Study: EPA Underreports Impacts of Air Quality Regulations

Feb 27, 2013

A new study commissioned by the U.S. Chamber of Commerce shows that the EPA’s methods for determining the impact of its air quality regulations on jobs are seriously flawed.

“While EPA continues to issue regulations to protect the environment, it must also be forthcoming and provide Congress and the American people with methodologically complete estimates of the impact its regulations may have on jobs and communities,” said Bill Kovacs, Senior Vice President of Environment, Technology & Regulatory Affairs at the U.S. Chamber of Commerce. The study, titled Impacts of Regulations on Employment, was conducted by NERA Economic Consulting.

The study discovered that EPA’s projected job-creating net benefits for new air quality rules were flawed because the agency considered only part of the potential overall employment impacts, ignored the effects of regulatory compliance costs on prices, and relied on aggregated data from four individual industries that do not mirror the industries targeted by recent EPA rules.

Perhaps the biggest flaw, according to the report, is that EPA’s assessments do not take into account the cascading effects of regulation compliance costs across interconnected industries and markets nationwide – a “whole economy” approach.

NERA analyzed four EPA rules using the whole-economy model and found similar results of adverse employment effects. EPA’s 2011 Utility Mercury and Air Toxics Standard (MATS) would have a negative impact on worker incomes equivalent to 180,000 to 214,000 lost jobs in 2015. The negative worker income impacts would persist at the level of 50,000 to 85,000 such “job-equivalents” annually thereafter. The EPA’s partial-economy analysis showed that regulation would create 46,000 temporary construction jobs and 8,000 net new permanent jobs.

By the same accounting, the cross state air pollution rule—which was invalidated by the D.C. Circuit Court last August—would have killed 34,000 jobs from 2013 through 2037, not created 700 jobs per year, as the EPA previously claimed. The industrial boiler maximum achievable technology (MACT) rule will cost an average 28,000 jobs per year over the same timeframe, not create 2,200 jobs per year. The study shows that the planned ozone National Ambient Air Quality Standard (NAAQS) will eliminate 609,000 jobs annually. EPA has not yet published an employment impact for the ozone NAAQS.

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