source:  lewrockwell

By James T. Moodey

July 1, 2024

Thank you to the Supreme Court for overturning Chevron deference which allowed our administrative state to determine laws, a job that should rest with the courts or Congress. However, the decision is about thirty years too late. We lost most of our manufacturing to China, because of Chevron deference.  This is how that happened:Murray N. RothbardBest Price: $3.44Buy New $8.95(as of 07:55 UTC – Details)

California formed our nation’s first clean-air district in the Los Angeles basin, the South Coast Air Quality Management District (SCAQMD). Smog is created by cars, trucks, and planes which are regulated by the Federal Clean Air Act and the California Air Resources Board (CARB). The new district had no jurisdiction over smog.

Our significant progress in reducing smog is not the result of CARB’s taxes and regulations and not from anything the SCAQMD has done. The progress is almost entirely due to the catalytic converter which was the invention of an oil company engineer.

SCAQMD with hundreds of employees had to vilify something other than smog to justify their existence and funding. Their successful ruse was to vilify the trace molecules of nitrogen in natural gas, which are harmless, but the public did not generally know that. At the time, the district admitted publicly that carbon dioxide is harmless.

They chose to regulate factories that use clean burning natural gas. Residences burn far more natural gas than factories, but few complained when the SCAQMD wrote rules to regulate factories.

These bellwether bureaucrats began by writing rules that required annual fees to operate machinery. They wrote any rules they wanted with no oversight or approval of the legislature. They granted themselves police power to enforce the rules and commonly issued $5,000 enforcement fines.

SCAQMD had written 1,145 rules when they wrote the most destructive regulation ever written – cap and trade. It was rule 1,146, which required natural gas measurement, layered with the RECLAIM rule which added the cap-and-trade feature. It was nicknamed “cap and trade” some years later.Rothbard, MurrayBest Price: $13.62Buy New $17.28(as of 03:26 UTC – Details)

The rule required a 75 percent reduction of gas burned over five years. It was implemented on January 1, 1994. That week eight factories announced that they would close. What would you do if a regulation landed on your desk requiring you to reduce your only heat source by 75 percent over five years? The rule applied to factories with equipment that burned 10-million BTUs per hour or more. That list was 466 of our largest factories, out of approximately 1,800 factories in the basin.

Each factory was given a target reduction of about 15 percent each year. My company was chosen for accuracy compliance with the rule. The factories had to have us test their gas physics instruments once per year. A factory might have four boilers (large water heaters), and shut down boiler number four to comply with the first-year target. As the years progressed, factories shut down more and more gas equipment until they were forced to close.

As we approached the end of the five years, in 1998, the SCAQMD decided to add a new list of smaller factories that use 5-million BTU equipment. This, ostensibly, was to extend careers of the nearly 800 employees at the air quality district. They did not stop. By 2001 they lowered the threshold all the way down to 75,000 BTUs (residential size), the smallest of factories. By the time I sold the interest in my company and quit counting in 2006, just over 1,200 of roughly 1,800 factories had closed.

Old boilers, heat-treat equipment, furnaces, and ovens are brittle and a risk to move. Most factories tried to hang on while they made other plans; but in the end, almost all of them simply closed and sold their machinery to Chinese import/export representatives. The Chinese observed our factories closing and began to make offers for the manufacturing equipment. They did not care about condition of the equipment, and they paid top dollar.

Chinese factory owners were anxious to export to the U.S. and what better plan was there than to buy the machinery to make what Americans were already buying?

The Los Angeles basin had been the largest manufacturing market in the country, roughly three times the size of the auto-industry Rust Belt. The 1994 cap-and-trade rule was the reason we now buy so much from China.

Progressives were so inspired by their success of regulating nitrogen at our factories that they decided maybe they could get away with regulating the other remaining molecule of natural gas exhaust that they had formerly declared to be harmless: carbon dioxide.

This is when and why progressives stopped talking about smog. They knew the public would know carbon dioxide is harmless, so they prevaricated that it causes global warming, and that global warming is dangerous.

The author’s book The Ladder Out of Poverty has a chapter about the cap-and-trade process and details the extensive economic damage it caused by reducing natural gas at our factories. He describes how no jobs were outsourced to China, all they wanted was our machinery (Ch. 4). His Weights and Measures company was chosen to be the sole source for compliance testing for that rule.