INSIGHT: House panel, manufacturers warn on EPA rules

07 June 2012 15:41  [Source: ICIS news]

By Joe Kamalick

WASHINGTON (ICIS)--Members of Congress this week joined US manufacturers to warn that increasingly draconian federal environmental rules and enforcement are smothering the nation’s energy development and threatening the overall economy.

In a hearing on Wednesday, the House Committee on Energy and Commerce charged that since President Barack Obama took office in January 2009, the Environmental Protection Agency (EPA) “has issued a suite of new regulations that EPA estimates will impose compliance costs that sum to tens of billions of dollars annually”.

The hearing reflected concerns aired this week by the National Association of Manufacturers (NAM), which raised an alarm about what it said was “excessive regulation” by EPA and other federal agencies that poses “the top challenge facing businesses”.

In a briefing paper issued by the Energy and Commerce Committee’s subsidiary panel on energy and power, legislators in particular targeted a rash of new EPA regulations that “apply across the US economy and will increase the cost of energy as well as impose complex new compliance, permitting, and other regulatory requirements on a wide range of sectors”.

“Affected facilities include coal-fired power plants, manufacturing facilities, energy extraction, agricultural and food processing operations, industrial facilities, refineries, commercial buildings, educational and healthcare institutions, and municipal and other facilities,” the committee noted.

That complaint relates to the spread of new rules since 2009. In addition, said the Republican-led panel, EPA’s enforcement of existing and new regulations has been overly aggressive, even punitive.

“At the same time, EPA’s enforcement efforts have targeted coal-fired power plants, energy extraction processes and other energy-related activities that impact the economy broadly,” the committee said.

“Furthermore, EPA has taken enforcement actions against states, including the disapproval of regulatory approaches that states have adopted in state implementation plans and the imposition of costly federal implementation plans.”

“In addition, EPA’s actions with respect to individual regulated entities include ‘de-flexing’ of numerous permits for major facilities in Texas and the pursuit of controversial enforcement orders.” The term de-flexing means that EPA has restricted previously flexible environmental regulatory approaches taken by some states.

“The combined national and regional regulatory and enforcement actions have raised concerns that the agency’s current priorities and enforcement-related activities contribute to an environment that deters new investments; delays or blocks large new projects; and adversely impacts economic growth, job creation, and economic competitiveness,” the committee said.

The National Association of Manufacturers agrees, saying in a special report issued this week that “the problem of excessive regulation weighs heavily on the minds of manufacturers”, raises their operational costs and makes them less competitive with foreign producers.

NAM said that in a recent survey of its 14,000 corporate members, 62% of respondents identified regulations and taxes as the top challenges facing manufacturers.

According to NAM, “US manufacturers face a 20% structural cost burden compared to nine major trading partners” because of regulatory compliance requirements.

That 20% structural cost burden represents an increase from the 17.6% regulatory financial load that NAM found in its 2008 survey.

The manufacturers group said that by its count, federal agencies have in the last couple of years issued 98 major rules that NAM regards as “overly burdensome” and which impose “real compliance costs that affect our ability to expand and hire workers”.

NAM listed two-dozen examples of what it termed high-priority regulatory programmes that, if not changed, will “greatly inhibit the ability of manufacturers to compete in the global marketplace”.

Most of the rules cited by NAM have been issued by EPA, but other federal agencies also are cited as active generators of regulations that impede business and trade, such as the Department of Transportation, the Securities and Exchange Commission, the Department of Labor and the Agriculture Department, among others.

Wednesday’s Energy and Commerce Committee hearing was to include an appearance by a former top EPA official, Al Armendariz, but he was a no-show.

Armendariz became the poster-boy for draconian EPA enforcement practices earlier this year when a video of one of his speeches emerged.

In that speech, Armendariz used a metaphor to illustrate his philosophy on how federal environmental enforcement policies should be implemented.

“It’s kind of how the Romans used to conquer the villages in the Mediterranean,” he said in the recorded 2010 presentation, “they’d go into a little Turkish town somewhere and they’d find the first five guys they saw and they’d crucify them. Then that town was really easy to manage for the next few years.”

“And so you make examples out of people who are in this case not compliant with the law,” Armendariz says in the video, “and you hit them as hard as you can and you make examples out of them, and there is a deterrent effect there.”

Although Armendariz quickly apologised for the remarks, he was forced to resign from EPA in April.

In the Wednesday House hearing, Energy and Commerce Chairman Fred Upton (Republican-Michigan) said that Armendariz’s remarks “provided a window into a pervasive mindset driving a long list of problematic enforcement and regulatory actions by the agency”.

“Over and over,” Upton said, “we have seen EPA treating job-creating energy companies as if they were the enemy” and “we have seen new regulations that defy any credible reading of the authority delegated to the agency.”

Upton indicated that his committee would soon issue a subpoena to compel an appearance by Armendariz.

The committee, along with similar regulatory review hearings held Wednesday at the House Science Committee, is expected to draft legislation that would force revocation of or adjustments in some EPA rulemaking. 

But any such requirements that get approved by the Republican-majority House are likely to be stillborn in the Democrat-controlled US Senate.

So Wednesday’s hearings, like much of what else happens on Capitol Hill these days, are more to draw attention to key voting issues as the US moves toward national elections in early November.

By: Joe Kamalick
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