Process Industries Hope for Change in Obama's Regulatory Strategy

Jan. 25, 2011
Steel, chemicals and petroleum groups say they're overburdened with laws that make them less globally competitive

President Obama's executive order last week to review regulations that could place unnecessary burdens on businesses struck a chord with manufacturers, particularly those in energy-intensive industries.

Manufacturers in many process industries have criticized the regulatory environment in the United States as a competitive disadvantage when compared with the less-stringent requirements in developing nations, such as China.

"We're hoping this will be a look at all regulations that are negatively affecting our competitiveness, including regulations that have been finalized or initiated on this administration's watch," says American Iron and Steel Institute President Thomas Gibson.

AISI wants the Obama administration to delay or prevent proposed unilateral regulations that the association says will negatively impact U.S. industry and allow emissions to increase from sources in competing nations that don't have similar regulations.

AISI reiterated its position in a statement released hours before Obama's scheduled Jan. 25 State of the Union address. One of the key regulatory issues that concerns AISI and other process industry groups is the EPA's regulation of greenhouse gasses from stationary sources under the Clean Air Act.

While some policy experts say the legislation will have little impact on manufacturing as a whole (see "EPA's Emissions Regulations: The Dog That Didn't Bark?"), AISI and other industrial organizations are fearful the rules could stifle the nation's economic recovery progress.

The EPA enacted the first stage of permitting requirements for stationary sources of emissions on Jan. 2. The rules require large industrial facilities that must already obtain Clean Air Act permits to include greenhouse-gas requirements in the permits if modifications to their facilities increase emissions by 75,000 tons a year. Starting in July, all new facilities emitting more than 100,000 tons a year will be required to obtain construction permits that address greenhouse-gas emissions.

The permit requires facilities to apply best available control technology, which the EPA determines on a case-by-case basis by taking into account factors such as the cost and effectiveness of the control.

But Gibson contends U.S. steelmakers have already implemented technologies that have reduced emissions significantly.

"The steel industry has and will continue to reduce its emissions and improve its energy efficiency every year because it makes business sense to do so," Gibson says. "But when you look at the regulations and the guidance that was issued along with the regulations, that seems to identify potential energy-efficiency improvements on the order of 53% for integrated facilities and 27% for electric-arc facilities - that's just ridiculous."

Gibson says the guidance is based on outdated studies and that many of the technologies cited have already been deployed. Additionally, if it were possible to gain significant additional efficiency improvements, the industry would have already implemented the appropriate measures, he says.

Other process industry organizations also have called on Obama reconsider the current regulatory climate, including the American Petroleum Institute and the American Chemistry Council.

On Jan. 18., Obama wrote an Op-Ed in The Wall Street Journal outlining his goal "Toward a 21st-Century Regulatory System." In the letter, Obama said his administration is "looking at the system as a whole to make sure we avoid excessive, inconsistent and redundant regulation."

The American Chemistry Council called on the Obama administration to "create clear and transparent standards for scientific data used to develop rules in order to ensure its objectivity and credibility" in a Jan. 18 letter to Jacob Lew, director of the U.S. Office of Management and Budget.

"The administration should establish uniform criteria for the relevance, quality and reliability of data relied on by all federal agencies," ACC said in the letter. "Doing so will level the playing field so that irrespective of funding source or affiliation of investigators, the government has a solid scientific basis for economic decisions."

The American Petroleum Institute suggested in a statement that based on its experience with regulations it could provide valuable insight into how to improve environmental legislation "so they work for all Americans."

"We agree it makes sense to fix regulations that produce little in the way of benefits and have harmful effects on jobs and our economy," API said.

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