National Association of Manufacturers study outlines EPA-induced costs

A new study from the National Association of Manufacturers finds major new U.S. Environmental Protection Agency rules could cost manufacturers hundreds of billions of dollars and eliminate millions of American jobs, noted the Republican majority on the House Energy and Commerce Committee in a Nov. 30 statement.

The NAM report analyzes the cumulative cost of new major EPA rules affecting the nation’s power sector, including the Utility Maximum Achievable Control Technology (MACT) Rule, the Boiler MACT Rule, the Coal Ash Rule, the Coal Combustion Residuals Rule, the Cooling Water Intake Structures Rule, the Cross-State Air Pollution Rule and the anticipated new National Ambient Air Quality Standards for Ozone.

The report finds compliance costs for the six regulations could total up to $111.2bn by EPA estimates and up to $138.2bn by industry estimates. Total capital expenditures are projected at $174.6bn to $539.3bn according to EPA data, and from $404.5bn to $884.5bn according to industry.

“EPA’s expansion of red tape is strangling job creators and American consumers at a time when they can least afford it. This report offers further evidence that EPA’s policies will hinder our economic recovery and the growth of American manufacturing,” said Energy and Power Subcommittee Chairman Ed Whitfield, R-Ky. “Rather than burdening American businesses with high compliance costs and uncertainty, we need commonsense policies that will foster investment and help bring manufacturing jobs back to America.”

The GOP majority on the Energy and Commerce Committee, in an effort to beat back EPA, has been advancing legislation like the Energy Tax Prevention Act, the TRAIN Act, the EPA Regulatory Relief Act, and the Coal Residuals Reuse and Management Act.

Study cites impact of higher electricity prices on the economy

“One immediate and incontrovertible impact of these new regulations would be an increase in electricity prices,” said the NAM study. “Utilities would incur costs of up to $142 billion in the short run to comply with only three of the dozens of EPA rules and would likely pass most of these costs through to their customers in the form of higher prices. Residential consumers would be affected directly, but electricity is also an intermediate good for business. It is consumed at the commercial and industrial levels in the course of producing and providing goods and services. As consumers of more than 28 percent of electricity production, manufacturers in the United States would see production costs rise. That would lead to higher prices of manufactured goods and services, resulting in lost sales at home and abroad, which, subsequently, would encourage layoffs and discourage new hiring and investment, render exports less competitive and ultimately suppress U.S. GDP.”

Given the impact of potential costs, it would be prudent for policymakers and the public to take a serious look at the assumptions and analyses supporting the EPA’s assessments and compare those to recent industry studies, the study said. “In light of the precarious state of the U.S. economy and national goals for U.S. businesses to invest, hire and double the value of export sales by the end of 2014, burdening the economy with costly regulations in pursuit of highly uncertain benefits would further discourage economic growth with little or no potential public health gain,” it added.

The study said that several factors account for the differences between the industry’s and the EPA’s estimates of costs of compliance with these rules. For instance, it said, compared to industry estimates, the EPA:

  • includes more aggressive assumptions about the capacity of the industry to comply;
  • underestimates the true likely impact of the financial burden on the industry by assuming long-term amortization of capital requirements;
  • excludes real compliance costs attributed to compliance with other rules when those rules remain in doubt or under legal risk; and
  • fails to account for the costs of its regulations on the broader econom.
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.