Viewing blog posts written by Gino DiCaro

California shoulders two leviathan programs as October closes

Posted by Gino DiCaro, VP, Communications on Oct. 29, 2010

I'll resist the simple trick-or-treat joke here, mostly because these two new costly programs require a very serious tone.

Today the California Air Resources Board released its proposed cap-and-trade program. On Monday the Department of Toxics and Substance Control tries to finalize the regulations for its Green Chemistry program. Both heap enormous new costs on our economy. The former creates large energy price increases. The latter will increase costs on consumer products that use any one of thousands of chemicals subject to review under disturbingly vague guidelines. This means prices will rise on virtually any product the DTSC chooses to focus on -- assuming you can still find the product in California.

Both programs will exist only in California, making the entire state even less competitive. In both cases, the programs are claimed to have at least neutral affects on our economy, although no proof has been offered. In the case of the cap-and-trade program, it has been held up as an economy and job booster. This is the first time I've seen government regulation used as an overall economic development strategy.

Both are well intended noble ideas but lack proper analysis to prove that either of the California-only programs are going in the right direction environmentally or economically. Both have only succeeded so far in creating grand press releases. The scientific rigor that must accompany such groundbreaking mandates, including an understanding of the costs of government regulation, has been non-existent.

The cap-n-trade program puts at risk California's enormous and country-leading energy efficiency gains by ensuring that new investments pop up in other states under less stringent environmental laws. This works against the original goal of AB 32 to reduce global warming emissions and it works against the 2.2 million unemployed Californians.  And on the subject of the cost of some of the technologies, Todd Woody of the New York Times summed up one technology yesterday:

"But this first wave (of solar farms) may very well be the last for a long time, according to industry executives. Without continued government incentives that vastly reduce the risks to investors, solar companies planning another dozen or so plants say they may not be able to raise enough capital to proceed."
The Green Chemistry program is basically asking consumers and employees to "trust us" with literally no independent review and an unsubstantiated rush to get the regulation implemented. By the time we know the consequences, the people writing the press releases will be gone. A number of leaders in green chemistry practices have warned the DTSC that their proposed rules are dangerously ambiguous and will have far-reaching effects beyond what is intended. An executive with Life Technologies -- a biotechnology tools company -- even testified before a Cal EPA hearing this week that the proposed green chemistry regulations threaten their H1N1 detection kits, forensic crime kits and tools to determine genetic diseases.

On Thursday of this week the Little Hoover Commission conducted its first hearing to begin tackling California's overall system for making regulations. Coming out of that hearing was the utmost concern that California passes laws, immediately gives agencies free reign with no accountability to make rules (and fees), and provides limited ability to look back at the effectiveness of these regulations. Our global warming law, AB 32, does provide the Governor with the ability to suspend for up to a year but it is simply not enough.

The key is independent peer review as these regulations become reality. Why are we so afraid of this? Cost-effectiveness and technological feasibility must be our beacon.

I submit these two leviathan regulatory programs, among many others, for the state to dissect as they take on our regulatory rule making and accountability process.

These two programs, as written, basically slam the door on many of the investments that California needs so badly. We just need to slow down and get them right.

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