Why the EPA doesn't consider job losses when it creates new rules

The Cost of Lisa Jackson  WSJ.com 8/3/11 Review & Opinion

The White House lookback on "excessive" regulation has concluded and—breaking news—there's more work left to do. So let's commend those in Congress trying to force the Administration to conduct a credible cost-benefit test.

Last month the House Energy Committee passed a bill that reforms the Environmental Protection Agency's process for creating new rules and mandates, which it has been doing with a special fervor under administrator Lisa Jackson. Known by the acronym the Train Act, the bill would help expose some of the true costs that the agency is trying to hide.

One major improvement is that the Train Act broadens the definition of costs. Under the status quo, the EPA can define almost anything as a benefit, and does. But the EPA rarely considers more tangible economic consequences, like its effects on employment, the price and reliability of energy, or the competitiveness of U.S. companies.

The Train Act would also require the EPA at least to gesture at the costs of its larger agenda. The agency is now tightening nearly every eco-regulation in existence, abusing in particular traditional air pollutant laws to shut down coal-fired power plants. This cluster of overlapping rules will cause far more cumulative damage than merely one or another rule would by itself.

A utility, for instance, might be able to comply with a single new rule, but under the EPA firehose it might be forced to retire some of its operations. Beyond the direct costs to the utility, plant closures would lead to job losses and higher prices for consumers and business, with their own knock-on effects.

This cost-benefit bias may explain why Ms. Jackson could claim at a "green jobs" conference in February that under the Clean Air Act, "For every $1 we have spent, we have gotten $40 of benefits in return. So you can say what you want about EPA's business sense. We know how to get a return on our investment."

Ponder that insight into the bureaucratic mind. What Ms. Jackson means by "spent" are merely the direct costs that she or her predecessors have imposed on the private economy. Ms. Jackson went on to call the EPA "one of the most economically successful programs in American history." No wonder her EPA won't do genuine cost-benefit analysis. She thinks all regulatory costs are benefits. This certainly helps explain the weak recovery.

The Train Act is not a cure-all, and one weakness is that it applies only to the EPA, rather than applying the same cost-benefit approach across the government. But it does provide more information about regulation. Republican sponsor John Sullivan of Oklahoma has worked to build support among moderate Democrats; the bill passed committee 33 to 13, with five Democratic votes.

In a recent Joan of Arc interview with the New York Times, Ms. Jackson said that "The only thing worse than no EPA is an EPA that exists and doesn't do its job." Try that one on the people who don't have a job because of Ms. Jackson's grandiose view of hers.