Climate bill would bloat federal agencies

The House-passed climate change bill, if enacted, would expand the federal government so much that it would take billions of dollars and thousands of new employees to implement.

Now-obscure federal agencies such as the Commodity Futures Trading Commission and the Federal Energy Regulatory Commission would have to become mini-behemoths in order to handle their expanded responsibilities. Congress would have to appropriate billions of dollars for more bureaucrats, much of which is not reflected in the House bill.

"The problem is that there's a mismatch between the government's capacity and its mission," said Darrell M. West, vice president and director of governance studies at the left-leaning Brookings Institution.

One provision would almost overnight create the nation's largest commodity market in which polluters would buy and sell rights to emit carbon dioxide. These rights - called allowances - are at the heart of the measure, which seeks to slash the amount of greenhouse gases by forcing polluters to curb their emissions or pay for the right to pollute.

"It could be a $2 trillion market within five years," said Bart Chilton, commissioner of the Commodity Futures Trading Commission.

The commission, which would police the new futures market for allowances, apparently would need to expand its work force by at least 31 percent initially to fulfill its obligations under the bill. The Federal Energy Regulatory Commission, which would oversee the day-to-day trading of allowances, has estimated that it would have to expand by 20 percent or 30 percent.

The Environmental Protection Agency, which would oversee pollution regulation, also would balloon in size. The agency regulates 330 million tons of pollution a year but would regulate 6 billion tons of carbon dioxide emissions a year from 7,400 facilities under the legislation.

The nonpartisan Congressional Budget Office said the government's expansion would cost $8 billion over a 10-year period. For the bill to operate effectively, nearly 1,500 regulations and mandates would have to be approved for at least 21 federal agencies. The rule-making process alone would take years.

Some lawmakers and outside critics question where the government would get the funding and whether it could be an effective monitor of such a large new market.

"You have to ask yourself if it is wise policy to create a new derivatives market on the heels of the collapse of derivatives markets, and I don't think it is," said Tyson Slocum, director of energy for Public Citizen, a Washington-based public advocacy group, and member of the Commodity Futures Trading Commission's energy and environmental markets advisory committee.

The Senate Appropriations Committee has set aside $177 million for the trading commission's fiscal 2010 budget - a 21 percent boost from the 2009 budget. But Mr. Chilton said the agency will have to assess whether it needs more money and people after fiscal 2010, especially if the climate bill becomes law.

Mary O'Driscoll, a spokeswoman for the Federal Energy Regulatory Commission, said she did not know how much money the agency would need for expansion but that any new funds would be generated by user fees.

"I'm not sure the government is capable of handling the bureaucracy that will come if the carbon market is set up," said William Kovacs, senior vice president of environment and regulatory affairs for the U.S. Chamber of Commerce.