Regulation:

Inst. for Policy Integrity's Livermore says pacing of air rules in line with past administrations

How does the Obama administration's pace on new regulations compare to those of previous administrations? During today's OnPoint, Michael Livermore, executive director of the Institute for Policy Integrity at the New York University School of Law, explains why he believes the Obama EPA's rollout of new rules is in line with previous administrations. Livermore also discusses why this round of air regulations has garnered so much attention.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Michael Livermore, executive director at the Institute for Policy Integrity at the New York University School of Law. Michael, it's great to have you back on the show.

Michael Livermore: My pleasure, thanks for having me.

Monica Trauzzi: Michael, we're seeing a lot of pushback from members of Congress on the pace and number of new environmental regulations. You feel the issue has been a bit blown out of proportion and politicized. Is there a misrepresentation of facts happening here in Washington?

Michael Livermore: Well, I think it's important to keep what's going on in a historical context. EPA has been making rules and rolling out environmental protections for 30 years. I focus on EPA because that's what's gotten a lot of the attention, of course. People do talk about regulations in some new areas, like financial regulation or this stuff that's happening in healthcare, and that maybe there's less historical precedent for. Of course, we've had financial regulation before as well, but with the environmental regulation really what's happening is on pace with what's happened over the last 30 years. It's not kind of fundamentally different with the Obama administration. There have been important rule makings on environmental issues under Reagan, under Bush I, under Bush II, under Clinton. There have always been like a movement on environmental issues, sometimes a little bit faster, sometimes a little bit slower. But what we're seeing now is not kind of fundamentally different from what's happened historically.

Monica Trauzzi: And there's always been opposition to those regulations. Is there more opposition now this time around or do you think that that also compares?

Michael Livermore: I think it's comparable to. I think it's easy to forget in the kind of heat of the moment, but I kind of have a hobby on the side where I look up kind of statements about past environmental regulations, from sometimes industry, sometimes opponents, sometimes proponents or moderates. And they kind of follow a pattern and the pattern goes something like hysterical outcry when an environmental rule is proposed, tempering over time and then eventually it just becomes normal. No one really talks about the particulate matter rule adopted by the Clinton administration is like a major thing. We all just kind of live with-it's improved the air, hasn't really had a tremendous economic impact in a negative way. But at the time, of course, it was going to destroy the economy and that's happened kind of time and time again. And so I don't know that the tone is really fundamentally different. You can see some pretty extreme statements in the past as well and so it's just one of those things that it just tends to happen periodically when you've got a-especially when you have a Democratic president in the White House that's doing the rules, because the political incentives work to push for a little bit more heightened kind of rhetoric.

Monica Trauzzi: So, the arguments right now against these EPA regulations are that the cost of compliance would just be way too high. Is there some truth to that?

Michael Livermore: Well, the thing is these rules-so, of course, there's lots of different rules that we're talking about. One rule that gets a lot of attention is the Utility Air Toxics Rule. And in that rule you-there are high costs, I mean there are costs certainly associated with the rule, but you have to look at those in light of the benefits. That's always the important thing. And so if you just look at the cost, of course, it looks like a lot, the same way I mean anything really looks like a lot if it's got kind of a price tag associated with it. But when you're talking about saving thousands of lives and ultimately when you look in economic terms is like $140 billion compared to like roughly $11 billion in costs, that's a bargain by any stretch. So, the costs are high when looked in absolute terms, but when you compare it to the benefits, we're talking about rules that are actually very cost effective.

Monica Trauzzi: So, EPA has already rolled back on a couple of the rules because of all this pressure coming from industry. What are your expectations moving forward? Will they roll back on some of the other rules?

Michael Livermore: Well, I think that I would be surprised. It kind of depends on the rule that we're talking about. So, like the Utility Air Toxics Rule, I would be very surprised if we saw anything kind of in terms of rollbacks. The boiler toxics rule, I don't think that it's going to fundamentally change. There already have been some changes in that rule. I don't see it kind of changing in a major way. The fuel efficiency rule, again, that was kind of pre-negotiated with industry, so it's actually quite interesting that anyone's opposing that rule. But there are still folks out there that say that that rule is kind of an incredible imposition by the government, even though the industry has like kind of agreed that it's a good idea. But I think that we're going to continue the pace. There's been delays, but, again, people freak out about the delays, but that happens as the normal part of the administrative process. People have been complaining about delays legitimately for decades. So I don't think the delays kind of presage any kind of serious rollback, although frankly, that having been said, I was surprised by the ozone rule. So, I'm not necessarily the most successful prognosticator.

Monica Trauzzi: Industry always says that there's so much uncertainty relating to these rules. If Congress were to pass some form of regulation that would halt the EPA from moving forward, will the uncertainty still exists?

Michael Livermore: Well, yeah, that's the thing I don't really understand about this uncertainty argument, is the uncertainty will exist kind of regardless. Any time the government could act or could do something different, that's the nature of regulatory uncertainty. It's actually more uncertain up to the point where they pass the rule. Once the rule is adopted, that's probably the most certain period that you're going to have, because the agency is not going to go make any radical changes soon after having adopted a rule. So it's actually the period immediately after a rule has been adopted where the uncertainty is the least and when the uncertainty is the greatest is the period prior to the rule being adopted, when you know the agency is going to do something, but you don't know exactly what it's going to be. That's kind of the greatest area of uncertainty. You really have to wait to do investments until the rule gets adopted, but because of all the opposition, we protract that period of uncertainty for very long stretches. Much better to just once the agency has made a decision, do the rule, people can make investments, change their market behavior on the basis of the new rule and uncertainty has been resolved. So, it's a very odd dynamic wind industry uses uncertainty as a reason to kind of fight rules and protract the uncertainty in the end.

Monica Trauzzi: How do you see these rules playing a role moving into the 2012 election?

Michael Livermore: Well, you know, that's quite an interesting question because folks obviously, they think about these rules in the context of elections a lot. It's not clear that these kinds of things, administrative actions, actually influence decisions by voters. It's often big macroeconomic things, the unemployment rate, which these rules have nothing to do with, GDP growth, that kind of thing, whether they find the president personable, whether the president has kind of brought us foreign policies successes or failures. Those things tend to drive elections much more than an ozone standard or the Utility Air Toxics Rule. It's just hard to imagine those having a really big influence on voter decisions in the end, maybe a little bit on the fundraising side, but even that I think is a pretty low probability event.

Monica Trauzzi: OK, we're going to end it there. Thank you for coming on the show, nice to see you.

Michael Livermore: Great, my pleasure.

Monica Trauzzi: And thanks watching. We'll see back here tomorrow.

[End of Audio]

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