THE BLOG

The Chamber's Latest on Regulations: Crazy Costs, Mythical Benefits

03/11/2011 06:24 pm ET | Updated May 25, 2011

Not to be outdone by the Small Business Administration’s aptly named Office of Advocacy, the Chamber of Commerce has issued its own breathless report on how many jobs we could save if we did away with environmental, land use, and utility regulations. Crunching a bunch of dubious numbers, the SBA Office of Advocacy’s consultants, Nicole and Mark Crain, claim that regulations cost $1.75 trillion a year, a number several of my CPR colleagues thoroughly debunked in a report issued in February. Undeterred and not to be outdone, the Chamber’s feverish Project No Project, released yesterday, claims that citizen opposition to polluting plants combined with “excessive” government permitting requirements to deny the economy a “$1.1 trillion short-term boost” and “1.9 million jobs annually.”

The premise of the Chamber’s report is that if busybody neighbors and fussy regulators would just get out of the way, 333 proposed “solar, wind, wave, bio-fuel, coal gas, nuclear, and energy transmission projects” around the nation could be under way pretty darn quick, and if they were, they’d produce loads of money for the Chamber’s members and local economies, and a raft of new jobs. “In aggregate, planning and construction of the subject projects would generate $577 billion in direct investment,” says the Chamber. “The indirect and induced effects would generate an approximate $1.1 trillion increase in U.S. GDP, including $352 billion in employment earnings.”

And hey, if we just got rid of child labor laws and worker safety requirements, imagine how much more profitable all those projects would be!

Let’s get real for a moment. All major manufacturing and power plants in the United States must get a variety of permits before they can start construction. Environmental permits are key, as are local government zoning approvals, and, in the case of electric utilities, approvals from state agencies that supervise this still largely monopolistic industry’s pricing structure. It’s no surprise that all these approvals annoy utility executives, who nevertheless managed to record strong profits last year, as part of an industry that can brag of having three of the top ten spots in the Fortune 500’s list of most profitable corporations.

They’re doing a lot better than state governments, suffering the shocks and aftershocks of the recession. And state budget shortfalls, of course, are a major reason why permitting can sometimes take a little while, since they result in short-handed regulatory agencies. Another good reason is that regulators need to get it right. That’s a lesson we should have learned from the BP disaster in the Gulf, since the statutorily mandated rapid permitting process for deep-sea drilling essentially forced regulators to approve the project before they’d truly scoped out whether it was safe. (Spoiler alert: It really wasn’t.)

As it happens, ProPublica reported yesterday on a real world example of the Chamber’s approach to bypassing all those pesky safeguards. The new Republican Governor of Pennsylvania, Tom Corbett, is moving ahead with turning authority to “expedite” permitting over drilling for natural gas in the Marcellus Shale to C. Alan Walker, head of his Department of Community and Economic Development, a former energy company executive who contributed $184,000 to the Governor’s campaigns. ProPublica is following the story closely because it is in the midst of a series about the devastating effects of the drilling—known as fracking—on rivers, streams, and underground water supplies.

And, while I understand why the Chamber highlights delays in projects that rely on eco-friendly wind energy, the truth is that if its anti-regulatory argument prevailed, and environmental regulators were sidelined during the permitting process, the major beneficiaries would be fossil fuel projects, especially coal-fired power plants, with all the nasty pollution side effects that kind of development entails.

Such dangers are exactly why we need rigorous approval processes. If the industry is too impatient to go through a methodical approval process before launching these enormous and inherently dangerous operations, the solution is not to “expedite” permitting by clearing it out of the way. Rather, state governments should pass the costs of a more efficient, faster, but still rigorous permitting system on to the facilities that create the risk and require the scrutiny. But as a veteran of at least four rounds of such battles in the Maryland legislature, I am here to tell you that permit applicants are the first to scream bloody murder at any suggestion that they should pay for the government services they consume, unlike the rest of us who pay to have a dog, get a driver’s license, obtain license plates, or go fishing.

Oh, and while we are on the subject of the average person, how about all those citizen efforts to block construction of major industrial facilities in their neighborhoods, a bit of activism the Chamber deplores? In a surprising display of political tone-deafness, the Chamber was patronizing enough to include in its report the personal income per capita of the people who live in the states where those 333 projects would be located. The large majority have incomes below—often significantly below—$40,000. The Chamber argues that they obviously need jobs making electricity for the rest of us, despite the manifest dangers of living in the shadow of a power plant, especially one fired by coal. In the Chamber’s view, it’s way past time for them to learn that they need to get out of the way of progress, Chamber-style.