- - Sunday, March 15, 2015

A new proposal from the Environmental Protection Agency has already forced four major industrial projects worth $7 billion in new investment in the Baton Rouge area to be put on hold or redirected elsewhere. These potential investments would have collectively contributed $86 million in wages annually to the local economy and created 2,000 jobs.

Unfortunately, Baton Rouge is just a microcosm of a phenomenon that will spread nationwide. Under the new EPA proposal to lower ozone emissions, 18 of the nation’s top-performing urban economies would, like Baton Rouge, suddenly find themselves in areas that are not in compliance.

In the history of an agency known for costing businesses dearly, the new ozone proposal stands out. If adopted, it will likely become the most expensive EPA regulation ever imposed in terms of impact on the U.S. economy. The most unfortunate part of the scenario is that the proposed rule isn’t needed.

Ozone is a gas that can exacerbate asthma and cause respiratory and heart problems. Reducing the amount in the atmosphere is a laudable goal — but one that has already been achieved. Ambient national ozone levels dropped by 27 percent between 1980 and 2010. Areas with the highest emission levels had even more dramatic drops, like Los Angeles, where the level dropped by 67 percent.

In 1997 the EPA classified 113 metropolitan areas as not attaining the required threshold, whereas today it classifies only 41 as such. In 2008, the EPA set a limit on ozone concentration in the atmosphere at 75 parts per billion (ppb), and while some areas struggled to meet the target, most have done so.

Today Americans are breathing air that is cleaner and more ozone-free than it has been in at least 35 years.

Now the Obama administration is poised to punish this success with astronomically pricey regulation. The EPA’s new proposed rule would ratchet the limit down from 75 ppb to between 65 and 70 ppb. According to a study issued by NERA Economic Consulting in February, the expenses involved in meeting this goal would reduce U.S. gross domestic product by $140 billion a year, or $1.7 trillion between 2017 and 2040. The regulation would cost the average household $830 annually, and result in 1.4 million fewer jobs being created by 2040. It’s nearly impossible to overstate the detrimental effect this would have on an economy still struggling to recover from a recession.

The EPA is not mandated to consider economic cost when setting its rules. No U.S. leader, though, can in good conscience ignore the kind of burden this regulation would impose on ordinary Americans. In 2011, President Obama seemed to agree when he squelched an earlier version of the job-killing proposal, saying that he wanted to “underscore the importance of reducing regulatory burdens and regulatory uncertainty.” Now he seems to have changed his mind.

There is no question that the burden will be high. According to the EPA’s own data, 558 counties across the country currently exceed the 65 ppb limit. Fifty-nine percent of the U.S. population lives in areas that would be out of compliance. Even if the EPA adopts the less-stringent 70 ppb threshold, more than half the country will not measure up. In all these areas, businesses will have to make costly investments in new equipment to bring down emissions, leading to layoffs and closures.

The proposed rule is especially galling given the onerous regulations already imposed on business. As it is, small companies pay $35,000 a year for regulatory compliance and never know when a new cost might pop up. In 2013, the EPA proposed restrictions on wood-burning stoves. In 2010 it tried to ban lead bullets and considered a crackdown on “farm dust.”

Other existing or coming regulations include one targeting cross-state air pollution that is estimated to cost $2.4 billion per year, and another targeting coal combustion residues that is estimated to cost $1.5 billion per year. Every dollar in compliance costs comes out of someone’s paycheck. Given the EPA’s track record, it’s impressive that it has managed to outdo itself with the new $1.7 trillion ozone proposal.

The EPA is accepting comments on its proposed rule until March 17 and will make a final decision in October. Presidents in their second term care about legacy, not electability. That gives Mr. Obama seven months to decide whether he wants to be remembered for having set the entire American economy back in order to solve a problem that was already successfully addressed.

Margo Thorning is senior vice president and chief economist for the American Council for Capital Formation.

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