red tape

Moratorium Lifted, But Drilling Still Blocked

by Ben Lieberman on October 13, 2010

in Economy, Energy, Environment, Global Warming, Natural Resources

With much fanfare, the Obama administration has lifted its moratorium on deepwater drilling in the Gulf of Mexico. But don’t expect much actual drilling any time soon, thanks to all of the administration’s other red tape strangling domestic oil and natural gas production.

Even before the April 20th Deepwater Horizon spill, the Obama administration had clamped down on new leasing on federally controlled offshore and onshore areas. In fact, 2009 saw less oil and gas leasing than in any year under Bush or Clinton, and 2010 was on track to be no better.

Nonetheless, the Obama administration Department of the Interior used the spill as an excuse to crack down further by imposing a six-month moratorium, until November 30th, on issuing any new deepwater drilling permits in the Gulf of Mexico. For all practical purposes, the administration also put an end to nearly all shallow water drilling in the Gulf, as well as exploration activities off Alaska.

Studies estimating thousands of lost jobs as a consequence of the moratorium — not to mention strong bipartisan opposition from Louisiana’s Congressional delegation — made for bad politics as well as bad policy. Whether or not influenced by the upcoming elections, the Department of the Interior announced that the moratorium is being lifted more than a month ahead of time.

The moratorium is gone, but all the pre-spill hurdles are still in force. In addition, Secretary of the Interior Salazar announced several tough new provisions and stated that only those operators who “clear the higher bar can be allowed to resume.” Interior concedes that these new requirements “may delay development of some OCS oil and gas resources.” Additional delays piled onto a policy that had already ground drilling to a near halt is not good news for American energy production.

Notwithstanding the official end to the moratorium, the real test is whether and to what extent drilling activity resumes. The American people need more energy, not to mention the thousands of high paying jobs an expanded domestic oil and gas sector would bring. If 2010 goes into the books as the second year in a row of sharply curtailed domestic energy production, the new Congress should take a close look at reversing this worrisome trend.

The Failed Stimulus Package Reveals What Economy Really Needs

by Ben Lieberman on September 29, 2010

in Economy, Energy, Regulation, Stimulus to Nowhere

A failure can make for a valuable learning experience, and the stimulus package is no exception. Clearly the stimulus has not worked, and from its inception many economists doubted the wisdom of the federal government trying to spend our way into prosperity. But putting aside questions about the merits of spending as means of sparking an economic recovery, it appears that the feds were not even able to dole out the money in a timely manner. The culprit — regulatory red tape.

Several studies conducted by the Department of Energy’s Office of the Inspector General (here , here , and here) have concluded that many of the stimulus-funded projects related to energy were very slow to get off the ground. For example, DOE’s investigation of one program dealing with block grants for energy conservation projects concluded that “as of August 2010, more than one year after the Recovery Act was passed, grant recipients had expended only about 8.4 percent of the $3.2 billion authorized for the Program.” Not exactly the “shovel ready” boost to the economy we were promised.

Regulatory delays were the reason. In its most recent report, DOE’s Inspector General concluded that “various regulatory requirements had slowed spending,” including “the Davis-Bacon Act, National Historic Preservation Act, Buy American provisions of the Recovery Act, and National Environmental Policy Act (NEPA).”

Granted, the programs funded by the stimulus are a big waste of taxpayer dollars, and it is a good thing that the feds can’t squander our money more quickly. But the point is that even the big government proponents of the stimulus package are finding out what it is like to get tripped up by — big government. Whilst hoisted on their own petard, one can hope that the legislators who supported the stimulus might figure this out.

Perhaps they will learn the critical lesson that can lead to real economic growth. Just as stimulus spending faces a regulatory gauntlet, so does private investment. Efforts by large and small businesses to expand — the real source of an economic recovery and job growth — are hampered by the regulatory state at least as much as are the government projects highlighted in the DOE reports. Streamlining or eliminating these regulatory hurdles would do far more to help the economy than all the stimulus spending in the world.

Obama Administration Blocks Clean-Up of Oil Spill by Louisiana and Foreign Allies By Imposing Red Tape

by Hans Bader on June 18, 2010 · 5 comments

in Agriculture, Economy, Energy, Environment, Ethanol, Global Warming, Health and Illness, International, Labor, Legal, Natural Resources, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Trade, Zeitgeist

The Obama Administration recently used red tape to force Louisiana to stop using 16 barges that were cleaning up the Gulf of Mexico by sucking thousands of gallons of oil out of Louisiana’s oil-soaked waters.

Earlier, it delayed the clean-up of the Gulf of Mexico by months, by blocking foreign crews from operating sophisticated clean-up vessels.  The Jones Act bans foreign vessels and crews from working in U.S. waters, but it gives the president the authority to completely waive that ban if he wishes.  Obama refused to lift the ban, even though American shippers who generally support the ban said they wouldn’t object to lifting it to fight the spill.  As a result of the ban, the U.S. has rejected a lot of foreign aid from counties with expertise in fighting oil spills, and accepted only a small amount of foreign equipment to fight the spill.

Even Democrats are now criticizing the Obama administration for refusing to waive the ban to allow America’s allies to clean up the oil spill:

“Rep. Corrine Brown (D-Fla.) said it was unacceptable that her state couldn’t utilize foreign vessels for skimming. She held up pictures of skimmers available in Mexico and Norway that could help.  ‘We are in emergency mode and we need skimmers,’ Brown said. ‘We need the big ones. I understand they’re available in other countries, including Mexico and Norway. What is the process for the state to utilize these vessels from other countries? … We’re talking about protecting Florida’s coast.’ . . .Deputy Maritime Administrator David Matsuda confirmed there has been one Jones Act waiver request for a foreign deck barge to operate within three miles of the U.S. coast. That request was denied . . . .Of course, the Obama administration could eliminate the bureaucratic delay entirely by simply following the precedent set by the Bush administration, which waived the Jones Act in the aftermath of Hurricanes Katrina and Rita in 2005 to transport oil and gasoline throughout the Gulf region. Homeland Security Secretary Janet Napolitano has the legal authority to suspend the law.”

“The BP clean-up effort in the Gulf of Mexico is hampered by the Jones Act. This is a piece of 1920s protectionist legislation, that requires all vessels working in U.S. waters to be American-built, and American-crewed. So” the U.S. Coast Guard ”can’t accept, and therefore don’t ask for, the assistance of high-tech European vessels specifically designed for the task in hand.”

The law itself permits the president to waive these requirements, and such waivers were “granted, promptly, by the Bush administration,” in the aftermath of hurricanes and other emergencies. But Obama refused to do so after the spill, notes David Warren in the Ottawa Citizen.  Instead, Obama rejected a Dutch offer to help clean up the spill, noted Voice of America News:

“The Obama administration declined the Dutch offer partly because of the Jones Act, which restricts foreign ships from certain activities in U.S. waters.  During the Hurricane Katrina crisis five years ago, the Bush administration waived the Jones Act in order to facilitate some foreign assistance, but such a waiver was not given in this case.”

“After the Obama administration refused help from the Netherlands, Geert Visser, the consul general for the Netherlands in Houston, told Loren Steffy: ‘Let’s forget about politics; let’s get it done.’” But for Obama, politics always comes first: “The explanation of Obama’s reluctance to seek this remedy is his cozy relationship with labor unions. . . ‘The unions see it [not waiving the act] as … protecting jobs. They hate when the Jones Act gets waived.’”

(The Obama Administration belatedly accepted some foreign equipment for use in fighting the spill, although it still blocked ships with foreign crews from working in U.S. waters.  As Voice of America notes, although ”the Netherlands offered help in April,” such as providing ”sophisticated” oil “skimmers and dredging devices,” the Obama Administration blocked their crews from working in U.S. waters, and as a result, this crucial ”operation was delayed until U.S. crews could be trained” in June.  “The Dutch also offered assistance with building sand berms (barriers) along the coast of Louisiana to protect sensitive marshlands, but that offer was also rejected, even though Louisiana Governor Bobby Jindal had been requesting such protective barriers.”)

In April 2009, the Obama administration granted BP, a big supporter of Obama, a waiver of environmental regulations.  But after the oil spill, it blocked Louisiana from protecting its coastline against the oil spill by delaying rather than expediting regulatory approval of essential protective measures.  It has also chosen not to use what has been described as “the most effective method” of fighting the spill, a method successfully used in other oil spills.  Democratic strategist James Carville called Obama’s handling of the oil spill “lackadaisical” and “unbelievable” in its “stupidity.”

Obama is now using BP’s oil spill to push the global-warming legislation that BP had lobbied for.  Obama’s global-warming legislation expands ethanol subsidies, which cause famine, starvation, and food riots in poor countries by shrinking the food supply.  Ethanol makes gasoline costlier and dirtier, increases ozone pollution, and increases the death toll from smog and air pollution.   Ethanol production also results in deforestation, soil erosion, and water pollution. Subsidies for biofuels like ethanol are a big source of corporate welfare: “BP has lobbied for and profited from subsidies for biofuels . . . that cannot break even without government support.”

ObamaCare Vastly Expands IRS Red Tape and Power, Raises Medical and Insurance Costs, Taxes, and Deficits, and Harms Very Sick People

by Hans Bader on April 27, 2010 · 1 comment

in Deregulate to Stimulate, Economy, Employment, Health and Illness, Healthcare, Insurance, Legal, Nanny State, Personal Liberty, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Zeitgeist

“Billions of more documents” will be have to be filled out by small businesses for the IRS so that a “spendthrift Congress can shake a few extra bucks out of” them to pay for ObamaCare. They will have to spend countless hours to “gather information,” such as about the person they buy a used car from, and the mom-and-pop landlords who lease space to them, even if the small business has to spend more money gathering the information than the IRS will collect in taxes as a result.  (The new health care law will raise far more revenue by taking away medical tax-deductions from “15 million very sick people” with “major medical expenses” starting in 2013.)

The health care bill vastly expands the power of the IRS.  The Washington Examiner says that “16,500 more IRS agents” will be “needed to enforce Obamacare.”  That’s “the biggest expansion of the IRS since World War II.”

ObamaCare is also costing major employers who provide health coverage for retirees billions of dollars.  “When companies started reporting the write-downs they’d take as a result of the passage of ObamaCare,” congressional Democrats “reacted with outrage at the announcements, and scheduled hearings to demand answers . . . from AT&T, Caterpillar, Deere, and Verizon.”  But now, the massive costs of ObamaCare are so obvious and undeniable that even congressional Democrats have “admitted that CEOs who reported billions in losses due to ObamaCare were required to state those losses after all,” and that their “companies acted properly and in accordance with” federal “accounting standards.”

“Economic experts from President Obama’s own Health and Human Services Department have released a devastating report noting that Obamacare ‘will increase national health care spending by $311 billion from 2010-2019,’ according to the Associated Press. Even worse, ‘Medicare cuts may be unrealistic and unsustainable, driving about 15 percent of hospitals into the red and ‘possibly jeopardizing access’ to care for seniors.’”  This contradicts Obama’s claims that the health care law would “bend the cost curve down” and cut the cost of health insurance.

This report existed before Congress voted on the health care bill, but Obama’s HHS Secretary concealed it until after the bill’s passage.

“The administration’s own actuary reported on Thursday that millions of people could lose their health insurance, that health-care costs will rise faster than they would have if the law hadn’t passed, and that the overhaul will mean that people will have a harder and harder time finding physicians to see them.”

To try to offset and hide the increased cost of health care resulting from their ill-conceived health care law, the Obama administration and congressional leaders are now proposing a new bill to “impose price controls on insurance,” even though similar legislation is already backfiring in Massachusetts, where health care costs spiraled upwards after the state government adopted a prototype of ObamaCare several years ago, resulting in “explosive costs.”

The health care legislation backed by Obama contains many penny-wise, pound-foolish provisions.  It spends money on frills like “cultural competency,” while cutting spending on crucial things like anesthesia.

Fourteen attorneys general are challenging provisions of the new health care law in court.  Their lawsuits argue that forcing people to buy health insurance is not a valid exercise of Congress’s power to regulate interstate commerce.

The new law imposes many middle-class tax increases, such as taxes on uninsured individuals, on cosmetic surgery, on medical devices, and on certain health care plans.  It also increases taxes on many investors and imposes marriage penalties.

The new health care law will reduce lifesaving medical innovation, raise taxes, drive up insurance premiums, break many campaign promises, and increase state budget deficits.  It  will jeopardize the quality of medical care, while imposing restrictions that failed when tried at the state level.  It ignores advice from doctors and federal experts, and lessons from countries with universal health care, about how to keep costs down.

While the CBO deceptively scored the health care bill as not increasing the federal deficit, thanks to the many tax increases in the bill, it did so only because it was required to accept many accounting gimmicks that even pro-administration journalists have admitted conceal the bill’s enormous cost and the fact that it will massively increase the deficit.  The New York Times‘ David Brooks, once a staunch supporter of President Obama, recently said that the bill’s drafters were “corrupted by power” and called arguments for the law “unbelievable” and “insane.”  The Atlantic’s Megan McArdle, who also voted for Obama, wrote that the law “is a fiscal disaster waiting to happen.”

U.S. Chamber unveils NIMBY Watch Web site

by Marlo Lewis on March 23, 2009

in Energy, Global Warming, Stimulus to Nowhere

Last week, the U.S. Chamber of Commerce unveiled a NIMBY-Watch Web site called Project No Project .

With case studies from more than 30 states, Project No Project  chronicles how NIMBY (“not in my backyard”) activists “block energy projects by organizing local opposition, changing zoning laws, opposing permits, filing lawsuits, and bleeding projects dry of their financing.” Many of the projects blocked are not coal plants but alternative energy projects or infrastructure often touted as “green.”

The site invites readers to provide examples from their own locales of NIMBY efforts to block or stall energy-related projects.

Proponents of “green jobs” should be concerned as much as free-market and property-rights advocates, because ”stimulus” projects are vulnerable to the same NIMBY tactics that, for example, have immobilized the Cape Wind Project in Nantucket, Mass.

Although Project No Project does not mention it, we also know from  comments submitted by the U.S. Chamber and allied groups on EPA’s Advanced Notice of Proposed Rulemaking, that NIMBY forces will aquire powerful new litigation tools if EPA, in response to the Supreme Court’s Massachusetts v. EPA decision, establishes greenhouse gas (GHG) emission standards for new motor vehicles. (For more background, see my recent post on MasterResource.Org.)

In a nutshell, vehicular GHG emission standards will make carbon dioxide (CO2) a “regulated air pollutant” under the Clean Air Act (CAA). That, in turn, will automatically make CO2 “subject to regulation” under the Act’s Prevention of Significant Deterioration (PSD) pre-construction permitting program. 

The cutoff for regulation as a “major stationary source” under PSD is a potential to emit 250 tons per year (TPY) of a CAA-regulated air pollutant. Approximately 1.2 million previously unregulated entities (office buildings, hotels, big box stores, enclosed malls, even commercial kitchens) actually emit 250 TPY. All would be vulnerable to new regulation, monitoring, paperwork, controls, and penalties if EPA establishes GHG emission standards for new motor vehicles.

To qualify for a PSD permit, major stationary sources must comply with “best available control technology” (BACT) standards. Even part from any investments required for BACT compliance, the PSD permitting process is costly and time-consuming. In 2007, each permit on average cost $125,120 and 866 burden hours for a source to obtain. No small business could operate subject to the PSD administrative burden.

So NIMBY forces must be licking their chops at the prospect that EPA Administrator Lisa Jackson plans on April 30 to issue an “endangerment finding” for GHGs. An endangerment finding  is the prerequisite to establishing GHG emission standards for new motor vehicles and, thus, the critical first step to making CO2 a CAA-regulated “air pollutant.” 

When and if EPA regulates CO2, expect a surge of litigation demanding that EPA impose PSD and BACT requirements on developers proposing to build or renovate big box stores, strip malls, fast-food restaurants, or other projects NIMBYites deem undesirable or contrary to “smart growth.”

Bottom line: Applying PSD and BACT to CO2–the inexorable consequence of establishing vehicular GHG emission standards–will turn the CAA into a gigantic Anti-Stimulus package. Is Team Obama paying attention?

Support for Stimulus Collapses Internationally

by Iain Murray on February 4, 2009 · 5 comments

in Deregulate to Stimulate, Economy, International, Stimulus to Nowhere

Rasmussen reports that support for the borrow-and-spend plan is falling rapidly:

The latest Rasmussen Reports national telephone survey found that 37% favor the legislation, 43% are opposed, and 20% are not sure.

Two weeks ago, 45% supported the plan. Last week, 42% supported it.

Opposition has grown from 34% two weeks ago to 39% last week and 43% today.

Interestingly, only 27% of independents support the package, indicating that President Obama would have to spend a lot of his political capital to turn them around.

Meanwhile, across the pond, support for British Prime Minister Gordon Brown’s similar stimulus package has also collapsed. In a poll of voters in the important “marginal” constituencies, where British elections are won and lost,

When asked about the stimulus measures adopted by Labour, 29% think they won’t make any difference and a further 35% say the difference made is not justified by the cost.

The Rasmussen poll also reveals that a tax-cuts only “stimulus” plan is more popular than the spending-heavy plan. It is a shame that the pollsters won’t measure support for a liberate-to-stimulate plan focused on reducing government-imposed barriers to economic activity. Cut red tape first, taxes second and you’ll be on your way to a cost-free package that genuinely deserves the label of stimulus.

The Smart Way to Provide Power

by Iain Murray on February 3, 2009 · 1 comment

in Deregulate to Stimulate, Economy, Energy, Environment, Regulation

It’s not often I disagree with Ron Bailey, but his article about the “Smart Grid” today glosses over the main reason why electric companies aren’t investing in it now.

It’s not because they’ll be selling less electricity and that means reduced profits. One of the main points about a smart grid means that you can charge more when there is a strain on the system caused by peaking and less when there isn’t. So your income stream takes on a different character. Yes, people tend to use less electricity on the whole, but this is made up for by the fact that you don’t have to generate extra electricity to supply the concentrated demand, and you are getting more revenue for electricity you generated that would otherwise be wasted. Most companies would prefer this, but there’s a lot of regulation out there, aimed at keeping prices “fair,” that prevents it. Why build a grid if regulation prevents you from utilizing its main benefit?

Moreover, there are massive regulatory barriers to construction. The presence of NEPA requirements, for example, which provide a pretext for environmental organizations to bog new infrastructure projects down in court action as well as red tape. That is one reason why three former California governors just complained about environmental regulations stymieing infrastructure projects.

There are two ways for government to incentivize investment in a smart grid. One way is to pony up taxpayer cash, to cover the costs of the regulations it has imposed. The other is to suspend or get rid of those regulations – and then they won’t have to take money out of our pockets (and our children’s pockets). Liberate is the best way to stimulate.

Alex Tabarrok has more on the reasons why grid upgrades just aren’t happening. See also here (this is not an endorsement of all those policies).