Reg Problem

Posted on August 26, 2003 | Type: In the News
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There seems to be plenty of finger-pointing going on, but ultimately, little is being said about the actual reason for the current gas shortage in Phoenix. Everyone seems to be aware that a pipeline broke and we have to wait for federal approval before gas can begin flowing. But, isn't anyone wondering why this problem is confined to the Phoenix metropolitan area?

The major reason for our fuel shortage is a result of changes to the Clean Air Act in 1990. Specifically, the changes included requiring the use of reformulated gasoline (RFG) in "nonattainment" areas. Our metropolitan region is such an area. Thus, in an effort to avoid losing transportation funding, state laws were passed and we were forced to adopt measures which included the use of oxygenated gas.

Oxygenates in gasoline include MTBE (Methyl Tertiary-Butyl Ether) and ethanol. The use of such oxygenated fuels to improve air quality, however, is a dubious prospect at best. A 1997 study by the White House National Science and Technology Council and a more recent study by the National Research Council both found that oxygenated fuels are less effective in reducing pollution and smog than previously believed. Such fuels are also not as readily available as standard gasoline. Because they are scarcer and more expensive to make, they cost more at the pump.

Second, oxygenated fuels are not as efficient as standard fuel. Thus, consumers are forced to buy and use more gasoline because of lower fuel economy. Third, there have been serious health issues linked to the use of MTBE in gasoline. These concerns include contamination of ground water supplies.

Even embattled California Governor Gray Davis recognized the problems associated with the use of oxygenated fuels. In 1999, he issued an executive order requiring phaseout of MTBE by the end of 2002. Unfortunately, the federal government denied California's request for a waiver from the federal requirements. Ultimately, Governor Davis sued the Environmental Protection Agency (EPA) in order to block the use of reformulated gasoline. Just last month, the Ninth Circuit Court of Appeals remanded the case back to the district court to determine whether the EPA abused its discretion in refusing to consider a waiver.

The refusal of the EPA to consider any reasonable alternatives should not be a shock to anyone familiar with the agency. It is an agency with over 17,000 employees and since its inception in 1970, the majority of administrators and assistant administrators have been lawyers. Accordingly, it has promulgated thousands of pages of regulations and "guidance" documents. The regulations alone create stack of papers two feet high.

Not surprisingly, the public wants an answer. Arizona Governor Janet Napolitano has even suggested "price gouging" statutes. But economists largely concur that such price controls are a bad idea, and in any case, they do not address the larger problem. Instead, our elected officials should focus their energy on necessary changes in the EPA.

First, the ability of the EPA to promulgate or issue regulations should be greatly curtailed. This can be done by requiring that every regulation be approved by a vote of Congress before its final approval. This ensures that legislators, who are accountable to voters, are ultimately responsible for making decisions, as opposed to federal bureaucrats.

Second, the EPA should be required to allow states to "opt-out" or receive waivers from environmental requirements. As is the case in welfare reform, states should be allowed to come up with innovative or creative methods for solving local problems. If temporary waivers are necessary, the EPA should be required to authorize such waivers in hours, not days or weeks. In the current shortage, such an approval would have resulted in gas flowing more quickly into the valley.

Ultimately, EPA-imposed regulations on states and localities are another example of regulatory delegation gone awry. Congress should be reminded that broad delegations of power to federal agencies are constitutionally suspect and insulate unelected bureaucrats from accountability. As the current gas shortage illustrates, when an unaccountable federal agency imposes its will on a state, there are often unintended consequences. Just ask anyone waiting in line for gas.

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