Energy & Entrepreneurs

House Energy and Commerce vs. EPA

by Raymond J. Keating

Finally, Congress is standing up against unauthorized power grabs by federal regulatory agencies. And to its credit, the House Energy and Commerce Committee, chaired by Rep. Fred Upton (R-MI), stands at the center of this effort to regain control of the regulatory process.

At the top of the list is the Environmental Protection Agency (EPA), whose high-profile power grab would damage U.S. entrepreneurs, businesses, consumers, and competitiveness.

In December 2009, the EPA administrator served up an endangerment finding stating that "the current and projected concentrations of the six key well-mixed greenhouse gases - carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6) - in the atmosphere threaten the public health and welfare of current and future generations." The door was opened to this kind of action due to an April 2007 U.S. Supreme Court decision saying that greenhouse gases were air pollutants under the Clean Air Act.

However, it's clear that Congress never intended to have the EPA regulate greenhouse gasses under the Clean Air Act. That was confirmed, once again, when The Wall Street Journal recently reported, "John Dingell helped write the Clean Air Act and its 1990 revision, and the Michigan Democrat has repeatedly said that neither was ever meant to address climate."

And then there's the economics, which are ugly. EPA regulation of emissions, such as CO2, in the name of battling so-called manmade climate change would mean drastic cuts in such emissions and, therefore, a dramatic increase in energy costs. Those higher costs would hit consumer pocketbooks; drag down GDP and employment growth; place U.S. firms at a severe disadvantage in the international marketplace; and hit hardest the small, entrepreneurial firms who are either struggling to survive or working to expand.

In an analysis of the economic fallout, the Heritage Foundation-Global Insight model found that the EPA regulations would lead to real GDP losses (in 2008 dollars) tallying up to $7 trillion by 2029, single-year GDP losses top $600 billion, and annual jobs losses topping 800,000 for several years.

The EPA's action on regulating emissions amounts to an economically destructive overreach.

In response, House, Energy and Commerce Chairman Upton and Rep. Ed Whitfield, chairman of the Subcommittee on Energy and Power, introduced the "Energy Tax Prevention Act of 2011" (H.R. 910). Quite simply, the bill would prohibit the Environmental Protection Agency (EPA) from regulating greenhouse gases.

On March 15, the committee voted 34-19 for H.R. 910, with three Democrats joining all of the Republicans on the committee. It will go to the full House in coming weeks, and is expected to pass.

In the Senate, Minority Leader Mitch McConnell (KY) is pushing an amendment with the same language as H.R. 910. Fittingly, given the negatives for small business if the EPA regulations go forward, McConnell is trying to attach his amendment to a small business bill. If that fails, Senator Jim Inhofe (R-OK), who is the chief sponsor of the legislation to nullify the EPA's regulation, said he will try to attach the measure elsewhere.

According to March 17 reports, the McConnell amendment has been put off until after the upcoming congressional recess.

This presents a significant test for Senate Democrats. Are they serious about looking to get the economy back on track, getting job creation moving again, and making energy more affordable? If so, then stopping the EPA in this case is a critical step.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.