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Regulatory Fatigue: A Small Business Perspective (Industrial heating industry needs affordable energy)

The health of our businesses is (or should be) a concern for all of us. As 2012 is still in its infancy, let’s take some time to reflect on new and upcoming regulations. Why? Because regulations are a part of the reason we are stuck between 8 and 9 percent unemployment and why business leaders are so uncertain of our economic future and unwilling to invest in it to create jobs. It’s a vicious circle.

This vicious circle has consequences, as explained by Cynthia Magnuson of the National Federation of Independent Business. She indicated that Washington’s recent policies have worsened the three top concerns among employers: healthcare costs, corporate tax complexity, and increased government regulations. Another business leader suggested that we “need to drain the regulatory swamp.”

Over the past three years, that swamp has gotten deeper. There are currently more than 4,200 proposed federal rules awaiting approval. Those that impact small businesses have increased more than 11% since 2009. The rule maker hurting job creators the most – and likely to have the greatest impact in our industry – is the EPA. They are currently considering hundreds of regulations.

To see the regulation shift over the past decade, go to www.industrialheating.com/regs.

By the EPA’s own estimates, new greenhouse gas (GHG) permits are expected to cost $125,000 and 866 hours per facility seeking compliance! R. Bruce Josten with the U.S. Chamber of Commerce described the proposed EPA rules as “the most costly, burdensome, expansive set of job-killing regulations ever crafted.”

Even if the EPA regulations don’t directly affect our facilities, we will still feel the impact in the form of increased electricity costs. An example of this is American Electric Power (AEP), which has increased its rates 48-88 percent in the last few years.

AEP rates are expected to increase another 10-35% in the next three years due to environmental regulations that are expected to cost the company $8 billion in compliance and upgrades.

Here in western Pennsylvania, the energy sector is adding significantly to our local economy. A recent story in the Pittsburgh Tribune-Review indicated that the energy industry accounted for one-sixth of all economic activity and 150,000 jobs at 750 employers. In a 10-county region, energy-related industries generated $19 billion in economic activity. My personal concern is that proposed regulations will hurt the energy sector, reducing jobs and hurting our local economy.

I’m not alone in my concern. Ed Yankovich, the international vice president District 2 of the United Mineworkers of America, recently wrote an editorial entitled, “EPA’s new rules spell economic disaster.” In it, he likens the EPA’s rules related to coal-fired power plants to “forcing an automobile manufacturer to build a vehicle that seats 10, goes 200 mph and gets 60 miles on a gallon of gasoline. It can’t all be accomplished currently in a single design.”

Yankovich went on to quote a National Economic Research Association analysis that estimates that “just two of EPA’s new rules will cost Pennsylvania 59,000 jobs over the next nine years. The NERA’s analysis also showed that these two EPA rules will drive up electricity costs 13-17% across Pennsylvania.”

The other regulations and “controls” to keep an eye on are those affecting individual businesses. Boeing is one that comes to mind. With its expansion limited in Washington state, Boeing decided to open a new plant – as any company might have done – to increase capacity (and employment).

The administration, through the NLRB, is challenging Boeing’s right to do this. In our opinion, the NLRB cannot be allowed to win this fight, which officially began June 14 and may not be concluded before next summer. If they win, American and foreign companies – think Honda or Severstal – will be discouraged from expanding in other states. Flexibility to move operations (within the U.S.) will be seriously reduced. Why is our government fighting Boeing?

If you think that Boeing is an exception and that this doesn’t happen to smaller companies, I’d urge you to read about the “attack” on Gibson Guitars. Was this government raid justified? Why was Gibson targeted?

The bottom line is that proposed regulations will likely increase our costs and negatively affect the way we do business in the future. How is that good for our industry or our economy? What can be done about it? Consider these questions as we roll into this 2012 election year.

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Reed Miller is the associate publisher and editor of Industrial Heating, “The International Journal of Thermal Technology.”  With print editions in English, Chinese, and Portuguese, Industrial Heating meets the educational needs of businesses consuming energy to heat metals above 1000°F.

Mr. Miller, holding a master’s in Metallurgy and Materials Science from Carnegie Mellon University, spent 25 years working in industry roles from melt-shop metallurgist to quality-assurance manager before taking over the magazine.

In addition to his technical writing, Miller pens monthly editorials (such as the above) on key issues for his 30,000 readership.

3 comments

1 Ed Reid { 02.14.12 at 12:59 pm }

When I was growing up, my father used to tell me that: “Ignorance of the law is no excuse.”

Today, ignorance of the law and the regulations which implement it appears to be unavoidable.

In this day of specialized lawyers and special courts and judges, the only person required to know all of the law and regulations is the affected individual or business.

2 Ray { 02.14.12 at 5:04 pm }

The Federal Register had 81,405 pages in 2010, and 46,758 pages were dedicated to current or proposed rules.

3 MarkB { 02.14.12 at 7:15 pm }

There are regulations and there are regulations. “Please don’t put poison in the river because it saves you money” is a good regulation. There may be too much regulation, but without it we’d be coughing up soot-balls while business owners lit cigars with $100 bills.

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