Policy Documents

Economy Derailed: State-by-State Impacts of the EPA Regulatory Train Wreck

April 18, 2012

The U.S. Environmental Protection Agency (EPA) has begun a war on the American standard of living. During the past couple of years, the Agency has undertaken the most expansive regulatory assault in history on the production and distribution of affordable and reliable energy. As of 2010, EPA regulations promulgated under the Obama Administration had already surpassed the Agency’s regulatory output in the entire first term of Bill Clinton, which, as the Wall Street Journal notes, was a period in which “the EPA had just been handed broad new powers” under the 1990 revisions to the Clean Air Act. With 30 major regulations and more than 170 policy rules still being finalized in the next five years, the extent of EPA actions could surpass its entire 40-
year history of regulation.

Numerous regulations, all proposed within a short timeframe, have created regulatory chaos and uncertainty, stagnating investment as the economy attempts to recover from recession. These regulations are causing the shutdown of power plants across the nation, forcing electricity generation off of coal, destroying jobs, raising energy costs, and decreasing reliability.

Economy Derailed: State-by-State Impacts of the EPA’s Regulatory Train Wreck sheds light on a few of the more onerous regulations that will hit all Americans in the next few years, and on some of the impacts that the nation is already experiencing. This report covers the economic effects of the Utility MACT Rule (also known as the MATS Rule), the Boiler MACT Rule, the Cross-State Air Pollution Rule, coal ash residuals regulation, cooling water intake regulation, potential EPA regulation of hydraulic fracturing, ozone regulation, restrictions and regulations on mining, and greenhouse gas regulations.

Major findings in the report include:

• Environmental quality in the United States continues to improve, despite the doomsday rhetoric coming from the EPA and environmental groups. Mercury, carbon monoxide, ozone, lead, nitrogen oxide, particulates, fine particulates, and sulfur dioxide have all decreased in both ambient concentrations in the atmosphere and in total emissions.

• Affordable and reliable energy has directly led to a high standard of living by allowing Americans to devote more resources to health-promoting activities such as diet, health care, and exercise rather than heating, cooling, and transportation costs. By contrast, unnecessary and burdensome environmental regulations do have negative health impacts that result from income being diverted away from health-promoting expenditures toward energy costs. These impacts are far worse for lower-income populations, because energy makes
up a larger proportion of their budget.

• The Utility MACT (MATS) Rule could require retrofits for up to 753 electricity-generating units, and up to 15 gigawatts of electricity could be forced into early retirement. The standards are so stringent that even recently permitted plants employing the best available technology cannot meet them, and no new coal plants are likely to be built. Although at odds with just about every independent cost estimate, the EPA’s estimate of annual cost is approximately $11 billion, and its estimate of annual health benefits from the reduction in mercury is only $6 million.

• The Boiler MACT Rule risks nearly 800,000 jobs nationwide,and the EPA has not estimated a single health benefit for reducing the pollutants that this rule was intended to address.

• The Cross-State Air Pollution Rule could threaten up to 7 gigawatts of electricity generation with early retirement, affecting reliability and affordability of electricity. The EPA estimates that the rule could cost $2.4 billion annually, yet the newest data reveals that the CSAPR may not even be necessary, because emissions have declined during the past few years.

• The regulation of coal combustion residues will have significant consequences on electricity generation and a robust recycling industry in the United States. The EPA estimates the average regulatory cost, for the next 50 years, to be almost $1.5 billion per year. Other estimates have found that the price tag could run up to $20 billion annually. In addition, states themselves already have regulatory structures in place, meaning that EPA action would be a redundant, burdensome layer of regulation.

• Cooling water intake regulation could affect more than 1,000 coal, oil steam, and gas steam generating units (totaling 252 gigawatts) as well as roughly one third of all installed nuclear capacity (approximately 60 gigawatts). This could threaten up to 41 gigawatts with early retirement, and would also affect electric reliability across the country.

• The further tightening of ozone standards could mean that approximately 85 percent of the nation would be in nonattainment of a strict standard that has already been deemed unnecessary. By 2020, the standard could threaten up to 7.3 million jobs.

• The EPA has begun a war against coal mining by halting alreadyapproved permits, holding back and unnecessarily delaying permits, and even revoking previously issued permits. The closure of coal plants resulting merely from EPA air quality regulations puts 27,000 coal mining jobs at risk.

• Estimates show that the regulation of greenhouse gases will lead to significant increases in energy costs, with increases of 50 percent for gasoline and residential electricity prices, 75 percent for industrial electricity prices and residential natural gas prices, and 600 percent for electric utility coal prices. These costs come with little to no environmental benefit.

• State economic impacts of the EPA train wreck vary depending upon the percentage of the state’s electricity derived from coal, whether coal mining operations exist within the state, and the makeup of the state’s industries. The top ten states impacted by the EPA regulatory train wreck are Illinois, West Virginia, Ohio, Alabama, Michigan, Indiana, Pennsylvania, Tennessee, Kentucky, and North Carolina.

• A broad and diverse coalition opposes EPA overreach. In sum, 32 current and former governors and lieutenant governors, 27 groups of state and local officials, 16 labor unions, 17 state legislative bodies, 10 state agencies, and 57 trade associations have openly voiced opposition to the escalating EPA expansion. This coalition represents millions of workers, thousands of state officials, tens of thousands of companies, more than 3,000 counties, more than 19,000 cities, villages, and towns, and thousands of state legislators across the country.

Given all of this EPA regulatory activity, it is essential for concerned state legislators to get involved and stop the economic derailment. This report outlines some of the available comprehensive and issue-specific legislative tools, which include expressing strong opposition to the EPA’s regulatory onslaught, enhancing regulatory review, introducing bills to assert state sovereignty, and providing guidelines for getting states on the right side of the ongoing legal and public relations battles.

While this report offers a snapshot of EPA regulatory activity and the ensuing economic damage, the regulatory landscape is constantly shifting. Ongoing updates to the regulations detailed in this report are available at www.regulatorytrainwreck.com.