Mr. President, I rise today to speak about the economic effect of regulations coming out of the Environmental Protection Agency (EPA) on the energy sector – in particular, on fossil fuels and coal. The State of Wyoming is the largest coal producing state in the nation. Coal represents almost 40% of our share of electricity generation – it is abundant, affordable, clean with stockpile-ability, and cannot be replaced through regulatory actions. But, this Administration continues to try and regulate coal out of existence.
In 2012, the EPA finalized a standard that requires a strict reduction in air emissions from electric generating utilities. It is known as the Mercury and Air Toxics Standards (MATS) rule, and like many of the rules coming from the EPA, the costs of this regulation are great and the benefits are limited. EPA estimates that the rule will create between $500,000 and $6 million in benefits related to mercury reductions at a cost of nearly $10 billion annually for implementation of the rule. The cost will be to customers – costs are allowed to be recouped.
Three years after the rule was finalized, the Supreme Court has ruled the EPA should have considered costs before determining to regulate mercury from fossil fuel-fired power plants. The cost/benefit ratio, assuming the EPA’s best case scenario, is approximately 1,600 to 1. The Court’s majority opinion called this an overreach and stated: “The Agency gave cost no thought at all, because it considered cost irrelevant to its initial decision to regulate.”
Since these standards began to take effect in April, utilities have already retired or plan to retire coal-fired plants to comply with cuts in emissions. The courts did not issue a stay on implementation, so companies began installing the mandated controls to meet the deadline for compliance. These costs will be passed on to consumers and will result in higher electricity prices. An average household could see their electricity bills go up by $400 per year – a cost which will disproportionately impact those with lower, fixed incomes like many older Americans.
In 2012, Congress had a chance to use the Congressional Review Act to stop this devastating rule from moving forward. The Congressional Review Act gives Congress the ability to disapprove of rules that go beyond what Congress intended. It requires a simple majority for passage and was a legislative vehicle available to stop the Mercury Air Toxics rule from moving forward. Unfortunately, it was rejected by the Senate majority at the time. It wasn’t until this lawsuit, filed by state governors, was finally decided that the agency was called out for charging ahead with this disastrous rule without considering the consequences.
Ratepayers should not have to wait this long for the correct decision. Congress must stand up to this runaway agency. But we need to expand on our tools to fight governing by rulemaking. We need to increase accountability for and transparency in the federal regulatory process by requiring Congress approve all new major regulations. The Regulations From the Executive in Need of Scrutiny (REINS) Act would ensure the people’s representatives get a say in regulatory action effecting our nation’s economy. The presumption should not be deference to a federal agency attempting to implement a regulation, but to Congress and the states.
If enacted, the REINS Act would require an up-or-down vote by both houses of Congress before any executive branch rule or regulation with an annual economic impact of $100 million or more can be enacted. In the case of the Clean Power Plan, the costs are in the billions, so it would ensure Congress gets a say to stop the EPA from regulating coal out of business.
Additionally, the Environment and Public Works Committee has moved legislation, the Affordable Reliable Energy Now Act (ARENA), which would extend this proposed rule’s compliance dates pending final judicial review. That way, we don’t see premature plant closures that harm our grid reliability and make energy more expensive before even knowing if the rule is on good legal standing.
Both of these bills would give Congress additional tools to fight executive overreach, and the House has already passed legislation similar to Affordable Reliable Energy Now Act. We must do what we can, because there’s no doubt the Mercury Air Toxics regulation will continue to be challenged: for its requirements of “outside the fenceline” changes, its coordination with existing source performance standards, the implantation of federal standards should states not submit plans, or on the scientific basis if the status quo contributes to the endangerment of public health. In fact, the White House has requested over $50 million to defend this rule in court.
And while the EPA ignores the costs, outside groups have projected 4-7 times the cost of the mercury regulations. The National Economics Research Associates found an annual compliance cost for Mercury Air Toxics ranging from $41-$73 billion, or up to $73,000 millions, as I like to put it – making the numbers feel real for those writing policy that effects consumer prices. It also shows states like Wyoming seeing double-digit increases in electricity prices.
Congress must ensure the EPA does not continue to act “unreasonably” by not considering the cost of compliance before drafting carbon regulations. By requiring states to implement their own plans, the EPA is trying to skirt their responsibility to determine true costs. The EPA has not adequately considered the costs of the Clean Power Plan.
Fifteen percent of U.S. coal-generating capacity is already planned for retirement. Wyoming would be forced to prematurely close four additional coal-fired power plants under this rule. Yet the EPA asserts that since states determine compliance, the remaining useful life of coal powered units prematurely shutting down need not be considered.
Governors have already began telling the EPA that they will not be able to submit plans to meet the proposed standards, so Administrator McCarthy has threatened a federal implementation plan if states do not comply. A federal implementation plan is a federal regulatory action and needs to consider the costs of premature plant shutdowns and consumer energy prices prior to being finalized. You cannot bypass these consideration by placing the onus on the states first.
Congress also needs to empower states to oppose federal regulations that hurt their constituencies. As Wyoming’s Governor Matt Mead’s commented on MATS: “The EPA does not have the legal authority to propose, finalize or enforce this Proposal. The EPA has introduced a Proposal that functionally and structurally hamstring the energy and electricity sectors, driving up electric prices. It will burden our nation’s economic security and prosperity with almost no environmental or health benefits.” The State of Wyoming is considering its legal options once the rule is finalized.
I have proposed an amendment to the Constitution which would give states the ability to repeal federal laws and regulations when ratified by two-thirds of their legislatures. This amendment stands up for states’ rights and gives them another option, other than the court system, to find solutions to regulatory problems. Ultimately, the states know what is best for them and it is time to shift the power back into their hands. Even when federal regulations may have good intentions, they can create situations in which they cause more harm than good.
Unfortunately, the regulatory process is skewed in favor of the Administration. We need to find a way to empower Congress and the states – those most accountable to the voters, to keep runaway agencies in check. Or we’ll continue to see regulations that impede our economy, by directly hurting the energy industry – which hurts individuals and business ratepayers, costs jobs, and is ultimately a price paid by consumers.
Thank you, Mr. President. I yield the floor.