations are designed to achieve social goals. However, there is no regulatory equivalent to the fiscal budget—no transparent accounting of spending priorities proposed by the President and appropriated by Congress. Americans are often unaware of regulations’ impacts because their costs are hidden in higher prices paid for goods and services and in opportunities foregone.

President Obama seemed to recognize the possibility that new regulations can do more harm than good when he directed EPA not to issue new ambient air quality regulations for ozone in September. However, that was just one of several regulatory actions underway with estimated costs in the billions of dollars per year. While EPA estimates very large (some might say incredible) benefits from these air quality regulations ($2 trillion per year by 2020), a closer look at those benefits reveals that the vast majority of them come from ancillary reductions in one pollutant. Over 90 percent of the upper bound benefits EPA attributed to the aborted ozone rule, for example, were due not to reducing ozone concentrations, but to a side effect of reducing exposure to very low levels of fine airborne particles (PM2.5).

All of the monetized benefits of EPA’s proposed rule that purports to reduce toxic air emissions from power plants (which EPA estimates will impose costs on electricity consumers of almost $11 billion per year) are due to these coincidental reductions in fine particles.

EPA claims the utility air toxics regulation will “cut harmful emissions of mercury, arsenic, chromium, nickel and acid gases, while preventing as many as 17,000 premature deaths and 11,000 heart attacks a year” resulting in “health and economic benefits of … as much as $140 billion annually,” but its analysis reveals that a miniscule fraction (measured in the hundredths of one percent) of those quantified benefits come from reducing the target pollutants.

Relying on these ancillary benefits to justify regulations is a problem for several reasons. First, the link between PM2.5 exposure and mortality is highly uncertain and the benefits almost certainly overstated. Second, EPA claims these benefits elsewhere in regulations designed specifically to reduce PM2.5. Third, in these new rulemakings, EPA claims benefits from reductions well below the standard established as “protective of human health.” Fourth, it is quite troubling that EPA appears to be consciously misrepresenting the benefits of the regulation – trumpeting toxic emission reductions when it estimates those benefits to be vanishingly small.

Finally, the single-minded pursuit of a single goal (in this case a single pollutant) forces scarce resources to be diverted from more productive uses and worsens Americans’ health and well-being. These ever-tightening standards will increase the cost of heating, air conditioning, food, and consumer products, while doing little to improve air quality.

As other contributors on this question have pointed out, pollution passes a business’ costs for disposal of wastes onto others, primarily the public. It should therefore be viewed as inefficiency. Congress and EPA regulators too often focus on cleaning up pollution at the end of a manufacturing process. They should instead focus more on preventing pollution in the first place during the production process, through adoption of cleaner manufacturing technologies.

The EPA issued a study several years ago detailing how industrial biotechnology can help the manufacturing sector reduce pollution, use less energy and water, and often reduce the number of process steps by providing alternatives to old line manufacturing processes. In addition, industrial biotechnology can be employed to manufacture renewable chemicals and biobased materials using renewable feedstocks rather than fossil resources. There are successful commercial examples of industrial biotechnology in use today, including biocatalytic processes in a host of sectors and production of green plastics for food wrap, drinking cups, biodegradable utensils and other applications. These technologies can help revitalize U.S. manufacturing by creating new markets for technology (which will create jobs for scientists and engineers), enabling new efficiencies, and preventing pollution. But while EPA has recognized the benefits, its regulatory rules still focus on making older manufacturing processes clean up at the end of the pipe rather than adopt new cleaner technologies.

There is another key consideration that policy makers should take into account. When the Organization for Economic Cooperation and Development (OECD) examined the efficacy of industrial biotechnology, they found that biotech processes not only prevent pollution, but also reduce manufacturing costs in most cases. The OECD found that cost reduction will be one of the key drivers for this technology’s adoption.

In the face of EPA’s lack of flexibility and efficiency it might take action by Congress to change this system. Congress should take a look at this as they begin to consider revamping the Toxic Substances Control Act (TSCA).

The sum effect of the U.S. Environmental Protection Agency’s (EPA) efforts to update standards covering a suite of sources and a range of toxic emissions is pretty straightforward: fewer people becoming sick, fewer heart and asthma attacks and fewer premature deaths. The Clean Air Act is a public health statute that charges EPA with establishing clean air protections. So far, the results are good. The benefits of clean air outweigh the costs by a 30 to one ratio.

For more than 40 years, the Clean Air Act and implementation of it at the local, state and federal levels has produced more healthful air. Since its enactment, emissions of air pollution have dropped by 60 percent and the investments and innovation necessary to tackle the challenge have followed. The recent push to label the Act and the EPA as “job killers” does not hold up to scrutiny.

A rigorous, peer reviewed analysis, The Benefits and Costs of the Clean Air Act from 1990 to 2020, conducted by the EPA, found that the air quality improvements under the Clean Air Act will save $2 trillion by 2020 and will prevent at least 230,000 deaths annually.

Those in Congress who are working to block, weaken, or delay clean air protections are ignoring the health consequences of such actions. They have put the interests of big corporate polluters before public health. They are also out of touch with the public on this issue.

The public supports EPA’s efforts to implement and update the Clean Air Act. A recent bipartisan survey indicates that more than 70 percent of voters do not want Congress to stop the EPA from setting stricter pollution limits and 66 percent of voters would prefer that EPA set pollution standards, not Congress. Moreover, 54 percent of voters believe updates are actually more likely to create new jobs than cost existing ones.

The regulations that EPA has finalized to control cross-state pollution, and that it will soon finalize to address mercury and air toxics, are long overdue. The power plant mercury and air toxic standards were part of the 1990 Clean Air Act Amendments. When they take effect, the clean-up will prevent 17,000 premature deaths annually.

The question is not whether or not EPA has struck the right balance, but instead, what took them so long?

The clean air rules put forward by the Environmental Protection Agency will have a profound impact on our struggling economy.

EPA's own data show that the CAA of 1990 have had a negative impact on GDP and growth see figures from EPA modeling here. The new rules are certain to add the uncertainty to the cost of electrical generation as well for other energy using and producing industries. Signs of the impact of uncertainty on the U.S. economy can be seen in the fact that gross private domestic investment is still $327 billion lower in the 3rd quarter of 2011 than in the 4th quarter of 2007 see chart. Each $1 billion loss in investment is associated with 15,000 to 22,000 fewer jobs. In my testimony from February 2011 to the House Energy and Power Subcommittee on the impact of EPA’s regulation of GHGs under the Clean Air Act, I highlight that if U.S. capital spending declines by $25 to $75 billion, in 2014 there would be an economy wide job loss of 476,000 to 1,400,000 when direct, indirect and induced effects are included. As a result, GDP would be $47 billion to $141 billion less in 2014. See testimony here. Given our weak economy we should slow down EPA's implementation of additional air quality regulations across the U.S. U.S. industry still faces huge uncertainties with additional regulator initiatives including Dodd Frank, health care and deficit reduction. The uncertainty created by EPA's regulatory policies will exacerbate our weak economic recovery.

Last year in an interview after issuing the President’s Deficit Commission report, co-chair Alan Simpson answered a question regarding the condition of the U.S. and global economies by quoting his co-chair Erskine Bowles: “We’re the healthiest horse in the glue factory.”

EPA can change that and make us the next batch of glue.

Given the fragile state of the global economy, it would not take much to push the U.S. back into a recession. Europe’s sovereign debt crisis and its resulting economic depression translate to fewer American exports and less foreign investment. Many of the pending EPA regulations would on exacerbate this state.

Numerous studies have documented the potential economic damage these regulations would cause. Even the U.S. Department of Commerce concluded that EPA’s air toxics rule for boilers would destroy 40-60,000 jobs annually while the agency claimed that it would create 6-12,000 new jobs. Commerce also concluded that EPA had used “lowball” cost estimates.

The Manufacturers Alliance (MAPI) published an analysis of the proposed ozone standard that concluded that the regulations would destroy 7.3 million jobs and cost $1 trillion annually between now and 2020. Virtually the entire nation would be put in non-attainment with states being forced to impose construction moratoria. It is no wonder that President Obama decided to kick the ozone standard can down the road.

During the short tenure of the Obama administration, EPA has set a record for new regulations, significantly surpassing the number issued under either President Clinton or Bush. Administrator Jackson acts as if she’s waging war against an environmental crisis where none exists. Real world data and objective analyses point in another direction.

Major air pollutants continue to decrease, and the American people are healthier and living longer than ever. Between 1980 and 2009, carbon monoxide levels fell by over 60 percent, nitrous oxides (NOx) dropped by 48 percent, and particulate matter (PM10) saw a staggering 83 percent decline. Biased models and statistical gimmicks can prove anything but they can’t make facts go away. And the facts are clear; the quality of our environment is good and getting better.

Unfortunately, Administrator Jackson’s dismissal of trade-offs and balance means she’s leading the agency according to an extremist agenda with little regard for its impact on business, the economy, and the 20 to 25 million unemployed and under employed people. She should be fired.

The best thing that could be done for long term environmental improvement and economic growth would be a 5-year moratorium on new regulations unless a compelling health and environmental risk could be demonstrated and validated. During that period, officials should conduct a major review of all major regulations to determine which ones have proven cost-effective and which ones have fallen short. The latter should be sunset.

A new approach to regulation is needed. Since 1980, the Code of Federal Regulations has grown by 50 percent. Surely, not all of the rules taking up those 150,000-plus pages are still needed. But in Washington with its expanding bureaucracy, regulations come close to having perpetual life, they never die.

A new approach would be based on lessons learned from the current regulatory approach and the many analyses that have made the case for regulatory reform. As a starting point, three major changes to regulations are needed. First, for all major regulations—those with a cost of $100 million or more—officials should institute a “look back” requirement after 5 years to determine if they are achieving their intended objectives cost-effectively. Second, major regulations should require Congressional approval before becoming effective. Third, there should be a sunset provision for all regulations so that necessary replacements can be based on current not historical circumstances.

EPA was created to protect the environment at a time when there were serious environmental problems. It’s now much better. And today’s environmental issues are much different and carry much larger cost to benefit ratios. EPA’s mission and its approach need to be changed to reflect today’s realities. It should either be subject to a major re-invention effort or perhaps become part of either the Departments of Energy or Commerce so that trade-offs get serious consideration and regulatory myopia can be replaced with a more strategic perspective.

If President Obama was really serious about job creation, he would direct EPA to be part of the solution to our economic crisis instead expanding the glue factory.

Like so much else in Washington these days, the wholesale vilification of regulation may make for good sound bites, but it results in lousy policy. Instead, we should be focusing on how to make the regulations that are critical components of our national wellbeing as cost-effective and as easy to comply with as possible. Contrary to the claims of some presidential aspirants and Members of Congress, our review of regulations over the past 20 years shows that this is possible. In some cases, it’s already happening. Smart regulations turn out to be far less expensive than predicted and often spur new industries and economic growth, rather than retard it.

The government must provide certainty to regulated industries so they know the rules of the game. Providing clear requirements for compliance, a timeline for implementation of the rules and following through on this roadmap empowers businesses. Ralph Izzo, CEO of PSEG, noted that his industry has known about impending Clean Air Act regulations for over two decades. He explained that the overdue Clean Air Act regulations “will help provide much needed certainty to invest in capital-intensive projects...” Conversely, Izzo warned, “any significant delay for these rules will only perpetuate uncertainty where clarity is needed.”Joseph Dominguez, a senior vice president of Exelon echoed Izzo, explaining, “Like many utilities, Exelon has anticipated the Toxics Rule and other environmental rules for years and made the necessary clean energy investments to prepare.” And as Tom Williams, spokesman for Duke Energy explained, “We have not engaged like others have on costs and complaining about EPA—our point is that we have been preparing for many of these regs for years.”

PSEG, Exelon and Duke are not protesting the clean air regulations because they were given ample time to comply and flexibility in how to arrive at the desired outcome. This is an example of the regulatory process working well. Past changes to the Clean Air Act show a similar experience. In the 1970’s, utilities were essentially required to use “scrubbers” to reduce SO2 emissions. In 1990, the regulations were adjusted to a more technology-neutral approach that allowed utilities to meet SO2 reduction standards with a variety of methods. This flexibility, along with new market incentives, resulted in utilities surpassing their targets for SO2 reduction and at far less cost than either industry or the EPA anticipated.

The federal government can also help industry comply by contributing to research and development for compliance technologies. The Department of Energy is currently funding R&D in lighting to help companies comply with new efficiency standards. Advances in technologies that result from these efforts could end up lowering costs for industry and consumers and, as important, creating new economic opportunities for American companies.

Regulations are not the only solution for environmental problems and often should not be the first solution. But when alternatives have failed and the problem is grave enough, we should not be afraid to push forward with measured and thoughtful steps to protect public health and the environment. Going back to PSEG’s Ralph Izzo, “Our experience shows that it is possible to clean the air, create jobs, and power the economy at the same time.” Let’s try to keep that in mind.

The actions of Republicans in Congress are not to roll back the Clean Air Act (CAA), but to put the breaks on new regulations that would further stifle economic and job growth while delivering very little environmental benefit. If companies must spend more time and resources complying with regulation, their capital will be diverted from productive economic expansion and job creation. It’s that simple.

At a time of high unemployment and slow economic growth, policymakers are wise to ask if the diversion of resources from productive activities to regulatory compliance delivers commensurate benefit. EPA is proposing and implementing several new regulations that have small environmental benefit compared to the full cost society will bear. Air quality, as measured by reductions in criteria pollutants, has improved by 63% since 1970 (see EPA’s Air Quality Trends page). Any improvements from new regulations will necessarily be incremental and costly considering how far we’ve already come as a society.

EPA has been in such a rush to implement new air quality requirements that it is not properly conducting cost-benefit analyses or ensuring new regulations are practical. EPA’s economic assumptions used in their cost-benefit analyses don’t pass basic standards. For example, past EPA studies have claimed CAA benefits based on underlying assumptions of a 96% return on investment resulting in benefits exceeding three times the profits of all U.S. corporations, and health benefits more than twice what U.S. residents spent directly on health care. (See Regulatory Sleight of Hand, Manufacturer’s Alliance/MAPI, April 2006). EPA’s estimations on premature deaths avoided are equally questionable. With such flawed underlying assumptions, it’s hard to have confidence that the resulting lost economic growth and jobs are worth the benefits. Clearly an independent agency is needed to determine the validity of new regulations.

A recent example is the consolidated rulemaking underway for the oil and natural gas industry. EPA claims a $29 million annual benefit from proposed regulations, but to arrive at that estimate they had to ignore the true cost of compliance and overestimate methane emissions by 300%. EPA is set to implement rules that largely codify what companies are already doing, while claiming the benefit is from their actions. The oil and natural gas industry is one of the few if not the only industry that has exceeded pre-recession job levels. New regulations continue to threaten one of the few bright spots in the economy.

EPA’s clean air rules—the Transport Rule and the Mercury and Air Toxics Rule—will be a net positive for public health and the economy as we continue to steadily improve the emissions performance of our nation’s electric generating fleet:

• Jobs will be created building and installing pollution control systems;
• The reliability of the electric system will improve, not deteriorate, with additional investments in aging electric infrastructure; and
• As various health experts have detailed, reductions in power plant air pollution will lead to better health, particularly in the Midwest and Southeast regions.

There will be costs involved in making the necessary upgrades and companies will choose to retire some of their oldest generating units rather than bring them up to modern standards, but, on balance, the nation benefits from a cleaner, modern fleet of power plants. We are a more productive and more prosperous nation because of the protections afforded by the Clean Air Act.

In the past few weeks, the attacks on EPA’s clean air rules have grown more intense with statements questioning the industry’s ability to install the necessary controls and claims that the lights will go out as a result of the rules. These same tired arguments have been trotted out again-and-again over the past several decades in an effort to slow clean air progress. The fact is that most utility companies have already made the investments to comply with EPA’s clean air rules or will soon be installing the necessary controls. It’s the plants that have been around for 40-50 years—having long-avoided investments in basic pollution controls—that are pushing to delay or weaken the rules.

EPA has a long history of working constructively with the utility industry to set reasonable standards and to guard against potential reliability concerns. Similar engagement can ensure implementation of the Transport Rule and the Mercury and Air Toxics Rule while protecting public health and the economy.

Studies have shown that the public health benefits from strong, efficient environmental regulations far outweigh the cost of reducing pollution. Our economy benefits from EPA’s clean air rules by reducing pre-mature deaths, hospital admissions, emergency room visits and lost work days due to respiratory illnesses such as acute bronchitis. According to a 2010 Office of Management and Budget report, the 19 major EPA air pollution rules issued in the last decade resulted in estimated benefits of $77-519 billion as compared to estimated costs of $21-24 billion.

If one really wants to look at spurring economic growth, it’s not by rolling back environmental protection but instead by providing regulatory certainty. Delaying proposed air standards and threatening to rescind existing regulations cause companies to hold off on investment decisions involving hundreds of millions of dollars. Before companies can make decisions about investing in pollution controls or building new generating units, they want to know what the regulatory requirements are. EPA has gone through an extensive public comment process with industry input for each rule it develops – it’s time for the Agency to finalize rules such as the Mercury and Air Toxics Standards for power plants, and for Congress to let the Agency do its job.

Claims of looming economic disaster due to EPA’s air pollution regulations are ungrounded. With the Air Toxics rule, for example, according to an analysis by the Clean Energy Group, many utilities are currently complying with the proposed regulations through readily available pollution controls. In addition, some utilities will choose to build new electric generation with state of the art efficiencies rather than install pollution controls on old, inefficient plants. Building a new power plant can involve investments of a billion dollars or more, creating good construction and manufacturing jobs.

Finally, almost all of the new plants will use cleaner burning, natural gas. Technology advancements have opened up large natural gas reserves in many areas across the country. Significant natural gas development is underway in places like Ohio and West Virginia. These rules present an opportunity for America to move to cleaner-burning natural gas electric generation, creating jobs and cleaner air at the same time.

This is an interesting but particularly tough question for one key reason: There is usually a very long lag time between the announcement of a federal regulation and its real-world impact on society.

I recall telling then-EPA Administrator Christine Todd Whitman nearly a decade ago that her legacy was likely to include the cleanup of dirty diesel engines. At the time, we were encouraging Whitman to press ahead with a plan to clean up diesel heavy equipment and related fuel – a plan projected to prevent 12,000 premature deaths a year from dirty air. Despite oil industry opposition, Whitman was agreeable and determined to do something positive. But by the time the rules went final in 2004, Whitman had gone off to “spend more time with her family” http://bit.ly/uoozCT , leaving then-EPA chief Mike Leavitt to take the curtain call.

Even so, the rules were phased in, not taking full effect until 2014. http://1.usa.gov/vjFL4k

So for anyone bashing these EPA regulations, who bears the blame: Whitman or Leavitt? Surely not Obama.

By the way, as far as we can tell, the diabolically clever but inaccurate phrase “job-killing EPA” was coined during the 2008 presidential campaign by Americans for Prosperity, the Koch brothers-launched “grassroots” organization with financial ties to Republican presidential candidate Herman Cain. http://bit.ly/vcjrZK http://bit.ly/ue3TSv

It has subsequently become part of what some might call our national political “conversation,” but, honestly, this is baloney: It’s just an effort to scapegoat the Obama EPA for an economy troubled by many other factors.

As for the Obama administration’s own actions, frankly, they remain a work in progress, as key decisions keep getting delayed on such matters as cleanup of coal-fired power plants and industrial boilers and national clean air standards for smog and soot. Obama has been fabulous at announcing proposals, less so in following through.

Indeed, as counter-intuitive as it might seem, one could argue at this point that the Obama administration’s clean-air record is about on a par with that of the prior Bush administration when you start tallying up such things as pollution avoided, lives saved, etc.

Yes, I realize this is political heresy!

The Bush crowd was routinely and rightly vilified for trying to cut corners for favored industries, but along the way, they did achieve some things. Consider not only the diesel heavy equipment rule (12,000 annual premature deaths avoided), but the diesel locomotive and small ship cleanup (more than 1,100 premature deaths avoided http://1.usa.gov/rInyoY ) and its legally flawed by partly effective “clean air interstate rule” which the Obama EPA concedes has already cleaned up about two-thirds of the pollution targeted by the Obama “good neighbor” plan – or roughly 8,700 to 23,000 premature deaths avoided annually.

And if anyone bashes EPA during the next few years about smog cleanup, let’s not forget the standards involved are those set in 2008 by the Bush administration – standards that sat on the legal shelf for several years while the Obama EPA tried to update them, only to be sandbagged by the President.

One could argue, interestingly, that the Obama EPA’s most significant accomplishment to date – in terms of public health impacts – is its less-publicized plan to clean up ocean-going ships and fuel (12,000 to 31,000 premature deaths avoided annually http://1.usa.gov/rVevX6 .) Please note these standards haven’t been fully phased in yet either – and were watered down, so to speak, by some Democrats in Congress. http://bit.ly/tXSDEU

Other very significant Obama administration environmental accomplishments – its landmark fuel economy/greenhouse gas standards for passenger cars and big-rig trucks -- would have less obvious impacts on public health. These, too, are being phased in and have had no significant impact on the economy. Even the more controversial greenhouse gas permit requirements for stationary industries such as refineries and power stations – what apparently prompted by Koch Brothers’ attack – have had minimal impact on the economy, according to Platts Inside Energy, which actually reviewed some permits and found that

a number of companies obtained GHG permits by making only minor and relatively inexpensive changes to their projects, belying claims by [Senator John ]Barrasso [R-WY] and other critics that the regulations would delay major projects or scrap them altogether http://bit.ly/ry9Rg9 sorry -- subscription required

I do think the Obama EPA eventually can – and should – surpass the cleanup and health-protection record of its predecessor, especially if its Cross-State rule stands and it moves ahead with such things as the mercury/toxic standards for coal-fired power plants and the still-in-the-works plan to set tougher new tailpipe pollution standards for passenger vehicles and reduce the sulfur content of gasoline. (For more on the latter topic, see http://bit.ly/rMSHHD . )

With a legal cattle prod by from American Lung Association, the EPA eventually may also move ahead with a much-needed plan to update national clean-air standards for fine-particle soot – a long-delayed initiative that eventually could prevent tens of thousands of premature deaths a year.

But let’s tell it like it is: because of the lag time involved, none of these highly cost-effective initiatives is having any significant impact on the American economy today. Eventually, they could collectively bring cleaner air, better health – and jobs in the pollution control industry (which, as the National Journal reported, AEP CEO and Chairman Michael Morris admitted in a recent call with investors http://bit.ly/sSrSTI .)

But that’s only going to happen if Congress rejects the scapegoating sloganeering of groups such as Americans for Prosperity – and if President Obama shows more guts than he did during the debacle over EPA’s attempt to set national smog standards based on science rather than the politics of the moment.

I urge lawmakers bent on undermining America's clean air safeguards to visit China. Once they see the smog obscuring the top of skyscrapers and feel the sting of breathing polluted air, they might realize that what stands between us and such filthy skies is the Clean Air Act.

By attacking this 40-year-old law, polluting industries and their allies in Congress deny the concrete, life-saving benefits this law has generated. In the 1970s, the air in Los Angeles hit unhealthy levels of pollution more than 200 days a year. By 2004, that number dropped to 28 days. In the 1970s, nearly 90 percent of American children had lead in their blood at levels higher than the CDC deemed safe. Today, only 2 percent of children do. By 1990, the law prevented more than 200,000 deaths annually and an estimated 18 million child respiratory illnesses per year, according to the EPA.

These gains have saved enormous amounts of money. A June Office of Management and Budget report found that between 2000 and 2010, the estimated annual benefits of 32 major EPA standards ranged between $82 billion and $551 billion, at annual costs between $23 billion and $29 billion.

There is no inherent tension between protecting our health and growing the economy.

Polluters don't just burn the money it costs to comply with regulations. They use it to pay for goods and services that create jobs. Implementing just one set of standards-CAIR Phase I-since 2003 has created <http://www.icac.com/i4a/pages/index.cfm?pageid=1> an estimated 200,000 jobs in the air pollution control industry. The EPA estimates <http://eponline.com/articles/2011/03/16/epa-proposes-first-mercury-pollution-standard-on-power-plants.aspx> that the proposed standard to reduce mercury, lead, and other heavy metals from power plants-which GOP lawmakers voted to block <http://switchboard.nrdc.org/blogs/fbeinecke/anti-government_rhetoric_in_th.html> -will create up to 31,000 short-term construction jobs and 9,000 long-term utility jobs.

Yet GOP leaders are trying to thwart clean job creation and remove our safeguards. I don't know one parent who wants to turn back the clock and have their children breathe dirtier air. Most voters don't want to either. A survey <http://thehill.com/blogs/congress-blog/energy-a-environment/188769-why-trashing-the-epa-wont-work-in-the-2012-presidential-election> conducted in October by Public Policy Polling commissioned by NRDC found that 78 percent of Americans want the EPA to hold polluters accountable for what they release into the community.

These voters recognize that making the air safe to breathe is not a partisan issue. President Nixon signed the Clean Air Act in 1970. In 1990, 89 senators and 410 representatives passed the Clean Air Amendments, which President George H.W. Bush helped develop and signed into law.

The Obama administration is continuing a four-decade-long tradition of adhering to legal mandates. Indeed several of the standards issued recently were required by court orders, because previous administrations had not sufficiently honored the Clean Air Act. Polluters may not like it, but it is the law.