Blogs - Blogs
OMB Memo: Serious Economic Impact Likely From EPA CO2 Rules...In Case You Missed It
May 12, 2009

Posted by: Matt Dempsey (202) 224-9797



In Case You Missed It... 


OMB Memo: Serious Economic Impact Likely From EPA CO2 Rules 


By Ian Talley


12 May 2009


Link to Memo

Link to Article


WASHINGTON (Dow Jones)--U.S. regulation of greenhouse gases such as carbon dioxide "is likely to have serious economic consequences" for businesses small and large across the economy, a White House memo warned the Environmental Protection Agency earlier this year.

The nine-page document also undermines the EPA's reasoning for a proposed finding that greenhouse gases are a danger to public health and welfare, a trigger for new rules.

The memo, an amalgamation of government agencies' comments sent from the Office of Management and Budget to the EPA, is in stark contrast to the official position presented by President Barack Obama and his Cabinet officials. It is likely to give critics of greenhouse-gas regulation ammunition in their political salvos against the administration.

Cabinet officials, including the president's climate-change czar, Carol Browner, have said the administration would prefer Congress create greenhouse-gas regulations through legislation, and not through the EPA's Clean Air Act authority.

But the White House has given the EPA the green light to move ahead with regulation under the Clean Air Act, a move deemed by some analysts as political leverage to push Congress to act because of the bluntness of the tool.

According to government records, the document was submitted by the OMB as comment on the EPA's April proposed finding that greenhouse gases are a danger to public health and welfare, a key trigger for regulation of the gases emitted from cars, power plants, and potentially any number of other sources, including lawn mowers, snowmobiles and hospitals.

While business groups have warned about the potential for a cascade of regulation and litigation, the EPA has said that greenhouse-gas rules would only be for large emitters.

The memo - marked as "Deliberative-Attorney Client Privilege" - doesn't have a date or a named author. But an OMB spokesman confirmed it was prepared by Obama administration staff as part of the inter-agency review process of the proposed endangerment finding.

"It's a conglomeration of counsel we've received from various agencies...and it's not indicative of an OMB or administration-wide position," an OMB official said.

OMB spokesman Tom Gavin said, "It's up to the EPA now to consider the various suggestions that were part of the interagency review and make some decisions on which direction they want to move."

The position outlined in the memo is at odds with other White House documents on the proposed endangerment rule, which appear to affirm the EPA's decision to move ahead with the endangerment finding.

"Making the decision to regulate CO2 under the [Clean Air Act] for the first time is likely to have serious economic consequences for regulated entities throughout the U.S. economy, including small businesses and small communities," the OMB document reads.

"The finding should also acknowledge the EPA has not undertaken a systemic risk analysis or cost-benefit analysis," it reads.

The head of the U.S. Chamber of Commerce's environment and regulatory affairs, William Kovacs, said the memo "confirms almost everything we've been saying on the spillover effects of regulating greenhouse gases." He said the OMB legal brief exposes the administration and the EPA to litigation if it finalizes the endangerment finding and begins to regulate greenhouse gases under the Clean Air Act, particularly because it was drafted during the deliberation process.

Although an official within the EPA's Climate Change Division said the agency "considers everything we receive," an EPA spokeswoman couldn't immediately comment on the extent to which memo influenced the drafting of the proposed rule.

Earlier this year, EPA chief Lisa Jackson dismissed concerns raised by groups such as the Chamber and the National Association of Manufacturers, saying, "It is a myth...[that] EPA will regulate cows, Dunkin' Donuts, Pizza Huts, your lawn mower and baby bottles."

The White House legal brief starts by questioning the link between the EPA's scientific technical endangerment proposal and the EPA's political summary. Jackson said in the endangerment summary that "scientific findings in totality point to compelling evidence of human-induced climate change, and that serious risks and potential impacts to public health and welfare have been clearly identified..."

"The finding rests heavily on the precautionary principle, but the amount of acknowledged lack of understanding about the basic facts surrounding [greenhouse gases] seem to stretch the precautionary principle to providing regulation in the face of unprecedented uncertainty," the memo reads.
For example, the memo notes, the EPA endangerment technical document points out there are several areas where essential behaviors of greenhouse gases are "not well determined" and "not well understood."

The OMB memo questions with concern the adequacy of the EPA finding that the gases are a harm to the public when there is "no demonstrated direct health effects," and the scientific data on which the agency relies are "almost exclusively from non-EPA sources."

Based on the "dramatically expanded precautionary principle," the EPA would be petitioned to find endangerment and regulate many other alleged "pollutants," including electro-magnetic fields, noise, and salts called percholorates.

The memo also warns that the endangerment finding, if finalized by the administration, could make agencies vulnerable to litigation alleging inadequate environmental permitting reviews, adding that the proposal could unintentionally trigger a cascade of regulations.

The administration last week avoided requiring permitting reviews that would need to consider the impact of greenhouse gases when it decided not to revoke a Bush administration rule on polar bears. Although the Interior Secretary said greenhouse gases were the primary cause of the bear's loss of sea-ice habitat, the animal's listing as a threatened species couldn't be used to prevent oil refineries and coal-power plants from being built.


# # #


Majority Office
410 Dirksen Senate Office Bldg.Washington, DC 20510-6175
phone: 202-224-8832
Minority Office
456 Dirksen Senate Office Bldg.Washington, DC 20510-6175
phone: 202-224-6176