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The costliest regulation in American history

“The single most expensive federal regulation in U.S. history.”  That’s the finding of a new report calculating the costs of the Obama administration’s looming ozone regulations.

The Environmental Protection Agency is considering a suggestion by its Clean Air Scientific Advisory Committee to reduce the standard for ground-level ozone from the current 75 parts per billion to 60 ppb. It will formalize the proposal this December, with a final rule being issued in October 2015.

Taking that step could cost the American economy $270 billion annually, according to the study from NERA Economic Consulting on behalf of the National Association of Manufacturers (NAM). The report projects a loss of 2.9 million jobs equivalent. (Click here for breakdowns by state.)

And for what?

There is no evidence that reducing the current standard would provide Americans with additional health benefits. Writing recently in The Wall Street Journal, Doctors Julie Goodman and Sonia Sax noted that “in 2008 the EPA determined, and a federal court agreed, that this [current] standard protects public health.”

Indeed, the current standard is among the reasons that ozone levels have declined by one quarter since 1980, even as the size of the U.S. economy has roughly tripled. Overall air quality has improved significantly in recent decades as well, a point many people don’t realize; emissions of the six common air pollutants are down 72 percent since 1970.

One of the biggest problems with the proposed change is that EPA doesn’t identify ways that states can comply with the tighter standard. And if the 60 ppb threshold is unachievable, as critics suggest, nearly the entire country would wind up in the non-attainment penalty box.

As the American Petroleum Institute puts it, 94 percent of the U.S. would be closed for business under the new ozone standards.

API MAP_08-2014

This could lead to the shutdown – or, at the very least, the prohibitively costly modification – of power plants, factories, businesses, heavy-duty vehicles, off-road vehicles, and even passenger cars. And new economic development would be precluded as well.

Again, there is no discernible public health benefit that would arise from a reduced threshold, as this excellent video from NAM makes clear:

(Click here if video doesn’t play)

Finally, there are problems with the process by which this costly regulation is being foisted on the American economy.

The Clean Air Act is explicit that the scientific advisory committee must “advise the Administrator of any adverse public health, welfare, social, economic, or energy effects which may result from various strategies for attainment and maintenance of such national ambient air quality standards.”

It has never upheld this statutory requirement to flag the adverse economic effects of proposed regulations in this or any other case.

Nevertheless, EPA Administrator Gina McCarthy is considering acting on the committee’s recommendation to move forward with a proposal that will visit significant harm on the U.S. economy.

I noted recently a trenchant warning from former Obama administration official Cass Sunstein about overregulation. He cautioned about “cumulative burdens, stemming from the aggregation of rules that may make sense in individual cases, but that when taken as a whole, are not easy to justify.”

Those comments were made in light of new federal regulatory burdens that exceeded $100 billion annually each year from 2008 to 2011.

A cumulative $100 billion is bad enough. A single rule costing the economy $270 billion annually? It defies reason, and it will be consumers, job seekers, the (currently) employed, and American companies who will be paying the price for years to come.


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