ENGLER: Obama’s discretionary jobs crisis

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As he prepared to sign legislation to lift the debt ceiling and address the nation’s debt, President Obama decried the politics that had put America in such economic peril.

“Our economy didn’t need Washington to come along with a manufactured crisis to make things worse,” the president said in Rose Garden remarks Tuesday, again declaring growth and jobs to be priorities.

Yet a “manufactured crisis” seems to be what the Environmental Protection Agency (EPA) is choosing to create with its proposed standards to reduce ozone emissions - the most expensive environmental regulation in U.S. history.

I use the phrase “choosing to create” intentionally. The EPA’s rules are entirely discretionary. Under the Clean Air Act, the EPA reviews air quality on a five-year basis, and it’s not required to revise ozone standards until 2013.

At issue is the EPA’s proposed change to the National Ambient Air Quality Standards (NAAQS) controlling ground-level ozone, a component of smog. Ozone is produced by a wide range of human activity, including construction, transportation, power generation, manufacturing, mining and farming.

These are the sectors America must count on to invest, expand and create the jobs to make serious, continuing reductions in the nation’s 9-plus percent unemployment rate.

Employers in these sectors will also bear heavy compliance costs, estimated by the EPA itself to range anywhere from $20 billion to $90 billion a year. These costs may even be too low because the agency assumes new technology will be invented to reduce the emissions.

Following years of scientific review, public input and legal proceedings, the Bush administration set a new limit of 0.075 parts per million (ppm) in 2008, a reduction from the currently enforced level of 0.084 ppm. Now, before that limit ever went into effect, the EPA is proposing even lower levels, ranging from 0.60 to 0.70 ppm.

At the lowest standard, up to 85 percent of the counties now monitored by the EPA would fall into “non-attainment status,” requiring state and local governments to impose new compliance plans on the private sector.

Existing businesses would face expensive, new retrofit requirements just to continue operating. New or expanding companies would be forced to obtain emission offsets and install controls. In effect, the EPA would be telling employers to make everything else a priority over hiring.

“This uncertainty and the difficulty of obtaining emission offsets and permits will discourage capital investment and make these counties less competitive,” Andrew Liveris, chairman of Dow Chemical, wrote last month to White House Chief of Staff Bill Daley in his capacity as head of Business Roundtable’s regulatory initiative. “Instead of creating jobs, these counties risk losing jobs when businesses respond to the higher costs and uncertainty by closing marginal facilities and siting new facilities elsewhere, including outside the U.S.”

Originally set to release its final rules in late July, the EPA has now delayed action until later in August, pending a review by the Office of Management and Budget. The delay is welcome, but provides little assurance about the looming impact on jobs and the economy.

EPA Administrator Lisa P. Jackson and White House officials speak now in general terms about maximizing “flexibility” while claiming billions of dollars of vaguely defined environmental and health benefits.

The truth is that air quality has been steadily improving without additional mandates. The EPA reports that average ozone levels declined in the 1980s, leveled off in the 1990s and have resumed a notable decline since 2002. As companies come into compliance with existing regulations, the air will continue to get cleaner.

In his Rose Garden remarks, Mr. Obama declared that renewed economic growth “is not about rolling back regulations that protect our air and our water and keep our people safe.”

But business is not asking the executive branch to roll back anything. These are new environmental regulations, and they are discretionary; the EPA itself acknowledges that no court or statute requires the agency to issue them.

It was argued that conflict over the debt limit posed great financial risk and uncertainty, which hindered the job creation that Congress and the president are so committed to supporting.

The nation avoided a default disaster, but a new jobs and economic crisis looms in the EPA’s ozone regulations - a crisis that will be indisputably manufactured in Washington. This is real uncertainty that scares away investment, depresses hiring and lowers growth estimates.

Thankfully, the president has it within his power to prevent this harm and regulatory overkill by instructing his EPA to practice the restraint our nation demands during such economic difficulties: Tell the EPA to pull back its discretionary ozone rule.

With jobs and economic growth at stake, now is no time for the most expensive environmental regulation in America’s history.

John Engler, former Republican governor of Michigan, is president of Business Roundtable.

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