Draft Bill Would Limit EPA Rulemaking Power

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Proposal would require Energy Department to review EPA regulations costing more than $1 billion.

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The U.S. Environmental Protection Agency (EPA) creates hundreds of new environmental regulations each year.  Normally these agency rules become law when the agency completes a process known as informal rulemaking.  But under draft legislation recently debated at a hearing on Capitol Hill certain economically significant EPA rules would require additional procedural steps.

The hearing, held by a House Energy and Commerce subcommittee, focused on the Energy Consumers Relief Act of 2013, a bill scheduled to be introduced by Rep. Bill Cassidy (R-LA).  The draft legislation would require the EPA to submit a report to Congress whenever one of its proposed regulations related to energy would cost more than $1 billion. The report would include the estimated direct and indirect costs of the proposed rule, its potential effect on energy prices, and any likely impact on employment.

The Secretary of Energy would then conduct an independent analysis to determine if the proposed regulation would cause an increase in energy prices, affect fuel diversity in the U.S. electricity generation portfolio, or otherwise harm the supply, use, or distribution of energy.

If the Department of Energy identifies problems in the EPA’s initial review, it would then conduct a subsequent economic analysis.  At this stage, the Energy Secretary would consult with the Secretary of Commerce, the Secretary of Labor, and the Administrator of the Small Business Administration. The Energy Secretary would examine whether the impact predicted in the initial analysis would “cause significant adverse effects to the economy.” The reviewing parties would need to consider “impacts on economic indicators, including those related to gross domestic product, unemployment, wages, consumer prices, and business and manufacturing activity.” The Secretary would then publish these findings in the Federal Register.

Ultimately, the draft legislation would prohibit the EPA Administrator from issuing a rule subject to review if the Energy Secretary determines that it would harm the economy.

According to Rep. Cassidy, the draft legislation would inform the American people that “they may lose their jobs due to an EPA energy-related rule.” Rep. Ed. Whitfield (R-KY), the subcommittee chairman added that “given the prolonged weakness in the economy and stubbornly high gasoline prices and unemployment rates” the bill would provide “a level of scrutiny that is long overdue.”

At the hearing, a number of industry representatives praised the bill. Paul N. Cicio, president of the Industrial Energy Consumers of America stated: “Someone has to pay for these regulations and that someone is the industrial sector and other U.S. consumers.” He added that as “the only sector of the economy that competes with global competition, the pass-through of these costs to us is significant” and “erod[es] our ability to compete and create jobs.”

However, the draft legislation was not universally lauded. The EPA issued a Statement for the Record, noting that the bill “could delay or even block public health and environmental protections for Americans based on misplaced concerns that EPA standards would be bad for the economy and bad for employment.”  The agency also pointed out that the legislation “departs from the principle that both the benefits and the costs of regulations should be considered together.”

William M. Rom M.D., MPH of the American Thoracic Society testified that air pollution causes health problems, which can itself lead to significant financial costs.

Rep. Henry A. Waxman (D-CA), a Ranking Member on the Committee on Energy and Commerce also criticized the draft legislation, arguing that the analysis that would be called for under the draft would not account for the benefits of EPA rules. He noted that “the benefits of the most important rules dwarf the costs.” Waxman also asserted that the bill, as drafted, “simply adds more bureaucracy to the rulemaking process.”