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Inhofe Speech: EPAs Anti-Industrial Policy - Threatening Jobs and Americas Manufacturing Base
September 29, 2010

Contact: Matt Dempsey Matt_Dempsey@epw.senate.gov  (202) 224-9797

EPA's Anti-Industrial Policy - Threatening Jobs and America's Manufacturing Base

Inhofe Floor Speech - September 28, 2010  

 

Link to Senate Report

FOX NEWS: Senate Report Warns of Obama Job-Killing Regulations

LISTEN: EPW Report Shows New EPA Rules Will Cost More Than 800,000 jobs

As Prepared for Delivery  

Today, I am releasing a Minority staff report from the Senate Committee on Environment and Public Works, where I serve as Ranking Member.  The report examines the impacts on jobs and the economy from four significant EPA rules, including EPA's greenhouse gas proposals.  This report outlines how these rules threaten the economic viability of America's manufacturing base and hundreds of thousands of well-paying jobs.  It focuses on the following:

  • the pending Boiler MACT regulations;
  • the revised National Ambient Air Quality Standards for ozone;
  • the new Cement MACT regulations;
  • and EPA's endangerment finding and tailoring rule

And these 4 rules are by no means all that the EPA has planned. In the coming months, EPA is expected to propose (and, in some cases, finalize), among many others:

  • standards for cooling water intake structures at power plants;
  • national ambient air quality standards for dust and particulate matter;
  • maximum achievable control technology standards for coal-fired power plants;
  • new source performance standards for coal-fired power plants and refineries; and
  • rules governing disposal of coal combustion waste.

So what does all this mean?  The American Forest and Paper Association estimates that:

"about two dozen new regulations being considered by the Administration under the Clean Air Act, if all are promulgated, potentially could impose on the order of $17 billion in new capital costs on papermakers and wood products manufacturers in the next five to eight years alone."

And this is just for one industry.  Many others will be similarly affected.

Now before I begin, let me say that the Clean Air Act (CAA) has spurred major reductions in pollution from cars, factories, and power plants.  Such success deserves praise.  I have worked and will continue to work in a bipartisan manner to enact meaningful, cost effective reductions in air pollution as I did as Chairman of the EPW Committee with Clear Skies and recently with the Committee's efforts to address 3P legislation.

Unfortunately, the Obama EPA favors bureaucracy and heavy-handed intervention more than jobs and growth.  In many cases, the Clean Air Act is no longer about clean air; instead, it has become a blunt instrument for EPA to punish American's manufacturers and small businesses.  If America wants to compete economically with China, India, and other developing economies, this cannot continue. 

Boiler MACT

The first rule covered in the report is the Boiler MACT.  The Boiler MACT (MACT stands for maximum achievable control technology) would impose stringent emission limits and monitoring requirements for eleven subcategories of boilers and process heaters. This proposed rule covers industrial boilers used in manufacturing, processing, mining, refining, as well as commercial boilers used in malls, laundries, apartments, restaurants, and hotels.

The Industrial Energy Consumers of America (IECA), which represents companies with 750,000 employees, said that they are "enormously concerned that the high costs" of the Boiler MACT "will leave companies no recourse but to shut down the entire facility, not just the boiler."

This is what the econometrics firm IHS-Global Insight found in its analysis of EPA's proposal.  IHS-Global Insight concluded that the proposal could put up to 798,250 jobs at risk.  Moreover, they said every $1 billion spent on upgrade and compliance costs will put 16,000 jobs at risk and reduce US GDP by as much as $1.2 billion.

EPA's pending Boiler MACT regulations also threaten my home state of Oklahoma. Covanta Energy, which in 2008 reopened the Walter B. Hall Resource Recovery Facility, a waste-to-energy plant that can process up to 1,125 tons of municipal solid waste per day and generate 240,000 pounds of steam per hour, would be forced to install costly controls.  From what I understand, the Boiler MACT proposal threatens its economic viability.

These concerns are shared by 40 of my colleagues, including 18 Democrats, who wrote to Lisa Jackson on the Boiler MACT regulation yesterday. Quote-

"As our nation struggles to recover from the current recession, we are deeply concerned that the pending Clean Air Act boiler MACT regulations could impose onerous burdens on U.S. manufacturers, leading to the loss of potentially thousands of high-paying jobs this sector provides.  As the national unemployment rate hovers around 10 percent, and federal, state, and municipal finances continue to be in dire straits, our country should not jeopardize thousands of manufacturing jobs."

Ozone

On January 6, 2010, for the second time in less than two years, EPA proposed to tighten the national ambient air quality standards (NAAQS) for ground-level ozone.  Specifically, EPA is proposing to strengthen the 8-hour "primary" ozone standard. 

EPA estimates that setting the primary standard within its proposed range will cost $19 to $90 billion.

This proposal comes on the heels of the revised 2008 ozone standard, which was lowered significantly.  The CAA only requires a NAAQS revision "at least" every five years, so EPA is not required to revise the status quo.  Meanwhile, states are in the midst of planning to meet the 2008 ozone standard, while some communities are not yet in compliance with the 1997 standard. 

EPA recently announced that it is delaying the announcement of the new ozone standards until "late October."  My guess is that they will be delayed until after the election.  It's not hard to see why. Whatever level EPA ultimately picks, it will dramatically increase the number of so-called "non-attainment" areas nationwide. 

Based on 2008 air quality data, we could see as many as 608 new non-attainment areas, with many of them highly concentrated in manufacturing regions and states relying on coal for electricity.

So what does Non-attainment mean?  Well, for local communities, it can mean the following:

  • loss of industry and economic development, including plant closures;
  • loss of federal highway and transit funding;
  • increased EPA regulation and control over permitting decisions;
  • increased costs for industrial facilities to implement more stringent controls; and
  • increased fuel and energy costs

In my State of Oklahoma, at least fifteen counties--Adair, Caddo, Canadian, Cherokee, Cleveland, Creek, Dewey, Kay, Mayes, McClain, Oklahoma, Ottawa, Pittsburg, Sequoyah, and Tulsa--would face new restrictions on economic growth and development, depending on what EPA decides.

We all support cleaner air, but here's where the Obama EPA and I disagree: it shouldn't come at the expense of people's jobs or the economy.  Apparently I'm not alone in thinking this way. 

On August 6, 2010 a bipartisan letter was sent to EPA Administrator Lisa Jackson on the agency's ozone reconsideration.  It wassigned by Senators Voinovich, Bayh, Lugar, Landrieu, Vitter, McCaskill, and Bond. Quote:

"While we believe we can and should continue to improve our environment, we have become increasingly concerned that the Agency's environmental policies are being advanced to the detriment of the people they are intended to protect.  That is, these policies are impacting our standard of living by drastically increasing energy costs and decreasing the ability of our states to create jobs, foster entrepreneurship, and give manufacturers the ability to compete in the global marketplace."

Portland Cement MACT

The third rule discussed is the Portland Cement MACT.  According to EPA, "A projected 181 Portland cement kilns will be operating at approximately 100 facilities in the United States in the year 2013."  EPA's new emissions standards under Section 112 of the Clean Air Act will apply to 158 of those kilns.  About seven kilns will be subject to EPA's new source performance standards under Section 111 of the CAA.

The cement industry is essential to America's economy.  According to a study by the Maguire Energy Institute at Southern Methodist University (SMU), the cement manufacturing industry in 2008:

  • Produced $27.5 billion in GDP;
  • $931 million in indirect tax revenue for state and local governments; and
  • Sustained 15,000 high-paying jobs.

In addition to those 15,000 direct jobs, the industry has an "induced employment" effect, which helps create and sustain an additional 153,000 jobs.  "Importantly," the Maguire Energy Institute noted, "these are primarily high-wage jobs generating about $7.5 billion annually in wages and benefits."

According to the Portland Cement Association, EPA's rule puts up to 18 cement plants at risk of shutting down, threatening nearly 1,800 direct jobs and 9,000 indirect jobs.

These jobs and cement production will go to China.  Here's what a professor from King's College in London (UK) said about EPA's rule:

"So rather than importing 20 million tons of cement per year, the proposed [rule] will lead to cement imports of more than 48 million tons per year. In other words, by tightening the regulations on U.S. cement kilns, there will be a risk transfer of some 28 million tons of cement offshore, mostly to China."

Senators Voinovich and Lincoln wrote a bipartisan letter to Administrator Jackson sharing these concerns back in February. Quote-

"In a very real sense, if a reasonable standard is not adopted in this matter, we anticipate that substantial cement capacity may move overseas to the detriment of industrial employment, environmental protection, and infrastructure needs in the United States."

Endangerment Finding/Tailoring Rule

The final rule discussed in the Report is the Endangerment finding. As I have documented on the Senate floor before, EPA promulgated its endangerment finding for greenhouse gases in December 2009, which I said could lead to "the greatest bureaucratic intrusion into the lives of the American people." It will trigger costly, time-consuming permitting requirements for new and modified stationary sources of GHGs, such as power plants, factories, and refineries. 

But those are not the only sources potentially covered by EPA's regulatory net: schools, hospitals, churches, restaurants, farms, and many others may need to obtain Clean Air Act permits.  

We are talking about 6.1 million sources subject to EPA control and regulation. That's not mean saying this; it comes directly from EPA.

Based on these numbers, the US Chamber of Commerce found that these 6 million sources could include:

  • 260,000 office buildings;
  • 150,000 warehouses;
  • 92,000 health care facilities;
  • 71,000 hotels and motels;
  • 51,000 food service facilities;
  • 37,000 churches and other places of worship; and
  • 17,000 farms

GHG regulation will mean higher energy costs for consumers, especially for minorities, the poor, and the elderly.  Remember they have to spend proportionately more of their incomes on energy, and rising energy costs inflict greater harm on these groups.

In an attempt to stem the impending economic harm facing thousands of small businesses, EPA has developed the so-called "tailoring rule," which phases in the largest sources first, those that emit 75,000 tons and 100,000 tons. However this rule violates the plain language of the Act and is currently being litigated. If this Rule is thrown out by the Court, millions of sources, and the economic uncertainty that it brings, will be subject to EPA and citizen suit enforcement actions.

That is why on Feb 19th Senator Rockefeller, joined by seven of his Democratic colleagues, wrote to Administrator Jackson on their concern with the tailoring rule and the endangerment finding. Quote:

"We write with serious economic and energy security concerns relating to the potential regulation of greenhouse gases (GHGs) from stationary sources under the Clean Air Act...[W]e remain concerned about the possible impacts on American workers and businesses in a number of industrial sectors, along with the farmers, miners, and small business owners, who could be affected as your agency moves beyond regulations for vehicle greenhouse gas emissions..."

In some cases, these rules would have no meaningful environmental benefits.  Consider EPA's rules to regulate greenhouse gases: they would reduce global temperatures by 0.0015 C by 2100, an amount so small it can't be measured on a ground-based thermometer.

In the case of EPA's rules to regulate cement plants, we are at risk transferring 28 million tons of cement offshore, mostly to China, which uses less efficient, and therefore higher polluting, production technology.

All of these rules have sparked bipartisan opposition.  Just yesterday, 41 Senators wrote to EPA Administrator Lisa Jackson about their opposition to EPA's Boiler MACT rule.  Here's what they wrote:

"As our nation struggles to recover from the current recession, we are deeply concerned that the pending Clean Air Act boiler MACT regulations could impose onerous burdens on U.S. manufacturers, leading to the loss of potentially thousands of high-paying jobs this sector provides.  As the national unemployment rate hovers around 10 percent, and federal, state, and municipal finances continue to be in dire straits, our country should not jeopardize thousands of manufacturing jobs."

"While we support efforts to address serious health threats from air emissions, we also believe that regulations can be crafted in a balanced way that sustains both the environment jobs."

These rules are out of balance, and EPA needs to change course.

Our task ahead, which I believe is shared by some of my Democratic colleagues who have expressed their opposition to these rules, is to bring balance back to federal clean air policy, so that economic growth, job creation, and environmental progress can coexist, rather than be in conflict with each other. 

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September 2010 Speeches

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