PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Lawsuits Against EPA for Overstepping Authority

By at 19 August, 2016, 1:02 pm

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by Raymond J. Keating-

President Barack Obama’s Environmental Protection Agency (EPA) has been a hotbed of regulatory activism, including, for example, it’s Clean Power Plan and Ozone Standard. Early this month, 14 states and assorted industry groups went to court noting that the EPA has exceeded its statutory authority with its Methane Rule.

The 14 states are Alabama, Arizona, Kansas, Kentucky, Louisiana, Michigan, Montana, North Carolina, Ohio, Oklahoma, South Carolina, Texas, West Virginia, and Wisconsin. The states declare: “Petitioners will show that the final rule is in excess of the agency’s statutory Authority and otherwise is arbitrary, capricious, an abuse of discretion and not in accordance with law.”

As the Washington Examiner reported: “The lawsuit asks the D.C. Circuit Court of Appeals to review the EPA’s rule regulating methane emissions from new, reconstructed and modified oil and gas wells that use fracking, saying that the agency is exceeding its statutory authority.

The states argue that the regulations impose an ‘unnecessary and burdensome’ standard on the oil and natural gas industry, ‘while setting the stage for further limits on existing oil and gas operations before President Obama leaves office.’” The article went on to quote West Virginia Attorney General Patrick Morrisey saying, “The rules are a solution in search of a problem and ignore the industry’s success in voluntarily reducing methane emissions from these sources to a 30-year low.”

Unjustified Regulation

Again, assorted private groups have gone to court as well. As reported by Law360.com: “The Independent Petroleum Association of America led a group of 18 other industry groups in a separate petition, and the Western Energy Alliance filed its own suit. Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia, said in a Tuesday statement that oil and gas producers, some of whom are barely remaining solvent in a time of low prices, can’t afford another regulatory burden. ‘The cost of compliance with unjustified regulations with no rational cost to benefit ratio is simply destroying the industry in West Virginia and the entire region,’ Burd said in the statement.”

Indeed, the increased costs of complying with these regulations will have a negative impact on investment and on consumers. As widely reported, the EPA projects higher costs of $530 million in 2025, while other studies point to annual costs of $800 million.

Cumulative Regulatory Burden on U.S. Energy Industry Harms Small Businesses the Most

This regulatory effort by the EPA lines up with the administration’s intense hostility to all kinds of carbon-based energy. In this case, we have the federal government reaching out to increase the costs and diminish the competitiveness of oil and natural gas produced via hydraulic fracturing, a process that has helped transform the United States into the largest natural gas and oil producer on the planet.

For good measure, these and other EPA costly and misguided regulations imposed on the oil and natural gas industry fall heavily on the small businesses that overwhelmingly populate the energy sector. Consider, for example, that 90.7% of employer firms among oil and gas extraction businesses, 78.1% of drilling oil and gas wells businesses, and 81.5% of firms among support activities for oil and gas operations businesses have less than 20 workers.

Regulatory overreach – beyond anything intended by Congress – calls for action via the courts, and by Congress itself.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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