Clean air, water rules spark different responses

[November 29, 2011]  WASHINGTON (AP) -- Large and small companies have told Republican-led congressional committees what the party wants to hear: dire predictions of plant closings and layoffs if the Obama administration succeeds with plans to further curb air and water pollution.

But their message to financial regulators and investors conveys less gloom and certainty.

The administration itself has clouded the picture by withdrawing or postponing some of the environmental initiatives that industry labeled as being among the most onerous.

Still, Republicans plan to make what they say is regulatory overreach a 2012 campaign issue, taking aim at President Barack Obama, congressional Democrats and an aggressive Environmental Protection Agency.

"Republicans will be talking to voters this campaign season about how to keep Washington out of the way, so that job creators can feel confident again to create jobs for Americans," said Joanna Burgos, a spokeswoman for the House Republican campaign organization.

The Associated Press compared the companies' congressional testimony to company reports submitted to the Securities and Exchange Commission. The reports to the SEC consistently said the impact of environmental proposals is unknown or would not cause serious financial harm to a firm's finances.

Companies can legitimately argue that their less gloomy SEC filings are correct, since most of the tougher anti-pollution proposals have not been finalized. And their officials' testimony before congressional committees was sometimes on behalf of -- and written by -- trade associations, a perspective that can differ from an individual company's view.

But the disparity in the messages shows that in a political environment, business has no misgivings about describing potential economic horror stories to lawmakers.

"As an industry, we have said this before, we face a potential regulatory train wreck," Anthony Earley Jr., then the executive chairman of DTE Energy in Michigan, told a House committee on April 15. "Without the right policy, we could be headed for disaster."

The severe economic consequences, he said, would be devastating to the electric utility's customers, especially Detroit residents who "simply cannot afford" higher rates.

Earley, who is now chairman and CEO of Pacific Gas & Electric Corp., said if the EPA had its way, coal-fired plants would be replaced with natural gas -- leading to a spike in gas prices. He said he was testifying for the electric industry, not just his company.

But in its quarterly report to the SEC, Detroit-based DTE, which serves 3 million utility customers in Michigan, said that it was "reviewing potential impacts of the proposed and recently finalized rules, but is not able to quantify the financial impact ... at this time."

Skiles Boyd, a DTE vice president for environmental issues, said in an interview that the testimony was meant to convey the potential economic hardship on ratepayers -- while the SEC report focused on the company's financial condition.

"It's two different subjects," he said.

Another congressional witness, Jim Pearce of chemical company FMC Corp., told a House hearing last Feb. 9: "The current U.S. approach to regulating greenhouse gases ... will lead U.S. natural soda ash producers to lose significant business to our offshore rivals...." Soda ash is used to produce glass, and is a major component of the company's business..

But in its annual report covering 2010 and submitted to the SEC 13 days after the testimony, the company said it was "premature to make any estimate of the costs of complying with un-enacted federal climate change legislation, or as yet un-implemented federal regulations in the United States." The Philadelphia-based company did not respond to a request for comment..

California Rep. Henry Waxman, the senior Democrat on the House Energy and Commerce Committee, said the SEC filings "show that the anti-regulation rhetoric in Washington is political hot air with little or no connection to reality."

House Republicans have conducted dozens of hearings, and passed more than a dozen bills to stop proposed environmental rules. So far, all the GOP bills have gone nowhere in the Democratic-run Senate.

"I will see to it, to the best of my ability, to try to stop everything," California Sen . Barbara Boxer, the Democratic chairman of the Senate's environment committee, vowed in reference to GOP legislation aimed at reining in the EPA. She predicted Republicans "will lose seats over this."

The Obama administration has reconsidered some of the environmental proposals in response to the drumbeat from business groups. In September, the president scrubbed a clean-air regulation that aimed to reduce health-threatening smog. Last May, EPA delayed indefinitely regulations to reduce toxic pollution from boilers and incinerators.

James Rubright, CEO of Rock-Tenn Co., a Norcross, Ga.-based producer of corrugated-and-consumer packaging, told a House panel in September that a variety of EPA, job safety and chemical security regulations would require "significant capital investment" -- money that "otherwise go to growth in manufacturing capacity and the attendant production of jobs."

Rubright conveyed a consulting firm's conclusion that EPA's original boiler proposal before the Obama administration withdrew it in May would have cost the forest products industry about $7 billion, and the packaging industry $6.8 billion.

Another industry study, he said, warned that original boiler rule would have placed 36 mills at risk and would have jeopardized more than 20,000 jobs in the pulp and paper industries -- about 18 percent of the work force.

But a month before his testimony- and three months after EPA withdrew its boiler proposal -- Rock-Tenn told the SEC that "future compliance with these environmental laws and regulations will not have a material adverse effect on our results or operations, financial condition or cash flows." The company did not respond to a request for comment.

[Associated Press; By LARRY MARGASAK]

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