U.S. Chamber of Commerce News Release:

Release Date: Feb 27, 2013Contact: 888-249-NEWS

---

U.S. Chamber Report Reveals Flaws in Job Number Calculations in EPA Regulatory Impact Analyses

EPA has Consistently Failed to Take Into Account the Real World Impact

WASHINGTON, D.C.—A new report released by the U.S. Chamber of Commerce today finds that the Environmental Protection Agency (EPA) has often distorted the true impact of regulations on job creation by using incomplete analyses to assess effects on employment. The report, commissioned by the U.S. Chamber and written by NERA Consulting, studied EPA’s proposed economically significant rule makings between 1995 through 2011, and found that the approach on which EPA based many employment forecasts was flawed, considering only part of the potential overall impacts and ignoring the effects of regulatory compliance costs.

“This study reveals striking omissions and inconsistencies in EPA analyses,” said Bill Kovacs, the Chamber’s senior vice president for Environment, Technology & Regulatory Affairs.  “Instead of using the most complete models to provide a true forecast of how regulations impact employment, EPA instead used either incomplete computer models, or in other cases, chose to perform no analysis at all.   This report establishes that EPA has consistently failed to take into account the real world impact of regulations on communities and industries. 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.”

The report concluded that the correct approach for assessment of the overall economic and employment impacts of rules with large economy-wide costs is to model the impact of regulation compliance cost through a “whole-economy” model.  This approach takes into account the cascading effects of a regulatory change across interconnected industries and markets nationwide.  NERA found that EPA possesses the capability to perform such “whole-economy” modeling and had actually done so in connection with two rulemakings in 2005.  EPA’s failure to use the more comprehensive economic analysis tool in its rulemakings partially accounts for the agency’s consistently optimistic estimates of employment impacts in those rulemakings

NERA applied the whole-economy approach to estimate the economic impact of four major rules below and found results of adverse employment effects, differing significantly from EPA’s projections:

• EPA’s partial-economy analysis of its 2011 Utility Mercury and Air Toxics Standard (MATS) showed the regulation would create 46,000 temporary construction jobs and 8,000 net new permanent jobs. By contrast, NERA’s whole-economy analysis estimated the MATS rule would have a negative impact on worker incomes equivalent to 180,000 to 215,000 lost jobs in 2015, and the negative worker income impacts would persist at the level of 50,000 to 85,000 such “job-equivalents” annually thereafter.
• EPA’s Cross State Air Pollution rule would have an impact on worker incomes equivalent to the annual loss of 34,000 jobs from 2013 through 2037, compared to EPA’s claim of 700 jobs per year gained.
• EPA’s Industrial Boiler Maximum Achievable Technology (MACT) rule would have a negative impact on worker incomes equivalent to 28,000 jobs per year on average from 2013 through 2037, compared to EPA’s claim of 2,200 per year gained; and
• EPA’s planned Ozone National Ambient Air Quality Standard (NAAQS) would reduce worker incomes by the equivalent of 609,000 jobs annually on average from 2013 through 2037. EPA has not yet published an employment impact for the Ozone NAAQS.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.