Cross-posted from RegBlog.
As Stuart Shapiro recently pointed out in a RegBlog post, President Obama himself made the decision a week ago to withdraw the U.S. Environmental Protection Agency’s (EPA’s) ozone National Ambient Air Quality Standard (NAAQS). Presidents have occasionally acted to resolve disputes between the White House Office of Information and Regulatory Affairs (OIRA) and EPA before, but typically OIRA acts in the President’s name without knowing exactly what he thinks about the regulatory details that OIRA negotiates with EPA. Stuart Shapiro also correctly points out that the President’s substitution of his general policy judgment for a judgment of an agency charged by Congress with the responsibility to implement a statute’s policy has implications for administrative law.
Obama’s withdrawal of the ozone NAAQS shows why these implications should trouble everybody, even those who do not like the Clean Air Act’s policy of basing the NAAQS on health considerations alone, leaving cost for later consideration in formulating plans to meet the NAAQS. Many Americans still believe that the “rule of law not men” embedded in our Constitution should mean something. There is some wisdom in this idea. Enacted law, however imperfect, can lend some stability to efforts to solve stubborn national problems and moderate the tendency of government to go into wild mood swings that can make government ineffectual. The rule of law, however, demands that those who enforce the law follow its policies even when they conflict with their personal or political preferences.
The Supreme Court has held that EPA must set the NAAQS at a level that protects public health without regard to costs. Obama’s decision relies squarely on a rejection of the law’s fundamental policy, citing the burdens on regulated firms during a time of economic weakness as the primary reason for withdrawing the standard. I would find the President’s decision to ignore the law in favor of his own policy preferences troubling, since we long ago rejected monarchy, even if I were sure that his policy decision was a sensible one.
Full textCross-posted from Legal Planet.
A current conservative refrain is the regulatory uncertainty is holding back the economy. Consider an editorial entitled “Obama’s regulatory flood is drowning economic growth”:
Businesses large and small face more uncertainty today about the federal regulatory environment than at any point since the New Deal . . . . Seeing this tsunami of red tape flooding out of Washington, company owners and executives wisely opt to delay new hires and investments until they have a clearer idea how much their already huge compliance costs will increase and how the markets will be warped by changes mandated by the bureaucrats.
Of course, it sounds better to talk about “regulatory uncertainty” than just to say that businesses hate the idea that they’ll have to cut pollution or give more information to consumers. In any event, there’s so much wrong with the “uncertainty” argument that it’s hard to know where to begin. Here are ten fatal flaws:
House Republicans have promised this week that upon their return to Washington after the recess they will attempt to stop 10 important proposed regulations because they are “job-destroying.” Adhering to the belief that “if you say it often enough, people will believe its true,” the party continues to insist that regulations cost jobs. But, as I discussed in a recent post, the evidence shows that regulation is not a drag on employment because it stimulates the creation of as many new jobs as are lost, and because job gains from regulation can offset job losses, leading to a net gain in employment.
But there is another problem with the Republican agenda: it ignores the benefits of regulation. A new CPR white paper on regulatory benefits indicates why the Republican deregulatory agenda won’t help with jobs and is a bad deal for Americans.
Government regulation has greatly benefited the American public, while the failure to regulate has cost us dearly. This reality is easily missed because no single, easily digested statistic perfectly proves the point. But, when my coauthors and I assembled the available evidence, we found that regulation has produced substantial and important benefits for the public without sacrificing jobs at the same time. There is simply no reason to suppose the regulations on the Republicans’ hit list will produce any different result.
This CPR white paper, Saving Lives, Preserving the Environment, Growing the Economy: The Truth About Regulation is the first of its kind to assemble the available evidence concerning the benefits of regulation. And the evidence is impressive. For example, according to OMB’s annual report on regulation to Congress, regulatory benefits exceed regulatory costs by 7 to 1 for significant regulations. Even these estimates don’t capture the full advantages of regulations; some benefits, such as reducing toxic mercury pollution, are difficult to monetize, and aren’t even counted. The advance estimates of benefits from agencies have historically proven lower than the benefits in reality. The payoff for environmental regulations is even greater. EPA estimates the regulatory benefit of the Clean Air Act exceeds its costs by a ratio of 25 to 1. Similarly, a study of EPA rules issued during the Obama Administration found that their regulatory benefits exceeded costs by a ratio as high as 22 to 1. Nevertheless, 8 of the 10 regulations House Minority Leader Eric Cantor put on his hit list are proposed EPA regulations.
Full textShortly after my August 5th post criticizing their Data Quality Act complaint to EPA, the International Platinum Group Metals Association sent me a kindly-written response letter (Inside EPA recently reported on the letter). Accusing me of both missing the point of their complaint and brushing aside important scientific concerns to make a headline-grabbing call for “over-regulation,” IPA reiterated their concern that EPA’s draft IRIS assessment for halogenated platinum salts fails to meet DQA standards. Their letter is an eloquently-written piece of advocacy, but it provides no information to alter my analysis that their complaint falls squarely within the realm of “frivolous” claims that EPA has the discretion to decline to review.
To recap, both OMB’s government-wide guidelines and EPA’s own internal rules for dealing with DQA complaints (both Bush-era creations) allow the agency to decline to review “frivolous” complaints, such as those “for which a response would be duplicative.” As evidenced by the IRISTrack listing for the document at issue here and the express assurances of Paul Anastas to Rep. Ed Whitfield in a July 29 letter, IRIS staff are tantalizingly close to publishing a final draft of the platinum salts IRIS profile. When it is finalized, the IRIS profile will surely address IPA’s concerns, given that they have been voiced on multiple prior occasions during the IRIS assessment process by both IPA and members of EPA’s external peer review team (pdf). EPA should decline to review this redundant/duplicative/frivolous DQA complaint.
IPA claims I’m missing the point, arguing:
Full textThe goal is to fix the problem earlier rather than later, so that the proposed [inhalation reference concentration] no longer sits on so ephemeral a foundation when it goes for final review. And the timing and form of the remaining review process are themselves open to question. With no hard deadline for issuing the final report, the information reflecting the error is still out there, and as no rulemaking is involved, there are no standards governing the attention given to public comments on the draft.
The final agency regulatory “look-back” plans, released by the White House this morning, don’t appear to satisfy anyone. They fall far short of their obvious goal: to placate greedy and intemperate industry demands that major rules be cancelled. And they distress public interest advocates, who fear they will preoccupy agencies with make-work at the expense of crucial life-saving initiatives.
The plans themselves, at first look, are largely well-intentioned given the assignment the agencies were given. The EPA plan discusses, for instance, how the internet could be better used to facilitate on-line reporting by polluting plants. In some instances, though, the changes, if done as planned, would have real-life negative consequences: the planned axing of “clearance testing” under EPA’s renovation, repair and painting rule will save money, yes, but run the risk of leaving lead dust behind to poison children when they move back into renovated buildings. The EPA’s final plan dutifully calculates the cost savings of its regulatory changes, but it all but ignores foregone regulatory benefits, such as these.
The plans won’t placate big business or Republicans in Congress. Eric Cantor reliably called them “underwhelming,” while the Chamber of Commerce complained that the administration has made a “ a worthy effort at making technical changes to the regulatory process, but the results of this lookback will not have a material impact on the real regulatory burdens facing businesses today.”
Give a few inches, and you don’t get anything in return. So what is the White House doing, then?
Full textThe current anti-regulatory mantra of Republican legislators (e.g., Cantor, Boehner, Issa) and conservative think tanks (e.g., CEI and Heritage) is that regulation is a “job-killer.” And a top plank of Republicans’ job agenda when they return from the summer recess is to limit regulations. There is just one problem with this rhetoric. It is not backed up by the data, including the latest Department of Labor study on the reasons why employers lay off workers.
Economic studies indicate that regulation is not a drag on employment and may actually increase the number of jobs. Bezdek, Wendling and Di Perna found that “EP [environmental protection], economic growth, and jobs creation are complementary and compatible: Investments in EP create jobs and displace jobs, but the net effect on employment is positive.” (Quoted here, p. 15). Likewise, when Richard Morgenstern and his colleagues studied the impact of EPA regulation in four large polluting industries, they found that there was an increase in jobs in two industries (petroleum and plastics) and no statistically measurable impact on jobs in the other two industries (pulp and paper and steel). Consider too that Stephen Meyer compared the economic performance of states with strong environmental regulation to states with weaker regulations after the 1990-1991 recession. He found that “[e]nvironmentally stronger states [did] not experience more precipitous declines in employment during the recession. Nor do they demonstrate a higher rate of business failure.”
A little-noticed report from the Bureau of Labor Statistics (BLS) released on August 10 throws more cold water on the claim regulation kills off jobs. The BLS data examines the reasons companies give for laying off workers when the layoffs involve 50 or more workers who are laid off for more than 30 days (“extended mass layoffs”). The BLS data says that in the second quarter of 2011, 261,346 workers were laid off in such events. Of those, 690 of the separations were attributed by the employers to “Governmental regulations / intervention.” That’s .26% of the separations.
Full textWhat would you do if a report you funded was debunked by a scathing critique from the nonpartisan Congressional Research Service? What if you found that the researchers you funded had based 70 percent of their analysis of the costs of regulation on a regression based on opinion polling data? What if the researchers who had published that opinion polling insisted publicly that their data was never meant to be used for such purposes? What if a member of Congress had publicly lambasted you for keeping the underlying data used in the study from being examined by the public?
For the Small Business Administration’s Office of Advocacy, the answer appears to be: Stay the Course. In new research proposal requests I noticed recently posted on the SBA’s website, the SBA appears to have learned little.
The Office of Advocacy’s flawed report that got so much attention is cited regularly by anti-regulatory Members of Congress who like to repeat over and over the study’s thoroughly discredited contention that regulations cost the U.S. economy $1.75 trillion each year. The study itself was written by economists Nicole Crain and Mark Crain, under a contract from SBA’s Office of Advocacy (“Advocacy”).
Full textFormer Senator Blanche Lincoln, now heading the National Federation of Independent Business’s new anti-regulatory campaign, faced criticism in recent days for citing the debunked SBA study claiming regulations cost $1.75 trillion in a year. The NFIB used that stat last week in launching its campaign (see ThinkProgress), and Lincoln cited the number in a National Journal forum post on Monday:
While some federal regulations are important, it costs the U.S. economy a staggering $1.75 trillion a year to comply with them, according to a report commissioned by the Small Business Administration last September.
Two respondents on the forum, CPR President Rena Steinzor and Public Citizen President Robert Weissman, specifically criticized Lincoln’s use of the thoroughly debunked number. In a new post Wednesday, Lincoln didn’t mention “$1.75 trillion” but instead wrote:
Currently, federal regulations are draining nearly 12 percent of U.S. GDP annually.
Where’d that new number come from? Doesn’t sound familiar. There was no citation. Let’s see, U.S. GDP is about $14.7 trillion; multiply that by 12 percent and you get about… $1.75 Trillion.
Full textAustan Goolsbee, outgoing Chairman of the Council of Economic Advisers, took to the Daily Show on Wednesday for one last sit-down with Jon Stewart. Stewart included a question on regulations (part 2, at 3:55), and Goolsbee gave a spirited defense:
Stewart: Does the president believe business is overregulated? Does he think we are bureaucratically so snafu-d and entangled that that is the problem with the economy right now?
Goolsbee: As a general matter, no. Though there certainly [are] individual things that could be done different and streamlined, where, you know, they have to submit paper forms, they can’t do it on the web, you know, things of this nature. But, the president said from way back when, being for rules of the road doesn’t make you anti-market. And in fact, what we saw in the financial system, what we saw in oil drilling in the Gulf, and a bunch of places, ripping up the rules of the road were devastating to business. It wasn’t just that it was bad for society, it was bad for those companies that nobody was following the rules of the road, because when you lose public trust you don’t have it.
Not bad for boiling it all down to a few sentences.
Full textHouse Republicans are fond of accusing the Obama Administration of trying to “regulate when it cannot legislate.” With a slight modification, a similar accusation can be hurled at House Republicans: They are trying to appropriate when they cannot legislate. This accusation has the benefit of actually being true.
The Fiscal Year 2012 appropriations bill for the EPA and the Department of Interior, currently being debated in the People’s House, is loaded down with dozens of anti-environment and anti-public safety policy riders. Several of these riders are virtually identical to bills that have been considered or are being considered in the House, but which have no chance of passing the Senate or surviving a presidential veto. These riders include a measure that prohibits the EPA from regulating coal ash as a hazardous waste (Section 434), blocks the EPA’s efforts to regulate greenhouse gases (Section 431), exempts offshore oil drilling facilities from several Clean Air Act requirements (Section 443), among others.
None of these policy riders would save the American taxpayer a single dime. They do, however, offer House Republicans a better chance to advance their anti-regulatory agenda than would a stand-alone bill—a wildly inappropriate end-run around the constitutionally mandated legislative process designed to provide their corporate benefactors with benefits that would otherwise be opposed by the majority of Americans.
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