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Leaked OMB Memorandum Confirms EPA Endangerment Finding Threatens Economy

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Leaked OMB Memorandum Confirms EPA Endangerment Finding Threatens Economy

Leaked OMB Memorandum Confirms EPA Endangerment Finding Threatens Economy

‘Serious economic consequences,’ Memo Warns

Washington, DC, May 12, 2009 -  A leaked government memo warns of “serious economic consequences” of regulating carbon dioxide as a pollutant.  At a Tuesday Senate Environment and Public Works (EPW) hearing, Senator John Barrasso (R-WY) presented the leaked memo on the Environmental Protection Agency’s plan.

EPA’s proposed rule would find that emissions of greenhouse gases, principally carbon dioxide (CO2), endanger public health and welfare. This would start a regulatory chain reaction, potentially imposing crushing new regulations on the American economy.

The OMB memo states, in part:

Making the decision to regulate CO2 under the CAA [Clean Air Act] for the first time is likely to have serious economic consequences for regulated entities throughout the U.S. economy, including small businesses and small communities.  Should EPA later extend this finding to stationary sources, small businesses and institutions would be subject to costly regulatory programs such as New Source Review.

“OMB’s memorandum confirms what free market groups have been saying for months,” said CEI Senior Fellow Marlo Lewis. “The endangerment finding will trigger a regulatory cascade with potentially severe impacts on energy prices, economic development, and jobs.”

Awareness of the economy-chilling potential of Clean Air Act regulation of carbon dioxide is likely one reason that the EPA, for the first time ever, issued a stand-alone endangerment finding with no accompanying regulatory proposal. A similar political calculus likely explains the Administration’s recent decision to retain the Bush policy on polar bears—classifying them as “threatened” but declining to use the Endangered Species Act to control greenhouse gas emissions.

“Team Obama is playing with political dynamite,” said Lewis. Once EPA finalizes the endangerment finding, the stage is set for a flood of litigation to impose draconian Clean Air Act controls on the economy. Similarly, litigation groups will demand that the Administration use the Endangered Species Act to stop greenhouse gas emissions.

“It will all happen on President Obama’s watch, and he will take all the blame. Republicans will be quick to exploit the political backlash,” Lewis said. “For the sake of the country and his own political legacy, President Obama should introduce legislation to preclude regulation of greenhouse gases under existing environmental statutes.” 

See also, CEI Senior Fellow Iain Murray’s commentary on NRO.