Jim McTague warns in his latest Barron’s “D.C. Current” column that the pending “fiscal cliff” associated with Congress’ budget battle isn’t the only issue leading to “corporate America’s paralyzing vertigo.” McTague points also to a “regulatory cliff.”
Post-election, the Environmental Protection Agency alone could wreak havoc on the economy with a flood of new mandates that will cost businesses hundreds of billions of dollars. According to Bill Kovacs, senior vice president for the environment, technology, and regulatory affairs at the U.S. Chamber of Commerce, there were 620 rules in the EPA pipeline three years into the Obama administration, versus 412 in the pipeline three years into the Bush administration. That’s a 50% increase. What’s more, some of the rules are “really big,” says Kovacs.
“Think of how much of a change these 620 proposals might represent,” he says. “It makes it difficult to engage in a planning cycle. What equipment do you use? How exactly do you build it to comply with changing regulations? How do you amortize the cost of using it?”
Business lobbyists have been trying to make this point to Congress, the only possible source of reprieve.
One controversial EPA proposal on ozone emissions was stayed by President Obama in September for consideration in 2013. By the EPA’s own reckoning, the rule if implemented annually would cost American businesses $90 billion. But a related rule due to be taken up in December similarly would declare large swaths of the U.S. “closed for new business” until emissions are reduced to meet lower caps than exist today, says Anne Kolton, spokeswoman for the American Chemistry Council.
A proposed rule mandating reductions in particulate matter — the so-called soot rule — likewise would severely limit manufacturing expansion in most of the country. These rules would take effect beginning in 2020. A rule delayed until June 2013 to reduce the number of fish inadvertently sucked up by nuclear-power plants and manufacturers will cost at least $384 million per year. And proposed rules for fracking will raise the cost of natural gas.
