On Friday (September 23, 2011), the House passed a bill that would block two of the administration’s flagship Clean Air Act (CAA) regulations targeting coal-fired power plants. It would also establish a new Cabinet-level committee to examine the “cumulative and incremental impacts” of a dozen EPA actions affecting the electric power sector. The bill, known as the Transparency in Regulatory Analysis of Impacts on the Nation (TRAIN) Act (H.R. 2401), sponsored by Rep. John Sullivan (R-Okla.), passed by a vote of 233-180.

The TRAIN Act declares that two EPA regulations “shall be of no force and effect”: the Cross State Air Pollution Rule (CSAPR), finalized in August, and maximum available control technology standards regulations for hazardous air pollutants from electric generating units (Utility MACT Rule), finalized in May. EPA would be prohibited from promulgating a new cross state air pollution rule until three years after the multi-agency committee submits its regulatory impacts report to Congress (due August 1, 2012). EPA would also be prohibited from promulgating new hazardous air pollutant regulations for electric generating units until one year after the committee submits its report.

The inter-agency committee would assess the cumulative and incremental impacts of various EPA actions on U.S. global economic competitiveness; national, state, and regional electricity and fuel prices; national, state, and regional employment; and the reliability and adequacy of U.S. bulk power supply.

EPA actions to be assessed include two Bush administration rules — the 2005 Clean Air Interstate Rule (CAIR) and 2008 national ambient air quality standards (NAAQS) for ozone — plus several Obama administration regulations: Boiler MACT Rule, Utility MACT Rule, Coal Combustion Residuals Rule, Primary (health-based) national ambient air quality standard (NAAQS) for Sulfur Dioxide, Primary NAAQS for Nitrogen Oxides, Cement Plants MACT Rule, New Source Performance Standards (NSPS) addressing greenhouse gases, New Source Review pre-construction permitting requirements addressing greenhouse gases, Title V operating permit requirements addressing greenhouse gases, any rule establishing or modifying a NAAQS (such as new standards for ozone), and any CAA rule addressing motor fuels.

The TRAIN Act gets its name from the claim, voiced by the agency’s critics, that EPA is engineering a “regulatory train wreck.” By imposing too many new regulatory requirements on coal-fired power plants within too short a time frame, critics contend, EPA is creating a high risk of service disruptions, premature unit retirements, and increases in electric rates, which in turn will lead to job and GDP losses.

The American Legislative Exchange Council’s (ALEC) was the first to make a detailed case that EPA is on a disaster course, publishing EPA’s Regulatory Train Wreck: Strategies for State Legislators in February 2011.  The Congressional Research Service, in EPA’s Regulation of Coal-Fired Power: Is a Train Wreck Coming? (August 8, 2011), came to a different conclusion, arguing that although EPA’s rules would accelerate the retirement of old inefficient coal plants, electric supply and reliability would not be affected and consumer price impacts would be moderate.

In a report published last week, Potential Impacts of EPA Air, Coal Combustion Residuals, and Cooling Water Regulations, NERA Economic Consulting argues that EPA’s Cross State Air Pollution, Utility MACT, Coal Combustion Residuals, and Cooling Water Rules would:

• Lead to the premature retirement of 39 gigawatts of coal-fired capacity in 2015 (equivalent to 12% of U.S. coal-fired capacity in 2010).
• Increase electric-sector compliance and capital expenditure costs by $127 billion from 2012 through 2020.
• Increase natural gas generation by 19.7% and natural gas prices by 10.7%, which in turn would increase industrial, commercial, and residential natural gas costs by $58 billion over the 2012-2020 period.
• Decrease net employment by 183,000 jobs per year during 2012-2020.
• Decrease cumulative GDP by $190 billion during 2012-2020.

After Friday’s vote in the House, Greenwire (subscription required) summed up the political state of play:

With the Senate controlled by Democrats and the White House promising a veto, the TRAIN Act is unlikely to ever become law. But it puts pressure on President Obama, who recently told EPA to wait on stricter smog standards because of concerns about the economy.

House Republicans will use this fall’s floor agenda to keep fighting the agency’s rules. In two weeks, the House is scheduled to vote on bills that would overturn EPA’s new limits on mercury and other toxic emissions from industrial boilers and cement kilns.

“The ozone rule is just the tip of the regulatory iceberg,” Energy and Commerce Chairman Fred Upton (R-Mich.) wrote in an op-ed published today in the conservative journal Human Events. “If the president is really serious about job creation, he must do much more to rein in EPA’s overreach.”

File this one under regulatory trainwreck. NERA Economic Consulting has just published a study on the combined economic impacts of EPA’s Clean Air Transport (CATR) Rule and Utility Maximum Available Control Technology (MACT) Rule.

NERA estimates the rules will impose $184 billion in cumulative costs on the electricity sector, increase average U.S. electricity prices in 2016 by 12%, and reduce net U.S. employment by 1.4 million jobsduring 2013-2020.

“It is important to note that this report only covers CATR and Utility MACT,” comments Brandon Plank of the Republic Policy Committee. ”It does not include the costs of EPA’s greenhouse gas regulations under the Clean Air Act, New Source Performance Standards for refineries and utilities, ozone and particulate matter standards, reclassification of coal ash, etc.” (See chart below.)

Here is the NERA study’s summary of key results:

• Coal unit retirements would increase by about 48 GW
• Electricity sector costs would increase by $184 billion (present value over 2011-2030 in 2010$) or $17.8 billion per year
  • Includes coal unit compliance costs (including $72 billion in overnight capital costs), fuel price impacts, and costs of replacement energy and capacity
• Coal-fired generation in 2016 would decrease by about 13% and electricity sector coal demand in 2016 would decrease by about 10%
• Natural gas-fired generation in 2016 would increase by about 26% and Henry Hub natural gas prices 2016 would increase by about 17%
  • Increased natural gas prices would increase natural gas expenditures by residential, commercial, and industrial sectors by $85 billion (present value over 2011-2030 in 2010$) or $8.2 billion per year
• Average U.S. retail electricity prices in 2016 would increase by about 12%, with regional increases as much as about 24%
• Net employment in the U.S. would be reduced by more than 1.4 million job-years over the 2013 – 2020 period, with sector losses outnumbering sector gains by more than 4 to 1.