[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
A REVIEW OF EPA'S REGULATORY ACTIVITY DURING THE OBAMA ADMINISTRATION:
ENERGY AND INDUSTRIAL SECTORS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND POWER
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
JULY 6, 2016
__________
Serial No. 114-156
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Chairman Emeritus Ranking Member
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania ELIOT L. ENGEL, New York
GREG WALDEN, Oregon GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington KATHY CASTOR, Florida
GREGG HARPER, Mississippi JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky PETER WELCH, Vermont
PETE OLSON, Texas BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
MIKE POMPEO, Kansas JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon
BILL JOHNSON, Ohio JOSEPH P. KENNEDY, III,
BILLY LONG, Missouri Massachusetts
RENEE L. ELLMERS, North Carolina TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
Subcommittee on Energy and Power
ED WHITFIELD, Kentucky
Chairman
PETE OLSON, Texas BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois JERRY McNERNEY, California
JOSEPH R. PITTS, Pennsylvania PAUL TONKO, New York
ROBERT E. LATTA, Ohio ELIOT L. ENGEL, New York
GREGG HARPER, Mississippi GENE GREEN, Texas
DAVID B. McKINLEY, West Virginia LOIS CAPPS, California
MIKE POMPEO, Kansas MICHAEL F. DOYLE, Pennsylvania
ADAM KINZINGER, Illinois KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia JOHN P. SARBANES, Maryland
BILL JOHNSON, Ohio PETER WELCH, Vermont
BILLY LONG, Missouri JOHN A. YARMUTH, Kentucky
RENEE L. ELLMERS, North Carolina DAVID LOEBSACK, Iowa
BILL FLORES, Texas FRANK PALLONE, Jr., New Jersey (ex
MARKWAYNE MULLIN, Oklahoma officio)
RICHARD HUDSON, North Carolina
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
(ii)
C O N T E N T S
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Page
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 2
Prepared statement........................................... 3
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 4
Hon. John Shimkus, a Representative in Congress from the State of
Illinois, opening statement.................................... 6
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement................................... 156
Witnesses
Janet McCabe, Acting Assistant Administrator, Office of Air and
Radiation, Environmental Protection Agency..................... 7
Prepared statement........................................... 9
Answers to submitted questions............................... 184
Travis Kavulla, President, National Association of Regulatory
Utility Commissioners, on Behalf of the National Association of
Regulatory Commissioners....................................... 45
Prepared statement........................................... 48
David Porter, Chairman, Railroad Commission of Texas............. 63
Prepared statement........................................... 65
Lynn D. Helms, Director, North Dakota Industrial Commission,
Department of Mineral Resources................................ 81
Prepared statement........................................... 83
Robert Weissman, President, Public Citizen....................... 101
Prepared statement........................................... 103
Charles D. McConnell, Executive Director, Energy and Environment
Initiative, Rice University.................................... 126
Prepared statement........................................... 128
Submitted Material
Letter of December 14, 2011, from Mr. Upton, et al., to Lisa
Jackson, Administrator, Environmental Protection Agency,
submitted by Mr. Griffith...................................... 158
Letter of February 3, 2012, from Gina McCarthty, Assistant
Administrator, Environmental Protection Agency, to Mr. Upton,
submitted by Mr. Griffith...................................... 162
Letter of May 4, 2012, from Arvin Ganesan, Associate
Administrator, Environmental Protection Agency, to Mr. Upton,
submitted by Mr. Griffith...................................... 178
Slide, ``Coal-fired Power Plants Planned and Under
Construction,'' Platts Database, energyxxi.org, September 2015,
submitted by Mr. Griffith...................................... 182
Analysis, ``Estimated Costs and Benefits of Proposed Cement
NESHAP,'' Environmental Protection Agency, submitted by Mr.
Griffith....................................................... 183
A REVIEW OF EPA'S REGULATORY ACTIVITY DURING THE OBAMA ADMINISTRATION:
ENERGY AND INDUSTRIAL SECTORS
----------
WEDNESDAY, JULY 6, 2016
House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:02 a.m., in
room 2322, Rayburn House Office Building, Hon. Ed Whitfield
(chairman of the subcommittee) presiding.
Members present: Representatives Whitfield, Olson, Barton,
Shimkus, Latta, Harper, McKinley, Kinzinger, Griffith, Johnson,
Long, Flores, Mullin, Rush, McNerney, Tonko, Engel, Green,
Castor, Welch, and Loebsack.
Staff present: Will Batson, Legislative Clerk, Energy and
Power; Mike Bloomquist, Deputy Staff Director; Allison Busbee,
Policy Coordinator, Energy and Power; Tom Hassenboehler, Chief
Counsel, Energy and Power; A.T. Johnston, Senior Policy
Advisor; Ben Lieberman, Counsel, Energy and Power; Brandon
Mooney, Professional Staff Member, Energy and Power; Mary
Neumayr, Senior Energy Counsel; Annelise Rickert, Legislative
Associate; Dan Schneider, Press Secretary; Peter Spencer,
Professional Staff Member, Oversight; Jean Fruci, Democratic
Energy and Environment Policy Advisor; Caitlin Haberman,
Democratic Professional Staff Member; Rick Kessler, Democratic
Senior Advisor and Staff Director, Energy and Environment; John
Marshall, Democratic Policy Coordinator; and Alexander Ratner,
Democratic Policy Analyst.
Mr. Whitfield. I'd like to call the hearing to order this
morning, and today's hearing is a review of EPA's regulatory
activity during the Obama administration in the energy/
industrial sector.
We'll have two panels of witnesses this morning. The first
one, of course, is Ms. McCabe, who is a frequent visitor to the
committee, and we welcome you again this morning, Ms. McCabe.
And then on our second panel I'll introduce each of those
witnesses when it comes time for them to give their opening
statement.
At this time, I would like to recognize myself for 5
minutes for an opening statement.
OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
During the almost 6 years that I have been chairman of this
subcommittee, we've had 40 hearings that have looked at various
EPA rules and proposals that affect or will affect the Nation's
energy and industrial sectors.
These are the critical sectors for ensuring our Nation's
economic productivity and prosperity. The costs and burdens of
EPA's unrelenting rulemaking upon these sectors have been a
constant concern.
We've seen the impact of these rules in scores of shuttered
coal-fired plants, the delayed and canceled projects, and the
destruction of thousands of jobs in communities dependent upon
this abundant energy resource.
But the impact of compliance costs is only part of the
story. Our hearing record, which reflects testimony from
Federal officials, State energy and environmental regulatory,
legal experts and economists, shows EPA's controversial and
extreme interpretations of its statutory authorities to
transform its role from that of environmental regulator to that
of the Nation's ultimate energy regulator.
In fact, on the climate change issues, the philosophy seems
to be that the end justifies the means, whether or not laws are
violated or not.
We see this first hand in the EPA's implementation of the
administration's climate change agenda, which is reflected in
what is already more than 100 greenhouse gas-related rules.
EPA's pursuit of greenhouse gas standards for the power
sector is a case in point. The Agency's new interpretation of
its authorities have led to a new source standard that
effectively prohibits the construction of power plants in the
United States that use the most advanced commercially proven
clean coal technologies, the kind being built today in Japan
and around the world.
In fact, Mr. Shimkus, Mr. Olson and I were in a plant in
Japan last week. Zero NOx emission, zero SOx emission,
operating, burning 3 million tons a year, cannot be built in
America.
The prospect of this kind of regulation combined with
utility MACT and related rules has undermined the
diversification of our Nation's future energy supply. The
Agency's assertion of new authorities to set energy policy is
even more troubling with EPA's existing source rule.
The so-called Clean Power Plan would effectively place EPA
in the driver's seat over the States and the Federal Energy
Regulatory Commission in transforming how electricity is
generated, transmitted and consumed in the United States, an
influence over State electricity systems never contemplated by
Congress when it adopted the Clean Air Act.
And given EPA's preferred reading of its authorities, there
is only increased influence over energy policy to come. EPA is
already setting greenhouse gas standards for new and existing
oil and natural gas production.
We have to ask what will be the next EPA interpretation of
its authority. The administration and EPA's Administrator admit
the goal is to reduce massively the use of fossil fuels. That's
the goal.
But that is not the purpose of the Clean Air Act. Congress
did not write the Clean Air Act to be the vehicle for taking
command of State energy planning, the efficient and economical
dispatch of electricity or the production of oil and gas.
Congress did not write the Clean Air Act to provide EPA
with the ability to create new regulatory powers and
authorities so it can transform the Nation's energy system.
Yet, this is exactly what the Agency is doing. And I might
add that Congress also rejected the idea of cap-and-trade once,
yet EPA is pushing a back door cap-and-trade policy without
congressional approval.
Under the Clean Power Plan, EPA has interpreted the Clean
Air Act to give itself the power to plan the resource mix of
the U.S. power sector.
EPA has created a de facto fuel and renewable energy
standard for America. EPA and the administration are emerged
and engaged in blatant favoritism.
For example, nuclear power plants receive no credit for
their continued contribution to carbon emission abatement and
wind energy by the Interior Department has been given a blanket
exemption from the Federal Migratory Bird Act and the Eagle
Protection Act.
And remember, BP was fined $100 million under the Migratory
Bird Act for the birds that were killed during the Gulf oil
spill. So this administration is engaged in favoritism as it
pursues its carbon future for America.
I look forward to the testimony of our witnesses today. I
would remind everyone that 27 States filed a lawsuit against
the Clean Power Plan, and the Supreme Court issued a stay.
And don't forget Larry Tribe, when he testified before this
committee, the constitutional lawyer from Harvard, said the
Clean Power Plan was like picking up the Constitution and
tearing it up.
[The prepared statement of Mr. Whitfield follows:]
Prepared statement of Hon. Ed Whitfield
When the Obama administration took office in early 2009,
Americans were struggling with the worst economic recession in
a generation.
There is no question that today many Americans continue to
struggle to make ends meet. And there's no question that during
this time period, EPA has continued to promulgate thousands of
pages of new regulatory requirements each year, with a number
of major rules imposing annual compliance costs measured in the
billions of dollars.
Current estimates put the total EPA's regulatory compliance
burdens, based on the Agency's own numbers, at more than $380
billion per year, or 2.1 percent of U.S. GDP. Heritage
Foundation researchers added up EPA's own estimates and
determined that annual costs to comply with EPA rules have
grown by more than $50 billion since 2009.
During my chairmanship, we have held 40 hearings that have
looked at various EPA rules and proposals that affect--or will
affect--the Nation's energy and industrial sectors. These are
the critical sectors for ensuring our Nation's economic
productivity and prosperity. The costs and burdens of EPA's
unrelenting rulemaking upon these sectors have been a constant
concern. We have seen the impacts of these rules in scores of
shuttered coal power plants, the delayed and cancelled
projects, and the destruction of thousands of jobs in
communities dependent upon this abundant energy resource.
But the impact of compliance costs is only part of the
story.
Our hearing record--which reflects testimony from Federal
officials, State energy and environmental regulators, legal
experts, and economists--shows EPA's highly controversial and
continuously evolving interpretations of its statutory
authorities to transform its role from that of a traditional
environmental regulator to that of the Nation's ultimate energy
regulator.
We see this firsthand in the EPA's implementation of the
administration's climate change agenda, which is reflected in
what is already more than 100 greenhouse gas related rules.
EPA's pursuit of greenhouse gas standards for the power sector
is a case in point.
The Agency's new interpretation of its authorities have led
to new source standards that effectively prohibit the
construction of power plants in the United States that use the
most advanced, commercially proven clean coal technologies--the
kind being built today in Japan and around the world. The
prospect of this regulation, combined with Utility MACT and
related rules, has undermined the diversification of our
Nation's future energy supply.
The Agency's assertion of new authorities to set energy
policy is even more troubling with EPA's existing source rules.
The so-called Clean Power Plan would effectively place the EPA
in the driver seat over the States and the Federal Energy
Regulatory Commission in transforming how electricity is
generated, transmitted, and consumed in the United States--an
influence over State electricity systems never contemplated by
Congress in the Clean Air Act.
And given EPA's preferred reading of its authorities, there
is only increased influence over energy policy to come. EPA is
already setting greenhouse gas standards for new and existing
oil and natural gas production. We have to ask, what will be
next under EPA's interpretation of its authorities?
The administration and EPA's Administrator admit the goal
is to reduce massively the use of fossil fuels--but that is not
the purpose of the Clean Air Act. Congress did not write the
Clean Air Act to be the vehicle for taking command of State
energy planning, the efficient and economical dispatch of
electricity, or the production of oil and gas.
Congress did not write the Clean Air Act to provide EPA
with the ability to create new regulatory powers and
authorities so it can ``transform'' the Nation's energy system.
Yet, this Agency is pursuing these actions.
And I might add that Congress rejected the idea of cap-and-
trade once, yet this EPA is pursuing a back door cap-and-trade
policy without Congressional approval.
Fortunately, the Courts have checked EPA's overreach in
several recent decisions. The numerous legal infirmities of the
Clean Power Plan have led to an unprecedented stay of those
power sector rules by the Supreme Court, pending completion of
judicial review.
This morning, we have two panels to discuss the regulatory
issues and their practical impacts on States and the energy and
industrial sectors. I'm pleased to welcome back Acting
Assistant Administrator Janet McCabe, who will testify on EPA's
regulatory activity during this administration.
And I particularly look forward to our second panel, which
will provide us the real world experience with the Agency's
rules on State energy and environmental regulation.
Ultimately, it will be up to Congress to ensure EPA stays
in its statutory lane for environmental standard setting. It
will also be up to Congress to take a holistic look at the
statutes that govern our energy and electricity markets, and
energy policy--to ensure our laws enable a growing, productive
economy.
The hearing today will help further develop the record
necessary to do this.
Mr. Whitfield. With that, at this time I'd like to
recognize the gentleman from Chicago, Mr. Rush, for his opening
statement.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. I want to thank you, Mr. Chairman.
Mr. Chairman, as the EPA under the Obama administration
prepares the legally mandated regulations to protect the air,
protect the land, and protect the water for all Americans, the
majority party has insisted on digging its heels and fighting
these rules at every turn.
Unfortunately, Mr. Chairman, it is impossible to address
the most pressing issues associated with climate change if we
simply follow the example of the Republican Party of putting
our collective heads deep, deep, deep in the sand and kicking
this serious problem down the proverbial road for the next
generation to tackle.
Mr. Chairman, all one has to do is to look at any number of
articles that are written daily over the past 5 years alone to
read about a thousand-year flood, read about the floods that
wiping out parts of South Carolina and West Virginia even as we
speak.
Mr. Chairman, pick up a daily newspaper, any daily
newspaper from anywhere around the country at any time over the
last year or 2, and you can read about the 100-year-old-
drought-driven areas in the West.
Mr. Chairman, in fact it seems almost annually that we are
witnessing drought-fueled wildfires incinerate millions of
acres of forest at a record pace from Alaska to California,
claiming the lives of firefighters, innocent people, destroying
lives and devastating livelihoods.
Mr. Chairman, we understand that the Republican Party has
never met a regulation that it did not want to kill. We get it.
We get it, Mr. Chairman.
However, at some point, the majority party needs to stop
simply trying to obstruct and follow the lead of President
Obama, follow the lead of my allies around the world and indeed
pretty much every other nation on this planet and heed the
warning put forth by all of the world's scientists and Mother
Earth, Mother Nature herself.
Mr. Chairman, it is not simply enough to rail against the
EPA for establishing regulations protecting our most sacred
natural resources of air, water, just because these rules are
perceived to hurt the profit margin of certain industries.
Mr. Chairman, this is the United States of America and not
the United States of Avarice. Mr. Chairman, there are other
worthwhile benefits to society besides how much money a
corporation earns in a single quarter.
In fact, Mr. Chairman, the Clean Air Act and the rules
associated with it has been one of the most socially,
environmentally and economically beneficial laws ever enacted
by this Congress by anybody's standard, rather, period.
Time and time again, we've heard from our colleagues on the
other side of the aisle that the EPA has overstepped its
authority and is promulgating regulations that would hurt
industry, kill jobs and bring about the downfall of the
American way of life as we know it.
We've heard it time and time again. It's an old record.
It's tired. That dog simply does not hunt anymore, Mr.
Chairman. And yet, the benefits of the Clean Air Act programs
have consistently outweighed the costs that we have been warned
against at each and every time.
Mr. Chairman, you know as well as I, in a recent report to
the Congress, the Office of Management and Budget found that in
the average the 32 major rules promulgated by the EPA between
2004 and 2014 had benefits between $160 billion and $788
billion compared to costs of just $38 billion to $45 billion.
By 2020, Mr. Chairman, the economic benefit of reducing air
pollution is estimated at almost $2 trillion, exceeding in cost
by a 30 to 1 ratio.
So Mr. Chairman, my friend, instead of always crying wolf
over the EPA rules, I would urge the majority party to work
with those of us who want to address one of the world's most
pressing challenges and help find new strategies to address the
issue of climate change that impacts every man, woman and child
in this country and around the world--those who are born and
those who are yet to be born. With that, Mr. Chairman, I yield
back the balance of my time.
Mr. Whitfield. The gentleman had no time left but you'll
get a statement. But Mr. Upton is not going to be with us this
morning. He's chairing another conference. And is there anyone
on our side of the aisle that would like to make some comments?
Mr. Shimkus, recognized for 5 minutes.
OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Shimkus. And Mr. Chairman, just to welcome our guests.
Also kind of raise the point that you raised that we did visit
a supercritical clean power plant in Japan, the Isogo Thermal
Power Station, and I think the takeaway from many of us was
that when we talked to other countries that are involved in
this debate they really create and incentivize and give
emissions credits for more efficiencies and lowering
CO2.
I think our problem is is that we don't if there was a net
benefit because of new technology and incentives. Our pathway
still is using technology that's not available. There is
technology that will make power plants more efficient.
This is a 1,200-megawatt two unit system and they broadly
boast about the reduction in carbon emissions and they use that
in their calculations and we don't see that coming from the
administration.
And to my colleague and friend, Mr. Rush, all our question
is where does the executive branch get its authority and we
don't think the legislative branch should excuse the executive
branch for any reason for illegally breaking the law by
promulgating rules and regulations that are not founded in
statutory authority.
That's part of our debate here today too. So we do welcome
you. It will be an interesting hearing and I thank you and I
yield.
Mr. Whitfield. Will the gentleman yield?
Mr. Shimkus. I will yield.
Mr. Whitfield. I might just point out I read this in one of
the opening statements of one of our witnesses: Former Energy
Secretary Steven Chu even criticized the Clean Power Plan this
past month, arguing we should make a Clean Power Plan that's
based on clean energy, not renewable energy. So even our former
Secretary of Energy made that comment about the Clean Power
Plan.
Mr. Shimkus. I yield back my time.
Mr. Whitfield. Gentleman yields back. At this time, is
there anyone on--I see Mr. Pallone is not here. Do any of you
all want to make any opening statements at this time?
OK. OK, that concludes the opening statements and we've
already introduced Janet McCabe, who's the Acting Assistant
Administrator of the Office of Air and Radiation, U.S.
Environmental Protection Agency, a native of Indiana, and Ms.
McCabe, we appreciate your being with us today and you're
recognized for 5 minutes for your opening statement, and then
I'm sure there will be a few questions for you.
So thanks for being with us. You know the drill. The
microphone, red light, and all that. So thank you.
STATEMENT OF JANET McCABE, ACTING ASSISTANT ADMINISTRATOR,
OFFICE OF AIR AND RADIATION, ENVIRONMENTAL PROTECTION AGENCY
Ms. McCabe. Thank you, Chairman Whitfield and Ranking
Member Rush, who had to step away and all the members of the
subcommittee. Thank you so much for inviting me here to testify
today on EPA's regulatory efforts under the Clean Air Act.
The mission of EPA is to protect public health and the
environment and the Agency's regulatory efforts further those
goals. We are guided in meeting those goals by science and by
the law, which serve as the backbone for each of the Agency's
actions.
For over four decades we have cut air pollution in this
country by 70 percent and the economy has more than tripled. I
will focus my opening statement on providing more detail for
three rules, which will provide tremendous benefits to public
health and the environment and they've mostly been mentioned
already this morning--the Clean Power Plan, the methane
standards for the oil and gas industry and the ozone national
ambient air quality standards. Climate change is a tremendous
environmental and public health challenge. The most vulnerable
among us including children, older adults, people with heart or
lung disease and people living in poverty may be most at risk
from the impacts of climate change.
Fossil fuel-fired power plants are by far the largest
stationary source of U.S. CO2 emissions. Using
authority under the Clean Air Act to address these emissions,
the EPA finalized the Clean Power Plan last August.
Although the Clean Power Plan has been stayed by the
Supreme Court, we are confident that it will be upheld because
it rests on strong scientific and legal foundations.
Since the stay was issued, many States have been moving
forward voluntarily to cut carbon pollution from power plants.
They have also asked EPA to continue our outreach and
development of supporting information and tools that will help
guide States when the Clean Power Plan becomes effective which
we're doing while ensuring that we fully comply with the stay.
For example, we recently proposed design details for the
optional Clean Energy Incentive Program to address State
requests for additional clarification as States consider their
options to reduce carbon pollution.
In May, EPA announced steps to further reduce methane and
other harmful air pollutants from new and modified sources in
the oil and gas industry along with the critical first step in
tackling methane emissions from existing sources.
These steps will help combat climate change and reduce
emissions of other harmful air pollutants. These standards
build on the Agency's 2012 rules by adding requirements that
the industry reduce emissions of greenhouse gases using readily
available and cost effective technology and by covering
hydraulically fractured oil wells along with additional
equipment and activities that were not covered in the 2012
rules.
They also required owners and operators to find and repair
leaks, which can be a significant source of emissions. These
final standards reflect significant stakeholder input and in
particular provide companies a pathway to demonstrate that
requirements under a State rule are comparable to requirements
in the final rule.
This would allow sources to comply with a specific final
rule requirement by complying with a State regulation. We know
that existing sources in the oil and gas sector also emit
substantial amounts of methane and as a first step in the
regulation of these sources we've issued a proposed information
collection request, or ICR.
When finalized, it will require companies with existing
operations to provide information on technologies and costs
that are critical to the development of reasonable regulations.
In addition, EPA plans to seek voluntary information on
innovative strategies that can accurately and cost effectively
locate, measure and mitigate methane emissions.
The draft ICR was published early in June and the first of
two public comment periods will last for 60 days. Finally, in
October of last year, the Agency completed the periodic review
of the national ambient air quality standards, or NAAQS, for
ground level ozone.
We have a primary standard directed at protecting public
health and a secondary standard directed at protecting public
welfare, for example, trees, plants and ecosystems.
Exposure to ground level ozone can harm the respiratory
system, aggravate asthma and lung diseases and is linked to
premature death. These health impacts impose significant costs
on Americans and can adversely affect their daily lives through
missed school and work.
The Clean Air Act requires EPA to review the NAAQS every 5
years to make sure the standards continue to protect public
health with an adequate margin of safety.
Based on the law, a thorough review of the science, the
recommendations of the Agency's independent science advisors,
assessment of EPA experts and after extensive public engagement
and opportunity to review and comment at many steps along the
way, the Administrator determined that the appropriate level to
protect the public health with an adequate margin of safety was
70 parts per billion.
The two-step process of a science-based NAAQS review
followed by implementation is a system that works. EPA and
State, local and tribal co-regulators share a long history of
successfully managing and improving air quality.
For ozone, existing and proposed Federal measures like
vehicle standards and power plant rules are reducing and will
continue to further reduce ozone pollution nationwide.
We expect that the vast majority of counties outside of
California will meet the 2015 ozone NAAQS by 2025 without
having to take any additional action beyond those Federal
measures.
Again, I thank the subcommittee for inviting me here today
and I look forward to your questions and the discussion on
these and other EPA actions.
[The prepared statement of Ms. McCabe follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Ms. McCabe, thank you very much for your
opening statement and I'll recognize myself for 5 minutes of
questions.
When the Clean Power Plan was being discussed, one of the
comments that was frequently made by any representative of EPA
was that we were providing maximum flexibility to the States.
And yet, the reality is that in your so-called building
blocks where States can go to natural gas or they can go to
renewable energy they simply don't have that option. It's
simply not there to the extent necessary.
So many critics say that that flexibility argument--we're
giving maximum flexibility to the State--is really a red
herring, that there is no flexibility for those States that
have that unique problem facing them.
I mean, do you agree with that or do you just feel like oh,
if you work hard enough you can--I mean, you all arbitrarily
set the CO2 standard for every State. So this
flexibility argument you honestly believe that these States
have the flexibility to meet this requirement?
Ms. McCabe. I do, Mr. Chairman, and I can explain why.
First of all, I think it's important for me to say that the
goal for each State was in fact not arbitrarily set. It was set
after very careful evaluation of----
Mr. Whitfield. Who set it?
Ms. McCabe. The EPA rulemaking sector.
Mr. Whitfield. Yes, EPA set it.
Ms. McCabe. But not arbitrarily. It was based on
information and data collected from the industry from States.
Mr. Whitfield. Well, some States would disagree with that.
I've talked to many of them, and they view--even though you
went through a process, that you set the standard.
Ms. McCabe. Well, there's a difference between who set the
standard and whether it was set arbitrarily. I was taking issue
with the use of the word arbitrary, and the record lays out--
people can disagree and certainly do disagree that we made the
right choice or that we evaluated the data appropriately.
Mr. Whitfield. Why do you think the Supreme Court issued a
stay of the Clean Power Plan?
Ms. McCabe. Because this is a very important issue, and
they felt that as courts have done before----
Mr. Whitfield. So you don't feel like that they had any
questions on the legality of it, that they simply stated
because it was such an important issue?
Ms. McCabe. They gave no indication of their reasoning. No
court has spoken to the substance----
Mr. Whitfield. But your interpretation is it was so
important that they stayed it?
Ms. McCabe. That's how I understand it. This is----
Mr. Whitfield. That's your understanding.
Ms. McCabe [continuing]. Courts sometimes do stay
regulations while they're going through review.
Mr. Whitfield. Uh-huh. Now, let me ask you this question.
Despite the stay of the Clean Power Plan, last week EPA
published a 44-page proposed rule setting forth the details for
Clean Energy Incentive Program and requesting comments by
August 29th, 2016.
The purpose of the program is to incentivize early action
by States to comply with the Clean Power Plan. Now, if a State
or affected stakeholder does not comment on this proposed rule
during the public comment period, will they have foregone their
right to comment on the rule?
Ms. McCabe. This is a completely voluntary program, and
people are welcome to comment on it during the comment period.
Mr. Whitfield. Well, the rule is not final yet, is it? Or
is the rule final yet? OK.
Ms. McCabe. No, it isn't. It's proposed.
Mr. Whitfield. But you're saying that it's not going to be
mandatory? It's going to be voluntary?
Ms. McCabe. Absolutely not mandatory. It's an early action
opportunity that's provided in the Clean Power Plan. It's not--
--
Mr. Whitfield. Will there be a final rule?
Ms. McCabe. If the Agency finalizes it, it will----
Mr. Whitfield. And does the EPA plan to finalize the rule
before the end of this administration?
Ms. McCabe. I can't speak to the schedule. But I expect
that the Agency will move to finalize the rule.
Mr. Whitfield. Now, if the EPA does finalize this rule, how
would this comport with the stay?
Ms. McCabe. We believe that this is not--taking this action
is not inconsistent with the stay, and this may come up again
this morning. We consult regularly with our lawyers at the
Department of Justice.
The stay precludes EPA from implementing the Clean Power
Plan. EPA is doing nothing to implement the Clean Power Plan.
Mr. Whitfield. Now, do you think there is universal
agreement to what you just said, or do you think there are
opposing views to what you just said?
Ms. McCabe. I wouldn't want to speak for other people.
There are usually a variety of views on everything that EPA
does.
Mr. Whitfield. So that's EPA's view, right?
Ms. McCabe. It's the EPA's view. It's the Department of
Justice's view, and we are being very, very careful about this,
Mr. Chairman.
Mr. Whitfield. OK. Because I remember you all making very
strong comments that you had every faith and confidence that a
stay would not be issued by the Supreme Court.
Ms. McCabe. We did believe that to be true. I think many
people believed that to be true.
Mr. Whitfield. Well, a lot of us did not believe that to be
true. Anyway, thank you very much, and my time is expired. I
recognized the gentleman from Illinois, Mr. Rush, for 5
minutes.
Mr. Rush. Ms. McCabe, I really appreciate you coming before
the subcommittee for the umpteenth time to deal with this
issue, and if one didn't know any better they might think that
the majority party really, really, really has it out for your
agency.
And you're aware the premise of today's hearing is that EPA
has repeatedly overstepped its authority and is really nearly
issuing burdensome new rules that will kill jobs and send the
American economy down the tank.
You've heard these claims many times before the Republican
Party cried wolf when it comes to actual cost and benefits
attributed to Clean Air Act rules and other regulations issued
by your agency.
We all understand that facts are not always the driving
force behind many of these claims, and as a matter of fact it
seems as though facts are standing in the way of a lot of these
claims. But they keep coming anyway. I would like for you at
some point in time during my questions to really focus on
separating the, for this subcommittee, some of the truth of the
ever present fiction that's in the room.
In my opening statement, I stated there were societal
benefits associated with EPA rules. They go far beyond the
quarterly earnings of certain industries.
Can you state some of the additional benefits to the EPA's
regulatory framework that impacts all Americans?
Ms. McCabe. Yes, sir. Thank you for the question.
It's clear that air pollution has significant impacts on
public health across this country. That includes increased risk
of asthma attacks, other respiratory illnesses, premature
death, other sorts of health impacts that mean missed work
days, missed school days for children and parents need to stay
home.
These are real everyday issues that families across the
country have to deal with. When it comes to climate we know
that climate is changing, we know that that is having impacts
that is being reflected in increased wildfires, increased
droughts, increased flooding, increased violent storms, some of
the things that you mentioned yourself, Congressman Rush.
These are having real impacts on people, on their health,
on their economic well-being and their ability to live their
lives in this country.
Mr. Rush. Well, besides the health status of Americans and
I've noticed for the last 25 years I've seen--I know more and
more people, more and more families who are victimized by
asthma over the last 25 or so years.
So the health issues are really, really troubling and a
critical stage for our Nation. But what are some of the
economic benefits associated with the EPA rules, particularly
in areas of spurring new technology and innovations in
transportation and electricity and in manufacturing sectors?
Ms. McCabe. Yes. That's absolutely been the case. The rules
over the years have spurred the creation and invention of
pollution control technology which not only employs people here
in the United States installing and designing that but is an
exported product that the United States exports around the
world, which brings, again, value back to the United States.
Mr. Rush. So from a perspective of the health benefits to
the Nation and the economic benefits to the Nation, you made an
overall assessment of the work that the EPA has done in the
past. Let's just take from the past to the present.
Ms. McCabe. Well, each time EPA does a rule of economic
significance we follow OMB requirements and do a cost benefit
analysis, and as you alluded to in your opening remarks the net
benefits of the EPA rules have numbered in the billions of
dollars over time, far outweighing the costs of each one of
those rules.
Mr. Rush. Mr. Chairman, I want to thank you for your
kindness and I yield back.
Mr. Whitfield. Gentleman yields back. Thank you.
At this time. I'd like to recognize the gentleman from
Texas, Mr. Olson, for 5 minutes.
Mr. Olson. I thank the Chair.
I thank you, Ms. McCabe, for joining us again today. Hope
you had a happy 4th of July.
We sometimes disagree, sometimes strongly. But the folks
back in Texas 22 appreciate your willingness to come before
this committee.
My first question concerns your budget documents. You
stressed that the Clean Power Plan goes far beyond traditional
end of the pipe regulation.
In your fiscal year 2016 submittal to Congress you stated,
and I quote, ``the breadth and uniqueness of the Clean Power
Plan rulemakings will require that the Agency devotes
significant resources to its implementation.
Traditionally, the EPA's regulatory analysis would focus on
only emitting sources and end of pipe controls. The existing
power plant rule requires that the EPA look at the emission
control strategies that are either shifting generation away
from higher emitting plants or reducing the need for generation
in the first place,'' end quote.
That sounds to me like you all wrote the law. As you know,
only Congress writes the law. Article one, section one is very
clear. All legislative powers herein granted shall be invested
in a Congress of the United States which shall consist of a
Senate and a House of Representatives.
Where in the Constitution or statute has Congress
authorized EPA to go from end of pipe controls to generation
shifting? Where is this in this document? Please tell me?
Ms. McCabe. It's actually--Congressman, it's in Section
111(d) of the Clean Air Act, which is where our authority comes
from. The--that section directs us to look at the approaches
and controls that industry uses in order to develop our
regulations that set reasonable standard for sources under
111(d).
It is not misdirected to end of pipe controls and we made--
have studied the ways that the utility industry has found ways
to reduce not just carbon but other air pollutants over the
years. And so our rule was grounded very much in the types of
approaches that that very industry has been using.
Mr. Olson. But that's a big change. End of pipe to all
these other things, that's Congress' job. That's our job.
That's lawmaking. One further question about the rule of law.
Do you believe the EPA has the authority to compel the future
generation shifting from natural gas to renewables--not coal
but natural gas to renewables? Do you have that authority? The
same authority you're using now?
Ms. McCabe. Our job is to develop rules that reduce air
pollution. That's our job under the Clean Air Act, setting
technology-based standards following the direction that
Congress gave us in Section 111(d).
We are not requiring any particular fuel to be used. We are
providing broad opportunities for the industry to use the kinds
of approaches that they use and would choose to use.
Mr. Olson. Well, you're banning one source of power from
being used--coal--for sure. I mean, you say you're not choosing
that, but you are, ma'am. The real world says you are choosing
power sources. You are picking winners and losers.
My second question is about the technological advancements
that have allowed our country to emerge as the number-one
producer in the world of oil. In fact, a study came out from
Norway this past week.
A 3-year analysis confirmed that by 2020 America will have
264 billion barrels of recoverable oil compared to 256 billion
barrels with Russia and 212 billion barrels with Saudi Arabia.
We are number one, man.
America is number one again. My own State of Texas has been
at the front of this revolution even with today's energy prices
and that's why I am stunned to see concerns coming from the
largest and most efficient oil and gas regulators in America,
the people in Texas, the railroad commission when it comes
before your agency.
Is it correct that EPA's new regulations will cause natural
gas and crude oil production levels to decline? Yes or no?
Ms. McCabe. I don't believe it will, sir.
Mr. Olson. Well, ma'am, according to your economic impacts
discussed in your final rule on Page 35,886, it says it does
just that. A follow-up question--is it correct that EPA's new
methane regulations will make the U.S. more reliant on foreign
energy imports? Yes or no.
Ms. McCabe. I don't believe that that's correct, sir.
Mr. Olson. Same thing. Page 35,886. Your final rule says it
will. I yield back.
Mr. Whitfield. Gentleman yields back. At this time I
recognize the gentleman from California, Mr. McNerney, for 5
minutes.
Mr. McNerney. I thank the chairman and I also submit with
due respect that this is really a political hearing. Ms.
McCabe, I'm going to ask some questions about exceptional
events.
How often have public entities filed for exceptional events
at the EPA?
Ms. McCabe. I don't have an exact number, Congressman, but
I would be happy to get you one. It's been a number of times.
Mr. McNerney. OK. And how often are those approved, those
exceptional event requests?
Ms. McCabe. We've approved a number of them, and some of
them we have not.
Mr. McNerney. OK. Moving on--there's been talk in this
committee about exceptional events. My office has talked to
yours about exceptional events. Is the EPA working on anything
that would modify exceptional events to take place during
prolonged droughts and how much can be done on the regulatory
side.
So, basically, I'm asking are exceptional droughts going to
be considered for exceptional events in the future?
Ms. McCabe. Yes, this is a very challenging situation,
Congressman, especially as we see more and more drought coming.
So drought in itself is not considered an exceptional event.
We are working with the States and with all stakeholders to
try to find ways to make sure that we make this process as
reasonable as possible and reflect that there can be situations
in which there are high dust events that may be able to be
considered exceptional events.
Mr. McNerney. Well, that's good because as you know we're
having a prolonged drought in the valley in California and it's
making a very challenging situation for our districts.
Technological advancements on the electrical grid from
transmission through end use have helped improve efficiency and
reduced emissions. Many utilities have embraced the Clean Power
Plan, including those in my own home State of California.
Can you talk about the Clean Energy Incentive Program and
how it will help further promote innovative technologies?
Ms. McCabe. Sure. One of the--one of the strengths that we
feel of the Clean Power Plan is the openness that States have
to bring in a use energy efficiency as a way to reduce their
carbon emissions and there's many, many programs across the
country many of which have been spawned and encouraged at the
State and local level that are being very effective in bringing
not only emissions down but also bringing value to the
communities in which those technologies are installed.
Some of these are industrial applications, commercial
applications and residential applications and we think that
both through the Clean Energy Incentive Program, which is our
voluntary early action program, but also throughout the life of
the Clean Power Plan there--because those types of approaches
are often very cost effective to implement that States will
want to choose to invest in those.
Mr. McNerney. So we're talking about creating jobs through
developing new technologies?
Ms. McCabe. Absolutely, and then implementing those
technologies in our communities.
Mr. McNerney. Now, I personally believe that implementing
the Clean Power Plan will not result in a much higher--any
electricity prices and I see a parallel between this and the
sulfur dioxide emissions through the cap-and-trade program. Is
that your thinking as well?
Ms. McCabe. Well, we looked at that in our regular impact
analysis and we predicted that in part because of the increased
use of energy efficiency approaches that electric bills will
actually go down in 2030 when the program is fully implemented.
Mr. McNerney. So some of the statements we're hearing might
actually scare consumers but in reality we expect lower or even
electricity prices?
Ms. McCabe. That's what our analysis showed.
Mr. McNerney. You mentioned a proposed innovative
collection request--information collection request for oil and
gas industry related to methane emissions. How difficult is it
to locate, measure and mitigate methane emissions?
Ms. McCabe. This is an area of very rapid development the
industry is working very hard on it and there are many others
in the research fields as well as at EPA that are working on
these issues and across the Federal Government. So that's why
we're going to put out a call for innovative ideas.
There are great advances in how people can detect emissions
and it's important to remember that any leak of this material
is leak of a product that can be sold. It's not just a loss of
a natural resource. It's actually a valuable product.
So the industry itself has great incentive to find these
leaks and fix them. And so detecting leaks and then also on the
mitigation side.
Mr. McNerney. Does the EPA currently have any data on that,
on collection emissions or detecting emissions?
Ms. McCabe. We do. We do that through our greenhouse gas
emissions inventory program. Every year we collect information.
Every year people are finding ways to be more accurate and more
complete in that information.
Mr. McNerney. Are emissions, or capturing fugitive
emissions, is that improving?
Ms. McCabe. Yes, it is and will continue to, for sure.
Mr. McNerney. All right. Thank you, Mr. Chairman.
Mr. Whitfield. The gentleman's time has expired. At this
time I'll recognize the gentleman from Texas, Mr. Barton, for 5
minutes.
Mr. Barton. Thank you, Mr. Chairman.
Would you define just as concisely as you can what you
think the mission statement of the EPA is?
Ms. McCabe. To protect the health and the environment,
implementing the laws that Congress has passed.
Mr. Barton. Say that again.
Ms. McCabe. To protect public health and the environment,
implementing the laws that Congress has passed.
Mr. Barton. OK. I'll accept that.
Do you know how many pages of rules the EPA has issued
since 2009 to try to be generous to do what you just said?
Ms. McCabe. I don't know the number of pages, Congressman.
Mr. Barton. If I were to tell you that according to the
majority staff it was 33,841 would you accept that?
Ms. McCabe. I would not disagree with you. I don't have any
reason to know what the number is.
Mr. Barton. OK. Well, that's what the majority staff memo
says: 3,924 rules encompassing 33,841 pages.
Now, some of the major rules, and again, this is according
to the majority staff so you can dispute this, the Clean Power
Plan, the carbon pollution standard for power plants, mercury
and air toxic standards for power plants, cross-State air
pollution rules for power plants, coal ash rule for power
plants, effluent guidelines for power plants, which would be--
which would be water, wouldn't be air--316(b) rule for power
plants, which again would be a water rule, not an air rule.
Air rules for the oil and gas industry, actions to reduce
methane emissions from the oil and gas industry, the Boiler
MACT, the Cement MACT, the Brick MACT, the Ozone NAAQS, the SO2
NAAQS, the PM 2.5 MACTS and the RMP rule--those are the major--
the 16 major rules.
Now, using 2008 as the baseline, can you tell me how all of
these rules have improved air quality in the United States?
Ms. McCabe. Well, that's a large variety of rules
addressing a number of things. They all come from
requirements----
Mr. Barton. OK. I'm not asking you where they come from.
I'm taking you at your word which you say the mission statement
of the EPA is. I have outlined to you how many rules you--not
you personally but your agency--has issued. I've outlined the
major rules according to the majority staff and I've asked you
a basic question.
How much have all of those rules improved air quality in
the united States? Ten percent? Five percent? Zero? You know,
you can measure it by ozone reduction, particulate matter,
however.
Surely, your agency has a metric to track how all of these
rules are meeting your mission statement. I'm asking you what
it is.
Ms. McCabe. We do have metrics and I would be happy to
provide specific numbers. SO2 emissions have gone done
considerably in this country. Ozone levels have gone down.
Ninety-five percent of the areas that did not meet the 1997
ozone standard now meet it.
Mr. Barton. So can you give me or give the committee a
specific--you can do it by rule, you can do it generically. My
seat-of-the-pants nonscientific estimate is it hasn't had an
impact. Has not changed the basic air quality 1 percent.
Ms. McCabe. We would----
Mr. Barton. Now, you can prove me wrong and I'm happy to
see it but I want it statistically. I want it engineering
scientifically proven.
What I can tell you is that you have impacted--not you
personally but EPA has impacted the economy by billions of
dollars. You have killed the coal industry, basically. Killed
it. Which, to his credit, President Obama said he wanted to do.
But I want to give you a specific example. This is a power
plant that's not in my district. It's in Congressman Flores'
district.
It's a Big Brown plant right outside of Fairfield, Texas,
in Freestone County. That is a coal-fired power plant that's
been there approximately 50 years. It employs about 500 people
directly and is the single biggest economic generator in
Freestone County.
It's probably going to close in the next year or so because
of some of these rules. It's just--they can't meet the
compliance costs and they're just going to probably have to
close the plant.
If that happens and if you're still at the EPA I want you
to go to Fairfield, Texas with Congressman Bill Flores and
explain to those people who've lost their jobs how you've
improved their environment.
I want you to do that, because I don't think it's possible.
And, you know, I voted for the Clean Air Act amendments in
1991. I want clean air.
I want clean water. But I don't want an organized attack on
the energy-producing sector of America because of, to use Mr.
McNerney's term, a political decision to go after hydrocarbons.
And with that, Mr. Chairman, I yield back.
Mr. Whitfield. Gentleman's time is expired. At this time
I'll recognize the gentleman from Texas, Mr. Green, for 5
minutes.
Mr. Green. Thank you, Mr. Chairman and Ranking Member, for
holding the hearing. I want to thank Acting Administrator
McCabe for being here and the EPA's regulatory activity is the
subject of much debate and we're happy to have you before our
committee once again to discuss the issues.
The EPA's Clean Power Plan changed significantly from the
proposed rule and the final product. My understanding was that
the EPA wanted to be responsive to stakeholder feedback
including many concerns brought up by industry. The EPA
proposed Federal implementation plans on October 23rd of 2015.
The final rule indicated a 90-day comment period that ended
in January of 2016. Did the Agency extend that comment period?
Ms. McCabe. I don't believe we did, Congressman, but it's
closed now. So we're considering all the comments that we got.
Mr. Green. OK. How many comments had the Agency received?
Ms. McCabe. Oh, gosh, on the Federal plan I'm not sure. But
we received many hundreds of thousands of comments on the Clean
Power Plan and its various pieces over the years.
Mr. Green. What type of----
Ms. McCabe. Millions, in fact.
Mr. Green. OK. What type of feedback has the Agency
received?
Ms. McCabe. Well, if you're speaking about the Federal plan
and the model rules we've got a lot of feedback on the how
those rules can help States as they design their plans, very
constructive feedback on how to make the rules workable for
States while preserving the flexibility that the States have
under the plan.
Mr. Green. What did EPA do to respond to those millions of
comments?
Ms. McCabe. Well, in the----
Mr. Green. Just a general--did you modify the plan or did
you----
Ms. McCabe. In the Clean Power Plan itself, yes, we made a
number of changes in response to the comments both on process
issues, on our evaluation of the underlying data in response to
additional data that we got, which is a routine occurrence when
we get good input from people in a rule making.
Mr. Green. OK. Well, in Texas, obviously, we are an oil and
gas State, and my Pennsylvania and Ohio friends tell me we
burnt dirt and call it coal in central and east Texas. But we
invest significant amounts in wind power--in fact, the largest
wind power production of any State.
I'd like to see the same thing done for solar. How does EPA
envision the Clean Energy Incentive Program encouraging new
solar construction?
Ms. McCabe. The way the Clean Energy Incentive Program
works, which as I've said already this morning is voluntary if
the State chooses to proceed with it, would incentivize
renewable energy and also energy efficiency by providing
additional allowances into the trading system that we expect
States will set up.
So it just provides a little extra bump for those
technologies to get going early in the system and provide the
energy that is carbon free.
Mr. Green. OK. The EPA wants to establish credit reserve
and we're running the verification authenticity issues within
the renewable fuel standard. I'd prefer not to see that again.
How does the EPA plan to verify and authenticate credits under
the CEIP, the Clean Energy Incentive Program?
Ms. McCabe. Very good question. So there are--because there
is a lot of work already underway that doesn't have to do with
EPA for people to generate credits for energy efficiency under
State programs, there are already systems in place that allow
people to appropriately verify that the reductions are real and
we are relying a lot on those systems not creating something
wholly new.
Mr. Green. And finally, the EPA had begun collecting
information on existing oil and gas production wells. Given
that there are approximately 40,000 oil and gas wells in the
U.S., what challenge does the EPA foresee in regulating
existing sources in a correlator that so many of these wells
are small producing wells that make up maybe 10 percent of the
total production?
Is there any discussion in EPA to exempt out those smaller
wells? Because if they are only 10 percent of the production
you would think that that would be, you know, not as big a
problem as the other 90 percent.
Ms. McCabe. This is exactly why we need to collect this
information. We are very far from making any decisions or even
recommendations about what our rule would look like.
But until we have this kind of information that can help us
understand where the real significant emissions are, how much
it will cost and what technologies are available to address
them, we can't really move forward with those rules which is
why we've got to collect the information.
Mr. Green. OK. Mr. Chairman, thank you. I yield back.
Mr. Whitfield. Gentleman yields back.
At this time I recognize the gentleman from Illinois, Mr.
Shimkus, for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman.
So many questions, so little time. So I'm just going to
jump into some of the points. I love the hearings because I
love to pick up where other people have talked about to other
than what's been prepared for us to ask.
To my colleague Mr. Barton, he cited one power plant. I can
cite three in Illinois--Wood River, Baldwin, Newton--all are at
major risk of closing. That's why--that's why I want to talk
about this new power plant in Japan.
If there is a way we could transition and incentivize
transitioning older generation to new generation then we'd give
these workers some hope. We'd give coal miners some hope.
But under the 111(b) standards we can't build this power
plant and this is the cleanest most perfect plant we can build
with technology right now. Well, we can't--the Japanese built
it. OK.
And so a major coal mining company just announced two days
ago they're laying off 4,400 workers--4,400. So when we talk
about the benefits which you laid out, I'm sure maybe we can
sell some new technology.
You have to consider the loss. You have to really
appreciate the job dislocation that's occurring in major coal-
producing areas in our country, and if there's emotions and if
there's politics behind that's because we're the ones that have
to talk to the coal-mining families.
We've got to talk to the mayor and the county board
chairman who are losing their major source of revenue because
of power plants going to close.
So we don't see that in your--we never see that in the
analysis. When Congressman Barton read the numerous rules and
regs--I have done that before too--in your analysis you always
take, like, the Clean Power Plan and say this is the cost, this
is the benefit, boom.
You never do the cost of the cumulative aspects of
regulation. They pile on. In fact, I would say the costs are
exponential versus additive.
And so that's the crushing effect that's really occurring
in coal-fired power plant communities and in coal mining
communities across this country, and I think the Supreme
Court--this is the first EPA rule and reg that they stayed.
This is not like--this was a major deal for them to do
that, and so the question should be asked is why. The answer is
because we have successfully made the argument that if a rule
is being litigated the pencil should go down.
You can't force compliance when the final decision has been
made on the legality of the rule or reg because if you force
them to keep moving they'll shut down. They'll close. And then
as we saw in other regs, oh no, we were wrong--we illegally
promulgated this rule.
So the Supreme Court said no, stay. So that kind of brings
me to the--one of the questions that I wanted to ask. In the
wake of the stay, EPA officials have stated that certain
compliance deadlines in the Clean Power Plan may not be
penalized should the stay be lifted, the suggestion being here
that States and other stakeholders should be prudent to being
voluntarily preparing now for rule implementation in case its
legality is upheld.
OK. First of all, pens should go down. You ought to be
telling people, prepare for a rule that we don't know if it's
going to be legal or not. So here's the question:
Should parties granted the stay by the Supreme Court in any
way be penalized if they take no action on the Clean Power Plan
or EPA's derivative programs and guidance during pendency of
the litigation?
Ms. McCabe. We are absolutely not implementing--there are
no expectations that any State, down State or not, has any
obligations currently under the Clean Power Plan.
Mr. Shimkus. Yes, the question is should they be penalized.
You still have closing of the windows. You still have comments
going. What if they say we're not going to make comments until
we have a final ruling from the Supreme Court?
Ms. McCabe. But I don't see that as a penalty, Congressman.
It's their choice whether they want to comment or not. But that
particular rule----
Mr. Shimkus. But will you shorten the time frame? I mean,
are you going to now say you're not prepared to meet it? I'm
assuming it's not going to be ruled favorably. I'm going to
assume that it's because you've morphed the Clean Air Act and
you've provided powers to the Agency that weren't granted under
the original legislation. So I think the Supreme Court is going
to say it's illegal.
But assuming it is, the question is if States say we've got
to stay, we're not doing anything, many people are concerned
that you are moving forward regardless of the stay offered by
the Supreme Court.
Ms. McCabe. Well, I'll just say again, Congressman, that
with--in close consultation with the Department of Justice
there is nothing that we are doing now that implements the
Clean Power Plan in any way.
That was what was stayed. The Supreme Court did not stay
all action on climate. It didn't stay action by States, that
they may choose to take on climate.
It didn't stay efforts by EPA to provide assistance to
States when they ask us for that assistance, which they have
done, including that we move forward and provide more details
on the Clean Energy Incentive Program.
Mr. Shimkus. Thank you very much.
Mr. Whitfield. The gentleman's time has expired.
At this time, I will recognize the gentleman from New York,
Mr. Tonko, for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair, and thank you,
Administrator McCabe, for your hard work and for your
appearance here today.
This is just the latest in a series of hearings to push a
message that strengthening standards to protect our public
health and the environment are too costly, unachievable or a
drag or a drag on our economy.
Couple of observations--I would think that the greatest--
one of the greatest impacts on the coal-fired industry happens
to be falling natural gas prices. And then further evidence is
clear that the public health and environmental benefits of
Clean Air Act regulations have far outweighed the costs of
pollution reduction and we owe it to the next generations--
generations unborn to clean our air.
Because of the Clean Air Act, we have grown our economy,
created jobs and innovated new solutions to pollution controls.
In the United States, leaks from oil and gas wells are the
largest source of methane gas in the atmosphere.
In April, the EPA released a report that concluded methane
from oil and gas leaks makes up about a third of total methane
emissions.
In May, EPA announced steps to reduce those methane
emissions. We often hear about carbon emissions but
Administrator McCabe, can you explain how curbing methane
emissions will indeed help combat climate change?
Ms. McCabe. Yes, Congressman. As some of you may know that
methane is about 25 times more potent as a climate pollutant
than carbon dioxide. So even though CO2 is emitted
in far greater amounts, methane is a very serious contributor
to climate change.
You correctly noted that the extent of the emissions of
methane from the oil and gas industry many of those emission
are unintentional. They are leaks. They are not necessary, and
there is technology that is available. Several States are well
on their way to--have already put in place like the ones that
EPA just finalized to regulate these emissions.
So that's making a huge contribution to, as you say, our
health today and future generations.
Mr. Tonko. Thank you. And when EPA is going through a rule
making process, are there significant opportunities for
stakeholders to provide input in the pending regulation?
Ms. McCabe. There absolutely are. There are, of course, the
formal opportunities for public comment when we do a proposal.
But EPA operates routinely in the Office of Air and
Radiation where I work, by doing extensive outreach to the
stakeholders which includes the industry, first and foremost.
We can't develop these rules if we don't have good
relationships with the industry where we get good information
from them.
We also work extensively with the States who are our co-
regulators and actually are on the ground putting these
programs in place and making sure that they achieve the
benefits that they are designed to achieve.
So far before we put pen to paper on a proposal, we have
had extensive discussions with the industry and other
stakeholders.
Mr. Tonko. Well, for the recent--and I thank you for that.
For the recent methane rule, I am informed that EPA received
more than 900,000 public comments and held a number of public
hearings. Is that in fact correct?
Ms. McCabe. That is correct.
Mr. Tonko. And the regulation was finalized after giving
consideration to cost benefit analyses and technical
justification. Is that correct?
Ms. McCabe. That is correct and we made adjustments in the
final rule in response to some of those comments we got.
Mr. Tonko. OK. Was this methane regulation based on cost
effectiveness and availability of technology?
Ms. McCabe. That's correct.
Mr. Tonko. Well, it sounds like the levels set in this
regulation are achievable. The total climate benefit for this
rule or the benefits for this rule are estimated at I'm told
$690 million. Is that correct?
Ms. McCabe. That is correct.
Mr. Tonko. And is this more than the estimated cost? Are
the benefits----
Ms. McCabe. From the proposal?
Mr. Tonko. Yes.
Ms. McCabe. You know, I don't remember off the top of my
head but we can get that information for you.
Mr. Tonko. OK. That would be helpful. On top of that, EPA
did not factor in the health benefits from reductions in other
pollutants, which can be difficult to quantify but can have
serious health consequences, particularly for vulnerable
populations such as children and the elderly. Can you explain
the public health benefits of this new regulation?
Ms. McCabe. Yes, sir. So in addition to the methane
reductions, which of course are related to climate change,
these facilities emit sort of the standard--some of the
standard air pollutants that we worry about, those that
contribute to ozone formation and fine particles. They also
emit toxic emissions and, as you know, some of those are very
difficult to quantify the benefits because the research doesn't
exist. But these are chemicals that are known to have adverse
impacts on public health.
Mr. Tonko. And show themselves in what sort of health
impact?
Ms. McCabe. Some of them could be carcinogenic. Some of
them could affect the respiratory system, the cardiovascular
system, those sorts of impacts.
Mr. Tonko. OK. I've exhausted my time. But with that, I
thank you and yield back, Mr. Chair.
Mr. Whitfield. The gentleman yields back.
At this time I will recognize the gentleman from Ohio, Mr.
Latta, for 5 minutes.
Mr. Latta. Well, thanks, Mr. Chairman and Acting Assistant
Administrator. Thanks for being with us again. Really great to
have you here again and hear the questions being asked, at the
end of the day.
Let me ask my first question. Under the current statutory
framework is it the State environmental regulators or the
States' energy regulators who are supposed to plan the amount
of renewables, natural gas, coal and other resources for a
State's electricity sector?
Ms. McCabe. The choices about energy policy would be made
by--generally, I imagine by energy agencies, although every
State is set up somewhat differently.
Mr. Latta. OK. When you say that they might be set up
differently because wouldn't the expertise lie with the State
energy regulators and not the State environmental regulators?
Is that correct?
Ms. McCabe. I wouldn't disagree with that. I just--my point
is that some agents--some States have energy and environment
together and some have them separately.
Mr. Latta. OK. Let me ask this. How is that the Clean Power
Plan is not usurping the authority and expertise of State
energy regulators and transferring decision making to the
environment regulators?
Ms. McCabe. Because the Clean Power Plan is all about
carbon emissions, which is an air pollutant as identified by
the U.S. Supreme Court, and the rule sets standards for
emissions of air pollution. It leaves the choices of how to
achieve those reduction up to the States to plan and achieve.
Mr. Latta. Well, where does the EPA derive its knowledge
and expertise about how electricity is planned, operated and
paid for?
Ms. McCabe. We consult regularly with the energy agencies
and the energy expertise across the Federal Government. We also
have long relationships with the regional transmission
organizations, with State energy regulators as well as
environmental regulators.
Mr. Latta. OK. But again, when we're talking about being
paid for, who ultimately pays for this? Who pays for this?
Ms. McCabe. I'm sorry. Who pays for what?
Mr. Latta. Who pays for it? OK. When you are talking about
when you are--on the expertise and how electricity is planned,
operated and paid for. But when electricity is generated who is
paying for it? Because when you put more regulations out there
and increase the cost because, you know, going back to the
gentleman from Illinois and the gentleman from Texas and their
examples--let me give you another one.
In Ohio, the electric co-ops have built a plant on the Ohio
River and the--you know, the question for them then is what
happens to their electricity rates and the competitiveness
through the plant if all of a sudden the costs are being driven
up by more regulations of which I know that Mr. Barton had
pointed out the number of pages that are out there.
Who's going to pay that? Who's the ultimate--who is going
to be the ultimate one that has to pay for this?
Ms. McCabe. Well, Congressman, of course, the consumer pays
the bill. I think it really is important to note what Mr. Tonko
said, which is that EPA regulations are not at all the only
thing that's affecting the energy system in this country and
that is a very important point, and it gets lost.
Mr. Latta. And I think it also takes in effect--if you look
at the number of manufacturing jobs members have in their
district, and I have about 60,000 and I also have the largest
farm income producing district in the State.
So we have a lot of folks out there needing a lot of
electricity, and when you put the two together and also hearing
from my folks because if you go back--you know, when you talk
about you're looking at statistics and things like that I've
been told and it's been reported that if we had the exact same
effect that we had in January of 2014, which was one of the
coldest winters on record in the State of Ohio, we did not go
into brownouts or blackouts because we had enough existing
power out there that if we had the exact same conditions today
we would have those conditions of blackouts and brownouts
because we have plants closing.
So I think, you know, one of the concerns out there is when
you're talking about who's paying for this it's going to be the
consumer. But it's also the plants out there because they can't
keep up with the regs.
Let me move on. In the Clean Power Plan, for existing
electric-generating units, EPA contends Section 111(d) of the
Clean Air Act authorizes the Agency to force generation
shifting away from fossil fuels to renewable energy and
efficiency programs.
If EPA can force restructuring of the electricity sector,
can it also force the restructuring of other sectors?
Ms. McCabe. Well, I take issue with your use of the word
force. The Clean Power Plan doesn't force anything. It follows
the--what the industry is doing. The utility industry and
electricity supply is very different in the way it operates
from any other industry.
Mr. Latta. Well, let me ask this. Are any of these 70
source categories currently regulated under the Section 111 of
the Clean Air Act exempt from this type of restructuring?
Ms. McCabe. I just can't accept the premise of your
question, Congressman.
Mr. Latta. But you are saying that you can't accept the
premise but are--but are any of the 70 source categories
currently regulated under this section of the Clean Air Act,
which is 111 of the Clean Air Act, exempt from this type of
restructuring? So you're saying that you can't accept the
question?
Ms. McCabe. Well, I don't agree that we are restructuring
the energy system through our rule. I also want to draw a
distinction between the way the energy system works, which is
a--based on a regional interstate grid, very different from
other types of industries.
So the question doesn't really make sense.
Mr. Latta. Well, you know, if I could, Mr. Chairman, I'd
like to maybe submit the remainder of my questions to the EPA
for--because my time has expired.
Mr. Whitfield. Yes. OK. The gentleman's time has expired
and you may submit for the record.
At this time I'd like to recognize the gentlelady from
Florida, Ms. Castor, for 5 minutes.
Ms. Castor. Well, thank you very much, Mr. Chairman, for
calling this hearing to review the benefits of our
Environmental Protection Agency, especially to our health and
to our economy and with the focus on the Clean Air Act.
For those of you in the audience that really like to get
into the numbers of looking at the costs and benefits relating
to rules--our important bedrock environmental rules, the
Congress requires under the Regulatory Right to Know Act that
the Office of Management and Budget submit to us a report and
one was just filed in March and it--what if finds is that EPA's
major rules promulgated between 2004 and 2014 yielded more
benefits than major rules promulgated by other agencies over
the same period.
In the aggregate, the major rules promulgated by EPA have
benefits between $160 billion and $788 billion compared to
costs of just $38 billion to $45 billion. Rules promulgated by
the EPA in fiscal year 2014 alone have resulted in an estimated
$13 billion worth of benefits, far exceeding the $1 billion in
costs--in estimated cost and by 2020 the benefits--the economic
benefit of reducing air pollution is estimated at almost $2
trillion, exceeding costs by 30 to 1.
They go into much greater detail. So for those of you that
like to really dig in to what criteria they look at I encourage
you to do that.
You know, it's very difficult for the Congress and the
public sometimes to focus on impacts over decades of time.
We're always focused on the here and now. But I'll tell you
coming--watching the looming cost that we are going to suffer
if we do not address climate change in a very aggressive it's
really stark and already in the State of Florida we have local
governments having and taxpayers--local taxpayers having to
pony up multimillion dollars to adapt.
In Miami, they're already spending $500 million, $600
million because even on sunny days at high tide the streets are
flooded and they're having now to repair water systems and
wastewater systems already.
And here are some of the other costs that really aren't
discussed. We hear a lot of about cost to the industrial
sector. But let's talk about our neighbors back home. What they
predict are rising costs in property insurance from extreme
weather events, flood insurance--the Congress has grappled with
flood insurance--the rising cost of flood insurance.
One global reinsurance giant predicts that extreme weather
events are going to leave taxpayers on the hook for billions
and billions of dollars in future years. Florida depends on
tourism.
We're going to have to renourish our beaches. That's a very
significant cost. And the Congress is called upon time and time
again to respond to emergencies, extreme weather events. So
let's not lose sight of the true cost to taxpayers and our
neighbors back home, our small businesses from mom and pop
shops to all sorts of businesses. That has to be factored in.
So Administrator McCabe, I was glad to hear in your
testimony that even though the Clean Power Plan is in--on kind
of a regulatory hold for now that many States have been moving
forward voluntarily. Can you give us a quick snapshot of what's
being done voluntarily even though we're kind of in a temporary
holding pattern?
Ms. McCabe. Uh-huh. Yes, absolutely. A number of the States
that are moving forward are States that have been looking at
these issues for a number of years.
They are looking at reasonable restrictions on carbon
emissions from their utility systems or even more broadly
across their economies. They're looking at ways to integrate
their energy planning, their increased investment in wind and
solar, in energy efficiency and planning those in for a
carbon--a freer carbon future.
Ms. Castor. And do I understand that many States in
partnership with their electric utilities are already close to
meeting the goals laid out in the Clean Power Plan?
Ms. McCabe. I believe that that's generally correct. Of
course, the goals are--in the Clean Power Plan are many years
out into the future. But yes, there are States and utilities
that are well on their way, that utilities are increasingly
investing and relying on wind and solar as a significant
portion of their portfolio.
Ms. Castor. And those are job creators. I know EPA doesn't
really look at that side of the equation but one recent report
predicts that due to the Clean Power Plan and just the
significant shift towards renewables that we can anticipate 1
million new jobs in clean energy by 2030.
So there is a lot that goes into this cost benefit
equation. But I think it's plain as day that we have got to act
now aggressively to address the looming costs of the change in
climate.
Thank you, and I yield back.
Mr. Whitfield. At this time, the Chair recognizes the
gentleman from West Virginia, Mr. McKinley, for 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman, and thank you, Ms.
McCabe, for coming again to this. It just seems like you were
here not too long ago.
But let me go back over a little bit to restate that it's
my understanding that this hearing was to examine the effects
of major regulations on the energy and the industrial sectors.
Is that your understanding of the purpose of this hearing?
Ms. McCabe. I believe so, yes.
Mr. McKinley. OK. Thank you. Now, so I go to that is that
these effects of these regulations and there was a report that
Lisa Jackson used when she came here back 6 years ago. Used to
wave this report in front of us that was written by Morgenstern
back in 1999 and it was primarily intended to demonstrate that
she believed that more regulations actually helped the economy.
As a matter of fact, she said that from this report that
one and a half jobs are created for every million dollars spent
in meeting those regulations. Do you remember that report?
Ms. McCabe. Not specifically.
Mr. McKinley. OK. She used to wave this quite often, as
often as you came or come, she used to come and she used to use
this all the time. This justifies why we have so many
regulations.
So I'm just curious about that because, to me, it appears
from looking at the kind of three points of some of the things
these major regulations--there's one about that using this
about the jobs impact.
I think we're picking winners and losers because I don't
see one and a half jobs being created for the hundreds of
billions of dollars that have been spent.
It appears more we're picking winners and losers because in
the coal fields across this country they are struggling with
it. I know that there have been over 40,000 coal jobs lost--
direct coal jobs--let alone the 300,000 secondary jobs that are
affected with it.
So I'm struggling with the premise. So you can't tell me
whether or not you agree with this report any longer?
Ms. McCabe. I am not here to speak about that report,
Congressman, nor am I here to speak about----
Mr. McKinley. OK.
Ms. McCabe [continuing]. How much you would value any
particular regulation.
Mr. McKinley. Well, I just want--in terms of the economy,
what it's doing to the economy is these regulations, what have
happened with it because I think there was an initial premise
this was going to save jobs or create jobs. I don't think it
did.
Then we went--then we went to the environmental--you
pivoted to the environment and temperature and we talked about
temperatures were going to be under control if we pass some of
these rules and regs affecting the coal and the gas industry.
But yet even under the Clean Power Plan the EPA is
accepting that it only is going to reduce the temperature or
lessen it by 15 thousandths of a degree by the year 2100. I
struggle with that.
So it doesn't surprise me at all that now the EPA is
pivoting from the fact that jobs weren't created that there's
no temperature increase. So now they're--just in March, Gina
McCarthy was before us and she testified that she said that
it's not about the environment, it's not about the health and
safety for the people that we've been passing this.
She said it's about global leadership and I think wow, that
was--that was a jaw-dropping revelation that she came out--this
is not about the environment is why we're passing these--
despite what you just said to Joe Barton that's not what this
whole idea was about.
So I'm struggling with it because we've got a chart that
shows yes, we may be doing it, adhering to it in America but
the rest of the world is not following our global leadership
that was being promoted.
The rest of the world is continuing to use coal and create
more fossil fuel and CO2 emissions in the atmosphere
with this. Germany is building 26. India is going to double its
production with it.
So, to me, it comes across more as just an effort to have
bigger, broader, stronger, more intrusive Government as
compared to really helping people and their economy.
So we have seen it in the ag community what the EPA is
affecting, that that part of our sector of our economy, when
they went after the waters of the United States they went after
the farm dust rule, if you remember, for a while.
But then they backed off. Did they back--did you all back
off because you got push back? Because the science--you were
saying how it was supposed to be good for your health. But once
it was promoted on the farm dust you backed off.
Ms. McCabe. Congressman, respectfully, I have to disagree
with the way you're characterizing various prior statements of
the Administrator and others in EPA just on a whole range of
issues.
Mr. McKinley. I'm just going from testimony that they gave.
I'm not characterizing. Then you came out with a water quality
standard that you didn't even give the States a chance to have
a comment period.
You came out with a water advisory that is 70 times more
stringent than it is in Europe, 20 times more than numbers of
States. Communities that are struggling in rural America to try
to meet the water quality are going to spend millions and
billions of dollars across this country to meet a standard that
is questionable as to whether or not it's going to have an
effect with it.
So I'm going to go back in the remaining time--maybe I've
lost my time--what's the answer, back to Joe Barton, when we
talk to a coal miner that lost his job? It's OK because the
environment is better? Is that what you want to tell him?
Ms. McCabe. No. No, sir. Not at all. But I think it's
important to recognize that there's lots of things going on in
the energy system and coal is not as competitive as it was
because of natural gas and other things going on in the
industry.
Mr. McKinley. But States with natural gas are also into
recession. I'm sorry I'm going over my time.
Mr. Whitfield. Yes, the gentleman's time has expired.
Mr. McKinley. But we've gone over to Louisiana, New Mexico,
Oklahoma, Illinois, Wisconsin--they are all struggling with
this thing, and they are not coal-producing States.
Mr. Whitfield. At this time I would like to recognize the
gentleman from Iowa, Mr. Loebsack, for 5 minutes.
Mr. Loebsack. Thank you, Mr. Chair. Good to see you, Madam
Administrator. It's always good to have you here.
We're talking about a lot of very important issues here and
actually in some ways I can identify with some of the things
that were just said, being from Iowa. We have a lot of issues
having to do with water, a lot of different things.
I am confident that we can fight our way through a lot of
those issues. We're going to have to go to the State level, at
the local level, at the Federal level.
I think we're going to have to get all the stakeholders
together eventually and we're going to have to work through
this. It's not going to be easy, there's no question about
that, especially on the water issue.
But I do want to speak to two different issues, if I may.
As you might imagine, I want to talk to you about ethanol a
little bit. I want to talk to you about wind a little bit, two
things that are very important for the State of Iowa, two
issues, I think, where we have made tremendous progress over
the years as well.
When it comes to ethanol and the RFS, the renewable volume
obligations--the RVOs--we know because the Department of Energy
has stated that using ethanol as a vehicle fuel has measurable
greenhouse gas emissions benefits compared with using gasoline.
CO2 released when ethanol is used in vehicles is
offset by CO2 captured when crops that we use for
the ethanol are grown.
Given the role that renewable fuels play in cutting down
greenhouse gases, and I realize it's not universally accepted
but I believe that that is in fact the case, shouldn't the
recent RFS or RVOs--the renewable volume obligations--for 2017
be increased to achieve this goal?
Why are they at the level that they're at, given that the
EPA itself has said that this is good for our environment?
Ms. McCabe. Yes. Yes, sir. Well, you're exactly right. That
is why Congress passed the renewable fuel standard, one of the
reasons. Also the other was energy security and we have found
that there have been increases in a whole range of renewable
fuels including ethanol that are good for climate change.
In our proposal we actually did propose an increase from
the prior year in the amount of renewable fuel that would be
expected to be used in the transportation system and each year
as we've done that RVO those numbers have grown.
We have--our job is to set those expectations and we have
done that after a careful review of what the system is able to
accommodate in order for those fuels to be used. Congress
didn't just want them to be produced and sit somewhere. They
wanted them to be actually used in the system and replace the
petroleum fuels.
Mr. Loebsack. Do you agree that if we have infrastructure
improvements, especially for E15, that that would help us move
along a little bit more quickly in terms of trying to get to
the goal that we're supposed to get to?
Ms. McCabe. I do think so and I think that that
infrastructure is growing. It's just taking a little bit longer
than everybody thought it would.
Mr. Loebsack. Right, and I won't get too much in detail
about the methodology used by the EPA but that's always a big
concern, obviously, that a lot of us have in these States that
produce ethanol and biodiesel for that matter too. It's not
just an ethanol issue, as you know.
So I just want to make sure that we stay on top of this
because we can in fact accommodate, I think, more production of
ethanol and biodiesel. We've just go to--in particular we've
got to deal with the infrastructure issue, I think, going
forward.
You know, too, that Iowa is--I know that Congressman Green
talked about Texas being a wind producer. In Iowa, you know,
we're well over 30 percent of our electricity now is accounted
for by wind energy, as you know.
The concern that a lot of us in Iowa has is the Clean Power
Plan, which as you know says that we've got to achieve a 32
percent reduction in carbon pollution.
But the start date for all of that is January of 2013 and a
lot of States like Iowa, at least some States and Iowa in
particular, achieved a tremendous amount of progress prior to
that date. And I mentioned this to Administrator McCarthy as
well, kind of gone round and round about this--you know, 32
percent.
The Clean Power Plan, I think, makes a lot of sense moving
forward. It's going to be more difficult for some States than
others. But Iowa has already made tremendous progress and we're
not getting an credit for the progress that we made in the past
by starting that date at 2013.
Is there any possibility for flexibility for States like
Iowa to get credit for what we've already done?
I think it's unfair in some ways to start at that
particular date and not take into account what States like Iowa
have already done, especially on wind production.
Ms. McCabe. Yes. Well, I think this question really
reflects this debate that folks have been having this morning
about what is our role under 111(d).
It is not an energy policy rule. It is technology rule and
for any technology rule we do under Clean Air Act we have to
pick a starting point. And you're always going to have people
on one side or the other that wishes the starting date were a
different time. We picked ours because of the information that
we had from sources out of that date.
It is still the case, however, Congressman, that States
like Iowa that have been aggressive and are continuing to be
aggressive in renewable energy are charting themselves a path
to meet the Clean Power Plan and especially if States choose to
get into a relationship with one another, in trading
relationships, that can provide great advantages to a State
that is really on the leading edge of developing those
resources.
Mr. Loebsack. I would just encourage more flexibility
moving forward on this issue. Thank you, Madam Administrator.
Thank you, Mr. Chair.
Mr. Whitfield. At this time the Chair recognizes the
gentleman from Virginia, Mr. Griffith, for 5 minutes.
Mr. Griffith. Thank you, Mr. Chairman, and Madam
Administrator. I'm going to read to you from Section 321 of the
Clean Air Act. This provides, quote, ``the Administrator shall
conduct continuing evaluations of potential loss for shifts of
employment which may result from the administration or
enforcement of the provisions of the Clean Air Act and
applicable implementation plans including where appropriate
investigating threatened plant closures or reductions in
employment allegedly resulting from such administration or
enforcement.''
Yes or no, does the EPA--I would submit the EPA does not
conduct these continuing evaluations. Isn't that correct?
Ms. McCabe. Sir, whenever we do a regulation we look at
those very characteristics in great detail.
Mr. Griffith. You look at those characteristics when you
propose a new regulation but you do not conduct continuing
evaluations of potential loss through shifts of employment and
then investigate threatened plant closures or reductions in
employment allegedly resulting from the administration or
enforcement of those regulations. Isn't that true? Yes or no.
Ms. McCabe. There have been a variety of efforts over the
years, but you're reflecting that there is a difference of
opinion about our obligations under that study.
Mr. Griffith. Well, there certainly isn't a difference of
opinion with ``shall,'' is there? ``Shall'' means you shall do
it, does it not? There's no wiggle room, is there?
Ms. McCabe. It does say ``shall,'' but it reflects a set of
activities that----
Mr. Griffith. All right.
Ms. McCabe [continuing]. People could disagree on exactly
what those were.
Mr. Griffith. I don't know how you disagree on that, ma'am.
But we'll just leave that as it is. Despite that plain
language, I understand that in 2009 in response to a letter
from Mr. Barton and Mr. Walden, the EPA said it has not
interpreted the CAA Section 321 to require the EPA to conduct
employment investigations and taking regulatory actions. Can I
interpret your prior answers to mean that it's still the
position of the EPA?
Ms. McCabe. I wasn't involved in the writing of that
letter, Congressman. But I'd be happy to provide further
information on it.
Mr. Griffith. All right. I will follow up with that.
According to the American Coalition for Clean Coal
Electricity by the end of 2016 it is estimated that almost 51
megawatts of coal-fired generation will retire or convert
because of EPA policies.
And I know the EPA was asked to conduct an investigation
pursuant to 321 of the Clean Air Act with respect to any of
these plant retirements. But that has not happened, has it?
Ms. McCabe. As I said, each time we do a rule we look--that
affects the power industry we do a forecast to get a sense of
what the impact on the industry may be.
Mr. Griffith. But when Murray Energy asked you all to do
this and filed suit on that, you asked that it be dismissed and
claimed that the energy corporation did not have standing to
ask you to do that nor had they been harmed by the Clean Air
Act. Have you looked into the situation at all?
Ms. McCabe. Sir, I really don't want to speak to ongoing
litigation, which you understand is very active.
Mr. Griffith. I understand that. But I will tell you, here
is the concern I have. My district has lost thousands of jobs.
I don't have any Murray Energy plants or coal-generating plants
or coal-production plants in my district.
But it does concern me when they send out last week a
notice that they are going to lay off another 4,400 employees.
According to an article in the Wall Street Journal, a year ago
they had 8,400 employees.
Now they have 5,356 and they are laying off 80 percent of
those, or at least they have sent out the warning notices
required by law.
But they may lay off 80 percent of those. While it is true
that natural gas prices are low, it is also true that
regulations have killed the coal industry in many, many ways
and it doesn't seem that you all are following through on your
Section 321 requirement that your constantly continuing
evaluations of potential loss or shifts in employment and then
when there are losses, and Mr. Murray has made it very clear
there are losses coming. And if you don't want to do that one
because there's litigation look at Alpha Natural Resources.
I don't think they're suing you right now. But they are in
bankruptcy court and they do have a lot of--or had a lot of
employees in my district. There are still some but not as many
as there were.
You have a requirement to follow up on this. I don't
believe you're doing it. Your answers here today indicate to me
you're not doing it. The industry is in trouble.
I will also tell you what's interesting is you talked about
methane being a whole lot worse than carbon dioxide. Right now
they are proposing in my region two or three new giant gas
pipelines.
Now, I am not against the gas industry. But you have
indicated there is a lot of leakage when they're both getting
the natural gas out of the ground, which we have some in the
district, and then when they are piping it across the country.
But your policies on coal have pushed people to natural gas
even before the coal-fired power plants have used up their
useful life and I think that's a shame because I think you all
have been penny wise and pound foolish and you certainly have
not considered the fact that thousands, tens of thousands, of
people in the coal industry and those industries that supply
the coal industry have lost their jobs and you all as a group
have not done your job under Section 321 of the Clean Air Act.
I yield back.
Mr. Whitfield. Gentleman's time has expired. The gentleman
from Illinois is recognized for 5 minutes. Mr. Kinzinger.
Mr. Kinzinger. Thank you, Mr. Chairman, and Acting
Assistant Administrator, thank you for being here, and thanks
for your service to your country.
I echo the concerns of many of my colleagues about the
sheer number of regulations that have come out of the EPA
recently. But I'm more concerned about how our economy and the
small businesses and manufacturers are supposed to handle all
these regulations.
I think many Americans are very concerned, rightly so,
about the state of our economy and I share those concerns,
especially in light of the cost of so many of the EPA's
regulations.
I just have a few questions. In a recent report by the
Competitive Enterprise Institute, they estimate the total
compliance costs for EPA regulations to be about $386 billion
in 2016. To put that in perspective, that's 2.1 percent of our
GDP.
Do you think that the $386 billion estimate is in the
ballpark and if you don't what is your best estimate of
compliance costs?
Ms. McCabe. I really couldn't speak to that number. People
do various studies. They base their studies on various
assumptions that may or may not be what's actually borne out by
the rule. So I really couldn't speak to that.
What I can say is that we do an evaluation for each one of
our rules of the expected costs and the expected benefits
associated with it.
Mr. Kinzinger. Would you agree that when a manufacturer
faces a new compliance cost--let's say it's not $386 billion if
you don't think so, or whatever the number is, there's a
number--do you think they have to commit resources to comply
with those rules?
If a manufacturer has to comply with your rules do they
have to commit some of their own resources to do it?
Ms. McCabe. Sure. There would be expectations that they
would invest in control equipment or other approaches to reduce
emissions.
Mr. Kinzinger. So if a manufacturer has to devote resources
to comply with new EPA rules they have fewer resources
available to produce or expand production of goods and services
unless they increase prices?
Ms. McCabe. Well, I don't know that it's as simple as that,
and our rules always look at what kinds of approaches are cost
effective and the impact that they would have, and in fact many
industries have grown over the years with making investments in
cleaner technology.
Mr. Kinzinger. How does the EPA examine the impact of
higher prices for goods and services? So, I mean, obviously we
can go back and forth on, you know, whether it's good, bad,
indifferent.
But we admit and we understand that there is some level of
resources that a manufacturer will have to commit, which is
less invested in expanding or promoting goods.
How does the EPA examine the impact of higher prices for
goods and services or less expansion throughout the whole
economy as a result? Do you guys take that into account?
Ms. McCabe. So we follow OMB directives and methodologies
in looking at our economic evaluations. Not everything has
tools available to look at the impacts and so we work with OMB
and others to continually develop better tools for that.
Mr. Kinzinger. Mullin, you have to sit back.
Ms. McCabe. So that's how we do it. Right now, there aren't
good tools that you could accurately do whole economy modeling
such as you described.
Mr. Kinzinger. So you're saying that there is not--
basically, the second and third order of facts is not taken
into account. So, you know, basically cost of--if the
manufacturer has to invest what they are not going to grow by
that's not taken into account by those models?
Ms. McCabe. Or how much they are going to grow and be able
invest more because it's been--it's good for their business.
Mr. Kinzinger. And for the EPA rule setting carbon dioxide
standards in the new coal plants did the EPA consult with
equipment vendors or contractors to determine if a plant could
be built with carbon capture and storage technology to meet new
standards?
Ms. McCabe. We certainly consult with a whole variety of
people in the industry.
Mr. Kinzinger. And can you identify any of the vendors that
made those assurances and if not, why not?
Ms. McCabe. I'd be happy to get back with you--to you with
more details on who we spoke to.
Mr. Kinzinger. OK. But you will be able to do that then? We
will count on that response.
Ms. McCabe. Sure.
Mr. Kinzinger. OK. And for the existing coal plant rule,
EPA set emission standards that are impossible to achieve at
units themselves and will require beyond the fence actions. Is
there any coal-fired electric generating unit in the world that
can meet carbon dioxide emissions rate that the Agency has set
for existing power plants?
Ms. McCabe. Through its own--the coal emissions?
Mr. Kinzinger. Yes.
Ms. McCabe. Themselves? No, I don't believe so. But there
are technologies and techniques that they can use in order to
reduce their emissions.
Mr. Kinzinger. And these would be the beyond the fence
actions?
Ms. McCabe. Well, CCS would be one way that a coal plant--
fuel mixing is another way that they could reduce their
emissions.
Mr. Kinzinger. So the next question and my last one, is
there any control equipment or work practice that exists today
that would allow an existing coal-fired unit to meet the
standard? You think--you say there is.
Ms. McCabe. Yes.
Mr. Kinzinger. OK. All right. Well, it will be interesting.
With that, I yield back. Thank you.
Mr. Whitfield. At this time I will recognize the gentleman
from Ohio, Mr. Johnson, for 5 minutes.
Mr. Johnson. Thank you, Mr. Chairman, and Ms. McCabe,
thanks for joining us today. You know, the Congressional Budget
Office has stated that if we increase the costs of energy it
increases the cost of goods and services, costs which fall
disproportionately on low-income households like those that I
represent in eastern and southeastern Ohio.
You previously testified that the Agency did not assess the
full economy wide impacts of the Clean Power Plan. So is EPA
currently using economy wide modeling to estimate the full
economy impacts of its rules?
Ms. McCabe. We don't have tools available to do that kind
of analysis.
Mr. Johnson. But the law requires you to do that kind of
analysis, doesn't it?
Ms. McCabe. Whole economy modeling? I don't believe so,
sir. The law requires----
Mr. Johnson. Aren't you--aren't you supposed to consider
the economic impacts of the--of the rules that you put out? I
think that's what I heard just a little bit ago.
Ms. McCabe. In accordance with the methodologies that the
Office of Management and Budget sets forth and we follow those
procedures and----
Mr. Johnson. But I thought I understood just a little bit
ago that you're not following those procedures either.
Ms. McCabe. No, we are.
Mr. Johnson. OK. Don't you think that the EPA should
consider those full economy impacts?
Ms. McCabe. I think these are very, very complicated
issues.
Mr. Johnson. Oh, yes. They are complicated. The rules are
complicated. The regulations that you guys are putting out are
complicated. It's draining the life blood out of our--out of
our businesses.
Between the Clean Power Plan, the Waters of the U.S. and
others that you folks have gotten, you just heard from my
colleague, Mr. Kinzinger from Illinois, the hundreds of
billions of dollars that you guys are sucking out of our
economy every year that could be going toward job creation.
You know, the money that is coming out in Federal
regulations, particularly from the EPA, is like a--is like a
dadgum permission slip to do business in America. Doesn't
produce a product, doesn't pay a salary. It doesn't go to any
company's bottom line. It's like going to the movie theater and
buying a ticket but you don't get the popcorn or the diet Coke.
You've got to pay extra to get that stuff and the projector
doesn't work. It's a ripoff of the American people, and the
Federal courts have shown and have demonstrated through their
rulings that you guys are consistently overreaching.
I think it's absurd. I think it's irresponsible. Quite
honestly, Ms. McCabe, I think it's un-American. You obviously
don't have a concern and your department doesn't have a concern
for the economic well-being of the very people that create jobs
in this country.
Let me ask you another question. Is it correct that the EPA
will not engage the Clean Air Scientific Advisory Committee to
consider adverse effects of implementing air quality standards?
Ms. McCabe. It's not correct that we will not. We----
Mr. Johnson. Have you done so?
Ms. McCabe. We----
Mr. Johnson. Have you done so? Yes or no.
Ms. McCabe. Not in the context----
Mr. Johnson. OK. So you haven't. So why not? Why not up
until now?
Ms. McCabe. The Clean Air Science Advisory Committee has
focused its attention on the standards, on the standard
setting.
Mr. Johnson. No, I'm asking you. I know what they do. I am
asking you why you haven't consulted with them--why you haven't
engaged with them.
Ms. McCabe. We engage with them all the time.
Mr. Johnson. No. You just told me you didn't engage with
them, that you haven't up until now. So first you say you
didn't, now you say you did. That's the same kind of double
talk that our businesses are getting across the country. Have
you engaged with the CASAC?
Ms. McCabe. We have----
Mr. Johnson. Have you engaged with the CASAC----
Ms. McCabe. I am trying to answer you, Congressman.
Mr. Johnson. No, you are not. It is a yes or no question.
Have you engaged with them?
Ms. McCabe. Yes, we have engaged with them.
Mr. Johnson. Why did you just tell me that you haven't?
Ms. McCabe. Because----
Mr. Johnson. You said not up until now.
Ms. McCabe. Because you asked me about a specific topic.
Mr. Johnson. No, I asked you is it correct that the EPA
will not engage with the Clean Air Scientific Advisory
Committee to consider the adverse effects of implementing air
quality standards. You said it's not true. I said, ``Have you
engaged with them?'' You said not at this time.
Ms. McCabe. Not on that topic.
Mr. Johnson. OK. Well, that's what I am asking you about.
Ms. McCabe. All right.
Mr. Johnson. That's why I don't let you ramble on because
you try to deflect the answer to something that you want to
talk about instead of what the American people are concerned
about, why you are not doing your job and why you are not
considering the implications of the rules that you're putting
out.
Is it correct that the EPA does not believe it has to
investigate jobs losses pursuant to Section 321 of the Clean
Air Act? Do you think you're supposed to do that?
Ms. McCabe. As I noted----
Mr. Johnson. Yes or no? Do you think you are supposed to do
that? I got six seconds. Do you think you're supposed to do
that?
Ms. McCabe. This is a matter in litigation, Congressman.
So----
Mr. Johnson. So due to a matter that is in litigation, you
can't answer whether or not you are supposed to do that?
Ms. McCabe. We believe that we are discharging our duties
under the Clean Air Act.
Mr. Johnson. Are you required to investigate jobs losses
under Section 321?
Ms. McCabe. The statute speaks for itself and says what it
says, and we're ----
Mr. Johnson. And you are not doing it. It's absurd, Ms.
McCabe.
Mr. Rush. Gentleman, order.
Mr. Whitfield. Gentleman's time has expired. At this time,
I recognize the gentleman from New York, Mr. Engel, for 5
minutes.
Mr. Engel. Thank you. Acting Assistant Administrator
McCabe, thank you for joining us. I am a little taken aback by
the hostility that I hear in this room. I just want you to know
that there are many of us who approve of the work that the EPA
does.
Mr. Johnson. Point of personal privilege, Mr. Chairman.
Mr. Engel. We want--we want--we want clean air.
Mr. Whitfield. Would the gentleman suspend for just 1
minute?
Mr. Engel. Yes.
Mr. Johnson. You know, I find it absurd that we would be
challenged on an air of hostility when we are doing what the
American people require us and request us to do, which is to
hold the EPA accountable.
If we are not going to do it then who is going to do it?
Mr. Rush. Mr. Chairman--Mr. Chairman--Mr. Chairman--Mr.
Chairman.
Mr. Johnson. I have the floor. I have been recognized.
Mr. Engel. You took my time.
Mr. Johnson. Though I claim back my time. His time was
over.
Mr. Whitfield. OK. Let's hold it for just a minute.
Obviously, climate change and regulations are something we all
feel very strongly about, and I don't think it's correct to
question anyone's motives.
And we all have very strong feelings about this. Mr.
Johnson is speaking in defense of his constituents. Mr. Engel
is expressing what he perceives as hostility. What would the
gentleman like to say?
Mr. Rush. Mr. Chairman, my side has sat here very patiently
and calmly while this witness, who by every indication has
worked tirelessly on behalf of the American people--to be
called un-American, that is absurd.
Mr. Whitfield. Well, Mr. Rush----
Mr. Rush. That is extreme and I said it to you when it was
mentioned, if you don't agree with the facts, then all of a
sudden you are called un-American.
Mr. Chairman, there is no place in this hearing for a
witness, be it from the EPA or whatever governmental agency
there is to be called an un-American.
Mr. Whitfield. He said it was in his opinion un-American.
He didn't say she was un-American. And there are very strong
feelings on this issue because many people, and we are speaking
for our constituents, believe that EPA is exceeding its legal
authority under the direction of a president who is trying to
impose his will on climate change around the world. So there
are strong feelings on the issue, there is no question.
Mr. Engel, you are recognized. We will give you--you were
about 4 minutes when we interrupted you.
Mr. Engel. I think it was more than 4, Mr. Chairman. I
would like to have my 5 minutes. I really just----
Mr. Whitfield. Well, I would be happy to give you 5
minutes.
Mr. Engel [continuing]. Say anything except welcome the
witness and----
Mr. Whitfield. You are recognized for 5 minutes.
Mr. Engel [continuing]. Let me say that I am not
questioning anyone's motives. Everybody has the right to
express their mind. I just question the hostility that the
questions are being asked. I think you can disagree with a
witness. You can tear down whatever they have to say. But I am
a big believer in you do it in a way that doesn't call anyone
un-American and that you don't question anyone's motives.
I think that the Administrator is trying to do her job. We
are trying to do our job, and I think that we can have
differences of opinion and state the disagreements without
being hostile. That's all I wanted to say.
I am a supporter of what you try to do with clean air and
clean water. I believe the history of the Clean Air Act shows
that the United States can reduce pollution while creating jobs
and strengthening the economy, and your testimony and Ranking
Member Rush's opening statement set forth statistics on how
EPA's pollution reduction program saved lives and improved
public health, particularly among children and senior citizens.
So I won't repeat that here. I'll get to my questions. I
have about four of them, so if you could keep your answers
brief I would appreciate it.
Many of my colleagues criticize the compliance costs of
EPA's regulations. Please explain the opportunities that
regulated entities and industries have to communicate concerns
to regulators during the rulemaking process and please explain
how those concerns are taken into account.
Ms. McCabe. Both before we start the rulemaking and
certainly through formal comment periods we solicit people's
views on all of the information that we use to develop our
rules including rules about cost.
We are constantly looking for ways to adjust the rules to
provide opportunities for people to comply with them in the
most cost-effective way possible.
Mr. Engel. Thank you. In your experience how often are
major rules adopted where projected costs exceed projected
benefits?
Ms. McCabe. Where costs exceed the benefits I am not aware
of any that I've worked on where the costs exceeded the
benefits.
Mr. Engel. Thank you. The U.S. has become a world leader in
pollution control technology supporting millions of jobs,
generating hundreds of billions of dollars in revenues and tens
of billions of dollars in exports every year.
Has the Clean Air Act contributed to the development of
that industry here in the United States?
Ms. McCabe. Yes, sir, it has through our automotive
technologies as well as other pollution control technologies.
It absolutely has.
Mr. Engel. Thank you. The EPA and the National Highway
Safety and Transportation Agency have proposed new vehicular
fuel efficiency standards that establish average fleet one
standards of 40.1 miles per gallon by model year 2021 and 49.6
MPGs by model year 2025. If possible, please discuss the cost
benefit consideration associated with this proposal.
Ms. McCabe. So this proposal is great because it means
American motorists are using less gas. That means they are
pumping less. They are saving that money in their pockets and
everybody appreciates that.
Mr. Engel. Thank you. On August 8th of 2011, EPA finalized
a cross-State air pollution rule and after a series of court
challenges that delayed implementation I understand that the
EPA now expects to update and finalize the rule by next month,
August 2016. If possible, could you please discuss the cost
benefit considerations associated with this rule making?
Ms. McCabe. Yes, sir. Absolutely.
This is a rule that's required for upwind States to reduce
their emissions that contribute to ozone air quality problems
downwind.
We reviewed the variety of technologies that are available
to electric utilities to reduce those emissions of NOx and
found a number of extremely cost effective approaches--$1,500
per ton or less--that could be implemented very quickly
including turning on pollution control technology that has been
installed but is not being run at this time.
Mr. Engel. Thank you. On June 22nd, 2010, EPA finalized a
rule which strengthens the primary sulfur dioxide NAAQS to a
level of 75 parts per billion. Principal effects would be to
require additional controls on fossil fuel-fired power plants.
If possible, could you please discuss the cost benefit
considerations associated with this rule making?
Ms. McCabe. So sulfur dioxide has very clear impacts on
public health. So every time you reduce sulfur dioxide you are
achieving benefits that can be monetized in terms of people's
public health.
There are very well understood technologies, very cost
effective technologies that are available for facilities to
reduce their emissions of SO2 and I should note that those very
same kinds of technologies are helpful in meeting other
requirements.
Mr. Engel. Well, again, thank you for your testimony and I
appreciate the work you do and sorry that you weren't treated
very courteously.
Ms. McCabe. Thank you, sir.
Mr. Whitfield. At this time, I recognize the gentleman from
Oklahoma, Mr. Mullin, for 5 minutes.
Mr. Mullin. Thank you, Mr. Chairman. Thank you once again
for being here. I don't envy your position and unfortunately I
have lost a tremendous amount of respect for the EPA and what
their mission statement has turned into.
From trying to protect our environment, which I'm a big
advocate for--I am the fourth generation on my farm. We live in
the same location that, literally, my family stopped walking
because I'm Cherokee and when we came into Oklahoma, still live
in the same area. Love it.
And so we're about protecting it. My kids will grow up on
the same place. But the EPA has turned into more of an agenda-
driven agency than actually doing its original mission
statement as you stated earlier.
And I just want to kind of rehash some things. I mean, you
have--you have said that you believe that energy costs is going
to be lower due to the EPA's regulation. Is that correct?
Ms. McCabe. What I was referring to was our projections in
the Clean Power Plan, that by the 2030 compliance year because
of the investment in energy efficiency that we predicted that
people's bills would go down by about 7 percent.
Mr. Mullin. So out of those Clean Power Plans, there are
several regulations specifically to the power plants and by
fully implementing all of those out of 16 rules it's going to
cost the industry--now, this is where you are saying it's going
to lower costs to our consumers--by the time all of these 16
rules are fully implemented it's going to cost the industry
$28,912,000,000 a year annually to comply--annually. Now, who's
going to pay for that?
Ms. McCabe. Well, I'm not sure where your number comes
from, Congressman, so----
Mr. Mullin. This is from you guys. EPA's estimate of
compliance cost--EPA's--these are yours--so this isn't my
number. This isn't the majority's number. These are your
numbers. The 16 rules that you have towards power plants,
$28,912,000,000 annually--your numbers--to comply. Now, where
is the cost saving to the consumer? Who is going to pay for
that?
Ms. McCabe. This is a very large industry. The utility
industry----
Mr. Mullin. No, no, no, no. Who is going to pay the $28
billion? Let us just round it up to $29 billion because you
guys usually underestimate because you want to try and make
your numbers look good. So let's say $29 billion annually. Who
is going to pay for that?
Ms. McCabe. What I am trying to say, Congressman, is that
consumers pay rates which are set through----
Mr. Mullin. So what you're saying is you expect the
industry to absorb it?
Ms. McCabe. I am not saying any--I am not giving you any--
--
Mr. Mullin. Well, now, you made the claim that the
consumers' cost was going to go down.
Ms. McCabe. Yes, sir.
Mr. Mullin. OK. How are you coming up with that claim if
you can't answer who is going to pay for the $29 billion that
you guys estimate it is going to cost annually to comply with
your regulations?
Ms. McCabe. This industry invests every year millions and
millions of dollars----
Mr. Mullin. This is--no, no, no. This has nothing to do
with investment. This has to do with complying with your
regulations.
Ms. McCabe. Respectfully, Congressman, it does have to do
with investment.
Mr. Mullin. No. No, it doesn't. This is to comply.
Ms. McCabe. Yes, and they're----
Mr. Mullin. There is a huge difference. I am a business
owner. There is a cost to implement every regulation that comes
in. That has to either be absorbed by the company, which can't
usually absorb it, or it's got to be passed on to the consumer.
Now, if you are going to sit here and tell me as a witness
that it is going to lower the cost, you are telling the
American people that it is going to lower the cost but your
estimates--your estimates are saying it's going to cost $29
billion annually for the industry to comply and your only
answer is that it is going to be absorbed by the industry? You
are making that assumption?
Ms. McCabe. The increased use of energy efficiency will
mean that people are using less energy.
Mr. Mullin. Now, the last time you were here I went through
energy efficiency that you guys were claiming and we didn't
show that. The cost of the compliance of the appliances had
went up and greatly outpaced the cost of energy savings. So now
you are saying that it's going to save it because of energy
savings. So you're making an assumption--you are making a false
claim then?
Ms. McCabe. I am not making a false claim.
Mr. Mullin. No, you are saying that it is going to save the
consumer dollars. You are making that assumption----
Ms. McCabe. I am----
Mr. Mullin [continuing]. And so you are making a false
claim because there is nothing to back that up.
Ms. McCabe. What there is to back that up is our regulatory
impact analysis, which lays out all of this analysis----
Mr. Mullin. By your own costs it's $29 billion a year. Who
is going to pay for it?
Ms. McCabe. Sir, you need to look at the regulatory impact
analysis that goes through----
Mr. Mullin. No. What you need to do is understand the
industry. I read your bio. You have never worked in the
industry. You have worked against the industry from day one.
Ms. McCabe. That is absolutely not true, Congressman.
Mr. Whitfield. The gentleman's time has expired.
Mr. Rush. Mr. Chairman, a point of order. When are you
going to stop the badgering of witnesses before this committee?
And then I respect the prerogatives of every member of this
committee--every Member of the House. I respect the witnesses.
Mr. Chairman, if they're asked a question, then they should
have some reasonable amount of ----
Mr. Whitfield. Well, I didn't--it's not my opinion that
Mr.----
Mr. Rush. Mr. Chairman, please don't cut me off. At least I
ask for some reasonable assurance that they are going to be
able to answer the question that they are asked. Now, Mr.
Chairman, this hearing is getting way out of hand and then you
have to have some responsibility for it.
Mr. Whitfield. This hearing is not out of hand.
Mr. Rush. Yes, the hearing is----
Mr. Whitfield. People have a right to ask the questions.
Mr. Rush. This witness has been badgered and badgered----
Mr. Whitfield. She has not been badgered.
Mr. Rush [continuing]. And badgered and badgered and
badgered and badgered, Mr. Chairman.
Mr. Whitfield. I respectfully disagree with you.
At this time, I recognize the gentleman from Missouri, Mr.
Long, for 5 minutes.
Mr. Long. Thank you, Mr. Chairman. I appreciate and I wish
there was as much respect on the House floor for the activities
there as what there are in this room and if you want to look at
disrespectful look at last Thursday on the floor of the House--
the representatives of the people's House.
Ms. McCabe, I am sure you're aware in February of this
year--I moved to the chair. I can see--it's the only one I
can't see--get him out of here.
But I'm sure you're aware that in February of this year the
Supreme Court issued a stay on the implementation of the Clean
Power Plan. The EPA has stated it will continue to provide
tools and support for States that seek the Agency's guidance
and just last month issued a proposed rule on design details
for a program out of the Clean Power Plan.
Why does EPA continue to issue implementation guidance on
the Clean Power Plan in light of the Supreme Court's stay and
shouldn't the EPA stop issuing guidance for the Clean Power
Plan?
Ms. McCabe. Congressman, we are not implementing the Clean
Power Plan, which is what the court stayed. No State is
required to do anything under the Clean Power Plan. While that
is----
Mr. Long. But you're issuing guidance on it or not?
Ms. McCabe. We are developing further tools in response to
requests from States that are voluntarily choosing to go
forward and work on these issues and the Supreme Court did not
stay all activity of the Agency. It did not stay activity of
States that want to do something to address these important
public health issues.
Mr. Long. Yes, but it issued a stay on the implementation
of the Clean Power Plan, correct?
Ms. McCabe. Which we are--which we are not doing.
Mr. Long. So you are not issuing guidance on the Clean
Power Plan?
Ms. McCabe. Developing tools is not implementing the Clean
Power Plan, which is what was stayed.
Mr. Long. What is the EPA's interpretation of the stay of
the Clean Power Plan?
Ms. McCabe. Our interpretation is that we cannot require
any State to take any activity that is required under the Clean
Power Plan and we are not doing that.
Mr. Long. OK. Does EPA consider the cumulative impact of
economically significant rules when proposing additional rules
and if so what influence does this have on the EPA when
proposing new rules or updates to current rules?
Ms. McCabe. Each time we do a rule we take into account all
the rules that have gone before it and build that into our
analysis of costs and benefits.
Mr. Long. OK. Since 2009, the EPA has published nearly
3,900 final rules--the final answer. Roughly, how many of these
rules have been considered economically significant, which
means they have an annual effect on the economy of $100 million
or more?
Ms. McCabe. I don't know the answer to that question,
Congressman. I would be happy to get it for you.
Mr. Long. I didn't think you would but I was hoping you
would be able to get it for me. So I----
Ms. McCabe. Yes. Absolutely. We will gladly get it for you.
Mr. Long. Yes, I appreciate that. And under the Paris
climate agreement the United States agreed to revisit its
greenhouse gas goals in 5 years with the object of making them
more stringent.
Will this agreement lead the EPA to more proposed stringent
standards for the power sector, you think?
Ms. McCabe. I really can't speak to rules in the future,
Congressman. But this is a global and challenging problem that
people will continue to work on.
Mr. Long. Former climate chief--excuse me, a former chief
climate counsel of an environmental group recently mentioned
that there could be newer versions of the Clean Power Plan if
the Supreme Court rules in favor of the plan.
Is the EPA currently doing work on a more stringent version
of the Clean Power Plan for power plants?
Ms. McCabe. No, we are not.
Mr. Long. Under Section 111, standards are to be reviewed
every 8 years. Would more stringent standards be in fact a
possibility?
Ms. McCabe. That every 8-year review applies to Section
111(b), which is the standards for new power plants. So just
wanted to clarify that.
But at this moment, we are not looking at any review of the
111(b) and 111(d) standards.
Mr. Long. OK. Well, I'd feel, you know, kind of left out if
I didn't get to raise my voice at least once today. So I want
to thank you for being here and I yield back.
Mr. Whitfield. The gentleman yields back and that concludes
all the questions. So Ms. McCabe, thank you for being with us
this morning. We look forward to continuing working with you on
these issues.
At this time, I would like to call up the second panel of
witnesses, and on the second panel we have--I am actually just
going to introduce the second panel as we call them for their
testimony.
So if the second panel would come forward and Ms. McCabe
thank you again. Our actual first witness on the second panel
will be Mr. Travis Kavulla, who is the president of the
National Association of Regulatory Utility Commissioners and
he's the vice chairman of the Montana Public Service
Commission.
So we will recognize Mr. Kavulla for his 5-minute opening
statement, and just make sure that the microphone is on and you
see the lights on the table. When the 5 minutes is up, the red
light will come on.
So at that point, you can start summarizing. But we do
appreciate all of you being with us this morning and, Mr.
Kavulla, you are recognized for 5 minutes for an opening
statement.
STATEMENTS OF TRAVIS KAVULLA, PRESIDENT, NATIONAL ASSOCIATION
OF REGULATORY UTILITY COMMISSIONERS, ON BEHALF OF THE NATIONAL
ASSOCIATION OF REGULATORY COMMISSIONERS; DAVID PORTER,
CHAIRMAN, RAILROAD COMMISSION OF TEXAS; LYNN D. HELMS,
DIRECTOR, NORTH DAKOTA INDUSTRIAL COMMISSION, DEPARTMENT OF
MINERAL RESOURCES; ROBERT WEISSMAN, PRESIDENT, PUBLIC CITIZEN;
AND CHARLES D. McCONNELL, EXECUTIVE DIRECTOR, ENERGY AND
ENVIRONMENT INITIATIVE, RICE UNIVERSITY
STATEMENT OF TRAVIS KAVULLA
Mr. Kavulla. Thank you very much, Chairman Whitfield and
Ranking Member Rush and members of the committee, for sitting
through this hearing today and affording us your attention.
I am speaking today on behalf of the National Association
of Regulatory Utility Commissioners, a 127-year-old
organization that represents the public utility commissions of
the United States.
I think it's safe to say that when the rule was--the Clean
Power Plan was published in the Federal Register October of
last year it represented the EPA's most far-reaching regulation
of the electric power sector in the Agency's history.
NARUC's members are divided on what should be done to
address carbon dioxide and other greenhouse gases emissions.
However, NARUC has advocated unambiguously that States'
traditional regulatory oversight over utility resource planning
not be eroded and that low-carbon-emitting resources of all
kind receive credit in the Clean Power Plan.
In both respects, the EPA's regulation falls short of these
principles. Traditionally, air quality regulations identify the
pollutant that they have in mind to abate and then they specify
the technology which either maximally controls for its
emissions or is the most cost effective in controlling the
emission of a pollutant.
Then the regulation will require the installation of that
technology or require the facility that emits that pollutant to
limit its emissions to the same--to the same level.
In short, traditional environmental regulation revolves
around installing specific pollution control technologies at
the facility that produces the emissions and certainly in all
previous rules issued under Section 111(d) a facility-specific
technology has been at the core of the regulations emissions
standard.
And if you look back at the several regulations issued
under 111(d), these technologies are fairly modest in scope and
limited in their applicability to certain industries--for
instance, spray cross-flow packed scrubbers for the phosphate
fertilizer industry.
When the EPA, however, decided to focus on electric power
generation under Section 111(d), instead of focusing on the
emitting facility as the--as the point of regulation, the EPA
instead focused on what it called the complex machine that is
the North American power system and it identified through a
system of so-called building blocks a more comprehensive system
to abate the emission of carbon dioxide.
The EPA then set about creating State requirements that
were not limited to reducing emissions from coal-fired
generators based on facility upgrades but on the idea that if
only natural gas-fired or renewable generation were more
prevalent coal plants would dispatch less often, reducing their
emissions.
Together, the requirement-setting process leads to a more
stringent emission standard for coal plants which is impossible
to achieve at the specific plants using demonstrated
technology.
In short, to regulate existing power plants, the EPA is
effectively requiring the construction of entirely new power
plants. This novel approach means that EPA has interpreted the
Clean Air Act to give that agency the power essentially to plan
the resource mix of the U.S. power sector.
Effectively, the EPA has created a de facto fuel and
renewable energy standard. I am concerned about this because
traditionally making determinations as to the economic,
environmental and social efficiency of utilities' investments
to serve retail customers has been for nearly a century the
province of State utility commissions.
Regulated utilities that own generation file integrated
resource plans that are subject to review by State utility
commissions.
These are intended to be processes that take a wide ranging
look at customers' needs, incorporating demand forecasting a
wide consideration of available resources including energy
efficiency and indeed environmental externalities.
In my experience, State utility commissions possess and
deploy substantial technical resources in analyzing these
plans.
But when the EPA adopted a system that encompassed the
entirety of the State's electric power production what it
really did was to remove the IRP function of a utility
commission and replace it with a carbon resource planning
process undertaken by the State's environmental regulator and
the Governor's office under Section 111(d).
It may seem innocuous to transfer one regulator--an
economic regulator like myself with an environmental regulator,
but the functional transfer of authority is highly
consequential for several reasons. It gives a less experienced
regulator control over a resource planning process. It makes
the resulting plan a matter of Federal environmental law
enforceable under it sapping the ability of the industry and
the regulator to respond nimbly to changing market conditions.
The scope of the plan, rather than just for a single
utility, now becomes the entire State's electric resource mix
with the likelihood that certain parties are favored over
others and, finally, it introduces a new level of potentially
self-seeking politics and to have a plan in process.
Needless to say, Mr. Chairman, with the adoption of the
Clean Power Plan by the EPA, it fundamentally alters how and by
who utilities are regulated in the United States.
Thank you.
[The prepared statement of Mr. Kavulla follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you, Mr. Kavulla.
Our next witness is Mr. David Porter, who is the chairman
of the Railroad Commission of Texas and, Mr. Porter, thanks for
being with us today, and you are recognized for 5 minutes.
STATEMENT OF DAVID PORTER
Mr. Porter. Thank you, Chairman Whitfield, Ranking Member
Rush and members of this committee. For the record, I am David
Porter, chairman of the Railroad Commission of Texas.
For those of you who are not familiar with the Railroad
Commission, we are the State of Texas' chief energy regulator.
I am one of three statewide elected commissioners, and we
oversee everything from oil and gas to pipelines, uranium
exploration, surface coal mining, natural gas, local
distribution companies and alternative natural gas fuels.
The Railroad Commission has effectively regulated the oil
and gas industry in the state of Texas since 1919. It is one of
the oldest State agencies in the Nation and the most mature
energy regulatory body in the world.
Texas is the Nation's largest producer of oil and natural
gas, and the commission monitors approximately 433,000 oil and
natural gas wells, more than 335,000 of which are actively
producing.
This energy production supports 2 million jobs in Texas and
about a quarter of the State's economy. The oil and gas
industry significantly benefits Texas as well as the entire
United States.
The recent surge in drilling has considerable bolstered the
national economy. The result in historical production increases
have also paid the way for extraordinary geopolitical
advantages.
In recent years, the United States has been able to surpass
Saudi Arabia and Russia as the leading producer of oil and
natural gas liquids in the world.
We have also seen a huge shift in the balance of trade
because of the growing strength of our domestic energy
industry. Domestic oil production has increased by 4.3 million
barrels per day since 2006 and correspondingly, because of that
increase, the trade deficit has been decreased.
As chairman of the Railroad Commission, it is my job to
ensure fair and consistent energy regulation in Texas so
businesses can safely, efficiently and economically produce the
energy that powers our State and national economies.
That said, I very much appreciate the opportunity to submit
this testimony regarding recent rulemaking by the United States
Environmental Protection Agency under the Clean Air Act.
In my written testimony, I have detailed the Railroad
Commission's specific concerns about the recent EPA methane
rules, the Clean Power Plan and the mercury and air toxic
standards.
Time constraints will prevent me from detailing the
extensive concerns the commission has with the unprecedented
EPA rulemakings outlined in that testimony. But you will find
that these concerns are based on scientific fact and sound
legal and economic analysis.
You will also find that the underlying themes in EPA
rulemaking under the Obama administration have been the
consolidation of increased regulatory power in the Federal
Government to the detriment of State authority and the
circumvention of regulatory authority granted to the EPA by
Congress.
Clean Air Act rulemaking by the EPA during the Obama
administration has been characterized by minimal interaction
and consultation with Texas and other State regulatory
authorities, underestimated or ignored compliance costs,
overestimated, unjustified and exaggerated regulatory and
environmental benefits, increased regulatory and economic
burden on operation companies, especially the smaller operators
who make up an overwhelming majority of the oil and gas
industry in Texas, and the creation of one-size-fits-all
regulations that ignore economic realities and the significant
differences in regional operating conditions in State
regulatory existence.
History shows that decreases in emissions and improved
environmental conditions came about as a result of innovative
technological advances in market-driven efficiencies, not
through the massive overreach of Federal bureaucrats.
The Railroad Commission of Texas takes its role as a
steward of State resources very seriously. Our rulemaking
decisions are based on sound science and potential economic
impacts to all Texans, mindful that it is from industry that
these entrepreneurial ideas emerge.
When businesses are forced to operate as bureaucracies
which EPA seems intent on achieving through its unwarranted and
overreaching rules, innovation is stifled and both consumers
and the environment pay the price.
EPA policies under the Obama administration have
consistently striven to eliminate competitive energy markets
while ignoring engineering realities, sound science and
economic impacts.
Simultaneously, EPA has circumvented both the authorities
delegated to it by Congress and the rights of State regulatory
agencies to establish their own rules.
I believe you will find ample evidence of this in my
submitted testimony. I respectfully urge this committee to
prevent this administration from further assuming
unconstitutional powers and imposing intrusive regulations on
the States to ensure that our Nation continues to serve as the
global energy leader we are today.
Thank you for this opportunity to testify.
[The prepared statement of Mr. Porter follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you, Mr. Porter.
Our next witness is Mr. Lynn Helms, who is the director for
the North Dakota Industrial Commission at the Department of
Mineral Resources. Thanks for being with us, and you are
recognized for 5 minutes.
STATEMENT OF LYNN D. HELMS
Mr. Helms. Good afternoon, Chairman Whitfield and Ranking
Member Rush, members of the subcommittee. Thank you for this
opportunity to provide comments from the great State of North
Dakota on EPA's regulatory activity during the Obama
administration.
North Dakota is ranked second in the United States amongst
all the States in production of oil and gas. We produce
approximately 430 million barrels of oil and 585 billion cubic
feet of natural gas each year.
The North Dakota Industrial Commission and Geological
Survey oil and gas division regulate operations related to
production of oil and gas and protection of the State of North
Dakota's environment.
I have highlighted in my written testimony nine specific
actions since 2009 that have had major negative consequences to
North Dakota regulatory environment and/or economy.
It needs to be kept in context that those have been done in
conjunction with seven regulatory actions by the Department of
the Interior.
Those nine are the March 2010 to present hydraulic
fracturing drinking water study, the December 2010 class six
CO2 rules, the February 2014 hydraulic fracturing
using diesel fuel rule, the May 2014 hydraulic fracturing
chemical disclosure rule, the May 2015 waters of the U.S.,
August 2015 Clean Power Plan, May 2016 RCRA lawsuit, June 2016
methane reduction for new and modified sources and the June
2016 methane reduction information request on existing sources.
North Dakota has been left with no choice but to litigate
three of those actions and we have been involved in that
litigation. I want to focus the remainder of my time talking
about two or three of those.
In June of 2014, with the final rule published in August of
2015, the Environmental Protection Agency under President
Obama's climate action plan proposed to cut carbon pollution,
known as the Clean Power Plan.
This directly interferes with North Dakota's ability to
reduce natural gas flaring in the State. In order to build the
infrastructure to collect and process the natural gas that's
coming from the Bakken formation, the industry needs 300
megawatts of new electric generation.
Instead of granting us the ability to produce or build 300
megawatts of additional generation, the plan requires that we
cut or retire 1.3 gigawatts of existing power generation in the
State.
The result of that is a cumulative increase of flaring of
almost a trillion cubic feet of natural gas, a loss to the
State of over $100 million in gross production tax revenue and
a loss to the mineral owners of the State of $570 million in
royalty income.
North Dakota, along with 26 other States, sought and
received a stay of this rule. North Dakota's reduction of
carbon emissions under the proposed rule was 11 percent. That
was going to be difficult but maybe achievable. Under the final
rule, it was raised to 45 percent with no warning that that was
coming.
No credit for pre-2013 natural gas or wind installations,
and I can guarantee you that power costs will not go down in
the State of North Dakota.
On June 3rd of 2016, a final rule proposing a suite of
changes to the Clean Air Act for new and modified emission
sources in the oil and natural gas industry was published in
the Federal Register.
This rule contains all sorts of undefined things like
``technically achievable,'' ``technically feasible,''
``technically infeasible.'' It's a direct conflict with rules
in the State of North Dakota for reducing natural gas flaring.
The rule does not adhere to the statutory language in the
Clean Air Act for defining sources of emission. It aggregates
sources using a new quarter-mile standard which will cause
problems for the State of North Dakota for regulating how oil
well sites are placed in the State in order to minimize the
footprint of those sites on the State's landscape.
Finally, the proposed rule says it doesn't have any
federalism implications. But that's not true. The proposed rule
will conflict with numerous North Dakota current regulations.
North Dakota is currently filing a petition for review of
this harmful rule. And then finally, on June 3rd of 2016, the
proposed information collection effort for oil and gas
facilities was published in the Federal Register.
Information requests for tens of thousands, maybe 100,000
existing facilities, are being distributed across the country.
Comments on this proposed information collection are due August
2nd and we plan to submit extensive comments.
Unfortunately, North Dakota has submitted extensive
comments on all of these rulemakings and not one of them has
been accepted by the EPA.
Thank you for your time.
[The prepared statement of Mr. Helms follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you, Mr. Helms.
And our next witness is Mr. Robert Weissman, who is the
president of Public Citizen, and Mr. Weissman, welcome and you
are recognized for 5 minutes.
STATEMENT OF ROBERT WEISSMAN
Mr. Weissman. Thank you very much, Mr. Chairman, and thanks
to the gentleman from Virginia for joining us today and
tolerating this panel discussion.
I wanted to make three brief points in my 5 minutes about
both the regulatory process generally and about the regulatory
process as regards clean air rules and EPA action.
The first point is that the overall benefits of regulation
issued under both the Obama administration and the preceding
Bush administration massively outweigh the costs. We have heard
some reference to the best evidence about this earlier in the
hearing.
Generally, for overall regulation, in the low end benefits
outweigh costs two to one but probably as much as fifteen to
one. In the area of EPA rulemaking, benefits outweigh costs
four to one or as much as twenty to one.
And it should be said that I think the members of this
committee are absolutely right to focus on individuals who may
be displaced from jobs and recognizes there are real-life
costs.
But they ought to also recognize the real-life benefits.
These aren't just dollars being saved. These are illnesses
being averted, deaths being prevented, children who are not
suffering asthma attacks. The benefits are real.
As I discussed in my written testimony in some detail,
retrospective looking at cost estimates shows that industry
routinely overestimates costs and particularly in the
environmental area and I will come back to that point later.
Second point I want to make is about the issue of
regulatory delay. Public Citizen last week issued a new study
looking at the issue of regulatory delay and showing how slow
our rulemaking process is.
I think it's an area that this committee should look at
because we actually need to do much better at getting rules out
the door faster both to achieve their protective benefits and
to avoid the problems of regulatory uncertainty.
Our study found that economically significant rules are 40
percent slower to be issued than other rules, that economically
significant rules that are accompanied by a regularly
flexibility analysis and an advance notice of proposed
rulemaking take almost 5 years to issue, longer than the term
of a president.
We found that regularly delay as a problem is getting
worse, considerably worse now under the Obama administration
than it was previously under the Bush administration. It now
takes almost 3.8 years for a major rule to be issued.
We found that EPA and the Department of Energy are two of
the slowest agencies at issuing rules and also, incidentally,
that the Obama administration issued about 10 percent fewer
rules than the Bush administration had done through this period
of its term in office.
Lastly, I want to address focusing more specifically on
clean air rules and looking at those points and drilling down
as how they relate in the clean air and energy industrial
sector.
Again, in this area, the benefits massively outweigh the
costs, and just to focus on this area of the Clean Power Plan
because I think there has been some uncertainty about it, the
Clean Power Plan doesn't just generally have benefits that
outweigh costs.
Consumer cost--the consumer electric bill will go down
under the Clean Power Plan. I'm just talking about the Clean
Power Plan, and the reason for that is the consumers will be
using less energy under the Clean Power Plan than they will be
without the Clean Power Plan.
So even under the conservative accounting of the EPA, and
it is conservative accounting, the slight uptick in cost per
unit will be offset significantly by reduced actual
consumption.
Our analysis--Public Citizen's analysis shows that that is
true not just for the Nation as a whole but in every single
State. In every single State, consumer electric bills will
decline under the Clean Power Plan.
I should say as well that we retrospectively that costs are
overestimated. The Wall Street Journal talking about the
mercury rule noted that some industry trade groups has argued
that the mercury rule would prompt blackouts and skyrocketing
electricity prices. Already we know by 2015 that neither
scenario had materialized due largely to increased production
of natural gas. Again, we see cost estimates oversold.
If you look at the clean air rules you also see that key
benefits are not captured in the EPA's regulatory impact
analyses and that they often don't take the best choice in
terms of advancing net benefits for society, choosing instead
to focus on lowering cost, even though they are forsaking
benefits for the American people.
Looking at the rules--the actual rules that are issued by
the EPA--the Clean Power Plan, mercury rule, the ozone rule--
actually you see that the rulemaking process is slower than the
aggregate statistics I discussed earlier suggests because the
EPA is so slow to begin rulemaking in the first place. The
ozone rule is notable. But we just got issued a rule that was
required actually under statute to initially be issued in 2002.
And last, I think it's worth saying in the EPA context, as
you look at the science and you look at the actual rulemaking,
what is apparent is that the EPA massively trails the science.
The EPA is not acting nearly fast enough or nearly
aggressively enough based on what the science says and its
statutory obligations.
Thank you very much.
[The prepared statement of Mr. Weissman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you, Mr. Weissman.
Our next witness is Mr. Charles McConnell, who is the
Executive Director for Energy and Environment Initiative at
Rice University, and he also was former Assistant Secretary for
Fossil Energy at the Department of Energy.
So, Mr. McConnell, welcome, and you are recognized for 5
minutes.
STATEMENT OF CHARLES D. McCONNELL
Mr. McConnell. Thank you, Mr. Chairman and members. Glad to
be here to testify about the Sections 111(b) and (d) of the
Clean Air Act and the Clean Power Plan.
But before I begin, I would like to quote a novelist, Saul
Bellow, who said a great deal of intelligence can be invested
in ignorance when the need for illusion is deep.
And so for me, that is what is summarized by a lot of what
I have heard most of the day today. I got three key issues that
I think we need to be real clear about.
One, these EPA rules, specifically the Clean Power Plan,
does not serve environmental purposes. Calling this
environmental regulation is disingenuous.
Two, we don't have functioning interagency collaboration. I
personally witnessed that at the DOE. And three, EPA's
proposals actually harm energy sustainability. So the projected
chart that hopefully we'll be able to show here will outline
what the Clean Power Plan really does.
But I would like to say before we go to that I am not here
representing a political agenda or a political point of view. I
believe in climate change. I am not a denier. CO2 is
a forcing function for climate change.
It's not solely the forcing function but it is a
contributor and I think we have an obligation to do something
about CO2. I served in this administration and
believe in these fundamentals. But what we have with this plan,
as this chart indicates in front of you, this gives us a
worldwide CO2 concentration reduction of .2 percent.
It is a projected whopping .01 degree impact to global
temperature rise, and the sea level reduction impact is the
amount equivalent to two human hairs, and it is all offset by
three weeks of Chinese emissions. I find this plan stunningly
unambitious.
Our EPA Administrator actually acknowledged these facts in
testimony but said we should not judge this plan by its
ideological global leadership. It's in fact the cornerstone of
U.S. climate policy to show the world, and I ask show the world
what--that we are willing to make our energy more expensive,
less reliable for de minimis CO2 impact?
The fact that we have seven States bearing 40 percent of
this burden? And energy costs will go up. That's according to
PUC analysis across the country.
This is a false sense of accomplishment. It is not
meaningful climate policy, and I won't sit here and recognize
it as such. It's a forced renewable portfolio standard that is
a classic case of regulatory overreach.
The EPA is required to seek expertise through interagency
collaboration and public notice and comments which actually
includes those actually conducting business. How could this
program have been hatched?
Well, I would submit to you that the interagency
collaboration is illusionary. I led that office at DOE for 2
years and bore personal witness to any number of circumstances.
An example was a specific request made by EPA of my office
to comment on a term they called resourced adequacy. And what
is that? It's a theoretical analysis of theoretical installed
capacity that might be utilized to provide theoretical system
and supply reliability.
It's a term to appear insightful but it really isn't. It's
ideological mumbo jumbo.
It's forcing closure of coal and eventually gas generation
that we rely on. So why not ask of our PUCs to analyse real
reliability and real onstream data? Why not model real
reliability performance? I would submit it's because of the
inconvenient truths.
EPA rules don't promote real energy sustainability either.
We have a framework at Rice that's being broadcast here where
we ask three questions--is our energy more accessible, reliable
and secure?
Are we making our energy more affordable, cost effective
and globally competitive and are we being more environmentally
responsible? You got to answer yes to all three, and the CPP
fails this miserably.
I think we need to do three things. One, we need to embrace
how impactful clean fossil technologies are to our environment.
Not focus on shutting down the coal mining industry or the oil
and gas industries that we believe in.
The second thing we need to do is to meet these climate
goals. We need carbon capture utilization and storage. It has
been identified as the IPCC as the most critical technology for
the world to meet climate targets and the CPP rules deter it.
And the third thing is we need to encourage public/private
partnership to enable new transformative technologies, not
obstructing them with burdensome regulation.
Let me close with a quote often attributed to Mark Twain
and recently Laurence Peter from the Peter Principles. The
question is sometimes I wonder whether the world is being run
by really smart people who are putting us on or by imbeciles
who really mean it.
Thank you.
[The prepared statement of Mr. McConnell follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you, Mr. McConnell. I appreciate that.
At this time, I would like to recognize the gentleman from
Texas, Mr. Olson, for 5 minutes of questioning.
Mr. Olson. I thank the chairman, and welcome to our five
witnesses. I hope you enjoyed the fireworks show from the first
panel on July 6th the way I did.
A special howdy to the chairman of the Texas Railroad
Commission, David Porter, who I found out was born at the same
hospital I was, the Madigan Army Hospital in Fort Lewis,
Washington, many months before I was born, with all due
respect.
And also a special howdy to Chuck McConnell, the executive
director of the Energy Environment Initiative at my alma mater,
Rice University. Wise old owls are always welcome here.
For Chairman Porter, Mr. Kavulla and Mr. Helms, the
regulators on our panel, could you describe the--well, first of
all, you have been in the position of having to implement EPA's
regulations that address real world issues that either are
unknown, crop up. It is out of control.
My question is for all three of you, starting with you,
Chairman Porter. Can you describe the impact you think the
methane rules have on Texas energy production and, more
broadly, can you say anything about Ms. McCabe's testimony that
you disagreed with and to which you would like to respond to
correct the record, so to speak?
Chairman Porter, you are first at bat, sir.
Mr. Porter. Definitely, and I address it in my written
testimony. But I think the methane emissions rules would be
very bad for the oil and gas industry in Texas and one of my
biggest concerns is the effect that it would have on the small
operators if they really small stripper wells are not exempted
from those rules.
Even a relatively large number of wells is represented by
the stripper production, which is 10, 15 percent of total
production but it still is a viable part of the Texas economy,
particularly in the rural areas and small towns are support by
the small oil and gas companies that operate there. So the
economic impact is huge.
Mr. Olson. Mr. Kavulla, your comments, sir, about what was
raised or anything you want to straighten out with Ms. McCabe's
testimony, or a fact check?
Mr. Kavulla. Yes. Maybe just this persistent assertion that
has come up that utility bills will lower in cost, which I
don't find to be a credible assertion.
I mean, the premise of environmental regulation, whether
you agree with it or not, is that it serves to restrain some
kind of economic production to produce public health benefits.
Here there is an assertion that an industry that is in the
business of offering its production, sometimes in competitive
markets but other times under the regulation of PUCs, on a
least cost basis is not obtaining economic efficiencies that
you expect them to obtain.
I don't think it's credible to say that consumers would
just save money if an environmental regulator would stage an
intervention into the market. To me, that doesn't make sense,
and if true it means that utility commissions everywhere are
not doing their jobs at which I know them for a fact to be
requiring the low cost acquisition of energy efficiency as a
matter of law.
Mr. Olson. And Mr. Helms, back to you. I heard your
comments in your opening statement about the methane emissions
so I'm going to talk to Mr. McConnell.
In your testimony you mentioned that many of EPA's rules
fall short. They don't live up to the promises. That is
something I have touched on a lot in recent hearings.
Can you talk about the impact of the Clean Power Plan, how
will that impact? Does it hit the target? Or as you put the
slide up here, is it way off base?
Mr. McConnell. It's wrapped up to be climate legislation.
But in fact, as you can see from the chart, it doesn't do
anything about the climate. I think, Mr. Congressman, in my
view, the climate story is being written globally.
Really, much outside the United States, in places like
China we saw a chart earlier today with all the coal plants
being developed all over the world, that's a reality. That is
not something the EPA is going to stop. That is going to
happen.
And so for the United States to be a global leader we need
to provide global technology leadership, not global ideological
leadership with a plan that's wrapped up to be something that
it isn't, to punish ourselves for no climate benefit.
Mr. Olson. Amen. I was just in China and we saw their
reports in the local press. They're building new power plants
they know they don't need. They just want the jobs, more coal
emissions. So, again, it's a global challenge. It's not just
America's. Let's take care of our country first. I yield back.
Mr. Whitfield. The gentleman yields back. At this time, I
recognize the gentleman from Illinois, Mr. Rush, for 5 minutes.
Mr. Rush. I want to thank you, Mr. Chairman.
Mr. Weissman, I am quite interested in your views about the
delays within the regulatory agency that is assigned to protect
the American people.
And you stated in your testimony that there have been more
regs under the Obama administration than under the Bush
administration. Did I hear you correctly?
Mr. Weissman. No. Actually, about 10 percent fewer
regulations under President Obama than President Bush.
Mr. Rush. Fewer then. But in regards to the delays, what do
you think that we should be doing about the delays?
Mr. Weissman. Well, it is----
Mr. Rush. What?
Mr. Weissman. Yes, it is a confounding problem. I think the
single source--single primary source of delay is excessive
analytical requirements. So the Agency is to issue rules.
If you actually look at the technical material they put out
it's astounding in its volume and unfortunately there are
several proposals in Congress to add analytical requirements,
which would worsen the delay problem.
So I think the first thing to look at is how to pare back
some of the analytic requirements and the second is to hone in
on the role of the OIRA, the Office of Information and
Regulatory Analysis, and see how OIRA can be forced at minimum
to adhere to the standard that the--to the schedule standards
that it's supposed to abide by. It routinely does not turn
rules around according to the schedule it's required to under
the executive order.
Mr. Rush. What does--what is the impact when the rules are
designed to protect the environment and public health, safety
and financial security and then there are also the regulations
that are taking the longest to finalize and experience the most
delays in the regulatory process, what is the impact on the
community?
Mr. Weissman. Yes. It is quite severe. For one thing, just
as a business matter it's harmful because of--the biggest
problem for industry turns out to be regulatory uncertainty,
not knowing what the rules of the game are. Once the rules are
established industry actually is pretty adept and nimble at
adapting.
But in terms of--but we also lose over time the benefits of
those regulations. So, for example, the mercury standard is
projected to save between 4,000 and 11,000 lives every year--
every year.
If we wait 3 years, we are losing 12,000 lives. And we
might not know who the names of those people are, but they are
real people. They are not statistical abstractions.
Mr. Rush. So are you saying, then, there is very little
that we can do as a Congress to try to remove some of the
delays and the hindrances to getting these rules and these
regulations before the American people quicker?
Mr. Weissman. No, I think there is a lot that Congress
could do if it were so inclined. I would focus a lot on the
role of OIRA and holding that agency to account to make sure it
speeds the process and it does not needlessly and
inappropriately delay a rule.
I would look at the level of analytic requirements and
reduce what agencies are required to do and I would also look
at the problem of revolving door where people go from the
regulated industry into the regulatory agency and then back to
the regulated industry.
I think that revolving door creates a culture where
agencies are inclined to go slow because they are overly
sympathetic to the regulated industry of which they once were a
part of and may be seeking employment with in the future.
Mr. Rush. I want to thank--Mr. Chairman, I yield back.
Mr. Whitfield. The gentleman yields back. At this time, the
chair recognizes himself for 5 minutes of questions.
You know, from the questions of Ms. McCabe, I think it was
quite obvious to everyone that there is a lot of emotion about
this issue and when we talk about the Clean Power Plan, I think
Mr. McConnell really touched on an important point, and that is
that the result of the Clean Power Plan is so minute that it's
almost meaningless.
And yet, it's being pushed by the administration worldwide
and made a big deal of at the Paris agreement. We signed the
agreement, we implement this to fulfill our responsibility.
So it appears the U.S. is being a leader in addressing
climate change. But in reality, not anything is measurably
being done to climate change and yet the U.S. is really being
punished.
And one of the problems that I have had with the Clean
Energy Plan is the tortuous route that EPA went through to give
itself the power to do what it was trying to do. And
historically, in the U.S., the States, through the public power
commissions, the utility commissions or whatever, which you
represent, Mr. Kavulla, have had this authority to deal with
the energy issues.
And Ms. McCabe today responded oh, this is not a regulation
about energy--it's a regulation about emissions.
But in reality, this does give EPA authority to determine
what power is being used in the power plants. Is that your
impression, Mr. Kavulla?
Mr. Kavulla. Mr. Chairman, I would agree with that
characterization, yes. I think fundamentally because the rule
does not rely on an assumption about a particular pollution
control technology being the benchmark for the emission
standard that is set for the emitting plants, and it instead
relies on assumptions that coal plants will produce less often
if there is simply more wind and natural gas, that it is
essentially a regulation on the energy system broadly.
Mr. Whitfield. And Mr. Porter, would you agree with that
characterization?
Mr. Porter. I would.
Mr. Whitfield. And Mr. Helms, would you?
Mr. Helms. Very definitely, and when you look at the
methane reduction rules, Mr. Chairman, when you look at them
policing the fact that you've got to get a Title 5 permit now
for every multi-well horizontal drilling pad, you now have the
environmental regulators deciding when and where oil and gas
wells are going to be drilled as opposed to the oil and gas
regulators.
Mr. Whitfield. And Mr. McConnell, would you agree with that
characterization?
Mr. McConnell. Yes, I would, and we talked a lot this
morning about flexibility and how it's really flexible. Well,
that is disingenuous. It is not flexible.
If you look at the thresholds and you look at the
technologies and fuels associated with those thresholds it
makes you choose wind or solar, period.
You don't have an option in particularly the seven States
that are bearing 40 percent of the load of the responsibility.
Mr. Whitfield. Yes. And Mr. Weissman may not agree with
this characterization but we all recognize the benefit of the
Clean Air Act and we all understand the importance of the
impact on health.
But this is fundamentally changing the way we regulate
energy production in America and I think that is one of the
main reasons why the Supreme Court issued a stay because it was
kind of done under guise of darkness and no one really focused
on it, certainly not the public because it's so complicated.
Some of you mentioned in your testimony how complex this
is. And so that is the only point that I would make, and I'll
yield back the balance of my time and recognize Mr. Green for 5
minutes of questioning.
Mr. Green. Thank you, Mr. Chairman. I want to thank the
chair of the Texas Railroad Commission. Having served 20 years
in the State legislature, I appreciate the work you do, and
also Charles McConnell, who we flew up yesterday on the plane
and what you do at Rice University and we talked--I'm on the
other side of town. I have the University of Houston. So we are
glad to partner with Rice on lots of things.
I want to apologize to the panel. We actually have a
conference committee going on on our main floor, so some of us
are coming in and out during the hearing for votes and issues
on that.
But Chairman Porter, in your testimony, you raised concerns
about the regulation of low production well sites. Just last
week, the U.S. Energy Information Administration stated low
production wells, or as we call them stripper wells, account
for approximately 10 percent of U.S. production.
EIA estimated there is approximately 380,000 low production
wells operating in the U.S. whereas there are 90,000 non-
stripper wells. The production from each well would limit any
emissions, however. The sheer volume of wells would raise some
concern about the potential impact. Can you explain a bit more
about your concerns and why you think EPA should exempt these
wells?
Mr. Porter. The reason I think EPA should exempt these
wells, and there are studies being done at this time, is that
the impact on each individual well was extremely low because of
the volume.
And I think the reason it should be also is the economic
impacts on both energy production for the Nation and, of
course, the economic impact on the State of Texas and the small
communities and the small independent oil men that are the
backbone of most of rural Texas would be dramatically impacted
by the cost of complying with the same type of emissions
standards that you'd have on the large horizontal well at this
time.
Mr. Green. Well, and I also understand the difference
between what traditionally was large horizontal as compared to
what we are doing with the fracking in south Texas and even
before there, relatively quick wells that you get production
out and you move them.
Director Helms, in your testimony, you write that the State
of North Dakota is ranked number two in the United States in
production of oil and gas and I would like to remind everyone
that Texas is still number one, after North Dakota, California
and Pennsylvania. So we know a little bit about oil and gas.
Recently, the EPA identified the next issue of area they
address as methane from oil and gas production. When I drive
through south Texas I see there is no one in the oil and gas
sector that wants to see that flaring because that is product
going out and the royalty owners and I know the--don't want to
see that if they are not getting their royalty on it.
And I also know that the reason companies flare gas is
because they lack the infrastructure required to capture it or
send it to the market.
Can you talk a little bit about the infrastructure
challenges North Dakota faces and how building, gathering lines
would help alleviate the issue of methane flaring?
By the way, I have never not lived on a pipeline easement
in Houston, Texas in my life and if Texas doesn't have the
infrastructure then I don't know of anybody who doesn't but we
do have infrastructure problems with those in south Texas.
Can you talk about what North Dakota has been trying to
with the gathering lines?
Mr. Helms. Yes. Thank you, Representative Green.
North Dakota was faced with the largest oil field in the
world, the Bakken aerial extent, and it was discovered fairly
recently the infrastructure did not exist for gathering and
processing the natural gas.
We found ourselves in 2012 flaring 36 percent of the
natural gas. We needed to encourage----
Mr. Green. Did the State not receive any tax benefit on
those either?
Mr. Helms. Well, no tax benefit, no royalty benefit on
flared natural gas. Absolutely. And so we implemented rules
through the industrial commission to reduce that natural gas
flaring.
I am happy to report it's down to 8 percent now. But the
Clean Power Plan and the methane rules are going to interfere
directly with North Dakota's plan for reducing its gas flaring
by limiting the power that we have available for powering those
natural gas processing plants and by changing the configuration
of the oil field requiring us to add three to four times as
much pipeline in the ground in order to reach these smaller
pads that are going to be required under the methane reduction
rules.
And so they work exactly counter to the reasonable purpose
of reducing flared methane and reducing methane leaks.
Mr. Green. Well, did EPA take into consideration, in my
last eight seconds, what North Dakota has been doing already in
reducing it?
Mr. Helms. Congressman Green, there was not one single bit
of consideration given to our comments with regards to that
fact, and therefore we are petitioning them for reconsideration
of the rule.
Mr. Green. And, again, for the record, it seems like if you
are already reducing it and you have a plan that you've done it
without EPA why would they not accept it?
Mr. Chairman, I know I'm out of time.
Mr. Whitfield. I thank the gentleman. I recognize the
gentleman from Ohio for 5 minutes.
Mr. Latta. Well, thank you, Mr. Chairman, and thanks to the
panel for being with us today, this morning, this afternoon.
Appreciate it.
Mr. McConnell, if I could ask you the first question. It
has been said that carbon capture utilization and storage and
enhanced oil recovery might only be a niche in a full scale
CO2 storage opportunity to require much more than
EOR geological opportunities.
Is CCUS a niche, or is there a greater opportunity, and
just to follow-up on that, if it is a greater opportunity, what
kind of actions will it take from us to make the most of this
opportunity?
Mr. McConnell. Well, clearly, the answer to your second
question is we need to encourage the development, set up an
infrastructure in this country that actually promotes the
development of a technology that needs continual investment in
R and D.
But it's interesting, we're talking about research and
development and deployment of something that the EPA has
already determined to be commercially available and that is
also part of disingenuous conversation because if we still have
R and D dollars being put against that technology how could it
be commercially ready?
It's unimaginable. But to your first question, is it a
niche? Absolutely not. I took over at the DOE in 2011 as we had
done the national carbon sequestration mapping across this
country, looking at storage opportunities.
But I suggested to our national energy technology
laboratory that we needed to find where the oil deposits were
in this country because that is where we could get economic
benefit from carbon capture, utilization and storage and be
able to safely and permanently store those CO2
emissions in that formation.
So you get a perfect two-fer. You get a business
development opportunity for jobs, manufacturing and growth and
you get a climate benefit.
But instead what we've done is we've looked into these
regulations with the EPA now putting onerous responsibilities
onto oil and gas operators that is actually slowing the
implementation of what the IPCC has already determined to be
the most important global technology in our march toward
achieving climate targets globally.
There are oil opportunities off the shore of China, off the
North Sea, in the Gulf and around the world where this can be
deployed and taken globally to make a globally impact.
Mr. Latta. Thank you very much.
Chairman Porter, I think you have testified before us
before. I think you're sitting in the same seat, if I remember
correctly. But, you know, I would like to just go back to your
testimony because, again, listening to Ms. McCabe's testimony
and talking about, you know, going out and talking with a lot
of folks around the country.
But you know, looking at your testimony and I know you
didn't have a chance to run through some of these but I'm going
to just run through a couple of them real quick.
Minimal interaction and consultation with Texas and other
State regulatory authorities underestimated or ignored
compliance costs, overestimated unjustified exaggerated
regulatory environmental benefits, increased regulatory and
economic burden on operating companies in a one-size-fits-all.
I don't see from your comments that she must have talked to
you. Was there any kind of a cost benefit that was done for the
State of Texas of these regulations going into place?
Mr. Porter. Are you asking about the State of Texas or the
Federal Government?
Mr. Latta. Well, I'm just asking if the State of Texas got
consulted with all these different issues that you brought up
in your written testimony.
Mr. Porter. No, not directly. I mean, of course, like
everyone else we had the opportunity to make comments and we--
the Railroad Commission quite often do make comments on Federal
regulations and for the most part they seem to be generally
ignored. Occasionally, something is picked up. But----
Mr. Latta. So you don't think there was much interaction
that--or really listening to what you all had put forward to
the EPA then?
Mr. Porter. Not a lot. I will say as far as our interaction
between the EPA I was first elected to office in 2010, came in
2011. Interaction was very unpleasant with the EPA at that
point in time between the Railroad Commission.
In the last few years, it has gotten more civil. I'm not
saying that they listen to us a lot. But at least the lines of
communication are a little more open, and it's a little more
civil than it was when I first came into office 5 and a half
years ago.
Mr. Latta. Mr. Helms, how about the same question? Do you
have a lot of interaction? Do they listen to you?
Mr. Helms. Congressman Latta, very little interaction, and
as I stated in my comments, none of our recommendations on any
of these rules were implemented.
Speaking to the carbon capture and storage, North Dakota is
the only State who has applied for primacy. We did that back in
June of 2013. We have progressed through the entire process,
and our primacy application has been sitting on the
Administrator's desk since July 14th of 2014 with no action.
Mr. Latta. OK. Thank you very much.
Mr. Chairman, my time has expired and I yield back.
Mr. Whitfield. I thank the gentleman.
Now I recognize the gentleman from Missouri, Mr. Long.
Mr. Long. Thank you, Mr. Chairman.
Mr. Kavulla, in Missouri we get 80, 85 percent of our power
from coal, just to say that kind of as a precursor here. But
you mentioned in your testimony that the EPA has interpreted
the Clean Air Act to give it the power to plan the resource mix
for U.S. power sector.
Could you expand on this? What does this mean for States
having to implement the Clean Power Plan?
Mr. Kavulla. So in States like Missouri as well as Montana
and other heavily coal-dependent States there is no viable
pathway to come into compliance with the Clean Power Plan's
goal unless you basically build natural gas and renewable
infrastructure in order to displace some of your coal output.
That's the premise of EPA's goal setting or requirement
process in the regulation and I expect that that would be the
pathway toward compliance that most utilities would have to
find themselves in unless and until something like carbon
capture and sequestration becomes commercially available on a
wide scale.
Mr. Long. Are there any functioning plants right now of
carbon sequestration up and running operations? I know when we
did this a year, a year and a half ago there weren't any. Are
there today?
Mr. Kavulla. In North America, I believe there might be one
in Saskatchewan. There is one potentially coming online that's
been the subject of a great deal of media scrutiny recently in
Mississippi.
But in general, I wouldn't consider that a commercially
available technology. I'll put it this way. I am not aware of
any regulated utility or any utility in the competitive sector
which is currently proposing to its regulator the adoption of
carbon capture and sequestration as the least cost alternative.
Mr. Long. How about the reliability? Can you discuss the
impact of the Clean Power Plan? What effect it will have on
electric reliability if many of these coal-fired power plants
are shut down to comply?
Mr. Kavulla. In my view, it could be significant and this
is something where interagency consultation was very important
and may not have happened as well as it should have between the
Federal Energy Regulatory Commission and the EPA.
The FERC is the agency responsible for the reliability of
the whole electric system and particularly in those areas,
especially in the eastern United States, that rely on
competitive wholesale markets to assure enough resources for
the reliability of the system. The sudden unavailability of
some of those resources with nothing to step into the breach
may have real implications.
Mr. Long. Do you think that the EPA is providing adequate
flexibility for States to meet the Clean Power Plan standards
and if not what impact is this having for State utility
commissions?
Mr. Kavulla. My own personal view is that they are not.
Montana has, as a percentage, the most significant reduction
goal--47 percent reduction in carbon dioxide. And frankly, when
you have that monumental of a requirement the flexibility is a
meaningless concept.
I mean, you can only close down existing coal plants before
the end of their useful lifespan in order to comply unless
somehow there are available allowances to sell from others. So
far, it doesn't necessarily seem that there will be.
Mr. Long. In the next 5 to 10 years, if the EPA went
forward with an updated Clean Power Plan with more stringent
standards, what impact would this have on electric reliability?
Mr. Kavulla. Congressman, it's hard to say. I mean, it's
difficult enough to plan just for this regulation, much less
anticipate what the EPA may or may not do.
Mr. Long. I know when southwest Missouri down in the Joplin
area whenever I travel and I look at these power plants where
they have had to go in and spend hundreds of millions of
dollars updating to the latest EPA regulations, which might
take 6 to 8 years before you even know if the regulation is
going to be implemented or not, it's mind boggling.
And then I'm also reminded of a recent trip that I made to
Midland, Texas, to a large oil and gas outfit down there, and,
after we toured one of their drilling rigs, got up on top of
that and looked at that, we went and drove down this 2-mile--it
seemed like 2 miles; not sure it was that long--driveway back
into where they gather all the gas and oil and sort it out and
truck it out and pipe it out and whatever they are going to do
with it.
And there was a herd of cattle there, about 10 head of
cattle, in this pretty small area and there was a sheriff's car
there. And they said, well, what's the sheriff's car doing. So
then they went, people have been rustling our cattle. I
thought, how can you rustle 10 head of cattle, you know. But
anyway, I said, so what are the cattle--they're kind of in
middle of nowhere.
They said, well, that's our example, that those 10 cows put
out more methane gas than our entire operation here of oil,
gas, drilling, and piping, and sorting it all out.
So I am out of time. I yield back.
Mr. Griffith (presiding). I thank the gentleman and now
recognize myself for 5 minutes. Let me do a little clean-up if
I can.
Mr. McConnell, you said earlier that the analysis by PUCs
across the country show that electric rates would go up for the
folks back home. PUC is public utility companies or company?
Mr. McConnell. Yes.
Mr. Griffith. Yes. And their data indicates that their
electric rates are going to go up under these regulations.
Isn't that correct?
Mr. McConnell. As much as 40 percent in the seven States
that are going to bear 40 percent of the responsibility. Yes,
sir.
Mr. Griffith. And I don't think my State, Virginia, is one
of those seven States. But our State corporation commission
indicated previously that this would increase electric rates in
Virginia as well.
So that when folks talk about the rates going down you have
to come up with a formula somewhat like Mr. Weissman did which
show that while the per unit cost, I believe you said, the cost
per unit goes up but we anticipate the people will use less
electricity.
Do you see any indications that people are going to use
less electricity with all of these electric cars and electric
gadgets than----
Mr. McConnell. It's kind of unimaginable, isn't it,
Congressman? Yes, and so while we look at people in America and
consider the fact that we are more energy intensive than we
ever have been as a society, we will continue to be so. And
then more importantly, think about all the developing countries
around the world and how energy intensive they are going to be
over the next 15 to 20 years.
And this formula for reduction through the reduction of
power that people are going to have, kind of unimaginable while
we all pull out our cellphones and text and do all the things
that we do now, right.
Mr. Griffith. Yes, sir. I understand that.
Now, also I thought it was interesting you talked about
that there wasn't interagency communication and so forth and I
know what one of the things that the DOE is talking about now
is research parity between the fossil fuels and the renewables
and we're not getting there and in fact there has been some
push downward.
And wouldn't that help with what we have been talking about
with the CCUS, the carbon capture and storage programs?
Wouldn't it help if we had parity on clean coal technologies?
Because for places like Montana, as we just heard Mr. Kavulla
say, it's going to be very difficult for them to meet any of
these targets because they are so heavily dependent on coal.
Mr. McConnell. Eighty percent of our energy comes from
fossil fuel and yet we continue to push research down in the
fossil area, for some strange reason, and we are doubling down
on the renewable portfolio, which represents about 3 percent of
our energy in this country. It is stunning, actually.
And the other thing that's stunning is while this EPA will
continue to promote carbon capture, utilization and storage as
a commercially demonstrated technology, we are still having
conversations about an R and D budget. That is a bit
disingenuous, isn't it?
Mr. Griffith. Well, I will let you do the testifying here
today. But those who have seen my statements in the past would
know I'd probably agree with you.
Let me also talk about ``applied for primacy.'' I just want
to make sure that folks back home know what that means.
Mr. Helms, you said earlier that the State of North Dakota
had--in regard to carbon capture, it had applied for primacy in
2013. The paperwork was all finished and sitting on the
Administrator of the EPA's desk in 2014, and yet no action yet.
What does that mean, ``applied for primacy''?
Mr. Helms. Well, Mr. Chairman, when you look back at the
history of EPA, the first 20 years that this Agency existed it
did almost everything through State primacy programs, and those
programs were incredibly effective.
Starting in about 1990, Congress and the EPA chose to go
with top-down prescriptive regulation through massive one-size-
fits-all national programs. That has not served the Nation
well.
Primacy is a situation where the EPA sets a basic
framework. States apply to regulate under that framework. They
get approval of their program through EPA in that framework,
and they move ahead with regulation. That is usually an
underground injection control, air quality, all of those
issues.
Mr. Griffith. And when they talk about this--because my
time is running out--when they talk about the successes that
the EPA has had in the first decades of its existence it's been
done under that process with the primacy of the States, with
the EPA setting up guidelines and the States following through.
And now over the last five or six years or so that EPA has
moved away to a more Washington one-size-fits-all approach. Is
that what you are saying?
Mr. Helms. That is absolutely correct, Mr. Chairman, and
that is exactly why these rules don't work, and they can never
work because they are not being done State by State through
primacy programs.
Mr. Griffith. And I appreciate that.
I will say just as an editorial comment at the end that I
appreciate Mr. Weissman's testimony, and while we won't agree
on everything, there are some things that we would probably
agree on that might surprise him and others.
I don't agree on one thing that he said, though. He talked
about the mercury rules and said that the projections were
horrible and everything was going to happen, but by 2015
nothing had happened. The rule didn't fully implement until
2015. We didn't, fortunately, get a polar vortex this last
winter like we had in 2013-14.
I was reading an article this week about the deer
population in Virginia and how badly it had been affected by
the polar vortex of 2013-14. I would still submit that some of
those problems--and I hope we won't get a polar vortex--but
some of those problems brought about by shutting down our coal-
fired power plants will show up. Should we be so unfortunate as
a nation to get the same kind of conditions that we had in the
winter of 2013-14 in the next couple of winters, sure, by 2025
we'll probably be OK because we will have repaired the damage
at great cost to the ratepayers.
With that, my time is up, and I yield back. I do have some
business to take care of.
I would like to enter into the record correspondence from
the committee dated December 14, 2011, to EPA regarding its
benefit analysis and EPA's written responses dated February
3rd, 2012, and May 4, 2012. This correspondence relates to
EPA's use of particulate matter co-benefits in its benefits
estimates.
Also, I would ask unanimous consent that the slides that
were shown on the television today be submitted for the record.
And then there is some closing language we have to say about
other stuff in there.
There we go. And also that the record would remain open for
10 days for any Members that wish to ask questions or submit
other documents.
Mr. Rush. No objection, Mr. Chair.
Mr. Griffith. Thank you very much. Anything further?
All right. With that being said, that would end our hearing
today. Thank you all so much for your testimony.
[Whereupon, at 1:12 p.m., the committee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. Fred Upton
This subcommittee has held a number of hearings on specific
EPA regulations affecting the energy and industrial sectors,
but today we are going to take a comprehensive look at the over
3,900 final rules EPA has published in the Federal Register.
Many of the regulations on their own threaten jobs and
affordable energy in Michigan and areas across the country, but
it's the cumulative effect of regulations that matters most.
Regulated energy producers, manufacturers, and other job
creators don't get to pick and choose which EPA requirements to
comply with--they must meet them all. Likewise, State agencies
responsible for maintaining affordable and reliable electricity
supplies and overseeing energy production must somehow find a
way to implement all of EPA's regulations and mandates, no
matter how unworkable, costly, or ill-suited to that State's
particular circumstances.
Setting aside legal questions raised by certain rules, the
practical challenges associated with implementing the onslaught
of new energy-related regulations has never been greater. The
Clean Power Plan alone imposes an unprecedented set of new
mandates, and in conjunction with Utility MACT, ozone, and
other major rules already in place, EPA is dramatically
expanding the burden on energy producers and users.
Beyond the costs, EPA is also imposing unprecedented
control. The Agency has effectively bypassed the Department of
Energy, the Federal Energy Regulatory Commission, and the North
American Electric Reliability Corporation, who have
longstanding statutory roles in setting energy policy. Perhaps
most concerning, the Agency has sidestepped Congress, which
never authorized the expansive cap-and-trade scheme that has
become the centerpiece of the Obama EPA agenda.
The problem is not just that EPA lacks the statutory
authority to dictate energy policy, but that is also lacks the
competence to do so. For example, EPA's current and future
proposed rules are contributing to an evolving power sector
transformation and forcing many coal-fired power plants to shut
down which raises serious concerns about electricity costs and
reliability that the Agency is not equipped to confront. EPA
lacks the technical and policy expertise of, and should not be
substituting its own judgments for, the experts at FERC, NERC,
and State public utility commissions.
And, unlike FERC and State public utility commissions, the
Agency has no obligation to keep electric rates competitive.
These increases would be even greater if not for affordable
natural gas--something that is now under threat from stringent
new EPA regulations targeting emissions from natural gas wells.
EPA's regulations have also been inundating American
manufacturers. Not only do they face uncertainty regarding
future electric rates and reliability, but many also face
direct regulation under complex and unworkable rules. From
bricks to cement to automobiles, the Obama administration has
targeted many made-in-America products. On top of all that, the
latest ozone rule will further add to operating costs at most
existing facilities while making it very difficult to open a
new factory. And it is important to remember that the
cumulative burden EPA imposes here in the U.S. is far more
stringent than most of our industrial competitors, so American
manufacturers are being placed at a global disadvantage.
The consequences are significant, and President Obama is on
his way to becoming the first president in modern times to not
have at least one year of 3 percent economic growth. It is
important that we understand the impacts of these regulations
affecting our critical energy and industrial sectors.
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