New Report: States Shoulder Brunt of Environmental Regulatory Costs

Wednesday, August 17, 2016 - 10:30am

U.S. Chamber Study Chronicles the Growing Burden of Unfunded EPA Mandates

WASHINGTON, D.C.—The U.S. Chamber of Commerce today released a report, titled “The Growing Burden of EPA Unfunded Mandates on the States,” examining the current challenge U.S. states face as they work to comply with and implement myriad new environmental regulations. States administer 96.5% of all federal delegated environmental programs, but the report found that federal grants to states only fund 28% of the amount needed to run the programs.

“Instead of being the system of cooperative federalism that Congress intended, the current relationship between the Environmental Protection Agency and the states has become one-sided, with the federal government imposing its will,” said William Kovacs, U.S. Chamber senior vice president of Environment, Technology and Regulatory Affairs. “EPA and the Obama administration have introduced some of the most expensive regulations in our country’s history, and then left state and local officials with the tab.”

Within the last year, the EPA has finalized rules regulating the electricity sector, vast portions of U.S. land and water through the Waters of the United States rule, and a new Ozone rule that determines where new projects and facilities can be built. A heavy burden of implementing and enforcing these regulations fall to state governments with little financial help.

The report even found that grant assistance to states declined 29% between 2004 and 2015, while the cost of EPA regulatory mandates increased 35%.  

Arkansas Department of Environmental Quality Director Becky Keogh recently testified before a Senate Environment and Public Works Committee hearing, saying that “the uniquely American cooperative-federalism model” has been converted into a “coercive-federalism scheme, and the state role is now less partner and more pawn.”

To help alleviate this problem and prevent it in the future, the U.S. Chamber recommends redefining the term “mandate” to better track the impact on the states; requiring agencies to perform an analysis of probable unfunded mandate impacts; passing the Regulatory Accountability Act of 2015, which would improve the transparency of regulations; enacting the Sunshine and Regulatory Decrees and Settlements Act, which would ensure states are consulted before finalizing regulatory mandates; and several other actions outlined in the report.  

This study is the eighth in the Chamber’s series of regulatory reports aimed at holding government accountable for an increasingly complex web of regulations. To read the full study—which includes data obtained from 30 states and the EPA—please visit our website www.uschamber.com/etra.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

To conduct this research, the U.S. Chamber petitioned through open record requests all 50 states for a breakdown of their environmental agency expenditures and the associated grant funding they received from the EPA. In total, 30 states responded, in addition to the EPA. The data they provided is available in the study.