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 # 622  

March 2011




Upton-Inhofe Legislation Would Block the EPA's Harmful Climate Rules

U.S. Economy, Jobs, and Energy Costs at Stake

by Dana Joel Gattuso

 

Congress and the American people rejected a cap-and-trade scheme last year after much debate and deliberation. But that has not stopped the Environmental Protection Agency (EPA) from skirting the legislative process, disregarding the intent of the Clean Air Act, and greatly expanding its own authority to hand down harsh and debilitating carbon dioxide emissions limits.

These regulations—which even Time magazine says could be "the most far-reaching environmental regulatory scheme in American history"1 —will have a more severe impact on energy costs, U.S. jobs, household income, and economic growth than cap-and-trade legislation would have had.2 Furthermore, the regulations could reverse the economy's direction toward recovery and push us back into an economic slump.3

According to Dr. Margo Thorning, chief economist with the American Council for Capital Formation, U.S. investment could plunge by $290 billion this year, and by $300 billion by 2014, unless Congress intervenes to stop the regulation. The decline would be similar in scale to the fall we've seen in U.S. investment since the beginning of the recession in late 2007.4

The U.S. economy will also stand to lose millions of jobs as energy prices soar and industry is forced to cut back or invest overseas. A study by economist Dr. Roger Bezdek, a former research director for the Bureau of Economic Analysis, estimates 2.5 million jobs will be lost by 2030 as a result of the greenhouse gas emissions rules, and that average household income will fall by $1,200 a year.5

Furthermore, the rules will have an unjust and disproportionately large impact on minorities, increasing the number of African Americans in poverty by 20 percent. Dr. Bezdek estimates that by 2015, household income among African Americans will fall by $550. By 2020, African Americans stand to lose as many as 1.7 million jobs.6

For all the economic hardship, what are the likely benefits? Experts say the EPA's rules to regulate carbon emissions not only are costly but ineffective. The international Organisation for Economic Co-operation and Development, which promotes global economic growth, wrote in its 2010 Global Economic Survey of the United States that this "regulatory approach will be more costly [than cap-and-trade] and unlikely to deliver the required scale of reductions in emissions."7

And Time magazine reports:

"For all the sound and fury we're likely to witness from congressional Republicans over the coming year, the EPA's regulations won't do that much to reduce U.S. greenhouse-gas emissions. While the carbon cap-and-trade bills debated by Congress last year would have aimed to cut U.S. emissions 17 percent below 2005 levels by 2020, EPA officials believe that regulations could only achieve perhaps a 5 percent cut—far below the reductions many scientists believe are needed to avert dangerous climate change."8

Upton-Inhofe Bill To Block the EPA Has Bipartisan Support

Many members of Congress — Democrats as well as Republicans — are supporting legislation to prevent Obama from expanding the Clean Air Act and imposing more economic costs on Americans. U.S. Representative Fred Upton (R-MI), chairman of the House Energy and Commerce Committee, and U.S. Senator James Inhofe (R-OK), the ranking Republican on the Senate Environment and Public Works Committee, have introduced the Energy Tax Prevention Act9 to stop the EPA from regulating carbon dioxide emissions and bypassing the legislative process.

"EPA's regulations are a backdoor attempt by unelected bureaucrats to implement the highly unpopular cap-and-trade legislation that was rejected last year," said Rep. Whitfield, chairman of the House Energy and Power Subcommittee. "They are about as out-of-touch with what the American people want as anything moving forward in Washington… This is especially so, given what the rules would do to already-soaring gasoline prices."10

Among the Democrat co-sponsors of the legislation are Representatives Dan Boren (D-OK), Collin Peterson (D-MN), Nick Rahall (D-WV) and Senator Joe Manchin (D-WV).11 Senator Manchin, in a prepared statement, said: "It's time that the EPA realizes it cannot regulate what has not been legislated. Our government was designed so that elected representatives are in charge of making important decisions, not bureaucrats. That principle is even more essential when policies affect our whole country and could hurt our fragile economy. The simple fact is that the EPA is trying to seize more power than it should have, and must be stopped. I hope that Democrats and Republicans can come together to stop the EPA's jobs-destroying power grab."12

Other Democrats, particularly those from the Midwest region whose constituents stand to lose jobs across numerous industries, including farming, manufacturing, and power, have not indicated whether they will support the Energy Tax Prevention Act. Yet in a letter they wrote EPA Administrator Lisa Jackson last February, they make clear they are aware of the economic hardship the agency's climate rules will have in their districts: "We write with serious economic and energy security concerns relating to the potential regulation of greenhouse gases (GHGs) from stationary sources under the Clean Air Act… [W]e remain concerned about the possible impacts on American workers and businesses in a number of industrial sectors, along with the farmers, miners, and small business owners, who could be affected as your agency moves beyond regulations for vehicle greenhouse gas emissions…" The letter was signed by Senators Jay Rockefeller (D-WV), Mark Begich (D-AK), Sherrod Brown (D-OH), Carl Levin (D-MI), Robert Casey (D-PA), Claire McCaskill (D-MO), Max Baucus (D-MT), and the late Robert Byrd (D-WV).13

Similarly, three key Senate Republicans from New England — Senators Scott Brown (R-MA), Susan Collins (R-ME) and Olympia Snowe (R-ME) — have not signed on to the bill. Yet their support for last year's resolution to bar the EPA from regulating greenhouse gas emissions — as well as recent public statements opposing the EPA's climate rules — show they clearly understand the devastating impact these regulations will have on the economy in their respective states.

Senator Scott Brown (R-MA) wrote in an op-ed last June that allowing the EPA to regulate greenhouse gases "would give an unelected and unaccountable government agency the power to impose restrictive and damaging carbon dioxide regulations that will drive up energy prices and hurt job-creating small businesses in our country."14

Similarly, Senator Olympia Snowe (R-ME) released this statement pertaining to the Upton-Inhofe bill: "I believe that using the Clean Air Act to address climate will undermine our economy, add additional layers of federal bureaucracy, and increase costs for our manufacturing sector while failing to substantively reduce emissions. It is Congress — and not unelected bureaucrats — that should be responsible for developing environmental policies that integrate our nation's economic well-being as an urgent priority along with emissions reductions."15

Rockefeller Legislation Merely Delays the EPA Rules and Does Not Address Regulatory Uncertainty

Sen. Jay Rockefeller (D-WV) has also introduced legislation to curb the EPA's power to regulate greenhouse gas emissions.16 But, unlike the Upton-Inhofe bill, the Rockefeller bill would merely delay the EPA's climate rules by two years rather than permanently block them.

The problem with this "kick the can down the road" approach is that it impedes job creation and economic growth by furthering regulatory uncertainty. Also, it does nothing to stop the EPA from imposing regulations without voter approval. Americans emphatically said no to cap-and-trade legislation. Telling the EPA to wait two years before it overrides the will of voters is not acceptable and would invite EPA over-reach and encroachment on congressional authority in the future.

The Energy Tax Prevention Act would rein in the EPA, put Congress back in control, and steer our economy toward a complete and healthy recovery — not for two years but permanently.

The House bill passed the House Energy and Commerce Committee and is expected for a full vote on the floor of the House of Representatives before the Easter recess.17 Senator Inhofe's companion bill was introduced March 15 as an amendment to small business legislation.18

 

Dana Joel Gattuso is the Director of the Center for Environmental and Regulatory Affairs at The National Center for Public Policy Research.


 

Footnotes:

1 Bryan Walsh, "Battle Brews over EPA's Emissions Regulations," Time, January 3, 2011, at http://www.time.com/time/printout/0,8816,2040485,00.html.

2 Margo Thorning, "EPA Regulation of GHGs, U.S. Investment and Economic Recovery: Questions & Answers," Special Report, American Council for Capital Formation, December 2010, p. 2, at http://www.accf.org/media/dynamic/4/media_498.pdf.

3 Ibid.

4 Ibid.

5 Potential Impact of the EPA Endangerment Finding on Low Income Groups and Minorities, Management Information Services, March 2010, at http://www.affordablepoweralliance.org/LinkClick.aspx?fileticket=GBqH57mHH5w%3D&tabid=40.

6 Ibid.

7 OECD, Economic Survey of the United States 2010, at http://www.oecd.org/document/43/0,3343,en_2649_34569_46023275_1_1_1_1,00.html.

8 Bryan Walsh, op. cit.

9 See http://energycommerce.house.gov/media/file/PDFs/ETPA/ETPA.pdf.

10 Statement of Chairman Whitfield, Subcommittee on Energy and Power, Markup on H.R. 910, the Energy Tax Prevention Act, March 10, 2011, at http://republicans.energycommerce.house.gov/Media/file/Markups/Energy/031011/Whitfield.pdf.

11 See http://www.opencongress.org/bill/112-h910/show.

12 U.S. Senator Joe Manchin, Press Release, March 4, 2011, at http://manchin.senate.gov/public/index.cfm/press-releases?ContentRecord_id=7ee3731a-8838-4041-b8da-ae8b9b70d55e.

13 U.S. Senate, Letter to the Honorable Lisa P. Jackson, February 19, 2010, at http://begich.senate.gov/public/?a=Files.Serve&File_id=a1994105-4433-4d6e-8217-e2ebd7112e6b.

14 Scott Brown, "Protect Jobs and the Environment," Cape Cod Times, June 10, 2010, at http://www.capecodonline.com/apps/pbcs.dll/article?AID=/20100610/OPINION/6100342.

15 Jean Chemnick, "Senators from Northeast Are Only GOP Holdouts on Inhofe Bill," Environment and Energy Daily, Environment and Energy Publishing, March 4, 2011.

16 See http://www.opencongress.org/bill/112-s231/show.

17 Andrew Restuccia, "Cantor Promises Swift House Vote on Legislation To Block EPA Climate Rules," The Hill, March 10, 2011, at http://thehill.com/blogs/e2-wire/677-e2-wire/148611-republicans-approve-bill-to-block-epa-climate-rules-in-key-subcommittee.

18 Elspeth Reeve, "House Energy Panel Curbs Federal Power to Fight Climate Change," National Journal, March 16, 2011, at http://www.nationaljournal.com/dailyfray/house-energy-panel-curbs-federal-power-to-fight-climate-change-20110316.


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