PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Congressional Review Act (CRA) Checks a Welcome Move: Protecting Small Businesses in the Coal, Oil and Natural Gas Sectors

By at 1 February, 2017, 1:27 pm

 

 

by Raymond J. Keating-

From start to finish, for eight years, President Barack Obama has harmed the business environment with its regulatory policies – and that was particularly the case toward energy production. It seems that any roadblock or hindrance that could be erected toward the use and production of carbon-based energy was erected. And that included measures coming down the stretch of the Obama administration.

The U.S. House of Representatives fought the good fight after Republicans had regained control in the 2010 elections, but it was largely about stopping destructive measures from moving ahead via legislation. As a result, President Obama pushed his regulatory agenda forward via executive actions.

Stopping the Attack on Coal and its Workers

On December 19, 2016, the Obama Department of the Interior issued final coal-mining regulations related to monitoring streams near mines before, during and after operations. These additional, unnecessary, overreaching regulations naturally come with increased costs, and lost jobs.

At the time of the rules being finalized, U.S. Senate Majority Leader Mitch McConnell (R-KY) said:

“The president’s eight-year war on coal has wrecked the lifeblood of the economy and the livelihoods of coal country workers and their families. And this desperate, last-minute attempt to cement that effort against American energy and American jobs is just the latest example. This costly regulation, along with others that are already having a devastating impact, are part of the Administration’s plan to demolish these coal communities right now and long after the president has left office.”

McConnell pledged to stop the rule via the Congressional Review Act

On January 30, 2017, McConnell joined other Members of Congress – Senator Shelley Moore Capito (R-WV) and Republican Representatives Bill Johnson (R-OH), Evan Jenkins (R-WV) and David McKinley (R-WV) – to introduce a resolution of disapproval under the CRA to stop the rule. As explained in a release from Senator McConnell’s office:

The Department of Interior (DOI) argued that this rule is about keeping American waterways clean, when in reality it is a prime example of the regulatory overreach that was so common under the Obama Administration, and it gives federal bureaucrats more authority to make coal more expensive to mine and use. The Obama Administration also alienated states from the rulemaking process despite the fact that federal statute gives states primacy over regulating coal mining activity and requires cooperative federalism between the federal and state governments… Further this out-the-door regulation is a prototype of the duplicative, overreaching, and job-killing regulations released during the Obama Administration – altering over 400 regulations already in the books to regulate coal mining activity and waterways already regulated by states, the Environmental Protection Agency (EPA), and the Army Corps of Engineers. This type of regulatory overlap is expressly prohibited by federal statute and hurts jobs. One national study estimated that this regulation could threaten nearly a third of all coal-related jobs.

Congressman Johnson declared: “Make no mistake about it; this rule is not designed to protect streams. Instead, it was an effort to destroy coal jobs and push the coal mining industry right out of business through duplicative and overly burdensome regulations.” And Congressman McKinley added: “As Chairman of the Coal Caucus, we’ve made stopping the SPR [stream pollution rule] our number 1 priority because if implemented, it could shut down more coal mines and disrupt the livelihoods of over 80,000 miners and their families.”

Small businesses casualties

Regarding this and other regulatory attacks that constituted Mr. Obama’s war on coal, it needs to be understood that this also has been, in effect, a war on small business. After all, key coal sectors of our economy are dominated by small businesses. Consider that:

-61.5% of employer firms in the coal mining sector have less than 20 workers and 83.8 percent less than 100 workers

-67.3% of employer firms among support activities for coal mining businesses have less than 20 employees and 86.3 percent less than 100 workers

-53.9% of employer firms among petroleum and coal products manufacturing businesses have less than 20 employees, and 75.0 percent less than 100 employees

The CRA that rescinds the BLM rule is critical to the coal industry – and the many small businesses that have managed to survive – which hopefully will help put this important sector on a path to rebirth and growth.

Stopping the Attack on Small Businesses in Oil and Natural Gas

Also under the CRA, Congress has offered joint resolutions to repeal the Bureau of Land Management’s Waste Production, Production Subject to Royalties, and Resource Conservation rule, known as the methane Venting and Flaring Rule, covering oil and gas operations on federal land and Indian land.

Duplicative and Unnecessary Regulation and Red Tape

As the House Committee on Natural Resources has explained: “On November 15, 2016 the Department of the Interior’s (DOI) Bureau of Land Management (BLM) issued their final Waste Production, Production Subject to Royalties, and Resource Conservation rule (BLM’s Venting and Flaring rule). The rule attempts to regulate emissions from oil and gas development on federal lands, but instead represents one of the Obama administration’s most egregious abuses of executive power designed to destroy responsible energy production on federal lands. Methane emissions from oil and natural gas have significantly declined in recent decades without duplicative federal regulation and at a time when oil and gas production in the U.S. has surged. The rule, if implemented, will undercut this progress through duplicative regulatory burdens resulting in lost royalties, massive compliance costs and corresponding job losses.”

The Western Energy Alliance noted:

“Methane emissions from oil and natural gas production have declined by 21% since 1990 without federal regulation, even as natural gas production has increased by 47%. The industry is no longer the largest source of anthropogenic methane emissions, as National Oceanic and Atmospheric Administration (NOAA) and other studies have shown.34 Industry has been continuously innovating to reduce emissions, and its success along with the market incentive to capture and sell as much natural gas as possible will continue without new rules from BLM.” As for the impact of the rule, the Alliance reported that “an economic analysis by John Dunham & Associates estimates the BLM rule would capture less than $4 million in new royalties but at a staggering cost of $1.26 billion. The impacts will be felt across the West through $997,199,000 of dollars in lost output, wages, royalties, and $114,112,000 in lost tax receipts by local, state, and federal government.”

Abuse of Presidential Power

There’s also the issue of authority, or lack thereof, for the BLM to impose such regulations. With the announcement of joint resolutions under the Congressional Review Act, House Committee on Natural Resources Chairman Rob Bishop (R-UT) explained: “This rule is one of the most egregious abuses of power from the Obama administration designed to shut down responsible energy development on our federal lands. When unelected bureaucrats and ideological aims supersede congressional intent and responsible regulation – as was the case with this rule – Congress has an obligation act. This is the first of many steps we will take to cut red tape that is forcing job losses in communities across the country and undercutting our domestic energy resource potential.”

Senate Committee on Environment and Public Works Chairman John Barrasso (R-WY) added: “It is the job of the EPA and the states, not the Bureau of Land Management, to regulate air quality. Instead of enforcing a duplicative regulation, BLM should use its limited resources to permit natural gas pipelines on federal lands in a timely manner. Pipelines will help producers capture additional gas and get that gas to market. These projects will also create jobs and provide energy for Americans.”

Indeed, becoming the globe’s leading energy producer is something to be embraced, not undermined, by our elected officials. While wisely protecting the environment, the federal government should not be actively working against domestic oil, natural gas and coal production with costly, misguided and ideologically-driven regulations, as was the case with the Obama Administration.

Again, such a hostile agenda takes a disproportionate hit on the small businesses that overwhelmingly populate the oil and natural gas sectors of our economy. For example:

-90.2% of employer firms among oil and gas extraction businesses have less than 20 workers

-77.5% of employer firms among drilling oil and gas wells businesses have less than 20 workers

-80.7% of employer firms among support activities for oil and gas operations businesses have less than 20 workers

-59.2% of employer firms among oil and gas pipeline and related structures construction businesses have less than 20 workers

-52.9% of employer firms among oil and gas field machinery and equipment manufacturing businesses have less than 20 workers

By rescinding these unnecessary regulatory attacks on coal, oil and natural gas production, Congress and the Trump administration would be restoring a bit of rationale and accountability to the regulatory process and government’s power.  The small businesses and hard-working Americans who support and work in these critical American industries welcome this congressional check.

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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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