Report: Business Groups Say Clean Air Act Has Been a "Very Good Investment"

Economic benefits of clean-air reforms have outweighed costs by up to 40 to 1

U.S. businesses large and small have seen economic gains from EPA's use of the 40-year-old federal Clean Air Act, according to an analysis released this week that aims to counter arguments by industry groups that the law is anti-business.

The financial benefits of clean-air reforms have outweighed their costs by a margin of up to 40 to 1, according to the study commissioned by the Small Business Majority and the Mainstreet Alliance.

The report, carried out by environmental consulting firm M.J. Bradley & Associates, is based on data from previous EPA and independent calculations on the costs and benefits of Clean Air Act compliance.

It cites figures from global firm ICF Consulting that 1.3 million jobs were created in pollution-control industries between 1977 and 1991 as a direct result of the rules.

"The Clean Air Act has proven to be a very good investment," the authors concluded.

John Arensmeyer, founder and CEO of Small Business Majority, a small business advocacy group, said he felt it was time to air the figures, now that Congress has failed to pass a climate bill and attention has turned to the EPA to use its power to slow global warming.

"The focus of the [climate change] debate has moved to the EPA enforcement of the Clean Air Act," Arensmeyer told SolveClimate News. "We felt it was important to get some information out about that."

The Sausalito, Ca.–based Small Business Majority, which has no membership and is foundation-funded, claims it is focused on solving the problems of the nation's 28 million small businesses.

Arensmeyer, a former tech entrepreneur, said "the enforcement of the act creates a whole bunch of economic opportunities for small business" at a time of fiscal distress.

"We need to be focused on clean energy," he said. "That's really where the economy is going." And opponents "don't really have a lot of evidence" that clean-air rules are bad for bottom lines.

Clean Air Act Under Attack

The report comes at a time when the Clean Air Act, the crown jewel of U.S. environmental and health law, is under heightened attack by industry groups and conservatives on both sides of the aisle.

The law, passed in 1970, directs EPA to create and enforce rules on a range of air pollution problems, from acid rain to smog, motor vehicle efficiency and ozone layer protection.

EPA conducted two cost-benefit reviews of the act at the end of the 1990s. The results revealed that between 1970 and 1990, the price tag of cutting air pollutants was a massive $523 billion. The costs, however, were offset by $22 trillion worth of benefits to human health and worker productivity, the agency said, returning $42 in benefits for every dollar spent to comply.

The agency predicted that economic benefits from 1990 through 2010 would total $690 billion in 1990 dollars, compared with compliance costs of $180 billion—for a margin of 4 to 1.

But opponents are hardly convinced. With EPA in the midst of unleashing a flurry of new Clean Air Act rulemaking to control almost every source of air pollution—including heat-trapping gases—adversaries are cautioning against government overreach.

In recent months, EPA announced stricter standards for sulfur dioxide and nitrogen dioxide and unveiled new regulations for smog-causing pollutants. In November, it is expected to release ambitious—and potentially expensive—standards for ground-level ozone.

In a draft rule from January, the agency proposed shrinking the ozone standard to somewhere between 60 and 70 parts per billion (ppb), from the Bush Administration's 85 ppb to 75 ppb.

Job Killer, Manufacturers Say

Industry claims the costs of compliance would shutter businesses and kill jobs.

A September report by the Manufacturers Alliance for Productivity & Information (MAPI), a research group in Arlingon, Va. that does no lobbying on policy issues, said the new ozone rule would reduce U.S. GDP by $676.8 billion in 2020 and result in 7.3 million lost jobs throughout the economy during the same period.

Don Norman, an economist with MAPI and the report's author, said the reason for this is that the manufacturing sector would need to make huge investments to comply, and the wider economy would suffer. "The impact on the economy goes beyond the direct impact of the manufacturing sector," Norman told SolveClimate News. 

"As you tighten the standards, the incremental costs [of meeting them] increases very rapidly," Norman explained. "The reason is that it requires technologies that haven't even been developed yet. There's an assumption that they are somehow going to appear. And I'm sure there is room technologically for improvement, but I don't know if you can just assume everything."

On climate change, Norman said MAPI's members are concerned by the continued policy uncertainty in Washington, but it has no position on the EPA's moves to rein in climate-altering carbon dioxide. The National Association of Manufacturers, a lobby group, has called the agency's CO2 "agenda" "deeply troubling."

Greenhouse Gas Rules

Indeed, drawing the most fire over the Clean Air Act are the EPA's plans to apply the law to greenhouse gases.

In spring 2007, the U.S. Supreme Court ruled in Massachusetts v. EPA that the law's authority could extend to CO2. In December 2009, the agency finalized its endangerment finding, declaring greenhouse gases a threat to human health and welfare, and began considering how to develop rules to use the Clean Air Act to regulate them.

On January 2, 2011, the EPA "tailoring rule" will require over 30 industrial sectors, covering 85 percent of the economy, to begin reporting their emissions for the first time.

Bipartisan proposals have been introduced in both chambers of Congress to block or delay the EPA's action on CO2. A handful of lawsuits have been filed by oil and coal industry groups, several states and others.

The small businesses behind this week's report—which would be shielded from the tailoring rule requirements—are warning against delay.

"This has negative implications for many businesses, large and small, that have enacted new practices to reduce their carbon footprint as part of their new business models," the review said.

To coincide with the study, the Mainstreet Alliance, a national network of small-business groups, delivered a statement to Washington lawmakers signed by 498 small businesses in 30 states, urging them "to stand with small businesses and our communities, not big polluters, and support EPA's move to regulate greenhouse gas emissions."

The businesses run the gamut of sectors, including retail, law, dining and tourism.

Jason Collette, field coordinator for the New Hampshire-based Mainstreet Alliance, told SolveClimate News that this is the first time his group has ventured into Clean Air Act advocacy.

With health care put to bed, he said, they wanted tackle an issue that would address the nation's nagging unemployment woes.

"A lot of our membership feels passionately about this [and] feels that this is an opportunity for some of their community folks to get back to work," he said.

See also:

Will Senate Showdown on Clean Air Act Slow Down EPA's Momentum?

Clean Air Act Proving Effective in CO2 Regulation, Lawyers Tell Their Corporate Clients

New Clean Air Act Rules Likely to Apply to Embattled Kansas Coal Plant

US Declares Greenhouse Gases a Danger to Public Health and Welfare

Senate Urged to Protect Clean Air Act from Climate Bill 

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