    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

            CLEAN ENERGY POLICIES THAT REDUCE OUR DEPENDENCE ON OIL

    =======================================================================

                                    HEARING

                                   BEFORE THE

                     SUBCOMMITTEE ON ENERGY AND ENVIRONMENT

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE

                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 APRIL 28, 2010

                                   __________

                               Serial No. 111-113

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

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                        COMMITTEE ON ENERGY AND COMMERCE

                     HENRY A. WAXMAN, California, Chairman
    JOHN D. DINGELL, Michigan            JOE BARTON, Texas
      Chairman Emeritus                    Ranking Member
    EDWARD J. MARKEY, Massachusetts      RALPH M. HALL, Texas
    RICK BOUCHER, Virginia               FRED UPTON, Michigan
    FRANK PALLONE, Jr., New Jersey       CLIFF STEARNS, Florida
    BART GORDON, Tennessee               NATHAN DEAL, Georgia
    BOBBY L. RUSH, Illinois              ED WHITFIELD, Kentucky
    ANNA G. ESHOO, California            JOHN SHIMKUS, Illinois
    BART STUPAK, Michigan                JOHN B. SHADEGG, Arizona
    ELIOT L. ENGEL, New York             ROY BLUNT, Missouri
    GENE GREEN, Texas                    STEVE BUYER, Indiana
    DIANA DeGETTE, Colorado              GEORGE RADANOVICH, California
      Vice Chairman                      JOSEPH R. PITTS, Pennsylvania
    LOIS CAPPS, California               MARY BONO MACK, California
    MICHAEL F. DOYLE, Pennsylvania       GREG WALDEN, Oregon
    JANE HARMAN, California              LEE TERRY, Nebraska
    TOM ALLEN, Maine                     MIKE ROGERS, Michigan
    JANICE D. SCHAKOWSKY, Illinois       SUE WILKINS MYRICK, North Carolina
    CHARLES A. GONZALEZ, Texas           JOHN SULLIVAN, Oklahoma
    JAY INSLEE, Washington               TIM MURPHY, Pennsylvania
    TAMMY BALDWIN, Wisconsin             MICHAEL C. BURGESS, Texas
    MIKE ROSS, Arkansas                  MARSHA BLACKBURN, Tennessee
    ANTHONY D. WEINER, New York          PHIL GINGREY, Georgia
    JIM MATHESON, Utah                   STEVE SCALISE, Louisiana
    G.K. BUTTERFIELD, North Carolina
    CHARLIE MELANCON, Louisiana
    JOHN BARROW, Georgia
    BARON P. HILL, Indiana
    DORIS O. MATSUI, California
    DONNA M. CHRISTENSEN, Virgin
        Islands
    KATHY CASTOR, Florida
    JOHN P. SARBANES, Maryland
    CHRISTOPHER S. MURPHY, Connecticut
    ZACHARY T. SPACE, Ohio
    JERRY McNERNEY, California
    BETTY SUTTON, Ohio
    BRUCE L. BRALEY, Iowa
    PETER WELCH, Vermont
                     Subcommittee on Energy and Environment

                   EDWARD J. MARKEY, Massachusetts, Chairman
    MICHAEL F. DOYLE, Pennsylvania       RALPH M. HALL, Texas
    JAY INSLEE, Washington               FRED UPTON, Michigan
    G.K. BUTTERFIELD, North Carolina     ED WHITFIELD, Kentucky
    CHARLIE MELANCON, Louisiana          JOHN SHIMKUS, Illinois
    BARON HILL, Indiana                  JOHN B. SHADEGG, Arizona
    DORIS O. MATSUI, California          STEVE BUYER, Indiana
    JERRY McNERNEY, California           GREG WALDEN, Oregon
    PETER WELCH, Vermont                 SUE WILKINS MYRICK, North Carolina
    JOHN D. DINGELL, Michigan            JOHN SULLIVAN, Oklahoma
    RICK BOUCHER, Virginia               MICHAEL C. BURGESS, Texas
    FRANK PALLONE, Jr., New Jersey
    ELIOT ENGEL, New York
    GENE GREEN, Texas
    LOIS CAPPS, California
    JANE HARMAN, California
    CHARLES A. GONZALEZ, Texas
    TAMMY BALDWIN, Wisconsin
    MIKE ROSS, Arkansas
    JIM MATHESON, Utah
    JOHN BARROW, Georgia

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Edward J. Markey, a Representative in Congress from the
      Commonwealth of Massachussetts, opening statement..............     1
    Hon. Fred Upton, a Representative in Congress from the State of
      Michigan, opening statement....................................     3
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................     4
    Hon. Ed Whitfield, a Representative in Congress from the
      Commonwealth of Kentucky, opening statement....................     6
    Hon. John D. Dingell, a Representative in Congress from the State
      of Michigan, opening statement.................................     7
    Hon. Joe Barton, a Representative in Congress from the State of
      Texas, opening statement.......................................     7
        Prepared statement...........................................    10
    Hon. Charlie Melancon, a Representative in Congress from the
      State of Louisiana, opening statement..........................    16
    Hon. John Shimkus, a Representative in Congress from the State of
      Illinois, opening statement....................................    17
    Hon. Doris O. Matsui, a Representative in Congress from the State
      of California, opening statement...............................    18
    Hon. Joseph R. Pitts, a Representative in Congress from the
      Commonwealth of Pennsylvania, opening statement................    19
    Hon. Gene Green, a Representative in Congress from the State of
      Texas, opening statement.......................................    20
    Hon. Lois Capps, a Representative in Congress from the State of
      California, opening statement..................................    21
    Hon. Cliff Stearns, a Representative in Congress from the State
      of Florida, opening statement..................................    22
    Hon. Eliot L. Engel, a Representative in Congress from the State
      of New York, opening statement.................................    23
    Hon. John B. Shadegg, a Representative in Congress from the State
      of Arizona, opening statement..................................    24
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement.........................    25
    Hon. Steve Scalise, a Representative in Congress from the State
      of Louisiana, opening statement................................    26
    Hon. Jay Inslee, a Representative in Congress from the State of
      Washington, opening statement..................................    27
    Hon. John Sullivan, a Representative in Congress from the State
      of Oklahoma, opening statement.................................    28
    Hon. Jerry McNerney, a Representative in Congress from the State
      of California, opening statement...............................    29

                                   Witnesses

    Lisa P. Jackson, Administrator, Environmental Protection Agency..    30
        Prepared statement...........................................    33
        Answers to submitted questions...............................   231
    Fred Smith, Chairman, President and Chief Executive Officer,
      FedEx Corporation..............................................    69
        Prepared statement...........................................    71
    Jason Wolf, Vice President for North America Better Place........    82
        Prepared statement...........................................    84
    Robert Diamond, Former Lieutenant, U.S. Navy, Security Fellow,
      Truman National Security Project...............................    92
        Prepared statement...........................................    94
    Charles Drevna, President of the National Petrochemical and
      Refiners Association...........................................    97
        Prepared statement...........................................    99

                               Submitted Material

    Letter of March 17, 2010, from the Alliance of Automobile
      Manufacturers to United States House of Representatives and
      Senate, submitted by Mr. Markey................................   133
    Letter of March 17, 2010, from the Association of International
      Automobile Manufacturers to United States House of
      Representatives, submitted by Mr. Markey.......................   135
    Letter of March 15, 2010, from the UAW to United States House of
      Representatives and Senate, submitted by Mr. Markey............   137
    Documents submitted by Ms. Capps.................................   139

            CLEAN ENERGY POLICIES THAT REDUCE OUR DEPENDENCE ON OIL

                                  ----------

                           WEDNESDAY, APRIL 28, 2010

                      House of Representatives,
                Subcommittee on Energy and Environment,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 9:36 a.m., in
    Room 2123, Rayburn House Office Building, Hon. Edward J. Markey
    [chairman of the subcommittee] presiding.
        Present: Representatives Markey, Doyle, Inslee, Melancon,
    Matsui, McNerney, Welch, Dingell, Pallone, Engel, Green, Capps,
    Matheson, Barrow, Waxman [ex officio], Upton, Stearns,
    Whitfield, Shimkus, Shadegg, Pitts, Bono Mack, Sullivan,
    Burgess, Scalise, Griffith, and Barton [ex officio].
        Also Present: Representative Latta.
        Staff Present: Phil Barnett, Staff Director; Bruce Wolpe,
    Senior Advisor; Greg Dotson, Chief Counsel, Energy and
    Environment; Lorie Schmidt, Senior Counsel; Alexandra Teitz,
    Senior Counsel; Michal Freedhof, Counsel; Alex Barron,
    Professional Staff Member; Melissa Cheatham, Professional Staff
    Member; Caitlin Haberman, Special Assistant; Karen Lightfoot,
    Communications Director, Senior Policy Advisor; Lindsay Vidal,
    Special Assistant; Mitchell Smiley, Special Assistant; Mary
    Neumayr, Minority Counsel; Andrea Spring, Minority Professional
    Staff; Aaron Cutler, Minority Counsel; and Garrett Golding,
    Minority Legislative Analyst.

    OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN
            CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS

        Mr. Markey. Good morning. And welcome to the Subcommittee
    on Energy and the Environment.
        Consumers today spend more than half a billion dollars a
    day on foreign oil. That is half of our trade deficit. Between
    2001 and 2008, when gasoline increased from $1.46 to $3.27 a
    gallon, the annual household's annual energy cost increased by
    almost $2,000, slightly more than the average tax cut provided
    during the same period. These gas dollars go straight to OPEC,
    and some of them wind up in the hands of terrorists.
        We have spent too long resisting efforts to reduce our
    dependence on oil. As Tom Friedman of the New York Times puts
    it, the price of oil and the path of freedom run in opposite
    directions. Some oil payments find their way to Iran to fund
    its nuclear program, and other payments help fund teachings
    that perpetuate hate against Americans. But until recently, we
    were on the path of ever-increasing oil dependence.
        As you can see from the red line, in 2007 the Department of
    Energy projected increased levels of oil consumption far into
    the future. These are based on the Bush administration's oil-
    friendly policies, and these numbers were actually put together
    by the Bush administration Department of Energy.
        With Democrats in control of Congress, we moved quickly to
    end this dangerous cycle, enacting the first mandated fuel
    economy provisions in 32 years, which was a huge first step.
    President Obama accelerated their implementation with a 35.5
    mile-per-gallon standard by 2016. Combined with the Renewable
    Fuel Standard and the Recovery Act measures, you can see from
    the blue line that we have frozen our levels of oil consumption
    for the foreseeable future. Again, that number from the Energy
    Information Agency.
        But we can and we must do more. The EPA has modeled what is
    technologically possible from a range of clean energy policies
    like those in the Waxman-Markey bill. And you can see from the
    green line that we can save more than all of the oil we
    currently import from OPEC, as much as 4 million or 7 million
    barrels a day more than we have already accomplished. That is
    the green line.
        So we must continue down the path to further reducing our
    oil dependence. The Waxman-Markey bill includes $20 billion and
    other measures to deploy plug-in hybrid and all-electric
    vehicles, and has other provisions to help save oil.
        Now, I am sure we will be told, ``No, you can't. It will
    cost too much. It can't be done.'' But let me remind you, the
    automobile industry delivered that very same message for nearly
    a decade. They said the technology didn't exist; that we would
    all have to drive tiny little go-carts if we raised fuel
    economy standards; and that the industry would suffer.
        Meanwhile, other countries innovated. The U.S. bled
    manufacturing jobs. Some auto makers closed facilities, APTA
    facilities, in part because we didn't raise standards quickly
    enough for them to compete. A recent study found that by
    transitioning to electric vehicles we could create 1.9 million
    new jobs by 2030 in the United States; we can improve our trade
    deficit by $127 billion per year; and the typical U.S.
    household would pocket almost $4,000 extra in gasoline saved
    and other benefits.
        But if we do not act, we will prevent a generation of
    Americans from competing in the largest economic growth
    opportunity of the 21st century: The 2 million new clean energy
    jobs that would be created in America under the Waxman-Markey
    bill will be, unfortunately, created overseas; and we will
    simply trade our dependence on foreign oil for dependence on
    Chinese solar panels, Korean batteries, and German wind
    turbines.
        To say that it can't be done, I say to those, look at the
    clean energy entrepreneurs like A123, A Better Place, and the
    scores of new entrepreneurial companies that have begun this
    process of reinventing energy technologies and who are proving
    that, yes, it can.
        By charting this new path towards an energy-independent
    future, we will one day be able to tell OPEC that we don't need
    their oil anymore than we need their sand. That is what this
    hearing is all about.
        The chair has completed his opening statement. We now turn
    to recognize the ranking minority member, the gentleman from
    Michigan, Mr. Upton.

       OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Upton. Thank you, Mr. Chairman. And I would like to
    welcome all of our witnesses here this morning, with a special
    welcome to Administrator Jackson. Ms. Jackson, we have many
    important issues before this subcommittee, and we would hope
    that this is not your last visit. We look forward to your
    testimony and interaction today.
        Before I begin, I would like to submit for the record the
    June 2009 hearing testimony of Lion Oil. It is a small refiner
    with about 1,200 employees. It is located in Arkansas. And from
    that testimony regarding the Waxman-Markey cap-and-trade
    legislation--which I would note is pretty much the same as the
    EPA regulations--``will result in the shuttering of our
    refinery and the destruction of 1,200 jobs.''
        Yes, shuttering domestic refineries will not reduce our
    dependence on foreign oil. It will kill American jobs, while we
    import more refined oil products from countries with more lax
    environmental laws. EPA regulations that would result in the
    loss of domestic refineries would not extend to refineries in
    India, where we will be importing gasoline at, frankly, higher
    prices. We can remember the $4 gasoline in the past. These
    policies could send it even higher.
        I agree that we must take action to reduce America's
    dependence on energy from unstable foreign governments and
    dictatorships, but we can do that by increasing domestic
    production of oil and natural gas, including recovering our
    vast oil shale reserves while promoting unconventional fuels
    such as coal-to-liquid technology. We need, simply, all of the
    above. We cannot enact or have EPA force costly job-killing
    climate change policy under the so-called umbrella of energy
    independence.
        I would agree that if we allow the EPA to take command and
    control of our economy that our oil imports will in fact
    decrease. But you know what else will decrease? American jobs.
    Raising the price of gasoline because of cap-and-trade by as
    much as perhaps 70 cents a gallon, 77 cents a gallon, will
    indeed increase our consumption.
        We are seeing a trend to electrify the transportation
    sector, which I think is good, but electric cars have to plug
    into a baseload power source. The EPA is fighting a war on
    coal, where we get over 50 percent of our power today. I would
    be interested in hearing the administration's view on nuclear
    power, something that was not in cap-and-trade or, I believe,
    in the Administrator's testimony this morning.
        It is a fact that EPA climate regulations or worldwide
    climate agreements thus far will not include China or India. As
    we suffer from double-digit unemployment, are we going to send
    simply more jobs abroad for no environmental benefit? Yet many
    in Congress and the administration continue to promote policies
    that will push gas and electricity prices even higher by
    foolishly blocking and creating disincentives for energy
    production here in North America. They have also taken ill-
    conceived steps to block our government from using home-made
    fuel derived from coal and oil from our Nation's closest ally
    and northern neighbor, Canada. The glaring consequence of no
    domestic energy production is greater dependence on foreign
    sources of energy, coupled with higher gasoline, oil, and
    natural gas and electricity prices.
        Our economy is in a tough time right now. And coming from
    Michigan, I know firsthand just how difficult things are for
    the folks at home. Rising energy prices will only exacerbate
    the economic problems that we are facing, and by law the EPA is
    prevented from taking economic considerations into account. I
    think that is wrong.
        Now, before I yield back, I would just like to raise
    another important issue with Administrator Jackson: coal
    combustion waste or coal ash. For 30 years, EPA has resisted
    subjecting CCW to Federal hazardous waste management
    regulations. Doing so now, I believe, would have serious
    economic and environmental consequences. Coal ash has been
    regulated in accordance with varying requirements and programs
    established by the States, and unwarranted hazardous
    designation will eliminate the environmental benefits of
    reusing coal ash and only force greater disposal in landfills.
        Recycling the ash falls right in line with our new green
    era of responsibility. Both the Green Building Initiative and
    the U.S. Green Building Council encourage using fly ash in
    concrete or products that contain recycled materials in green
    buildings. That benefit would be lost if somehow we saw
    regulation. So I would hope that perhaps you might be able to
    comment on that.
        At this point, I yield back the balance of my time.
        Mr. Markey. The gentleman's time has expired.
        For the record, the Nuclear Energy Institute endorsed the
    Waxman-Markey bill.
        Let me turn and recognize the chairman of the full
    committee, the gentleman from California, Mr. Waxman.

    OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. Waxman. Thank you very much, Mr. Chairman.
        The title for today's hearing is on Clean Energy Policies
    that Reduce Our Dependence on Oil. Now, I think what we have
    seen in this country for decades is a view that we can't do
    anything about this problem. We are just dependent on foreign
    oil to sustain our way of life, and that is it. There is not
    much we can do about it. Maybe drill a little bit more in the
    United States to get more domestic oil, but you can't replace
    all that oil we are bringing in; so why try?
        In fact, the policies that we saw in the first part of this
    decade were exactly what the Republican President wanted. He
    had a Republican Congress, and therefore President Bush got
    through--energy policy--more than 95 percent of the policies he
    wanted. But what we accomplished in terms of dependence on
    foreign oil with regard to those policies, we were still on a
    trajectory to need more oil every year, year after year for as
    far as we could project into the future.
        It seems now that each year the amount of oil that we
    imported has been going up, up, and up and up, and that makes
    us more vulnerable, vulnerable to our national security being
    compromised.
        However, in the last few years Congress reversed its
    course. In, I guess it was 2007, and 2008, the Energy
    Independence and Security Act was adopted, and it increased the
    CAFE standard, which meant that cars had to be more efficient
    in the use of gasoline. The beginning of last year, we passed
    the Recovery Act, and in that law we invested in the technology
    and manufacturing capability to help bring plug-in electric
    vehicles to market beginning this year. In that law, we helped
    State and local governments replace their buses, trucks, and
    work vehicles with natural gas-powered vehicles, all the way
    from New York to Texas, from California to Maryland. So we have
    started to do things that have actually reduced our dependence
    on foreign oil.
        Today's hearing will explore some of the real actions we
    have taken already to cut our Nation's dependence on this oil.
    And I want to welcome Ms. Lisa Jackson to the committee. She is
    going to testify regarding clean energy policies that are being
    implemented by the EPA that are reducing our dependence on oil.
        Earlier this month, EPA finalized the historic rule
    establishing greenhouse gas tailpipe standards for cars and
    trucks. The EPA has produced strong but workable standards for
    tailpipe emissions, harmonized with standards from the National
    Highway Traffic Safety Administration. These standards will cut
    our oil dependence by 1.8 billion barrels of oil. It will draw
    on the development of new technology here in the U.S., and
    provide the U.S. auto industry with the certainty it desires.
    These standards do all this while saving American consumers
    $3,000 over the life of the vehicle.
        So what we have is a standard that is supported by the auto
    companies and auto workers, States, and the environmentalists.
    They are all on board. These policies are already making a
    difference for our Nation's future. For the first time in
    decades, the Energy Information Administration no longer
    projects that the U.S. need for oil will increase year after
    year. We now expect that the U.S. will not need any more oil in
    2030 than it did in 2007. This is a remarkable improvement for
    our energy security.
        There is still more work to do. Administrator Jackson will
    brief us on an important new EPA study that reveals the
    dramatic oil savings that are technically feasible and can be
    achieved through new energy policies.
        But the good news is that as we begin to solve the
    seemingly intractable problems of oil dependence, we also make
    progress on another seemingly intractable problem, the
    dangerous increase in our carbon pollution.
        This is what we stand for: strong, pragmatic, and effective
    policies that face the threats to our country and find sensible
    ways to resolve them. These are not partisan issues. They
    shouldn't be looked at as partisan issues. But we did go down
    that partisan road in the early part of this decade, and that
    road took us to greater dependence and problems that we see as
    intractable, rather than problems that we are now looking at as
    problems that we can deal with. And we can, as a result, have a
    safer and more efficient and more better future for our
    environment as well as the economy of this Nation.
        Thank you, Mr. Chairman.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentleman from Kentucky, Mr.
    Whitfield.

      OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
               CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

        Mr. Whitfield. Thank you, Mr. Chairman. And I am glad we
    are having this hearing today on clean energy policies that
    will reduce our dependence on oil. I am pleased also that we
    have Environmental Protection Agency Administrator Lisa Jackson
    with us this morning. And anytime we talk about dependence on
    oil, one of the innovative actions we are trying to move to is
    electrification of our transportation system. And I want to
    talk about the importance of coal in meeting the electricity
    demands of our country. We know today that coal produces 51
    percent, 52 percent of the electricity needs in this country.
    We know that the demand for electricity is going to increase
    dramatically over the next 20 years. And I have the clear
    impression that this administration and this EPA has a strong
    bias against coal.
        Now, why do I say that? Well, one, this endangerment
    finding that they are working on right now. We know and the EPA
    has admitted, itself, has acknowledged that the finding, the
    endangerment finding will cause job losses in the U.S., and I
    think that that represents a clear and present danger to our
    economy and all of our efforts to provide the conditions for
    job growth and prosperity.
        In addition to the endangerment finding, this EPA is
    limiting coal permits. This EPA is trying to designate coal ash
    as a hazardous material. This EPA, in my view, is trying to
    create as many obstacles as possible in using coal. And I can
    assure you that China is using more coal, India is using more
    coal, because they want to be competitive in the global
    marketplace, and we know that coal produces the least expensive
    electricity.
        Now, if we are going to provide additional incentives for
    solar power, wind power, I feel very strongly that those
    alternative sources are inefficient, too expensive, use too
    much land, and do not produce enough electricity and cannot
    produce enough electricity. And I would hope that this
    administration would spend more time, more money on helping us
    perfect carbon capture and sequestration. Dr. John Hauser at
    MIT is one of the leaders in this regard. He is working
    diligently with others to do this. And I think our long-term
    viability and strengthening our economy depends upon developing
    carbon capture and sequestration and continued use of coal.
    Thank you.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentleman from Michigan, the
    chairman emeritus of the committee, Mr. Dingell.

    OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Dingell. Thank you, Mr. Chairman.
        The Democratic Congress and the Obama administration have
    done a tremendous amount to reduce our dependence on foreign
    oil. Our efforts began with the Energy Independence and
    Security Act, which was dealt with in this very committee and
    which continued with the American Recovery and Reinvestment
    Act, and the administration's coordinated approach to deal with
    vehicle emissions, and, finally, the administration's proposal
    for increased offshore drilling.
        After many years of predictions that our dependence on
    foreign oil would only create additional dependence on that
    oil, we are seeing a change in that trajectory. The news only
    gets better if we see the American Clean Energy and Security
    Act signed into law.
        I would like to take a moment to commend Administrator
    Jackson for her work leading to a single, harmonized standard
    for greenhouse gas emissions and fuel efficiency for autos.
    Prior to this landmark agreement, our auto makers faced a
    patchwork of standards that would have been very nearly
    impossible to meet. Now that we have a single national standard
    for model years 2012 to 2016, it is time to begin the same
    approach for the post-2017 model years. The administration has
    been successful once, and I know that with effort, they can do
    the same thing again.
        As much as I disagreed with the Supreme Court in the case
    of Massachusetts versus EPA, the decision, although erroneous,
    was made. EPA was required to move forward with their
    endangerment finding, and they have done so. That endangerment
    finding is the legal underpinning for a national standard for
    autos. The national standard is too important to our
    manufacturers and to our economy for us even to consider a
    resolution of disapproval.
        Of course, it is important that we note that remarkable
    technologies are coming out of our auto makers. Whether we are
    talking about the Chevy Volt, the Ford Escape, and the Fusion
    hybrids, advanced transmission or advanced submission control
    technology, our auto makers are stepping up to the plate to
    provide consumers with quality, clean, and fuel-efficient
    technologies. GM is building the battery packs for the Chevy
    Volt in my district in Brownstown, Michigan, and Ford is doing
    the same thing at their Ypsilanti Township plant. We are busily
    creating 21st century jobs while we are protecting the
    environment.
        Mr. Chairman, I thank you again. And I look forward to our
    witnesses and their comments.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentleman from Texas, the ranking
    member of the full committee, Mr. Barton.

       OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF TEXAS

        Mr. Barton. Thank you, Chairman Markey. I want to thank you
    and Chairman Waxman for agreeing to hold this hearing and
    inviting Administrator Jackson. I want to thank you, Madam
    Administrator, for agreeing to come. I look forward to a
    productive exchange of ideas.
        Mr. Chairman, I think it is no secret that I don't believe
    the endangerment finding that the Environmental Protection
    Agency put out in April has been properly done.
        I guess I would start with the premise that when I was born
    in 1949, my life expectancy was 68 years old. My communications
    director and his wife had a baby girl last week; her life
    expectancy is 81. We are told by the Census Bureau that a baby
    born 10 years from now can expect or anticipate to live to 82.
    Neither of my grandfathers lived past the age of 67. My father
    died at the age of 71. My mother is alive and well at the age
    of 85.
        So I don't see as a basic premise how the Environmental
    Protection Agency can say that CO2 is an
    endangerment to the public health of the people of the United
    States when our life expectancy is going up, when the models
    that the endangerment finding are based on show no
    endangerment, even in their own models in the most extreme
    cases, until 200 years from now. It just doesn't wash with me,
    Mr. Chairman. So I am going to be asking our distinguished
    Administrator a number of questions about that endangerment
    finding when it is my opportunity to do so.
        This endangerment finding, if implemented and backed up by
    all the regulations that the Environmental Protection Agency
    has indicated they plan to put upon the United States economy,
    would require rules to regulate CO2 from aircraft,
    from ocean-going vessels, nonroad engines and vehicles, all
    types of fuels, cement plants, petroleum refineries, nitric
    acid plants, utilities, oil and gas production, landfills,
    animal feed operations. It could be construed to even allow
    regulation of large public events where large numbers of people
    accumulate, such as the World Series, Super Bowl, Boston Red
    Sox at Fenway Park, because under the strictest interpretation
    of the Clean Air Act, enough CO2 is emitted in a
    large gathering to trigger the point-source standard for
    regulation. I know that is not the intention. I don't think the
    EPA would do that. But it is technically possible.
        Our economy should be about economic jobs and growth, Mr.
    Chairman. Congress has an obligation to promote economic
    growth. This is the committee, the Energy and Commerce
    Committee, the oldest standing committee in the House of
    Representatives, that has the primary responsibility for
    authorizing legislation to create that economic growth.
        The Clean Air Act originated in this committee, as you
    know, Mr. Chairman. The senior members of this committee voted
    the last time on the reauthorization and amendments to the
    Clean Air Act early the 1990s under the leadership of then-
    Chairman John Dingell. I was a member of that committee at that
    time, and I voted for those amendments, Mr. Chairman. I think
    it was a good piece of legislation, and I have absolutely no
    qualms that I voted for it.
        Having said that, it is my opinion, and I think the record
    will bear this out, that the Clean Air Act was never intended
    to regulate CO2. CO2 is not a pollutant
    under the definition of that act. And the court case in
    Massachusetts versus EPA doesn't say that CO2 is a
    pollutant. It doesn't say that the Clean Air Act requires that
    CO2 be regulated. It simply says that the
    Environmental Protection Agency has an obligation to make a
    decision.
        It is my opinion that they have made the wrong decision. It
    is my opinion that the endangerment finding is, in and of
    itself, a threat to the economic vitality of this country. And,
    as I said earlier, Mr. Chairman, when it is my opportunity to
    ask questions of our distinguished Administrator, I will be
    asking her a series of questions about that endangerment
    finding.
        With that, Mr. Chairman, I am very appreciative of the
    opportunity to participate in this hearing. I yield back the
    balance of my time, and look back to a productive hearing.
        [The prepared statement of Mr. Barton follows:]
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        Mr. Markey. The gentleman's time has expired.
        The Chair recognizes the gentleman from Louisiana, Mr.
    Melancon.

    OPENING STATEMENT OF HON. CHARLIE MELANCON, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF LOUISIANA

        Mr. Melancon. Thank you, Mr. Chairman. I would like to take
    a moment, first of all, to recognize the families of the 11
    victims that lost their lives in the deepwater rig last week
    and those that were injured. I am thankful for those that
    survived. Those men and women are doing what so many other men
    and women do in Louisiana every day, working hard to provide a
    better life for their families and produce resources for their
    country. Their sacrifice is immeasurable to those that love
    them. And so I ask everyone to remember the human face of this
    tragedy and to keep them and their families in your prayers.
        I also ask that we all keep in mind the safety of those
    brave responders and pray for their work, that it goes swiftly
    and without incident, as we continue to try and clean up after
    this horrible disaster.
        I would like to also call attention to the serious
    environmental and economic threat posed by the disaster. The
    oil slicks that are spreading from the rig site could have a
    detrimental impact on marine life along our fragile coast, and
    they must be properly contained. The marshes and estuaries that
    line the Louisiana coast, as well as the Mississippi coast, are
    home to the most productive fisheries in the country, if not
    the entire world, and host countless species of migratory birds
    throughout the year. Protecting these natural gifts and
    resources must be a priority for all of us.
        My remarks today will be short and simple. I thank the
    Chairman for holding this hearing and allowing us the chance to
    have this very important discussion.
        All of our lives are touched by the production of oil and
    petroleum products every day. Many of us traveled by car to be
    here today, and to communicate with each other, all of us will
    use a plastic pen or keyboard at some point today. There is no
    doubt oil and its byproducts play an important role in our
    country's history and economic development. I think our
    committee and our caucus should be proud of the forward-
    thinking energy policies that have been put in place. But I
    would be remiss if I didn't point out the continuing importance
    of oil and petroleum products in our economy.
        The good-paying jobs and the affordable energy and chemical
    products drive our economy day in and day out. It is impossible
    to know exactly what the future looks like, but I think it is
    important today to focus on priorities, our national security,
    and strengthening the economy.
        I think we should be talking about energy independence.
    Producing energy from our homegrown assets, all of them, not
    just some of them, makes us less reliant on hostile nations and
    promotes American ingenuity. For example, we shouldn't have to
    buy all of our patented solar equipment from foreign
    manufacturers.
        In Louisiana, we have proudly produced oil and gas for
    generations, constantly innovating and evolving the way we
    explore and extract. As I recognized at the beginning of my
    statement, there are real costs associated with production. But
    our State has selflessly carried on this work to ensure that
    the rest of the country can have some reasonable stability in
    energy prices and availability. We will continue to do this
    work and will lead the way until energy security becomes a
    reality for our country.
        In conclusion, I wish to request again that Administrator
    Jackson and her Agency continue to carefully review the science
    associated with requiring refineries to blend E-15 in their
    stock. It is estimated that in just a few short years, every
    gallon of gasoline sold in the United States will be at least
    blended to E-10 levels. This blend wall, as it is called, means
    that refiners will no longer be able to comply with the
    renewable fuel standard as established by law. I ask that the
    Administrator use her authority to reduce the blending
    requirements rather than force refiners to blend higher levels
    of ethanol in their commercial-grade gasoline. This move could
    have serious consequences, such as voiding some car and green
    engine warranties, which in turn lead to costly legal liability
    battles. Also, the high organic content of E-15 is known to
    increase the nitrogen and sulfur oxide, the nox and sox,
    emissions.
        Biofuels represent a strong part of the solution to our
    domestic energy needs, but balancing those needs with the
    impact on our existing economy is critical, and I thank the
    Administrator for giving this due consideration. And I again
    thank the Chairman for his time.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentleman from Illinois, Mr.
    Shimkus.

      OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Mr. Shimkus. Thank you, Mr. Chairman.
        And Administrator Jackson, welcome. We had a chance to
    visit about a year ago at the Illinois delegation luncheon, and
    I offered my assistance on an energy security approach that I
    think would meet some of your goals and objectives. I still
    offer that and look forward to working with you when you take
    me up on that offer.
        I am glad I followed my friend, Charlie Melancon, because
    you have a competing view on what we have done on renewable
    fuels, and I am going to use the opening statement to just pose
    a series of questions and talk about this, because I obviously
    have another issue I want to talk to once we get the questions.
        According to you, 65 percent of the gasoline in the United
    States is consumed by 2001 vehicles or newer. It has been
    widely reported that you are considering partially approving E-
    15 for 2001 model cars and newer, which I support. But there is
    a concern with this in that splitting the automobile population
    on an improved blend versus addressing the entire fleet--
    because you look at the capital expense that would be
    incurred--I think it is safe to say that many people would not
    do the expansion that is needed in infrastructure if you are
    only going to be able to address 65 percent of the fleet. So I
    will have a written question to ask for comments on that, and I
    think that is an issue that needs to be considered.
        The U.S. imports roughly 65 percent of petroleum today.
    This is an energy security hearing. Ethanol currently is about
    8.4 percent of the gasoline pool. It is the only thing we have
    done to decrease our reliance on imported crude oil, and it has
    had great success. And we have displaced 12 billion gallons of
    imported crude oil by using renewable fuels.
        Now, the interesting thing is that, because of the blend
    wall, we are producing ethanol and we are exporting it
    overseas. So if we want to continue to decrease our reliance on
    imported crude oil, why would we have an arbitrary limit that
    now forces us to export the ethanol, versus continuing to use
    the ethanol to decrease our reliance on imported crude oil? We
    are exporting to India, South Korea, and the EU, while we are
    still importing oil from Venezuela. This seems
    counterproductive.
        And I know that is why we are pushing, and I do appreciate
    your looking at the E-15. But that is also a reason why we
    think that looking at E-11 or E-12 for the entire fleet versus
    this bifurcation aspect of the 2001 vehicles and above might be
    an even more credible solution to addressing and decreasing our
    reliance on imported crude oil. It is good for the country, it
    is good for our energy security, it is good for farm income, it
    is good for rural America, it is good for jobs.
        And I thank the chairman, and I yield back the balance of
    my time.
        Mr. Markey. The gentleman's time has expired. The chair
    recognizes the gentlelady from California, Ms. Matsui.

    OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Ms. Matsui. Thank you, Mr. Chairman, for calling today's
    hearing. I would also like to thank Administrator Jackson and
    the rest of the witnesses for appearing before us today.
        I commend the EPA for establishing a greenhouse emissions
    standard for cars and light trucks, and for finalizing a
    renewable fuels standard, which, as Administrator Jackson
    rightly points out in her testimony, are inextricably linked to
    reducing our dependence on oil and cutting emissions of
    greenhouse gas.
        As we all know, oil provides more than 40 percent of all
    energy consumed and 97 percent of the energy used for
    transportation. However, it is crucial that we advance policies
    that lessen our carbon footprint, curtail harmful emissions,
    create jobs, and safeguard the physical and energy security of
    our Nation. In doing so, we will preserve and even improve upon
    our current way of life.
        To become less reliant on fossil fuels, Americans must
    embrace clean technology, clean fuels, and new ways to cut
    emissions. If we succeed in doing that, we will improve our
    manufacturing base and regain our competitive advantage in the
    global economy.
        Toward that end, I recently convened a clean technology
    regional summit in Sacramento and brought together clean-tech
    companies, nonprofits, utilities, colleges, and businesses to
    discuss ways in which they are fostering cooperative
    relationships and strategic partnerships to deepen the region's
    ongoing efforts to become a clean-tech capital.
        On top of Sacramento's leadership as an environmental and
    metropolitan planning model for the State of California, this
    summit demonstrated the region's vision to achieving greater
    energy dependence.
        Our Nation must also aspire to be the world leader in
    producing and exporting clean technology, and the President has
    repeatedly expressed this goal. Unfortunately, the United
    States still lags behind many of our international competitors
    in expanding our clean-tech industry, particularly in exports
    abroad.
        Just yesterday, I, along with Representatives Rush,
    Dingell, and Eshoo, introduced legislation, H.R. 5156, the
    Clean Energy Technology Manufacturing and Export Assistance
    Act, that would provide domestic manufacturing and foreign
    export assistance to boost the competitiveness of the U.S.
    clean-tech industry here at home and in the international
    marketplace.
        It is critical that our Nation become the leader in
    manufacturing and exporting clean technologies, not one that
    becomes increasingly dependent on foreign energy products. This
    legislation will enhance our standing in the clean energy race.
        I look forward to working closely with my colleagues,
    stakeholders, and other advocates to move the United States
    towards a more efficient energy economy that utilizes clean-
    tech manufacturing and lessens our dependence on the oil.
        I yield back the balance of my time.
        Mr. Markey. The gentlelady's time has expired.
        The chair recognizes the gentleman from Pennsylvania, Mr.
    Pitts.

    OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN
             CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

        Mr. Pitts. Thank you, Mr. Chairman. I would like to thank
    you for convening the hearing today on such an important issue.
        Like all of us, I believe that we should work to decrease
    the amount of greenhouse gas emissions in our atmosphere and we
    should be good stewards of this Earth and its resources. In
    addition, I think it is imperative that the United States
    become increasingly energy independent. The United States needs
    to produce far more clean energy from sources that do not rely
    on the whims of unfriendly nations in far-off regions of the
    world.
        Fundamentally, cutting carbon emissions through punishment,
    taxation, and the heavy hand of big government will only
    cripple our economy and send more jobs overseas; and I fear
    recent EPA actions and the enactment of cap-and-trade
    legislation would do just that.
        Instead, we should be encouraging a clean energy economy
    through innovation and encouragement and entrepreneurship. If
    we want to reduce our dependence on oil, I strongly believe
    that our clean and green energy future is a nuclear future. And
    with this goal in mind, I have introduced the SAFE Nuclear Act
    which stands for Streamline America's Future Energy. The bill
    provides for a regulatory process that will encourage an
    increase in the production of this clean alternative energy.
        Nuclear energy is a viable, clean alternative that can help
    strengthen America's energy infrastructure. Now, nuclear power
    can reduce our dependence on foreign sources of energy and
    reduce the emissions that come from burning fossil fuels. And
    my bill would provide an additional path in the regulatory
    process that allows for the approval of new nuclear reactors on
    or adjacent to an existing site without jeopardizing safety.
        Though we may not all agree on issues like cap-and-trade
    and EPA actions, we can all agree that we need to find a way to
    produce the energy that fuels our lives in a way that is
    environmentally friendly and sustainable. Nuclear power fits
    that description, and the SAFE Nuclear Act will go a long way
    toward making that safe, clean future a reality. I thank you
    for the time and yield back.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentleman from Texas, Mr. Green.

       OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF TEXAS

        Mr. Green. Thank you, Mr. Chairman, for holding the hearing
    today on the clean energy policies that reduce our dependence
    on oil. And I would also like to welcome Administrator Jackson
    and the other panelists to our committee this morning.
        Coming from Texas, we are the Nation's leader in renewable
    energy production and the pioneering and developing of its own
    State portfolio standard. I support efforts to promote
    renewable energy production that meets the unique circumstances
    and resources of each State. However, with increases in
    renewable energy, the Energy Information Administration found
    that oil and natural gas and coal will continue to make up a
    large majority of U.S. energy use, even to 2030 and beyond.
        If we are to reduce dependence on foreign oil, we must
    explore and produce more domestically, along with all our
    alternatives that we are investing in. We cannot drill our way
    out of our energy needs, but we cannot ignore the benefits that
    America gains with responsible domestic production. These
    benefits include reduced reliance on foreign imports, increased
    economic growth, new high-paying jobs, additional Federal and
    State revenues, and improved ability to meet our clean energy
    goals. That is why I strongly support increasing diversifying
    domestic production in the areas like Alaska's North Slope, the
    Gulf of Mexico, Federal lands in the West and the Outer
    Continental Shelf.
        I also supported the efforts to raise fuel economy
    standards in vehicles, to provide tax incentives for consumers
    to purchase fuel-efficient vehicles, extend tax incentives for
    renewable energy, increase energy efficiency standards for
    buildings and appliances, and promote public transit efforts.
    Several of these initiatives are part of last year's Recovery
    Act and the Energy Independent Security Act of 2007. They are
    working well. I will continue to support programs seeking to
    create cleaner energy technologies, because we all benefit from
    a cleaner environment.
        Finally, while I have you here, Administrator Jackson, I
    appreciate the working relationship that we have, but also
    applaud the administration brokering an agreement to provide
    the auto industry with one national program for fuel economy
    and greenhouse gas emissions, which was supported by the
    States, environmental advocacy groups, and the auto industry.
        And I would be remiss if I didn't also mention the work we
    are doing with EPA on the Superfund site that is in our
    district in East Harris County that our regional EPA is moving
    very fast to try to contain a problem that has been there for
    40 years. I know this is not an easy feat. However, I want to
    emphasize my opposition to the EPA regulating greenhouse gases
    from large stationary sources under the endangerment finding.
    It is my hope that Congress will send the President legislation
    to set parameters to help regulate emissions with minimal
    disruption to our economy.
        And, Mr. Chairman, again, thank you for calling this
    hearing. I yield back the balance of my time.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentleman from Texas, Mr. Burgess.
        Mr. Burgess. Thank you, Mr. Chairman. I appreciate the
    Administrator being here. It is so rare we have anyone from the
    administration come to our committee. I will save my time for
    questions, and I yield back.
        Mr. Markey. We thank the gentleman very much.
        The Administrator has been before our committee before. And
    I would just note that the Administrator of the EPA did not
    appear before our committee from 2001 to 2006, when the
    minority was then in the majority. So that was, without
    question, an unprecedented period of time without having the
    EPA Administrator appear before the committee of jurisdiction.
    That cannot be said about this Administrator. That was the most
    successful witness protection program in history.
        Let me now turn and recognize the gentlelady from
    California, Mrs. Capps.

       OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mrs. Capps. Thank you, Mr. Chairman, for holding today's
    hearing; especially welcome again to the Administrator of the
    EPA. And I want to associate myself as well with the remarks of
    my colleague Mr. Melancon regarding the tragedy off the coast
    of Louisiana.
        Today our economy relies on fossil fuels for energy, and
    every day we pay a price, many prices. And volatile prices
    starts instability and unnecessary pollution. We simply must
    change this untenable situation. The best way to beat this
    addiction is to reduce overall demand, promote renewables, and
    develop alternatives.
        Putting more attention on the potential of clean energy is
    something that I and others on this side of the aisle have been
    advocating for years. And since America is not exactly awash in
    natural oil and gas, reducing our dependence on them would be
    good not only for our environment but for our economy and
    perhaps, most importantly, for national security.
        But, to be honest, we have to do more than talk about the
    potential that renewables and alternative energy has for this
    country. We have to put into place more funding for programs to
    bring these energy sources to market, and we have to make
    changes in energy policy to encourage their use. That is
    exactly what Democrats have done in the last 3 years.
        We have enacted legislation, the Energy Independence and
    Security Act, and the Recovery Act, to provide an immediate
    jolt to the clean energy economy to create jobs and enhance our
    long-term competitiveness by reducing our oil dependence. At
    the same time, the House has passed legislation to establish a
    cap-and-trade system for global warming pollution. This bill
    has the potential to provide trillions of dollars in revenue
    that could be used, among other things, to provide money for
    investment in clean energy and tax relief for American families
    facing economic hardship.
        Mr. Chairman, we know what we need to do: Accelerate our
    economic recovery in the short term, ensure our long-term
    prosperity. Developing clean power and energy-efficient
    technologies while combating global warming are initiatives
    that meet these goals.
        Americans want real, meaningful solutions to our Nation's
    energy challenges. Unfortunately, the leadership under the last
    administration was driven by a fuel desire to drill our way
    toward energy independence, and did that by lavishing huge tax
    breaks on big oil, paying much less attention to reducing
    demand, renewables, and alternative energy. Their great plan,
    95 percent implemented, resulted in volatile energy prices,
    $500 billion in oil company profits, and an economy on the
    brink of collapse. Those of us who opposed the Bush-Cheney plan
    did so because we knew this was the likely result.
        We do have a better idea, one that meets today's crisis and
    transitions us to a new future. It is time to put taxpayer
    funds to a more productive use, jump-start investments of
    energy efficiency, renewables, alternative energy, all of which
    will reduce our oil dependence.
        Mr. Chairman, this issue will be the defining measure of
    our future economic standing and our international security
    over the next century. I believe we should all take this
    opportunity to work together to achieve this energy
    independence for our country.
        Thank you. And I yield back the balance of my time.
        Mr. Markey. The gentlelady's time has expired.
        The chair recognizes the gentleman from Alabama, Mr.
    Griffith.
        Mr. Griffith. Mr. Chairman, I will waive my opening
    statement and reserve my time.
        Mr. Markey. The gentleman will be able to reserve his time.
        The chair recognizes the gentleman from Florida, Mr.
    Stearns.

     OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF FLORIDA

        Mr. Stearns. Mr. Chairman, thank you.
        The endangerment finding that many of us feel was rushed
    into existence by the EPA really has many of us concerned about
    what the economic impact of this would be. It allows, of
    course, the EPA to impose the first ever Federal tailpipe
    standards for greenhouse gases. That is estimated to cost about
    $52 billion and require the largest industrial sources to
    install the best available control technology. I mean, that
    term itself, ``the best available control technology,'' I don't
    think Administrator Jackson, have you yet defined what this
    means and whether it is available?
        When you look at the impact of this, it is not going to
    affect just the auto industry and large industrial sources; you
    are going to regulate greenhouse emissions from aircraft,
    ocean-going vessels, nonroad engines and vehicle sources,
    cement plants, fuels, petroleum refineries, utility boilers,
    oil and gas production, landfills, and even animal feed
    operations.
        So, since 85 percent of the U.S. economy runs on fossil
    fuels that emit carbon dioxide, imposing a CO2 tax
    is equivalent to placing an economy-wide tax on energy use. I
    think that is what many, at least on this side of the aisle,
    are concerned about, the economic impact.
        Now, according to the Heritage Foundation Center for Data
    Analysis, the economic effects of carbon dioxide regulation
    would result in cumulative gross domestic product losses--and
    these are their figures--of $7 trillion by the year 2029, and
    single-year GDP losses exceeding $600 billion.
        So when you think about the impact of this, with a weak
    economy, with high unemployment, I think that has many of us
    concerned. It hit particularly hard on manufacturing, which
    manufacturing provides the better jobs. And so job losses in
    some industries could exceed 50 percent with this.
        So I think, regardless of what one's view might be on
    carbon dioxide and global warming, I think perhaps both sides
    of the aisle can agree that this would have huge economic
    impact. And companies obviously will innovate and try to work
    through this, but are they going to make long-term capital
    investments, waiting to see what the Administrator is going to
    do?
        And so when the EPA uses such language as ``best available
    control technology,'' if I was to invest in, let's say, a
    cement plant or I was going to do something in oil and gas
    production, or I was going to do something in aircraft or even
    animal feed operations, I would want to know what your
    regulations are going to be and how am I going to be impacted,
    before I invest a lot of my money.
        So I think you have put sort of a pale over the economy
    with this. And I think we need to, through this subcommittee,
    Mr. Chairman, work with commonsense energy solutions that will
    encourage domestic energy production and create jobs, and be
    careful of instituting this endangerment finding.
        Thank you, Mr. Chairman.
        Mr. Markey. The gentleman's time that has expired.
        The chair recognize the gentleman from New York, Mr. Engel.

     OPENING STATEMENT OF HON. ELIOT L. ENGEL, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF NEW YORK

        Mr. Engel. Thank you, very much, Mr. Chairman. I want to
    thank you for holding this important hearing and our witnesses
    for contributing their expert testimony. I look forward to
    hearing Ms. Jackson's testimony.
        We all know that we must break our addiction to oil. It has
    weakened our economy, it has transformed our wealth into
    nations and individuals who wish us harm, placed our troops in
    dangerous places, and damaged our environment. The U.S.
    consumes 25 percent of the world's oil production, yet controls
    less than 3 percent of an increasingly tight supply. Three-
    quarters of world's reserves are in OPEC Nations and in 2008
    the U.S. sent roughly $440 billion overseas to pay for imported
    oil.
        These economic and national security problems are enabled
    by the simple fact that oil provides more than 96 percent of
    the fuel for our transportation sector. It is really a transfer
    of wealth. Unless we act now the problem will continue to
    worsen.
        We should be doing the following: First, we should continue
    to increase the efficiency of our cars and trucks. Making fuel
    economy improvements in our existing vehicles will not break
    our addiction to foreign oil, but it will reduce our overall
    consumption.
        Secondly, we must force petroleum to compete with other
    fuels. There are many ways to do this and we should use them
    all. T. Boone Pickens has recommended switching to natural gas
    for fleet vehicles such as buses and taxis and for interstate
    trucking. These vehicles can run on natural gas and would only
    require new pumps at a few central locations and interstate
    truck stops. We should deploy drop-in fuels produced from waste
    and algae. These fuels can mix freely gasoline and diesel in
    existing vehicles.
        We should enact an open fuel standard that would require
    all new gasoline using vehicles to be flex-fuel vehicles,
    capable of running on gasoline, ethanol or methanol. I argued
    when we passed our global warming bill that that should have
    been in the bill, and it should have been and hopefully it will
    be when we get to a finished product. This cheap and simple
    modification uses technology that already exists. Brazil
    accomplished it easily several years ago. Methanol made from
    natural gas can be produced for around $1.20 a gallon of
    gasoline equivalent today.
        Thirdly, we should move to electrify automotive
    transportation. I have worked with my friends at Better Place
    several years now and I am eager to hear about their progress
    from Mr. Wolf on the second panel today.
        Basically we need to have a more balanced energy policy and
    a policy that relies so heavily on gas, on gasoline, is not one
    that can be sustained. We can really never be totally free with
    our national security as long as we rely on despots like Hugo
    Chavez or the Saudi royal family for our energy supplies. We
    need to move and we need to do it quickly.
        Thank you, Mr. Chairman.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentleman from Arizona, Mr.
    Shadegg.

    OPENING STATEMENT OF HON. JOHN B. SHADEGG, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF ARIZONA

        Mr. Shadegg. Thank you, Mr. Chairman. And I will try to
    keep my remarks brief. I want to associate my comments first
    with Mr. Melancon. I believe it is in America's interest to
    pursue all energy sources and particularly to appreciate the
    domestic energy we have produced, including oil, natural gas,
    and other sources of energy as well as coal.
        I am concerned about the topic that my colleague Mr.
    Shimkus raised, and that is the issue of increasing the ethanol
    blend. I have introduced legislation to require that no
    increase in ethanol be permitted until the safety of ethanol is
    studied in certain pieces of power equipment. I think that is a
    legitimate concern. There is a very real danger of that when
    ethanol blends go above 10 percent, we do not know what impact
    they will have on the safety of chainsaws and other pieces of
    equipment or on the reliability of many small motors, including
    outboard motors and marine engines, and it would be
    particularly unfair if we moved to those new blend standards
    and the cost of doing so is imposed on the American public
    either financially or in terms of safety risk because the
    equipment was not designed to run on those fuels.
        I do commend the EPA for its work, but I disagree with its
    endangerment finding. I believe it is based largely on the IPCC
    report, which was the result of almost 2 decades worth of
    research; however, tragically that research has now been very
    much placed in doubt. The IPCC report daily is criticized for
    new errors in its findings. It is found to have exaggerated the
    sea level rise in Bangladesh due to climate change because it
    failed to take into account sediment from the Himalayan rivers,
    it based claims on African crop year that were not peer
    reviewed, it erroneously claimed that the Himalayan glaciers
    might melt by 2035, it based claims on drought in the Amazon
    forest in a report that did not even study drought, and it also
    used as a basis for temperature predictions apparently data
    that does not even exist.
        Most recently, a study found that 21 of 44 chapters of the
    IPCC report would receive an F if graded on the grading system
    used in American schools because the papers relied upon and
    included newspaper clippings, newsletters, and press releases
    and not peer reviewed literature.
        It seems to me, and I will conclude with this, that when a
    nation decides to pursue massive public policy on the scale
    that we are talking about, it is absolutely critical for us to
    have the support of the American public behind us and not to
    impose very costly regulations on the economy that could cost
    jobs and damage our citizens without being sure that the
    science is right.
        And so I would simply urge that we continue to look
    carefully at the science, that if we decide to draw a policy
    based on that science that we in fact can assure ourselves and
    can rely confidently on it being accurate and reliable so that
    we can win the support of the people. They do not want to see
    us enact legislation based on political will and not based on
    sound science.
        With that, Mr. Chairman, I yield back.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentleman from New Jersey, Mr.
    Pallone.

    OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
                IN CONGRESS FROM THE STATE OF NEW JERSEY

        Mr. Pallone. Thank you, Chairman Markey, for having this
    important hearing and I am excited to have our EPA Commissioner
    Lisa Jackson here with us this morning. I have known Lisa from
    her days as Commissioner of the New Jersey Department of
    Environmental Protection and she has dedicated her life's work
    to protecting the environment and making our country a
    healthier place to live, and I want to welcome her here today
    to testify.
        I also want to mention, I know you mentioned about her
    being available, I remember very early in her tenure when she
    invited us down on the TSCA reform meeting, a bipartisan
    meeting. I think it was the first time I had ever been in the
    EPA Administrator's office in my 22 years here. So she is
    definitely trying to reach out on a bipartisan basis, and I
    appreciate that.
        Now we are here today to discuss the importance of
    developing clean energy policies that could reduce our
    dependence on oil. The U.S. Consumes 25 percent of the world's
    oil production but our country only contains 2 percent of the
    world's oil reserves. We waste a billion dollars a day buying
    foreign oil, and this money all to often winds up in the
    pockets of nations with hostile views of the United States.
    This hurts our economy, helps our enemies and puts our security
    at risk.
        We must put an end to our addiction to oil, and the best
    way to do this is to pursue aggressive clean energy policies
    with all the tools we have available. And this includes
    enacting a comprehensive climate change bill into law this year
    and allowing our Federal agencies such as the EPA to use their
    authority to regulate emissions and incentivize clean energy
    development.
        We must focus on clean energy policy such as wind power and
    regulation of global warming emissions rather than expanded
    offshore drilling that can cause tremendous harm to our
    environment. I am extremely troubled by the offshore oil rig
    which caught fire and ultimately sank off the coast of
    Louisiana last week. This is turning out to be one of the
    world's worst oil spills. And it is clear that offshore
    drilling cannot be done in a way that sufficiently protects
    America's coasts.
        And I respectfully request that the President and the
    Interior Secretary reassess their position on offshore oil.
    This disaster in the Gulf of Mexico only underscores the need
    for comprehensive clean energy policy. We must focus our
    efforts on wind and hydro power, which are some of the cleanest
    and safest forms of renewable energy.
        I want to commend the EPA and Administrator Jackson for all
    the work that they are doing to regulate vehicle emissions and
    stationary power sources through the endangerment finding. This
    plan will save the U.S. 1.8 billion barrels of oil over the
    life the vehicles purchased between 2012 and 2016.
        Once again I would like to thank the chairman for convening
    this hearing, especially for inviting the Administrator Lisa
    Jackson, who again has been out front on so many of these
    issues and you look forward to her testimony, thank you.
        Mr. Markey. Great. The gentleman's time has expired.
        The chair recognizes the gentleman from Louisiana, Mr.
    Scalise.

     OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF LOUISIANA

        Mr. Scalise. Thank you, Mr. Chairman. I share the
    sentiments of my colleague from Louisiana. Our prayers are with
    those families of the 11 rig workers who lost their lives. I
    urge the U.S. Coast Guard to move swiftly and use everything in
    their power to contain and clean up the spill and investigate
    the causes of the explosion so we can prevent this terrible
    tragedy from happening again.
        As we hear today from Administrator Jackson, I would hope
    that we have an opportunity to discuss the administration's
    plans for creating a national energy policy as well as the
    effects that many of the recent EPA restrictions would place on
    our country's economic and national security.
        I have long advocated for a comprehensive national energy
    policy that takes an all-of-the-above approach, incorporating
    efficiency measures, promotion of new energy technologies,
    development of renewable energies, and also making sure that we
    continue to expand our development of our own natural resources
    at home.
        This administration, however, has taken a different
    approach with restrictive energy policies. Unfortunately, we
    have seen attempt after attempt by this administration to
    restrict our ability to invest in our own natural resources.
    From recent threats by EPA to regulate greenhouse gas emissions
    to essentially halting the major development of natural gas
    with restrictions on hydraulic fracturing, what we are seeing
    is a recipe for making our country more dependent on Middle
    Eastern oil while killing off millions of American jobs.
        Before this administration places severe and economically
    devastating restrictions on domestic production of our own
    natural resources, it is incumbent to find ways to reduce our
    dependence on Middle Eastern oil. About 57 percent of the
    petroleum we use in America comes from foreign sources, and
    roughly 20 percent of those imports are from Middle Eastern
    countries. This not only restricts our ability to one day
    become energy independent, but also poses potential national
    security threats to our homeland.
        Instead of Washington bureaucrats mandating harmful
    policies that would kill key sectors of our national economy
    and make us more dependent on foreign nations who want to do us
    harm, we should instead explore policies that encourage
    investments in cleaner energy technologies and innovation in
    the private sector. The ingenuity of the American
    entrepreneurial spirit is what has made our country the best in
    the world. This Congress would be wise to encourage more of
    that innovation to achieve energy independence.
        Thank you, and I yield back.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentleman from Washington State,
    Mr. Inslee.

       OPENING STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF WASHINGTON

        Mr. Inslee. Thank you, it is an honor after the 40th
    anniversary of Earth Day to have a director of the
    Environmental Protection Agency here, and I just noted that we
    are kind of back to where we started, because the EPA got
    started when the Cuyahoga River caught fire in Ohio and people
    understood we had to do something about our problem. And this
    morning the headlines are the Coast Guard are thinking about
    lighting the Gulf of Mexico on fire to try to solve this
    problem. We are really back where we started.
        I want to point out that the oil slick that we are
    concerned about today is really the least of our problems about
    oil. Because there is a giant invisible oil slick caused by
    carbon dioxide that comes out of our tailpipes, that goes in
    the atmosphere, that falls in the oceans and goes into
    solution. That invisible oil slick is now causing the oceans to
    become acidic. The oceans today are 30 percent more acid, more
    acidic than they were before we started burning oil. And they
    will be much more acidic if we don't change our course.
        I want to show members if the committee what that means. If
    they put up this slide over here. This slide over here shows
    what happens when the ocean becomes acidic. When the ocean has
    more acid in it the creatures in it that take calcium carbonate
    out of the ocean and make their bodies can't do that anymore.
    This is a picture from NOAA and it shows a terrapod. These are
    small little plankton-like creatures and they had a shell and
    that shell, they get the calcium out of the water to make their
    shell. The problem is as the water becomes more acidic they can
    not make that shell anymore. This is a picture of what happens
    when you put a terrapod in water that is as acidic as it will
    be in 2100 if we continue on this path, and basically what you
    will see over a period of 45 days it melts. On the left you see
    the shell is intact, it starts to melt and it basically melts
    into an indistinguishable blob in 45 days. The entire food
    chains of the ocean are in danger because of the oil and coal,
    because they are making our oceans more acidic. And the
    scientific community believes there may not be healthy corals
    anywhere in the world by the end of the next century because of
    this acidic problem.
        So the oil slick we are worried about today is the least of
    our problems. The fact that our oceans may be dead in 100 years
    or full of weeds rather than beautiful corals is a significant
    issue why we should be addressing this. Basically what the
    scientists are telling us, unless we have a sea change in
    energy policy we may be killing the seas.
        So I think this hearing is an appropriate one to have. We
    know about the national security ramifications of giving $100
    million a day to Iran of American money, but we have another
    security and that is the protein we get out of the seas, and I
    hope that we can come up with a policy on comprehensive basis
    to solve this problem.
        Thank you.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentlelady from California, Mrs.
    Bono Mack.
        Mrs. Bono Mack. Thank you, Mr. Chairman. I will waive and
    submit my statement for the record.
        Mr. Markey. The gentlelady waives.
        The gentleman from an Oklahoma, Mr. Sullivan, is
    recognized.

     OPENING STATEMENT OF HON. JOHN SULLIVAN, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF OKLAHOMA

        Mr. Sullivan. Thank you, Chairman Markey. I appreciate you
    holding this hearing today on clean energy policies that reduce
    our dependence on oil. I am pleased to welcome Lisa Jackson,
    Administrator of the EPA, today. I look forward to her
    testimony and any developments on the foreseeable economic
    impacts that EPA CO2 endangerment findings and
    pending regulations will have on the U.S. economy.
        If allowed to go into affect, the CO2
    endangerment finding will impose a backdoor energy tax on the
    American people. By giving the agency unprecedented regulatory
    authority over almost every foreseeable aspect of our economy,
    burdening thousands of small businesses with unnecessary and
    costly compliance expenses and higher energy costs for American
    families while doing little to protect the environment.
        With our national unemployment rate at 10 percent, this is
    the worst possible time for this administration and the EPA to
    impose unnecessary job killing energy mandates on the American
    people.
        I am also interested in our witnesses' views on our own
    domestic oil resources and if they support the development of
    them, both on shore and off, to reduce dependence on foreign
    oil imports. According to the Congressional Research Service,
    the U.S. reserves for oil and natural gas are the largest in
    the world. I believe we must reduce foreign oil imports and
    start drilling and utilizing our oil and gas here at home.
        I look forward to the hearing, hearing the testimony of our
    witness, and I yield back the balance of my time.
        Mr. Markey. The gentleman's time has expired.
        The chair regular nieces the from a from California, Mr.
    McNerney.

     OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. McNerney. Thank you, Mr. Chairman, for convening
    today's hearing. It was almost a year ago that our committee
    favorably reported the America Clean Energy and Security Act,
    and I am grateful for this opportunity to evaluate the new
    policy proposals. Vigorously pursuing well crafted, clean
    energy policies is a matter of national security, economic and
    environmental concern. Investing in new energy technologies and
    energy efficiency improvements has tremendous potential to
    create high quality jobs, and I have seen this job creation
    potential firsthand through my experience in developing wind
    power and smart grid technologies.
        Even during tough economic times communities in my district
    in California are attracting cutting edge clean energy
    businesses that are creating good jobs. For example, an
    electric vehicle manufacturing facility just opened up in
    Stockton, California and is hiring new workers. Similarly, the
    Port of Stockton is doing significant business with wind
    turbine parts, creating jobs at our docks. There are tremendous
    opportunities for further job growth in the clean energy
    sector, but to harness that potential we need to continue to
    evaluate and recalibrate Federal policies.
        I would also like to note the compelling national security
    benefits of pursuing policies to expand America's use of
    domestically produced energy resources. Over the last 2 years
    our country has spent about a billion dollars a day overseas
    for oil imports, some of which will flow to countries that are
    unfriendly to our interests. Comprehensive international action
    to invest in clean energy resources would prevent millions of
    dollars a day from flowing to Iran. Clearly we have a
    compelling security interest in aggressively pursuing energy
    independence.
        Mr. Chairman, I thank you again for convening today's
    hearing and look forward to hearing from our witnesses.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentleman from Pennsylvania, Mr.
    Doyle.
        Mr. Doyle. I am waiving.
        Mr. Markey. The gentleman will waive. His testimony will be
    added to the question period.
        The chair does not see any other members seeking
    recognition at this time.
        Mr. Upton. Mr. Chairman, I just might ask unanimous consent
    for those members who are not here that they might be able to
    put a statement into the record.
        Mr. Markey. Without objection, so ordered.
        We will now turn to our witness and while also making--
    before that I will make a unanimous consent request that Mr.
    Latta and Mr. Murphy, both members of the full committee but
    not on the subcommittee, have asked for permission to
    participate in the witness questioning after each member of the
    subcommittee has completed their questioning. Without
    objection, so ordered.
        Let's turn to our extremely distinguished witness, and we
    thank her for coming back to the Energy and Commerce Committee.
    She is EPA Administrator Lisa Jackson. Before becoming EPA's
    Administrator, she served as Chief of Staff to the Governor of
    New Jersey and Commissioner of the State of New Jersey's
    Department of Environmental Protection. Ms. Jackson is a summa
    cum laude graduate of Tulane University in Louisiana and earned
    a Master's degree in chemical engineering from Princeton
    University.
        We are delighted to welcome you back to the committee,
    Administrator Jackson. Whenever you feel comfortable, please
    begin.

         STATEMENT OF THE HON. LISA P. JACKSON, ADMINISTRATOR,
                    ENVIRONMENTAL PROTECTION AGENCY

        Ms. Jackson. Well, thank you. Chairman Markey and Chairman
    Waxman, Ranking Members Upton and Barton, Chairman Emeritus
    Dingell, and members of the committee, thank you for inviting
    me to testify about the Environmental Protection Agency's work
    to reduce America's oil dependence and greenhouse gas
    emissions. That work stems from two seminal events.
        First, in April 2007, the U.S. Supreme Court concluded in
    Massachusetts v. EPA that the Clean Air Act's definition of air
    pollution includes greenhouse gases. The Court rejected then
    Administrator Johnson's refusal to determine whether that
    pollution for motor vehicles endangers public health or
    welfare.
        In response to the Supreme Court's decision and based on
    the best available science and EPA's review of thousands of
    public comments, I found in December 2009 that motor vehicle
    greenhouse gas emissions do endanger Americans' health and
    welfare.
        I am not alone in reaching that conclusion. Scientists of
    the 13 Federal agencies that make up the U.S. Global Change
    Research Program have reported that unchecked greenhouse gas
    emissions pose significant risk to the well-being of the
    American public. The National Academy of Sciences has stated
    that the climate is changing, that the changes are mainly
    caused by human interference with the atmosphere, and that
    those changes will transform the environmental conditions on
    Earth unless countermeasures are taken.
        The second pivotal event was the agreement President Obama
    announced in May 2009 between EPA, the Department of
    Transportation, the Nation's auto makers, America's auto
    workers and the State of California to seek harmonized,
    nationwide limits on the fuel consumption and greenhouse gas
    emissions of new cars and light trucks.
        My endangerment finding in December satisfied the
    prerequisite in the Clean Air Act for establishing a greenhouse
    emission standard for cars and light trucks of model years 2012
    through 2016. So I was able to issue that final standard
    earlier this month, on the same day that Secretary of
    Transportation Ray LaHood signed a final fuel efficiency
    standard for the same vehicles.
        Using existing technologies, manufacturers can configure
    new cars and light trucks to satisfy both standards at the same
    time. And vehicles complying with the Federal standards will
    automatically comply with the greenhouse gas emissions standard
    established by California and adopted by 13 other States. This
    harmonized and nationally uniform program achieves the goals
    the President announced last May. Moreover, the EPA and DOT
    standards will reduce the lifetime oil use of recovered
    vehicles by more than 1.8 billion barrels. That will do away
    with more than a billion barrels of imported oil, assuming the
    current ratio of domestic production to imports does not
    improve.
        The standards also will eliminate more than 960 million
    metric tons of greenhouse gas pollution, but if Congress now
    nullified EPA's finding that greenhouse gas pollution endangers
    the American public, that action would remove the legal basis
    for a Federal greenhouse gas emissions standard for motor
    vehicles. Eliminating the EPA standard would forfeit one-
    quarter of the combined EPA, DOT program fuel savings and one-
    third of its greenhouse gas emissions cuts.
        California and the other States that have adopted
    California's greenhouse gas emission standard would almost
    certainly respond by enforcing that standard within their
    jurisdictions, leaving the automobile industry without the
    nationwide uniformity that it has described as vital to its
    business.
        I would like to mention one more action that EPA has taken
    to reduce America's oil dependence and greenhouse gas
    emissions.
        In February I signed a final renewable fuel standard. It
    substantially increases the volume of renewable products,
    including cellulosic biofuel that refiners must blend into
    transportation fuel. EPA will implement the standard fully by
    the end of 2022. In that year alone the standard will decrease
    America's oil imports by $41.5 billion, and U.S. greenhouse gas
    emissions that year will be 138 million metric tons lower,
    thanks to the standard.
        EPA's recent work on vehicles and fuels shows that
    enhancing America's energy security and reducing America's
    greenhouse gas pollution are two sides of the same coin. The
    recent analysis by the Agency found that widespread deployment
    throughout the U.S. transportation sector of efficiency
    technologies and practices that exist today would cause the
    sector's oil use and greenhouse gas emissions in 2030 to be 25
    to 40 percent lower than they otherwise would be. So while we
    have started addressing the twin challenges of oil dependence
    and greenhouse gas pollution, we clearly have the potential to
    go farther and accomplish more.
        Thank you again for inviting me to testify. I would be
    happy to answer your questions.
        [The prepared statement of Ms. Jackson follows:]
        [GRAPHIC] [TIFF OMITTED] 76568A.007

        [GRAPHIC] [TIFF OMITTED] 76568A.008

        Mr. Markey. We thank you very much for your testimony, and
    now we will turn to questions from the subcommittee members.
    The chair will recognize himself.
        Isn't it true that the Supreme Court decision in
    Massachusetts v. EPA required the EPA to determine whether an
    endangerment finding should be made for global warming
    pollution from cars and trucks?
        Ms. Jackson. Yes.
        Mr. Markey. Isn't it also true that your predecessor in the
    Bush administration, Stephen Johnson, reviewed the science and
    approved a draft endangerment finding that found the global
    warming pollution endangers the public welfare?
        Ms. Jackson. Yes, sir, that is true.
        Mr. Markey. Isn't it true that the EPA's proposed
    endangerment finding made by Stephen Johnson was sent to the
    White House in December of 2007 and that the Bush
    administration's EPA also developed a regulatory framework for
    greenhouse gas emissions under the Clean Air Act?
        Ms. Jackson. Yes, that has been established as true.
        Mr. Markey. And isn't it true that the White House refused
    to even open EPA Administrator Johnson's e-mail? And isn't it
    true that nothing further happened until you conducted a review
    of the science and submitted your endangerment finding to the
    Obama White House, which actually opened the e-mail?
        Ms. Jackson. That is true.
        Mr. Markey. Now some critics have raised numerous questions
    about the accuracy of climate science over the last 6 months,
    including questions about whether the Himalayan glaciers will
    melt or whether the Amazon will dry out. Were any of these
    specific studies used to determine whether greenhouse gas
    pollution endangers public health and welfare in this country?
        Ms. Jackson. No, because the endangerment finding was
    focused on impacts to this country and to the welfare and
    health of Americans. None of those two studies that you
    mentioned and the errors that were found in those reports
    impacted endangerment findings.
        Mr. Markey. So give us a couple of key findings that you
    made relating to how changes and climate effect the United
    States that led to your decision.
        Ms. Jackson. Certainly. Sea level rise, increased threats
    of droughts, changes in our climate that would have dramatic
    impacts on agriculture and productivity, increased severe
    weather impacts, and I think even the acidification issues that
    we heard earlier all factored into my determination of
    endangerment.
        Mr. Markey. And so your decision was based upon the impact
    on the United America of America?
        Ms. Jackson. That is correct, absolutely.
        Mr. Markey. So whatever other information is out and being
    debated about the Himalayas or other parts of the world, that
    was not what your findings relied upon?
        Ms. Jackson. That is correct.
        Mr. Markey. Now, could legislative efforts to overturn the
    endangerment finding also have the effect of overturning EPA's
    car and light truck standards that you just finalized with the
    Department of Transportation, the ones that are supported by
    Ford, General Motors, Chrysler, the United Auto Workers, and
    that also reduce the need for 2 million barrels of oil per day,
    could legislative efforts to overturn the endangerment finding
    legislatively impact that decision?
        Ms. Jackson. Yes, I believe legislation that overturns the
    endangerment finding would certainly not only impact, but would
    nullify the regulations you mentioned because that finding of
    endangerment is the basis for those regulations.
        Mr. Markey. So this agreement that you reached that
    everyone agreed upon would in fact be endangered by legislative
    action?
        Ms. Jackson. Yes, I believe we would take what as we heard
    here many people think is a very good thing and was a victory
    for the environment and for our energy independence and our
    security and we would lose that victory, and in fact we would
    go back to where we were before, which was a nonuniform complex
    regulatory net that did not allow auto makers to move forward
    with certainty.
        Mr. Markey. Now, let me ask one final question and that is
    what has been the response from the automotive industry to the
    merger of the provision in the 2007 law with the finding in
    Massachusetts v. EPA and then this harmonization in terms of
    their response to their reinvention of the automobile and the
    competitiveness of our American auto industry? Could you talk a
    little bit about that and any misgivings you are hearing from
    the auto industry about moving in this direction?
        Ms. Jackson. The auto industry has come a long way. I think
    they have now embraced the certainty that one national standard
    gives them for cars from 2012 to 2026, so much so that I am
    aware that they have written asking Congress not to overturn
    the endangerment finding because----
        Mr. Markey. Can you say that again?
        Ms. Jackson. They have written asking Congress to not
    entertain legislation to overturn the endangerment finding
    because it would strip them of the very regulatory certainty
    they now have. They have also begun pretty public ruminations
    about wanting to start the next phase, to do it again, to look
    at opportunities, and we have also seen industries outside the
    passenger auto sector look for the same kind of treatment, if
    you will.
        Mr. Markey. So I think that is important for everyone to
    understand, that the United States automotive industry is
    asking that the endangerment finding not be overturned because
    it has created an investment environment that is making it
    possible for them to move forward very rapidly in creating new
    jobs here in America and becoming more competitive
    internationally.
        I thank you.
        Let me turn now and recognize the ranking member of the
    subcommittee, the gentleman from Michigan, Mr. Upton.
        Mr. Upton. Thank you, Mr. Chairman. Administrator Jackson,
    I just want to on a different issue, just want to bring to your
    attention an issue that is very important to Michigan and had
    some attention this last week. I don't know if it is crossed
    your desk yet, but my district, Kalamazoo, Michigan, is home to
    one of the largest Superfund sites in the country, Kalamazoo
    River, which is the fourth largest contributor of PCBs into
    Lake Michigan. It was labeled a Superfund site some 20 years
    ago, thousands of hours of meetings and negotiations have been
    held between State and local folks, EPA and the two PRPs
    charged with funding the clean up. Last week, Friday, Lando
    Bassett, one of the PRPs, came to a bankruptcy settlement with
    DOJ that required them to pay only pennies on the dollar for
    their obligation of the cleanup.
        I had been working very closely with Senator Levin, Senator
    Stabenow. We have been together shoulder to shoulder. We are
    preparing a letter that ought to be ready I hope by the end of
    the week to you trying to make sure that--find out what
    timetable EPA might have to ensure that the cleanup continues
    as scheduled and the health and welfare of the folks in the
    watershed is not harmed any further.
        I just want to bring that to your attention, and we look
    for your immediate response as quick as you can. I don't know
    if you are personally aware of it or not, but it is a big issue
    in southwest Michigan.
        Ms. Jackson. Yes, I am happy to look into it and get back
    to you with an idea on cleanups there.
        Mr. Upton. Great.
        I just want to say we all want to reduce our reliance on
    foreign oil, for me particularly coming from auto State. I am a
    big supporter of the electric hybrids, and I have driven the
    new Chevy Volt. I have seen an number of different cars that
    are literally going to be in the showrooms this year, and I
    know that because of that and other reasons our electricity
    needs are going to grow by 30 to 40 percent in the next 20
    years.
        And I am a believer in basic economics, particularly supply
    and demand. And as we have increased demand like we are likely
    to have and we are going to need more supply, otherwise that
    price is going to go considerably up. But sadly what I see
    coming down the line is a reduction of supply, more regulations
    in lots of different ways. I don't believe that we have the
    science yet--I am a big supporter of CCS, carbon capture, we
    will need more coal plants, clean coal, but we don't have the
    technology ready yet to impose that on not only existing but
    new power plants.
        I am wondering how many--I don't believe that EPA has
    approved any new coal--has allowed any new permitting for new
    coal plants in the last year or two.
        Ms. Jackson. The majority of the permitting actions for new
    coal plants happen through the States and at the State level. I
    would say that the reason there has been such a bottleneck in
    new coal plant permitting is litigation and a shortage of
    capital. Those are the primary reasons. There are issues with
    permitting, the permits then result in litigation, and there is
    great uncertainty about when this country will move to price
    carbon. That effects the investments markets as well as----
        Mr. Upton. They were also banking on this new technology,
    the CCS, to be in place, is that not right? Carbon capture?
        Ms. Jackson. I wouldn't necessarily agree that that is the
    driver for the permit decisions. In fact there is absolutely no
    reason why a permit decision at that point would depend on CCS,
    although I join you in hoping that technology has great
    promise. I am sure you know the President has asked me to
    cochair a CCS task force to get 5 to 10 projects up and running
    in the next few years so that we can hopefully make it
    commercially available.
        Mr. Upton. I just know as we look to try to meet these
    demands, 30 to 40 percent increase, and we are going to have to
    have more coal. We can't sit on our hands with that resource
    that is there. On the nuclear side I applauded the President
    breaking ground, I believe it was in Georgia, the two new
    reactors that he broke ground on back in February or early
    March, but I also know that we have to deal with Yucca
    Mountain. We have to deal with a high level of nuclear waste
    that has been zeroed out in their funding. And I also know as a
    supporter of renewables, wind and solar we can talk a lot about
    it, but if we don't have the resources to hook them up to the
    grid it is no good, let alone to have the backup when the wind
    and the sun don't shine, as they say.
        Ms. Jackson. Yes. The President has said that we need to
    invest in our traditional sources. We need to make sure that
    they are clean sources, so we also need to invest in the
    technologies like CCS that will address carbon pollution from
    coal, because coal is such a carbon intense fuel and has such
    high emissions.
        But I think you are right, his actions and this
    administration's actions have demonstrated a willingness to
    embrace other forms of energy, including domestic sources. The
    only thing I might add is that I think just like the cars rule
    is really an efficiency program for passenger cars, there is a
    need for us to focus as we have done in the Recovery Act and
    other places on energy efficiency, on making sure that the
    average American becomes a miser for power because we will be
    competing for power in a world marketplace that also----
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the chairman of the full committee,
    Mr. Waxman.
        Mr. Waxman. Administrator Jackson, as I understand it, this
    tailpipe rule that you have issued earlier this month would
    save 1.8 billion barrels of oil; is that correct?
        Ms. Jackson. That is right.
        Mr. Waxman. And I am thinking back over the last 30 years
    and I can't think of any law or regulation that has saved that
    much oil. Are you aware of any law or regulation that does so
    much to address our dependence on oil?
        Ms. Jackson. No, not off the top of my head, sir.
        Mr. Waxman. My understanding is that permit requirements
    for stationary sources are triggered when a pollutant is
    subject to regulation under the Clean Air Act. So according to
    that interpretation you issued on March 29, 2010, this will
    occur for greenhouse gases on January 20, 2011, when the
    control requirements of the motor vehicle rule take effect and
    then they are binding on manufacturers; is that correct?
        Ms. Jackson. That is correct.
        Mr. Waxman. Once motor vehicle rules are in effect next
    January, absent any action by the EPA, the Clean Air Act would
    require new or modified sources that emit more than 250 times
    of carbon dioxide per year to obtain a permit.
        Ms. Jackson. Right, absent any action by EPA.
        Mr. Waxman. So in effect because of the Clean Air Act when
    you deal with the mobile sources, which is what the Supreme
    Court decision addressed, that would trigger requirements for
    stationary sources for carbon pollution. I believe we all agree
    that if EPA did not take further action and these requirements
    went into effect as is, it would be a significant problem. 250
    tons is a reasonable threshold that generally captures only
    large industrial and commercial sources, but when you are
    talking about greenhouse gases it would be numerous smaller
    sources that are not regulated now and I think shouldn't be
    regulated. I think this would be an unacceptable situation, but
    thanks to your actions, we don't actually face that situation.
        Last fall you proposed a tailoring ruling to significantly
    narrow application of the permitting requirements to stationary
    sources of carbon pollution that would exclude these smaller
    sources. Can you update the committee on the status of that
    rulemaking?
        Ms. Jackson. Yes, Mr. Chairman, the rule went through
    public comment. We received a large number of public comments
    and are in the process of finalizing a rule. As you mentioned,
    it is important for us to do that in order to give assurance to
    smaller, and I would go as far as to say mid-sized sources,
    that they are not, come next January, going to be subject to
    immediate regulation and in fact we have said just the
    opposite.
        Mr. Waxman. What would the tailoring rule require? What
    would you do?
        Ms. Jackson. Right, it is not final. As we proposed it, it
    was a phase-in, it is a gradual phase-in of the larger sources,
    and I have given some hints as to what I believe will be in the
    final rule and I feel fairly comfortable saying that the final
    rule will include, come January, only those sources that are
    currently subject to Title 5 permitting for another pollutant
    to look at greenhouse gas pollution and then later in the year
    perhaps an additional number of sources would be phased in, a
    small number of very large sources. We haven't given the
    threshold as to what that would be, but it is orders of
    magnitude higher than 250 tons, the idea being that this is a
    very slow, deliberate, measured approach with a regulatory
    community quite frankly that is quite used to.
        Mr. Waxman. Is it fair to say EPA does not intend to second
    the smaller sources to Clean Air Act permitting for greenhouse
    gases any sooner than 2016?
        Ms. Jackson. That is absolutely true.
        Mr. Waxman. And just to be clear, these requirements can
    only apply to smaller sources in the future after EPA completed
    an additional rulemaking; isn't that correct?
        Ms. Jackson. That is correct.
        Mr. Waxman. Now some argue that tailoring rule may be
    overturned in court with disastrous consequences. Is your
    general counsel comfortable with the legal status for this
    tailoring rule?
        Ms. Jackson. Yes, sir.
        Mr. Waxman. Now even in the worse case scenario where the
    rule is overturned in court, wouldn't it take years before we
    could expect a final decision in the court?
        Ms. Jackson. Yes, I am not a lawyer, but I think----
        Mr. Waxman. Clean Air Act cases typically take 3 to 5 years
    before a decision becomes final. It also seems highly unlikely
    that the rule would remain in effect during any litigation.
    There would be a higher court to issue a stay. Petitioner would
    have to show a strong showing that he is likely to succeed on
    the merits and he would suffer irreparable injury absent a
    stay. It would be difficult to make this showing for a rule
    such as this that relieves burdens rather than imposing them.
    Is that what your lawyer has been saying?
        Ms. Jackson. That is absolutely right.
        Mr. Waxman. And Mr. Chairman, in my view they are taking a
    common sense approach, it is an effective approach that will
    avoid scenarios that none of us want. If Congress enacts
    comprehensive energy and climate legislation this year as I
    hope we will do, it will resolve the issue, and there is ample
    time for Congress to act on this issue in the future if and
    when it becomes necessary.
        Thank you, Mr. Chairman.
        Mr. Markey. The chairman's time has expired.
        The chair recognizes the ranking member of the full
    committee, Mr. Barton.
        Mr. Barton. Thank you. Thank you, Mr. Chairman. We are
    trying to convert centimeters to inches down here.
        Administrator Jackson, again thank you for being here. Are
    you familiar with the report that one of your employees Dr.
    Allen Karlin issued on the endangerment finding at the EPA?
        Ms. Jackson. I am familiar with the work and his desire to
    have that put into the record.
        Mr. Barton. OK. Did you read his report or a summary of his
    report?
        Ms. Jackson. I read some summaries of his report and
    ensured that my staff considered it as part of the comments.
        Mr. Barton. So you are aware that at least one person at
    the EPA is scathing the concerns about whether at that time was
    a proposed endangerment finding. One of his concerns was that
    EPA didn't do any independent analysis of some of these studies
    that were used to justify the endangerment finding. Why not,
    why didn't the EPA try to verify some of this information that
    the finding is based upon?
        Ms. Jackson. The majority of our work at EPA is done by
    looking at--I am sorry, let me start again. The endangerment
    finding work primarily relied on peer review, our standard was
    that we wanted to look at peer reviewed work and we had in
    addition to external peer reviewers a Federal team of reviewers
    who were reviewing our work.
        Mr. Barton. Some of the material apparently used were press
    releases. Is it standard operating procedure for the EPA to
    issue major findings based on a press release?
        Ms. Jackson. I believe what you are referring to, Mr.
    Barton, is that subsequent we have come to find out that there
    have been some allegations made that there were press release
    information in studies. What we did was whenever someone raised
    any questions about either the IPCC data or any of the
    underlying data, I made it clear to myself that we had
    obligation to investigate whether or not it changed the basis
    of the finding.
        Mr. Barton. I am sure you are aware that there are e-mails
    between Dr. Karlin and his superior in which Dr. Karlin is
    asking his study be considered. One of the e-mail responses is
    you don't understand, the White House has already made its
    decision, stop sending--stop working on this report. Are you
    aware of that e-mail?
        Ms. Jackson. Yes, sir, we discussed that, remember, a while
    ago on a phone call, we talked about it.
        Mr. Barton. So what is your response? He certainly was of
    the opinion that the conclusion had already been made that
    there really wasn't any real effort to do an analysis of the
    endangerment finding. And you have admitted--or your agency
    didn't do any independent studies, that you took at face value
    the material that was basically put out by the advocates were
    man-made greenhouse gases causing climate change.
        Ms. Jackson. No, sir, I don't agree with that assertion.
    The Agency's endangerment finding was based on thoroughly
    reviewed material by a number of scientific organizations. Mr.
    Karlin's and the e-mail changes we discussed. I don't know why
    his supervisor wrote what he wrote. He has been counseled, I
    did not personally do it.
        Mr. Barton. Counseled not to tell the truth, he has been
    counseled to keep his mouth shut? What has he been counseled to
    do?
        Ms. Jackson. He has been counseled not to make assertions
    that aren't factual. The endangerment finding that was begun
    under the Bush administration--this was years and years of work
    inside the Agency and Dr. Karlin's advocacy extended back into
    those days as well. The fact that he had an opinion should not
    have been shut down because someone asserted that the White
    House wanted----
        Mr. Barton. Dr. Karlin's opinion was that the EPA should
    actually do what it is supposed to do, which is try to
    independently evaluate, which has not happened.
        Now you mentioned in response to a question from Chairman
    Markey that one of the reasons that the endangerment finding
    was put forward was because of a rise in sea level. Do you know
    what the sea level rise has been in the last 100 years in the
    United States?
        Ms. Jackson. I am sure you have it, sir.
        Mr. Barton. I do. Would you want to make a guess?
        Ms. Jackson. I don't see a reason to guess.
        Mr. Barton. It is 20 centimeters. 20 centimeters. Do you
    know what the EPA estimates the reduction in sea level rise is
    going to be in the next 90 years because of your tailpipe
    standard that you have been talking about with Mr. Waxman and
    Mr. Markey? Do you have any idea what----
        Ms. Jackson. I actually never thought of it in terms of a
    reduction in sea level rise. We talk about it in terms of
    greenhouse gas emissions.
        Mr. Barton. Well, you said one of the reasons you issued an
    endangerment finding was because of rising sea level, where
    according to your own EPA scientists this tailpipe standard
    that you all talked about is going to reduce sea level rise
    over the next 9 years between 600ths to 1400ths of a
    centimeter. Now how in the world can sea level rise be used as
    an excuse for an endangerment to public health?
        Ms. Jackson. I am afraid that----
        Mr. Barton. I am just going on what you said, Madam
    Administrator.
        Ms. Jackson. Yes, but what we did in the rule that you are
    referring to is come up with a rule that reduces our dependence
    on oil, that says we can drive cars that are more fuel
    efficient and that put out less greenhouse gas pollution. That
    is what the law requires.
        Mr. Barton. My time has expired. Mr. Markey is being very
    gracious. Let me ask one more question, Mr. Chairman.
        If in fact the endangerment finding is shown to be flawed
    and is thrown out, is it not true that you cannot regulate
    CO2 under the Clean Air Act if you don't have the
    endangerment finding to give you the authority to do so?
        Ms. Jackson. There were a lot of nots in there, so let me
    make sure that I understand the question. If the endangerment
    finding is thrown out or in some way nullified, then the basis
    for the automobile rule----
        Mr. Barton. No, ma'am, the endangerment finding to regulate
    CO2 as a pollutant is--the EPA does not have the
    authority unless you have an endangerment finding giving you
    that authority.
        Ms. Jackson. Right, the endangerment finding is not a
    regulation but it is the basis for regulation of automobiles.
        Mr. Barton. Yes, ma'am. And if we don't have the
    endangerment finding--not you but the EPA does not have the
    authority to regulate CO2 as a pollutant, do you
    agree with that?
        Ms. Jackson. Right. If we don't have the endangerment
    finding, we lose the clean car rule, so it is gone, we lose any
    authority to regulate greenhouse gas emissions from motor
    vehicles.
        Mr. Barton. Thank you, Mr. Chairman. We will have a number
    of questions for the record.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentleman from Michigan, the
    chairman emeritus.
        Mr. Dingell. Thank you, Mr. Chairman. Thank you,
    Administrator, welcome to the committee.
        Am I correct in understanding that the endangerment finding
    is a legal underpinning for the national standard for
    automobile emissions?
        Ms. Jackson. Yes.
        Mr. Dingell. Now, what would happen to the national
    standard for autos if the Congress passed a resolution of
    disapproval of the endangerment finding?
        Ms. Jackson. The legal underpinning would then be gone and
    so I think that there would be no way to withstand any
    challenge to the legality of those regulations.
        Mr. Dingell. Now, what would be the practical consequences
    of that with regard to moving sources and what would be the
    practical consequence of that with regard to stationary
    sources?
        Ms. Jackson. With regard to moving sources the regulation
    would then be void. So we would go back to a situation where
    California would have the authority along with other States who
    opted in to regulate emissions from automobiles, and the
    Department of Transportation and NHTSA would do CAFE standards
    probably in accordance with ISSA and as far as stationary
    sources there would be no EPA authority to regulate stationary
    sources.
        Mr. Dingell. There would be none.
        Ms. Jackson. I believe.
        Mr. Dingell. Is there authority now to regulate stationary
    sources or is there not?
        Ms. Jackson. There is actually an obligation to--our
    reading of the Clean Air Act says there is an obligation to
    regulate stationary sources.
        Mr. Dingell. With regard to CO2?
        Ms. Jackson. Yes. Once it became a pollutant and was
    regulated and found to endanger public health and welfare, the
    Clean Air Act says now other portions of the Clean Air Act
    apply.
        Mr. Dingell. Now this is a result also of the Supreme
    Court's decision in finding an endangerment; is that right?
        Ms. Jackson. Yes, the Supreme Court's order that the EPA
    make a determination.
        Mr. Dingell. Now what is the practical result to stationary
    sources if this resolution disapproval passes the Congress?
        Ms. Jackson. The practical result to stationary sources,
    sir, would be that EPA regular--I believe, I am not a lawyer, I
    believe EPA would not be able to regular--would not be able to
    regulate stationary sources any more than mobile sources.
        Mr. Dingell. So how many different regulatory standards
    would be imposed on, first of all, stationary sources, but
    under what requirements of law?
        Ms. Jackson. Well, certainly and again not being a lawyer,
    but certainly we have already seen individual States who in
    some way are regulating greenhouse gas emissions----
        Mr. Dingell. Would they be regulated under which provisions
    of the law, would they be regulated under the State
    implementation plans, would they be regulated under some other
    section? What would be the practical effect in terms of the
    number of different regulations of the State rather than the
    stationary sources would have to meet?
        Ms. Jackson. With the caveat that I will make sure I get an
    answer from my lawyers, I am aware that States right now have
    their own State laws.
        Mr. Dingell. But the potential is for how many different--
    how many different sets of regulations that they would have to
    correspond to, it would have to do State implementation?
        Ms. Jackson. Uh-huh.
        Mr. Dingell. Would there be other requirements that the
    States under the Clean Air Act would have to meet?
        Ms. Jackson. There could be individual State level--we are
    assuming the endangerment finding is gone. So the Clean Air Act
    authorities for CO2 may not be available, but many
    States are already regulating under their own laws and other
    entities are feeling the effects of litigation under nuisance
    laws, under common law.
        Mr. Dingell. How many regulations would the auto industry
    have to meet in the moving sources?
        Ms. Jackson. Oh, potentially 50 or more. Right now 13
    States had joined with California to have their own
    regulations.
        Mr. Dingell. Now the agreements with California and the
    other States that are there now held by the administration
    expires just prior to 2017; is that right?
        Ms. Jackson. That is right, it is through model year 20----
        Mr. Dingell. Are there any negotiations going to see to it
    that we have the same national standard approach going forward
    for post 2017?
        Ms. Jackson. I think it would be a stretch to say they are
    in at this time, but there has been expressions of interest
    from auto makers to begin having discussions.
        Mr. Dingell. You are telling us that there are no
    negotiations going on under the auspices of the administration
    or EPA? And can you tell us why that is not taking place? You
    have to look forward to 2017, which is just a few years off.
        Ms. Jackson. Yes. I think it is probably just a matter of
    time that we have not yet.
        Mr. Dingell. Well, let me remind you that the law--rather,
    the automobiles are manufactured with a 3, 4 and 5-year lead
    time. So if I seek correct you only have a year or so before
    you are running into a serious collision with that lead time.
    When do you propose to start these things?
        Ms. Jackson. I think we need to do it soon, sir. So I will
    get back to you with when we can commit to looking at 2017.
        Mr. Dingell. So are you telling me that you propose to go
    back on down to EPA and to start looking into that and see what
    you can do about getting these negotiations going.
        Ms. Jackson. Yes, sir.
        Mr. Dingell. Thank you.
        Thank you, Mr. Chairman.
        Mr. Markey. The gentleman's time has expired.
        The chair has three letters from the Alliance of Auto
    Manufacturers, the International Auto Alliance, and the United
    Auto Workers, all saying they do not want the endangerment
    finding to be overturned. I ask unanimous consent that these
    letters be submitted for the record.
        Without objection, so ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Markey. The chair recognizes the gentleman from
    Illinois, Mr. Shimkus.
        Mr. Shimkus. Thank you, Mr. Chairman.
        Welcome, Administrator. A couple things.
        Let's be clear: When we say price carbon, we mean energy
    costs increase, correct? If 50 percent of our electricity
    portfolio is coal, we are adding an additional cost to
    electricity if we price carbon, correct?
        Ms. Jackson. And it depends how it is done, as to whether
    or not that is a small----
        Mr. Shimkus. Well, if we try to manage it, we have capital
    expenses, which then will incur millions of dollars of new
    equipment. Or we go to carbon capture sequestration, which is
    10 years down the road. That is all addition of cost. So let's
    be clear: When people say price carbon, they mean increased
    cost.
        Let me refer to this poster here. I have used it many
    times. My colleagues can all name these individuals. This is
    what happened under the last Clean Air Act amendments, which I
    think you can credibly argue had toxic emissions. Fourteen
    thousand jobs in Illinois, coal miner jobs, were lost, in
    Illinois alone, not including what happened in Ohio and
    Pennsylvania or across this country. Pricing carbon destroys
    jobs, not just in the coal mining industry, in the electricity
    industry and in the manufacturing industry, because you will
    increase cost of doing goods.
        That is why we are now segueing from the climate debate to
    energy and security, because with the failed IPCC rulings, with
    climate-gate, with the fact that scientists are not using the
    scientific method to replicate these tests, when we are talking
    about the Supreme Court ruling, the endangerment finding cannot
    stand on factual evidence.
        In fact, my colleague, Mr. Inslee, is just a perfect
    example of using tests that can't be replicated in the natural
    environment, because the test that he is quoting is a test that
    is a synthetic reproduction using unnatural factors and
    variables. In fact, CO2 was not even the substance
    to lower the pH in these samples. What was used was
    hydrochloric acid.
        So what would help the world address climate is that we
    would agree to use real science, real data that the public can
    perceive that can be replicated in a real-world environment. We
    are not using the scientific method. That is why now the public
    is skeptical on this whole issue of climate change.
        Administrator, what is the percent of the Earth's
    atmosphere that greenhouse gases make up?
        Ms. Jackson. It depends on how you define ``greenhouse
    gases,'' sir.
        Mr. Shimkus. Well, OK, you define it.
        Ms. Jackson. Well, EPA's endangerment finding includes six
    gases.
        Mr. Shimkus. Well, what is the percentage?
        Ms. Jackson. You know, I have some----
        Mr. Shimkus. It is 2. Two percent of the entire Earth's
    atmosphere is greenhouse gases.
        Now, you know what is the major percentage of what makes up
    greenhouse gases in the Earth's atmosphere?
        Ms. Jackson. I am thinking----
        Mr. Shimkus. Water vapor.
        Ms. Jackson [continuing]. Water vapor.
        Mr. Shimkus. Do you know what percentage?
        Ms. Jackson. Thirty percent maybe?
        Mr. Shimkus. A little higher.
        Ms. Jackson. No, I am not going to guess. Why don't you
    tell me?
        Mr. Shimkus. Ninety-five percent, 95 percent.
        So, of the 2 percent of greenhouse gases that are in the
    atmosphere, do you know how much is man-made greenhouse gases,
    which is what we are trying to say is endangering the public
    health?
        Mr. Doyle. Will the gentleman yield?
        Mr. Shimkus. It is 2--no, I will not. It is 2 percent of 2
    percent. It is 0.28 percent of the entire Earth's atmosphere is
    what we are debating here.
        Now, let me ask you another question. The endangerment
    finding says ``endangering public health.'' At what
    concentration does carbon dioxide endanger individual public
    health?
        Ms. Jackson. Well, we are not talking about what you
    breathe in that makes you sick. We are talking about
    concentrations of anthropogenic carbon dioxide.
        Mr. Shimkus. And define ``anthropogenic.''
        Ms. Jackson. Man-made.
        Mr. Shimkus. And that is 0.28 of the Earth's atmosphere?
        Ms. Jackson. But we are talking----
        Mr. Shimkus. Yes or no? Is that 0.28 percent of the Earth's
    atmosphere?
        Ms. Jackson. I don't know. I will certainly verify. It is a
    very low number volumetrically, but----
        Mr. Shimkus. It is extremely low.
        Ms. Jackson [continuing]. It is not low from a global
    warming perspective.
        Mr. Shimkus. Do you know the frustrating thing about this
    debate? We keep using tonnage to say--and people think of tons,
    and they say, ``Oh, we are overwhelmed by the tons.'' And we
    are talking about 0.28 percent of the atmosphere.
        Ms. Jackson. What we are talking about----
        Mr. Shimkus. OSHA has a standard where parts per million
    affects public health. Do you know what that standard is?
        Ms. Jackson. It has to be fairly high.
        Mr. Shimkus. Five thousand parts per million. What is the
    parts per million in the Earth's atmosphere of greenhouse
    gases?
        Ms. Jackson. It is 300 or so.
        Mr. Shimkus. Three hundred forty-eight percent.
        This is a fraud being perpetrated on the world that is
    going to destroy jobs on a false premise that carbon dioxide is
    going to wipe out the Earth's planet. And the public is on to
    this, and I am embarrassed by this administration to continue
    to push it.
        Mr. Doyle. Will the gentleman yield?
        Mr. Shimkus. I will not. I yield back the balance of my
    time.
        Mr. Markey. The gentleman's time----
        Ms. Jackson. Could I respond, Mr. Chairman?
        Mr. Markey. Yes, you may.
        Ms. Jackson. Thank you.
        I disagree with the premise of your analysis, sir. I am
    certainly not a climate scientist by training, but the volume
    of material in the atmosphere is a misleading statistic. What
    we are talking about is balance, is the simplest way I can
    explain it. That the atmosphere--may I finish, please?
        Mr. Shimkus. I haven't intervened yet, but----
        Ms. Jackson [continuing]. The atmosphere is in balance. And
    we keep putting these gases, which have the potential to act as
    they do in a greenhouse--CO2 is very warming. It may
    not be much of the volume of the atmosphere, but its potential
    to warm the atmosphere, to change our climate is much, much
    higher than its volume in the atmosphere, probably 25 or 30
    percent.
        And so, the analysis you are talking about is--to look at
    the volume and simply say it is not there is to ignore its
    effect. And it is not simply EPA or Lisa Jackson who is saying
    that. I mean, you know, the scientists in our country--we have
    to work by consensus. It doesn't mean there might not be some
    disagreement, but the overwhelming consensus is that climate
    change is happening, and it is due to man's impact through the
    fact that we are burning fossil fuels and we are accumulating
    vast amounts of greenhouse gas potentials.
        Mr. Shimkus. So you agree with the hockey stick calculation
    of the tipping point of greenhouse gases?
        Mr. Markey. The gentleman's time has expired.
        Mr. Shimkus. Can she follow up? You gave her time to
    respond to me. Can she follow up to my question?
        Mr. Markey. She was answering your question, and I felt----
        Mr. Shimkus. Does she subscribe to the hockey stick?
        Mr. Markey [continuing]. I felt that I would provide her--
    --
        Mr. Shimkus. The one that you brought out here numerous
    times, this hockey stick graph? Is that valid science?
        Mr. Markey. To the gentleman, you asked her a question.
        Mr. Shimkus. She responded.
        Mr. Markey. The time expired. She asked if she could
    respond to your question.
        Mr. Shimkus. All right. Thank you, Mr. Chairman.
        Mr. Markey. I was only doing it really as a courtesy to you
    so that----
        Mr. Shimkus. I am just asking if she still supports the
    hockey stick graph.
        Mr. Markey [continuing]. So that your answer to the
    question----
        Mr. Shimkus. Do you support the hockey stick graph?
        Mr. Markey. It is obviously----
        Mr. Shimkus. Do you know what the hockey stick graph is?
        Mr. Markey. I guess what the gentleman is trying to say is,
    how can only a 2 percent addition to the atmosphere cause such
    a huge change? And it would be like saying, how can--what if
    subprime loans were only 2 percent?
        Mr. Shimkus. What I am trying to say is the science is
    flawed, and we are going to destroy jobs. That is what I am
    saying.
        Mr. Markey. If subprime loans were only 2 percent of the
    total financial products in the world, could they cause a
    global financial meltdown?
        Mr. Shimkus. Two percent of 2 percent of 2 percent.
        Mr. Markey. Yet that is a financial reality, as is this a
    scientific reality.
        The gentleman's time has expired.
        The chair recognizes the--I know the gentleman from
    Pennsylvania would like to be recognized at this time, but that
    could only happen with the generosity and beneficence of the
    gentlemen from Texas and California.
        I recognize the gentleman from Texas.
        Mr. Green. OK. Thank you, Mr. Chairman. And I will try and
    be as quick as we can.
        Madam Administrator, I want to thank you again for
    appearing this morning.
        And I have always believed that a balanced energy policy
    must have three basic points: energy conservation and
    efficiency, research and development in new and clean energy
    technologies, and environmentally responsible domestic energy
    production.
        However, Administrator, even with these measures to
    increase efficiency that we in Congress push and your agency
    works to promote on a daily basis, do you believe it is still
    necessary to increase the environmentally responsive production
    of domestic natural gas supplies in order to meet short-term
    carbon reduction targets called for in any climate and to keep
    our manufacturing jobs here in the United States?
        Ms. Jackson. It is not my job to set that kind of policy;
    obviously, it is all of you. But I can say that, certainly,
    natural gas has a lower carbon emission factor intensity and
    could certainly be very helpful, especially now that we are
    finding that we have more of a supply than we knew we had.
        Mr. Green. I appreciate that. In fact, in the last few
    years, because you and I have talked about the kind of area I
    represent where we produce and refine and have chemical
    industries, and we have seen such a difference because of the
    success in expanding our long-term ability to produce domestic
    natural gas.
        On a similar subject, the Energy Information Administration
    estimates that there is 1,744 trillion cubic feet of
    technically recoverable natural gas in the U.S., or enough to
    supply our country for 90 years at current rates of production,
    according to the industry. Much of it can only be recovered
    when we use hydrofracking for wells.
        In 2004, an EPA study found no evidence that fracking
    threatens drinking water. And now, for the first time, the EPA
    has undertaken its own water analysis in response to complaints
    of contamination in drilling areas. I look forward to the
    results of your study. And I am confident hopefully you will
    reach the same conclusion as 2004, and hope that we can come
    back to discuss your findings in 2012.
        In the meantime, can you assure me that the EPA will not
    make any moves to regulate hydrofracking until you have
    completed your study?
        Ms. Jackson. As I understand it, sir, we couldn't because
    it would probably require a change in law of some type.
        Mr. Green. OK. Thank you.
        Mr. Chairman, my last question, and I will give you some
    time back, I hope.
        The EPA recently finalized a rule to implement the long-
    term renewable fuel standard by Congress under the Energy
    Independence and Security Act. The renewable fuel standard
    requires biofuels production to grow from 11.1 billion gallons
    in 2008 to 36 billion gallons in 2022. However, it is my
    understanding that refiners are having difficulty meeting these
    targets due to various factors, but mainly the feasibility of
    reaching target X by X time.
        Please discuss how the EPA plans to work with refiners to
    be able to resolve these issues. I have long advocated for,
    rather than setting these targets for years, to instead have
    the EPA study the issue for a few years and ensure that the
    targets are feasible and realistic. Does EPA have a plan, since
    we can't meet that target, on how we can actually still produce
    fuel to run our vehicles?
        Ms. Jackson. Right. So, under the Energy Independence and
    Security Act, EPA has many responsibilities. One of them is to
    set the target numbers based on supply that is actually out
    there. I think you are referring to cellulosic ethanol and the
    fact that this year, in setting the target, EPA lowered it
    dramatically because there really isn't supply out there. So it
    would be unfair to ask refiners to try to meet it.
        Mr. Green. Yes.
        Ms. Jackson. We are closely monitoring that. That is what
    the law requires us to do, to set those targets as production
    increases. And we work with sort of a cross-section of the
    industry on both sides, the refinery side and the producing
    side, to try to--and of course we work with the Department of
    Energy to set those numbers. And we will continue to do that,
    sir.
        Mr. Green. OK. Well, and I support expansion of research in
    cellulosic. In fact, one of my frustrations, Mr. Chairman, is
    we don't have the jurisdiction over the tax incentives for
    biofuels. But if we ever do that extender, I actually have
    biofuel refineries that are shut down because they can't
    economically do it without those tax extenders. And so I
    appreciate the--we will continue to work on that to help get
    that product there for us.
        Mr. Markey. Will the gentleman yield?
        Mr. Green. I will be glad to yield to my colleague from
    Pennsylvania.
        Mr. Doyle. Thank you.
        And, Mr. Chairman, I was trying to engage my good friend,
    Mr. Shimkus.
        I was just wondering, Mr. Chairman, if you know what
    percent of your blood is made of platelets.
        Mr. Markey. No, I don't.
        Mr. Doyle. About 3 to 7 percent of all our blood cells.
    Yet, you know, without that 3 percent, a small cut would cause
    you to bleed to death. Did you know that, Mr. Chairman?
        Mr. Markey. I know I could bleed to death, but I didn't
    realize it was from such a small percentage of my body could
    cause such a dramatic change in my overall wellbeing.
        Mr. Doyle. Mr. Chairman, did you know that each member of
    the Energy and Commerce Committee represents only 2 percent of
    our collective wisdom?
        Mr. Markey. That is a very high number, though.
        Mr. Doyle. That is a very high number, yes.
        I yield back, Mr. Chairman.
        Mr. Markey. I thank the gentleman.
        The chair recognizes the gentleman from Texas, Mr. Burgess.
        Mr. Burgess. Administrator Jackson, I think in response to
    some questions from Ranking Member Barton you cited the
    criteria used in the endangerment finding of acidification of
    the oceans, agriculture production, and increased weather. Do I
    recall that correctly?
        Ms. Jackson. Those are some of the criteria I listed.
        Mr. Burgess. But really, for an endangerment finding,
    aren't we required to see an effect on human health?
        Ms. Jackson. It is public health and welfare. There were
    two standards.
        Mr. Burgess. Can you give me an idea of the number of
    deaths in this country, either last year or the year before,
    the outsize number, that would occur because of the increased
    acidification of the oceans in those years?
        Ms. Jackson. Well, I don't think we made an assertion that
    there were deaths associated with increased ocean acidification
    last year, so I shouldn't have to defend a number. We never----
        Mr. Burgess. But for there to be an endangerment finding,
    though, there should be human endangerment.
        Ms. Jackson. But that is not the only criteria by which to
    make that determination, sir.
        Mr. Burgess. Well, what is the amount of carbon dioxide
    that is safe?
        Ms. Jackson. Well, it depends on what you mean by ``safe,''
    sir. People have talked about a level in the atmosphere; I have
    heard 350 parts per million, I have heard 400, 450. Scientists
    use very complex models to try to determine, as that percentage
    of CO2 increases and CO2 equivalents
    increases, what that would mean for rising sea levels, what
    that might mean for changes in our climate. So they try to work
    backwards to project what level----
        Mr. Burgess. If I could just stop you there for a minute.
    OSHA has a level of 5,000 parts per million, or half of 1
    percent, as being an acceptable level. NIOSH says 30 parts per
    million, though I don't know that anyone actually recommends
    that. So there is a wide degree of latitude amongst the Federal
    agencies of the level of carbon dioxide which actually causes
    damage to human health.
        Ms. Jackson. Well, that is apples and oranges, sir. I think
    the ocean numbers you are looking at are what you could breathe
    in if you are being occupationally exposed on a short-term
    basis. Those are probably cell numbers that would make you not
    able to breathe and, therefore, might harm you permanently and
    might kill you. Whereas, what I was referring to when we deal
    with climate change is what numbers would try to stop the
    trajectory in the changes in our atmosphere.
        Mr. Burgess. Well, maybe then you could help us by saying
    what does the EPA use to assess the health impacts of, say,
    carbon dioxide--and any of the other greenhouse gases, but
    carbon dioxide since that is the one we are talking about.
        Ms. Jackson. Right. EPA did not set a health level per se
    or an ambient air quality standard. What EPA did was look at
    what projections of the changing climate would mean on things
    like diseases that are carried by insects that might now be
    able to thrive in an environment where once there was winter
    weather that might kill them off, or exacerbation of impacts
    that are weather-dependent. So a great example is smog or
    ground-level ozone, which on warmer days is much, much worse
    for you and your lungs and causes increased morbidity and----
        Mr. Burgess. OK. Well, let's go to the vector-borne
    diseases, since you brought that up. Does the EPA have any
    peer-reviewed procedures that it uses for assessing the threat
    from vector-borne diseases?
        Ms. Jackson. What EPA did was use the studies, peer-
    reviewed studies, by those who for a living study vector-borne
    diseases and the incidence and potential incidence of those
    increasing.
        Mr. Burgess. And from a numbers standpoint, what is the
    impact on human health that we are likely to see?
        Ms. Jackson. Yes, so I think maybe--the endangerment
    finding is--think of it as a weight of evidence, that all these
    things move together, but there are no numbers of people who
    are going to die from vector-borne. There is a belief that it
    will increase, and that will endanger public health, endanger
    public welfare.
        Mr. Burgess. Well, let me ask you this. What if the Earth
    were warming but it wasn't humans that were causing it, it
    wasn't human-made carbon dioxide, but the Earth were warming
    and these diseases would increase because of the increase in
    the vector-borne component? Would there be anything we could do
    about that? Would there be mitigating factors that we could
    bring into play?
        And the answer is, of course we could. I mean, none of this
    stuff happens in a vacuum. The fact that we might have more
    mosquitos because the weather is warmer doesn't mean that we
    don't have anything else to use to impact that event. Is that
    correct?
        Ms. Jackson. Certainly. But that wasn't the question we
    were answering in the endangerment finding. We were asked
    whether the pollution from greenhouse gases would change our
    climate; and, if so, whether those changes endanger public
    health and welfare.
        Mr. Burgess. OK, good.
        Ms. Jackson. And the answer was an affirmative yes. And----
        Mr. Burgess. Great. Well, then how many people have died
    from the effects of elevated carbon dioxide in the last decade?
        Ms. Jackson. Again, you don't have to have a number of
    people who have died in order to make a finding of
    endangerment. If I tell you that it is dangerous to jump off a
    cliff, you don't have to actually do it to know that that is a
    dangerous thing. It was a finding----
        Mr. Burgess. No, because somebody else has already done the
    experiment and proved the theorem. But can you tell how many
    additional cardiovascular asthma deaths are linked to carbon
    dioxide increases of 100 parts per million in the atmosphere?
        Ms. Jackson. I think I have explained to you why that is
    not the analytical approach that was taken. We took the weight
    of evidence approach, as scientists have done.
        Mr. Burgess. Are you at the EPA doing research on this
    front currently?
        Ms. Jackson. We do some of our own research. EPA's Office
    of Research and Development has contributed three reports to
    the U.S. Global Change program. But we also rely on our
    partners and on the peer-reviewed work of scientists.
        Mr. Burgess. And what are the results of those?
        Ms. Jackson. The endangerment finding is based on that
    work, sir.
        Mr. Burgess. But you cannot provide us with numbers of how
    many people have actually been endangered.
        What about how many people died as a result of a 1 degree
    Fahrenheit temperature rise over the last 100 years?
        Ms. Jackson. I understand your point, but I think we are
    talking past each other at this point. You know, I can probably
    quote what other scientists say: that the evidence is that
    ongoing climate change will have broad impacts on society,
    including the global economy and the environment.
        For the United States, climate change impacts include sea
    level rise for coastal States, greater threats of extreme
    weather events, increased risks of water scarcity, urban
    heatwaves, western wildfires, disturbance of biological systems
    throughout the country.
        And I would add to that the issue of ocean acidification,
    which is certainly not----
        Mr. Burgess. Can you quantify the number of human deaths,
    then, from any one of those instances that you just cited?
        Ms. Jackson. The endangerment finding is based on the
    premise and the belief and, I believe, the scientific fact that
    the severity of climate change impacts will impact negatively
    public health and welfare. And scientists agree that that
    severity is going to increase over time.
        Mr. Burgess. Then how can you be convinced, as a matter of
    science, that you will be able to reduce the public health
    risks, and hence the number of deaths, from carbon dioxide when
    you can't quantify those specific impacts?
        Ms. Jackson. Well, I am convinced of the inverse, which is
    that, as the models show that increasing amounts of emissions
    of greenhouse gases are going to change the climate, that
    mitigation is one method, mitigation of those emissions is one
    method of addressing----
        Mr. Burgess. Mr. Chairman, I have several more questions
    along this line. I would just like to submit those in writing
    for the record, if the chairman will permit.
        Mr. Markey. The questions will be submitted in writing, and
    we would ask the administrator to respond in writing to the
    gentleman from Texas.
        Mr. Burgess. Thank you.
        Mr. Markey. We thank the administrator.
        The chair recognizes the gentlelady from California, Mrs.
    Capps.
        Mrs. Capps. Thank you, Mr. Chairman.
        Administrator Jackson, thank you for your patience.
        And we have heard some of our colleagues today question
    whether the science of global warming is sound. In particular,
    some of my colleagues allege that e-mails hacked from the
    Climate Research Unit at East Anglia University cast doubt on
    the entire scientific field.
        I want to ask you if you have seen the report by the
    British House of Commons Science and Technology Committee,
    which, and I quote, ``found no reason in this unfortunate
    episode to challenge the scientific consensus that global
    warming is happening and that it is induced by human
    activity,'' end quote; and the report of the independent
    Scientific Assessment Panel, which concluded that, and I quote,
    ``We saw no evidence of any deliberate scientific malpractice
    in any of the work of the Climate Research Unit, and, had it
    been there, we believe that it is likely that we would have
    detected it''; and, also, the Penn State report clearing
    Michael Mann, one of its scientists, of any misconduct.
        Ms. Jackson. I have seen both.
        Mrs. Capps. Thank you.
        Mr. Chairman, I would like to put all of these reports into
    the record, if I may.
        Mr. Markey. Without objection, so ordered.
        Mr. Burgess. Mr. Chairman?
        Mrs. Capps. I have them right here, the scientific reports.
        Mr. Markey. OK, we will withhold. I will make the unanimous
    consent request, if the gentleman from Texas would like to look
    at them, and we could then make the unanimous consent request
    subsequent.
        Why don't we just hold right now? If you could continue
    with your questions, and we will add back 30 seconds.
        Mrs. Capps. All right. Thank you very much.
        My next question: Have you seen the statements by Working
    Group One of the Intergovernmental Panel on Climate Change, the
    University Corporation on Atmospheric Research, the American
    Geophysical Union, the American Association for the Advancement
    of Science, the American Meteorological Society, and the
    Geological Society of America, all of which were issued after
    the hacked e-mails and all of which reaffirm the scientific
    basis for the threat of climate change? Have you seen these?
        Ms. Jackson. I believe I have seen them.
        Mrs. Capps. Thank you.
        I would like to enter all of those statements, as well,
    into the record. And, unfortunately, I don't have copies of
    them today.
        Mr. Chairman, may I have your consent to enter these
    records that I have just mentioned into the record today?
        Mr. Markey. The chair was distracted. Would the gentlelady
    make her inquiry again?
        Mrs. Capps. I asked the Secretary--and I don't want to
    belabor her time. The various statements which I have just
    enunciated, if they could be entered into the record in the
    same way.
        Mr. Markey. Great. Without objection, so ordered.
        [The information appears at the conclusion of the hearing.]
        Mrs. Capps. So, Administrator Jackson, in light of all of
    these statements from independent assessments and scientific
    societies, do you believe that it is safe to say that these e-
    mails do not in any way undermine the scientific basis of
    global climate change?
        Ms. Jackson. Yes.
        Mrs. Capps. Thank you.
        And now that we have made the facts on the science clear, I
    would like to ask some questions about public health and
    climate change. And, as you know, I am a public health nurse,
    and the connection between our health and climate change is a
    subject I care deeply about.
        I have introduced legislation that would help the American
    public adapt to the public health impacts of climate change,
    and it was included in the House-passed energy bill.
        I wondered if you would list briefly, if you can, some of
    the most important investments that you are considering which
    would ensure that we promote and protect public health by
    reducing oil dependence.
        Ms. Jackson. Well, certainly. You know, cars and the
    burning of oil create pollution, not only climate pollution but
    certainly pollution as well. In fact, one of the, you know,
    greatest legacies of the Clean Air Act are the reduction in
    NOX and SO2 pollution and particulate
    pollution through the Clean Air Act. And huge impacts on public
    health--in fact, 13 to 1, $13 of benefits in terms of public
    health to $1 spent.
        So my belief is that, while I am certainly not arguing that
    any one action can achieve all we need, we can see tremendous
    improvement in public health.
        Mrs. Capps. And so there are the monitoring and planning
    and infrastructure education opportunities that have already
    been in the Clean Air Act that you can adapt and use again,
    continuously use. Is that what your Department is doing?
        Ms. Jackson. Yes. And we are not using all the pieces of
    the Clean Air Act, but certainly bringing Clean Air Act
    regulations to bear.
        Mrs. Capps. Thank you.
        I just have a couple seconds left. Let me ask you how EPA
    is working with other Federal agencies to align policies in
    order to reduce oil dependence.
        Ms. Jackson. Well, all of our work--the work on the cars
    rule was, you know, closely coordinated with the Department of
    Transportation. But we work very closely with the Department of
    Energy, with NOAA, with Interior and Agriculture--all of them,
    by the way, who sat and agreed on the endangerment finding. So
    all of the work we do is through an interagency process that
    coordinates our work together.
        Mrs. Capps. Thank you very much.
        I yield back.
        Mr. Markey. The gentlelady's time has expired.
        And we will ensure that the gentleman from Texas sees the
    scientific data that the gentlelady has. As a matter of
    course----
        Mr. Burgess. Mr. Chairman, if I might, just with the
    stipulation and the understanding that in the record that is a
    limited and provisional report and not the final report that
    has been prepared, as I understand it. I am OK with it being
    inserted as long as there is the captioning that it is a
    preliminary and limited report.
        Mr. Markey. I think that is how--would the gentlelady from
    California--is that described as a provisional report? It is
    not a final report?
        Well, let me just say, in general, let's just--on the
    second panel, there is a witness whose conclusions I do not
    agree with. And I am sure that that witness is going to make a
    unanimous consent request that all of his analysis be put in
    the record. I will accede to that. It will go into the record,
    but it will be associated with that witness, as any of these
    reports are identified with the Member who is asking them to be
    inserted in the record at that point.
        So it is not an endorsement by the committee of any of the
    materials which are put in the record. It is just a further
    extension of the remarks and the information which that Member
    wishes to have included in the record. And that is just
    something that we do and we honor as a matter of course on this
    committee as part of a courtesy to any Member that has
    information which they would like to have included. But it is
    then up to each individual Member to make their determination
    as to what weight they wish to attach to it.
        Mr. Burgess. Thank you, Mr. Chairman. With that clear and
    coherent description, I will withdraw my objection. But thank
    you for providing the information.
        Mr. Markey. No, I thank the gentleman.
        And, without objection, the gentlelady's information will
    be included in the record.
        [The information appears at the conclusion of the hearing.]
        Mr. Markey. And the chair will recognize the gentleman from
    Louisiana, Mr. Scalise.
        Mr. Scalise. Thank you, Mr. Chairman.
        Administrator Jackson, a couple of weeks ago, I think you
    were in New Orleans talking to a group and were talking about
    how regulations and rules that your agency issues help create
    jobs. Can you expand upon what you meant with that?
        Ms. Jackson. I am happy to, but first I have to say ``Who
    Dat,'' right?
        Mr. Scalise. ``Who Dat.''
        Ms. Jackson. All right.
        What I was explaining is that the Clean Air Act--and cars
    are a perfect example. The catalytic converter is a home-grown
    technology, a home-manufactured technology--we exported it to
    the world--to deal with pollution, non-CO2 pollution
    but pollution from car exhaust. It is true of scrubbers or flue
    gas desulfurization units.
        So what I said was that we have a whole sector of our
    economy that is built around making sure we have clean air and
    clean water and our public health is protected and
    environmental health is protected.
        Mr. Scalise. Right. Is there an acknowledgement that some
    of those rules actually cost us jobs? Many companies who are
    operating by all the rules and doing things the right way,
    every time rules come out, it changes the way that they have to
    do business; people who aren't doing anything to hurt public
    health, but just people who then become burdened with new
    Federal rules and regulations that cost them money or, in some
    cases, have caused them to shift jobs overseas, lots of jobs
    overseas.
        So, while you might think that the rules create jobs, I
    would hope you recognize that some of those rules cost our
    country jobs at the same time.
        Ms. Jackson. I would certainly stipulate that rules are not
    free, that they have a cost to them, that we have to invest in
    having clean air, that we have to invest in having clean water.
    And that one of the things the laws of our country have said is
    that the American people demand that, that we could grow
    without any restrictions on pollution. And, certainly, I
    consider it a part of my job to ensure that the rules we put in
    place are----
        Mr. Scalise. But some of this goes beyond pollution, and
    hopefully I can have time to get into some of that. But right
    now your agency has a contest going on where, on your Web site,
    you claim that you are going to award $2,500 to somebody who
    makes a YouTube video explaining why rules are important.
        Do you really think, in the times that we are facing right
    now in our country economically, but also with the debt that
    our country is facing, that it is a wise use of taxpayer money
    to be giving $2,500 of taxpayer money away to somebody to make
    a video on YouTube about why rules are important?
        Ms. Jackson. Well, I am happy to take a look at that
    specific concern. I didn't prepare to look at it for this
    hearing. But if you would like----
        Mr. Scalise. It is on your Web site.
        Ms. Jackson. I am not disputing that, sir. I am not
    disputing that at all. What I am saying is that there are lots
    of things on our Web site that are designed to engage the
    public in the work that we do. And so----
        Mr. Scalise. Right. Engaging is one thing, but giving away
    2,500 taxpayer dollars is a different story.
        Ms. Jackson. I am happy to take a look at it for you, sir.
        Mr. Scalise. So you would consider withdrawing that $2,500
    reward.
        Ms. Jackson. I am happy to take a look at it. That is what
    I----
        Mr. Scalise. Maybe using it to help pay down debt. I would
    appreciate that.
        When we talk about the hydraulic fracturing process--and
    Congressman Green had asked you a similar question. I just want
    to make sure that we are correct on this. It is my
    understanding that you had said that you cannot regulate the
    fracking process without a change in law?
        Ms. Jackson. My understanding is that we can regulate only,
    I believe it is, hydrocarbons or diesel fluid injections right
    now.
        Mr. Scalise. Do you know of any examples--and we have a
    2004 report that says that fracking does not contaminate
    groundwater. Do you have any kind of findings that you have
    done that disputes that?
        Ms. Jackson. Well, I think there has been some important
    information that has come out lately. States are doing more and
    more investigation of complaints by their citizens that their
    water is being impacted. I think the----
        Mr. Scalise. And the States do regulate that right now.
        Ms. Jackson. Sir, I am not disputing who regulates it. You
    are asking if I am aware.
        Mr. Scalise. But do you have any reports of----
        Ms. Jackson. I am aware of concerns that there has been
    misleading information about what is going down wells. That
    might actually have come out of investigations by this
    committee. I have right now complaints before me from folks who
    say they are concerned and want----
        Mr. Scalise. If you can do this, because my time is running
    out, if you can get me a copy of anything you have that would
    purport to dispute that. Because you are doing a--your agency
    is putting a report together right now which--I would hope this
    Congress doesn't try to do anything to limit the fracking
    process, especially when there is no finding and no report from
    your office. So if you can get me that.
        On climate-gate and Himalaya-gate and Amazon-gate, you have
    not changed any of your conclusions on which EPA has based
    endangerment findings. What analysis has EPA done that caused
    you to reach that conclusion in light of these scandals that
    have erupted over falsified scientific data?
        Ms. Jackson. EPA reviewed the allegations as they were
    made, and they dribbled out over a period of time. And, in each
    case, my direction to staff was clear: to review whatever
    allegations were being made to determine whether they change
    the foundation for the endangerment finding. Certainly, that is
    our obligation to do.
        And, as I said in response to one of the earlier questions,
    we have made a determination, and it turns out that others now
    agree with that----
        Mr. Scalise. When did you conduct that analysis?
        Ms. Jackson. I am sorry?
        Mr. Scalise. When did you conduct that analysis?
        Ms. Jackson. As part of the endangerment finding and as the
    information became available, because some of this has dribbled
    out since.
        Mr. Scalise. And if you can get me any information you have
    on analyses you have done on climate-gate, Himalaya-gate, and
    Amazon-gate.
        Mr. Markey. The gentleman's time has expired.
        Mr. Scalise. Thank you. I yield back.
        Mr. Markey. The chair will recognize the gentleman from
    Washington State, Mr. Inslee.
        Mr. Inslee. Thank you.
        I wonder if our friends could put up that slide I had
    earlier that talked about this issue of ocean acidification.
        It has been astounding to me that we still hear debate
    about the existence of climate change. And I wanted to ask
    about what Janet Napolitano, who is the leader of NOAA, calls
    the evil twin--sorry, Jane Lubchenco. Excuse me. Thank you. I
    appreciate that. What she calls the evil twin of global
    warming, which is ocean acidification.
        We used to think it was a good thing that when we burned
    the oil and the carbon dioxide goes into the atmosphere and
    then it goes into solution and the oceans, we used to think
    that was a good thing because it got it out of the atmosphere
    so it would reduce the climate impact.
        But the scientific community is now telling me and the rest
    of Congress that it is an undisputed certainty, with no
    scientific debate whatsoever, that the carbon dioxide pollution
    from burning oil is now going into the ocean and creating more
    acidic conditions.
        And it is a scientific fact, I believe beyond dispute--in
    fact, I have never heard anyone in this room dispute the fact--
    that the oceans are now about 30 percent more acidic than they
    were before we started to burn fossil fuels, and that this
    happens because the pollution goes up, goes in the air, falls
    out of the sky, goes into the solution of the ocean and creates
    acid.
        Now, the scientists that I am talking about, we have some
    neuroscientists in Seattle and they have been doing research,
    they tell me that this is a certainty. There is just no doubt
    about this, there is no debate about this. No one has really
    ever challenged this conclusion that we are acidifying the
    oceans because we are burning fossil fuels.
        Is that a fair characterization of the science?
        Ms. Jackson. Yes. I am going to of course yield to Dr.
    Lubchenco. But we have talked about this, and I know it is
    exactly as you describe it, sir.
        Mr. Inslee. So if I can refer to this photograph, this is a
    photograph demonstrating what the future looks like. And it is
    a photograph, again, of a terrapod. These are small plankton,
    and these are the base of the food chain. These are what
    everything--not everything, but much of what life depends on in
    the ocean, because small fish eat these terrapods by the
    gazillions, larger fish eat them, and eventually the largest
    fish eat those fish. The whales depend, essentially, on the
    presence of these terrapods. So these are the basis of the
    entire food chain in the ocean.
        And what the scientists are telling me is that, as the
    oceans become more acidic, the very basis of the food chain is
    threatened because these terrapods and many other creatures
    will not be able to exist. For instance, we have not been able
    to grow an oyster crop in the State of Washington for 2 years,
    probably because of the acidification of the ocean. That is not
    totally clear yet, but probably because of that.
        So we have evidence before our own eyes that carbon
    pollution from burning oil has the capacity to actually melt
    the very basis of the food chain. Because what this experiment
    shows--and, actually, Dr. Lubchenco showed us this experiment
    in another committee hearing--that if you expose these shells
    to water that is as acidic as it will be in 2100, that the
    shells actually melt.
        And this has the fishermen concerned where I live in the
    State of Washington, because if you destroy the basis of the
    food chain--this is what salmon eat when they are in the
    Pacific Ocean. When these things are gone, there is no food for
    the salmon.
        So I guess the question is, is ocean acidification
    something legitimately to be concerned about from a human
    health standpoint? Because we get about 15 percent of our
    protein from the oceans, and the food chain appears to be at
    risk. Is that something legitimately to be concerned about, in
    your role?
        Ms. Jackson. I do think that it is a legitimate concern and
    one on which the science, like much of climate science,
    continues to just emerge and one that cannot be ignored.
        Mr. Inslee. And if you were going to--maybe this is getting
    to the personal a little bit, but let me just ask you. When you
    think of the human impacts of carbon pollution, what personally
    is most troublesome to you?
        Ms. Jackson. Well, you know, I could cite the $2 trillion
    in global damages that are estimated to occur from a changing
    climate. I think you know, we have talked about the fact that,
    although I do not attribute Hurricane Katrina to climate
    change, per se, I have seen what it requires of this country
    and its citizens, who all pulled together to help my hometown
    after the kind of catastrophe that happened when you saw a
    very, very severe flood.
        And to think about our economy, instead of being a
    productive economy, constantly having to respond to
    catastrophes that are induced by a changing climate over time;
    when I think of my children or my grandchildren spending all
    their time doing that instead of making new things, innovating,
    and building a better life, I worry. And I am very, very
    concerned. And I think--I know that we have an obligation to
    follow science and do that.
        And the good news of it, which I hoped we would talk about
    more in this hearing, is that we can do it in a way that
    decreases our dependence on foreign oil. It is something no one
    seems to want. I can't imagine they would.
        Mr. Inslee. Thank you.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentleman from Alabama, Mr.
    Griffith.
        Mr. Griffith. Thank you, Mr. Chairman.
        Thank you for being here. I looked at the clock, and it is
    10 after 12:00, and I know that we would probably prefer to be
    on the St. Charles Avenue trolly headed to the Camellia Grill
    for some chili cheese fries.
        Ms. Jackson. All right.
        Mr. Griffith. But anyway.
        Ms. Jackson. Did you go to Tulane?
        Mr. Griffith. Yes, I was there.
        Anyway, did the EPA do its own analysis of the challenge to
    the endangerment reviews? And, if so, I don't need to know the
    result, but we would like for you to provide us with that.
        Ms. Jackson. Yes, I did mention that we would provide it.
    So I am happy to get you a copy.
        Mr. Griffith. OK. My other point--and so many of the
    questions have already been asked--is that we, as Americans,
    represent 5 percent of the world's population, maybe 4.5
    percent. Does the EPA have any responsibility when it regulates
    to know the economic impact that it has on our economy as it
    relates to our global competition? Or are we regulating
    ourselves in a vacuum and, as you mentioned, children and
    grandchildren, jobs, economy, recognizing the population of
    China and the fact that they are probably not having this
    discussion right now?
        So does the EPA have a responsibility to do a global
    economic impact as it relates to our competitiveness?
        Ms. Jackson. In general, we do economic impacts on our
    regulations, but they tend to look at our domestic businesses.
        It is not true to say we don't care about economic impacts.
    That has been out there for a while. That is not a true
    statement. But we don't generally look specifically at a
    foreign business. So many businesses now are multinational,
    that we just look at what the impact would be, the cost to our
    business community.
        Mr. Griffith. I yield back the balance of my time, Mr.
    Chairman.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentleman from California, Mr.
    McNerney.
        Mr. McNerney. Thank you, Mr. Chairman.
        Administrator Jackson, I want to thank you for coming
    today. You knew it wasn't going to be an easy hearing, and you
    have been graceful, and I appreciate that.
        My understanding is that the endangerment finding was based
    on a preponderance of evidence supported by recognized
    scientific-based agencies and organizations. Is that correct?
        Ms. Jackson. That is a fair statement.
        Mr. McNerney. Could you name a couple of those agencies or
    organizations?
        Ms. Jackson. I am happy to.
        In the U.S. Government, the U.S. Global Change program is
    composed of NOAA and NASA and DOD and Agriculture and
    Transportation, so all of the folks who are watching these
    issues from various aspects of how they would impact us.
        And then, of course, there are the international efforts.
    The IPCC is named, but the IPCC is really made up of several
    boards that look at various aspects of these issues.
        And then there are additional studies, as well. The
    National Academies did a study that was one that we relied
    heavily on that brought together much of the science, as well.
        Mr. McNerney. Thank you.
        I am also thankful to my friend, Mr. Shimkus, for giving us
    perspective of global warming deniers, and that perspective
    believes that small changes in chemical composition of a
    solution couldn't possibly change the physical nature of that
    solution. So I am thankful for the other side for that
    perspective.
        I have another related question. I represent the Central
    Valley of California, part of it anyway, and it is a great
    agricultural region. We have terrific crops and export to the
    entire world. But we have air quality problems that cause
    asthma and other health-related issues.
        I was wondering what impact the endangerment finding and
    the subsequent policy rulings by the EPA might have on public
    health.
        Ms. Jackson. The effort to mitigate greenhouse gas
    pollution--which, I should just say for the record one time, I
    believe is best done through legislation, so, obviously, this
    body has already dealt with that question--would, by mitigating
    and stopping greenhouse gas emissions, start to put us on a
    trajectory to see climate change level off.
        There would certainly be some need for adaptation, telling
    populations that are already seeing changes, as well. So it is
    a system as we level off and stop the increase in changing
    climate, the heating in the Central Valley and increased
    droughts, we would--I am sorry, and increased impacts on
    water--we would start to see a change. But it is not an
    instantaneous thing. It is not----
        Mr. McNerney. But wouldn't that also have a spin-off of
    protecting public health, in your opinion?
        Ms. Jackson. Absolutely. Absolutely, sir. Yes.
        Mr. McNerney. Thank you.
        And I am just going to follow up on what you said. Wouldn't
    it be true that comprehensive energy legislation would be
    preferable and a superior approach to national security,
    health, and the economic challenges we are now facing?
        Ms. Jackson. Absolutely. I join the President in that call.
        Mr. McNerney. All right.
        And thank you. I will yield back.
        Mr. Markey. We thank the gentleman very much.
        And to our audience, we just would like to let you know
    that 27 members of the subcommittee have come today, which is
    just about every member of the subcommittee, which is a
    reflection of the importance of this issue but, you know, has
    contributed to the length of the hearing. And so we apologize
    to Members for that, although the information that we are
    receiving is invaluable.
        So the chair now recognizes the gentleman from Oklahoma,
    Mr. Sullivan.
        Mr. Sullivan. Thank you, Mr. Chairman. I think that is
    because of you, that we have so many here.
        Mr. Markey. I would not want to know how many came if it
    was just me.
        Mr. Sullivan. Well, again, thank you for being here. I am
    from Oklahoma----
        Mr. Markey. Oh, I apologize to the gentleman. I actually
    went out of order there.
        Mr. Sullivan. Oh.
        Mr. Markey. The gentlelady from California, with the
    indulgence of the gentleman from Oklahoma, is recognized.
        Mrs. Bono Mack. Well, I thank both the chair and my
    colleague. I hate to have that false start, but also glad to
    know that I am not last and least at the same time.
        But I want to welcome the administrator, as well, and thank
    her for her patience and say that I have an issue that I am
    hoping that you can look into further that is specific, at
    least now, to southern California.
        As you know, southern California has faced extremely
    challenging air quality issues, and, over time, the region
    established air quality standards in the issuance of permits
    for those who wish to construct or expand infrastructure
    projects. Those who seek these permits include everyone from
    hospitals, schools, fire, police stations, water projects,
    small businesses, and the list goes on and on.
        Recently, the EPA was petitioned to try to halt the
    issuance of new permits, even though the State acted with
    overwhelming bipartisan support on legislation to ensure that
    these could move forward.
        Given the nearly 15 percent--I am sure much higher,
    actually--but the 15 percent unemployment rate in much of
    California's Inland Empire, the importance of providing new job
    opportunities is crucial. In fact, holding up the existing
    permits being requested in parts of southern California will
    impede the progress of $10 billion in projects that will
    provide tens of thousands of jobs.
        It is my hope that the EPA will reject this petition, as we
    have had the permit program serving areas throughout L.A. and
    surrounding counties for decades. Our businesses need the
    certainties that they can invest, and our public entities like
    hospitals must expand to meet the growing needs. Again, it is
    my firm belief that this petition should be rejected, given the
    high stakes it represents for our regional economy.
        Are you able to respond specifically on this matter today,
    if you know personally about it? And if you don't know, are you
    willing to work with me to ensure the effects of this petition
    are seriously considered?
        Ms. Jackson. I am aware of the petition. I don't have a
    full briefing. I would be happy to meet with you and discuss it
    further. Obviously, staff have to review the petition on its
    merits, but we are happy to work with you on that.
        Mrs. Bono Mack. All right. Thank you. It is very, very
    important.
        But changing back now to the issue at hand, in February you
    testified in the Senate that you would prefer climate
    legislation over regulation of carbon dioxide emissions under
    the existing Clean Air Act. I happen to feel the same way,
    which is one of the primary reasons that I supported the House
    legislation, as it ensured that the EPA would not move forward
    unilaterally on a number of fronts, or at least temporarily.
        I recognize that there is a proposed enforcement delay
    being considered for various sources, but that still doesn't
    solve the problem that moving forward with regulations under
    existing statutes will be harmful to our economy, whether that
    is now, in 2011, or in 2020.
        As you know, California has its own regulatory regime that
    is moving forward, as provided by AB-32. And this leads me to
    my question: Would you support a complete preemption of EPA
    regulation of greenhouse gases under the Clean Air Act or other
    existing statutes and comprehensive climate legislation? As you
    know, the issue is one of the more clear interstate commerce
    issues we are considering in this committee. And if you don't
    support this preemption, can you explain why not?
        Ms. Jackson. Well, I haven't seen preemption language from
    the U.S. Senate. There is certainly a bill that passed this
    body that included some preemption.
        I certainly support the fact that legislation is going to
    have to deal with the tricky question of how to deal with
    competing State and Federal standards and try to harmonize all
    that, which is why I believe we have to have a legislative
    solution.
        But I also have to say that, in the interim, I believe I
    have to follow the law. And I believe very strongly that the
    Supreme Court decision wasn't an ``if you feel like it.'' It
    was, ``EPA must make a finding.'' And everything we have done
    since making that finding and, in fact, even leading up to it
    has been about trying to ensure that the Clean Air Act
    unintended consequences are minimized, so that you can have a
    rule for cars that is a good-news story without immediately
    having to regulate other sources that you don't want to.
        Mrs. Bono Mack. Can I just narrow this down? And I don't
    know that the clock necessarily started when I started, but I
    appreciate that I still have 3\1/2\ minutes.
        Regulate or legislate? I mean, it is not yes or no, but it
    is close.
        Ms. Jackson. New legislation that puts a market incentive
    on clean energy is the way to go. What that legislation says is
    the job of Congress and will be, I am sure----
        Mrs. Bono Mack. But you are saying you prefer that route? I
    mean, that is all I am asking is a simple--that is what--you
    said it before, and I am just asking you to reiterate it right
    now.
        Ms. Jackson. Yes, ma'am. Yes, ma'am.
        Mrs. Bono Mack. OK.
        Ms. Jackson. I prefer legislation.
        Mrs. Bono Mack. Thank you. And would you support Federal
    preemption of State greenhouse gas regulations?
        Ms. Jackson. All I can say is I prefer legislation. And the
    details of legislation are to be discussed.
        Mrs. Bono Mack. But this is very simple, especially in your
    capacity, a very simple question. Would you support Federal
    preemption of State greenhouse gas regulations? What do you
    support? It is very simple.
        Ms. Jackson. The administration, the Obama administration,
    has said over and over that we need legislation, that we prefer
    it. But that I do not have the luxury of ignoring the law. And
    so I, as I do my job at EPA----
        Mrs. Bono Mack. This is a second question from the first.
    Would you support Federal preemption of States? It is not
    regulate or legislate; it is now Federal or State preemption.
        Ms. Jackson. I support legislation. And I believe that that
    is one of the issues that good legislation is going to have to
    deal with. And, in the interim, I think I should do my job,
    which is to uphold the Clean Air Act as the Supreme Court has
    interpreted it.
        Mrs. Bono Mack. All right. Well, I don't think that is much
    of an answer for me.
        Ms. Jackson. Well, I also don't believe that it is an
    either/or question entirely. I also believe very strongly that
    the Clean Air Act can be used to do good things that are
    entirely consistent with legislation. And I think the clean
    cars rule is a perfect example of that.
        Mrs. Bono Mack. Well, it is a simple question, though. In
    fact, if California continues to move the bar, then where does
    that leave Federal legislation or regulation? If California--
    and as a proud Californian, but not necessarily agreeing and
    not necessarily agreeing that what California does is good for
    the rest of the country--but if California changes their
    standards, are you saying that we should then once again meet
    California standards?
        Ms. Jackson. I think the cars rule was a great example of a
    way to make sound and smart legislation. And, in fact, much of
    what happened in the bill that passed this committee and the
    House talks about how to meld the Clean Air Act authorities in
    with the new authorities that would come under legislation.
        So, again, I don't think I can simply say one or the other,
    because I think the trick of legislation will be to figure out
    how to put those two authorities together in a way that gets
    you things like the clean car rule. And, yes, California may
    look at even cleaner cars. And I think, when I spoke to the
    chairman emeritus, he asked me to go back and start thinking
    about what we are going to do for 2017 and beyond. And I think
    that is a fair question.
        Mrs. Bono Mack. Thank you.
        I yield back. Thank you.
        Mr. Markey. OK. The gentlelady's time has expired.
        The chair recognizes the gentleman from Pennsylvania, Mr.
    Doyle.
        Mr. Doyle. Thank you, Mr. Chairman.
        Administrator Jackson, you have been most generous with
    your time, and we have covered a lot of ground, so I really
    just have one question. I want to follow up on something that
    Representative Green talked to you about.
        In my State of Pennsylvania, we are sitting on a vast
    supply of natural gas in the Marcellus Shale. Geologists
    estimate it could be somewhere between 168 and 516 trillion
    cubic feet. And I get asked every day--I know that
    Representative Green referenced the EPA study on the effects of
    hydraulic fracking on drinking water. And we are starting to
    see a lot of wells go up in southwestern Pennsylvania and
    throughout our State. So we hear from our constituents every
    day about that.
        So we know there is a study, but could you give us an idea
    about the scope of this study? What all is the EPA looking into
    with regard to fracking? And when might we anticipate this
    study being made available?
        Ms. Jackson. EPA recently held a meeting of its Scientific
    Advisory Board. It is the Federal FACA that advises the EPA
    administrator on the scope of the study, how best to design a
    study of hydraulic fracking, primarily to look at potential
    impacts on drinking water, on water. And, of course, that would
    be, in this case, groundwater for the most part.
        And that study, I believe, is now scheduled to not have any
    results until either late in 2011 or early in 2012. I will
    double-check on the date. I mean, we haven't quite finished
    scoping it, so we haven't begun the actual study yet.
        We are designing it to be transparent, to use information
    that is being collected. Many States and localities are getting
    information and complaints on potential issues with respect to
    contamination. And it is being done primarily to serve as a
    resource to EPA but, of course, also to Congress and others,
    the States, in terms of what we know.
        One of the concerns is that there was a 2004 literature
    review. There were no samples taken. That study is widely cited
    as saying, ``See, that proves it is safe.'' And I don't think
    that is a fair or accurate summation of that study. I think
    that is an overbroad reading. And so I have said I believe we
    need to take some more data.
        Mr. Doyle. Having said that and given the fact that we
    might not have the study until 2011 or 2012, do you think it is
    wise for Congress to consider legislation to regulate hydraulic
    fracking in advance of the completion of this study?
        Ms. Jackson. Certainly, I would leave the legislative
    decisions to you. And I would certainly say that we will be
    happy to provide information, as we get it, to Congress in
    helping to inform your deliberations.
        Mr. Doyle. Thank you.
        Thank you, Mr. Chairman.
        Mr. Markey. Great. The gentleman's time has expired.
        And all time for--oh, I am sorry. I apologize again to the
    gentleman from Oklahoma. Mr. Sullivan----
        Mr. Sullivan. That is OK. I am used to it, Mr. Chairman.
        Mr. Markey [continuing]. Is recognized.
        Mr. Sullivan. Thank you, again, for being here.
        And, you know, the economy is not doing so well right now.
    I guess we can all agree to that. And unemployment levels are
    pretty high. And why did the administration choose to embark on
    the endangerment finding amidst all this?
        Ms. Jackson. The Supreme Court ruling, which mandated that
    EPA make a finding one way or the other, was in 2007. As you
    heard, the work had been done under the Bush administration,
    but the White House didn't open the e-mails. And that really
    didn't comport with the way I saw my responsibilities as the
    EPA administrator and, frankly, as the White House, you know,
    wanted us to do our jobs. And so we have moved affirmatively in
    response to a Supreme Court decision that is now 3 years old.
        Mr. Sullivan. Well, what analyses were performed to
    determine whether a positive endangerment finding would be
    beneficial for the economy or energy security? Did you do any?
        Ms. Jackson. That isn't what the Clean Air Act requires us
    to do. The Clean Air Act requires us to make a determination as
    to whether pollutants--in this case, greenhouse gases--endanger
    public health and welfare.
        Mr. Sullivan. Whether we lose jobs or people----
        Ms. Jackson. Well, let me be very clear. Any regulation of
    a pollutant is certainly done only after an economic analysis.
    So I do not want anyone to think that means we don't look at
    the economy. No one is more sensitive to the economic impacts
    of our rules than me; I have to sign off on them.
        But I think the clean car rule is a perfect example of the
    kind of smart regulation we can make under the Clean Air Act
    that reduces our dependence on oil, reduces pollution, and
    actually helps in job growth because the automakers want it so
    that they can get back to making cars.
        Mr. Sullivan. Congressman Doyle talked about hydraulic
    fracking. And I think that is a really good method to use. That
    is how we have been able to get over 120-year reserves of
    natural gas. He talked about the Marcellus in his area. That is
    why they have been able to get so much. And I think that helps
    us from a national security perspective but also jobs. And it
    is American-made energy, and we can use it in vehicles, and it
    burns clean and all of that.
        But are you aware of how many hydraulic fracks have
    occurred in this country since it has been implemented over
    decades and decades and decades?
        Ms. Jackson. I know it has been used in the oil industry
    for all that period of time. I don't know----
        Mr. Sullivan. Well, if you are involved in something like
    that, don't you think you should know, though?
        Ms. Jackson. Well, we are doing a study specifically
    because citizens and their representatives have said that they
    are concerned that, as this Marcellus Shale, which is a tighter
    formation than we have been producing natural gas from and
    which could potentially impact groundwater in areas that are
    quite densely populated, they want to know it is safe. And I
    think that is a fair question.
        Mr. Sullivan. You know that much. But also, there have been
    a million hydraulic fracks, over a million hydraulic fracks in
    the United States. Are you aware, since you do know a lot about
    that, are you aware of any instance where it has ever gotten in
    the groundwater?
        Ms. Jackson. Well, we have several allegations and concerns
    raised in places like----
        Mr. Sullivan. No, I mean concrete evidence.
        Ms. Jackson. --Wyoming and Colorado and Pennsylvania.
        Mr. Sullivan. As the EPA director, administrator----
        Ms. Jackson. But that is why we are doing the study, Mr.
    Sullivan.
        Mr. Sullivan. I know. But, over the decades, has there ever
    been in your research--I am sure you do research and put
    information together to determine this as you move forward with
    this study. Have you seen any instance in the past, any court
    case, anyone suing someone, any verifiable evidence--that is
    what I think you have to go back towards--to see if there is
    any precedent that shows that this----
        Ms. Jackson. No, but I would say that we have seen cases
    where people have raised concerns and we haven't been able to
    say conclusively ``absolutely not.'' And that is why, rather
    than saying, ``Take our word for it,'' we are saying, ``Let's
    do a study; we will involve the industry in it, but----
        Mr. Sullivan. What if I raise concerns I think that this
    endangerment finding could be detrimental to our economy,
    sending jobs overseas, losing jobs overseas; would you address
    my concern in that?
        Ms. Jackson. We did an 11-volume copy to address concerns.
        Mr. Sullivan. There are a lot of Americans concerned about
    this legislation, this endangerment finding, and that they will
    lose their jobs. I mean they are concerned about that,
    especially my district where I have 100,000, 300,000 some-odd
    people working in the energy industry. They are scared to
    death. This is, I believe, an attempt to curtail that business.
    But I think that if we have a million of these facts and they
    are willing to list all the things that are used, mainly water
    and sand, but any chemical that is used listed, what is the
    problem? A million; I mean, that is pretty good data to use in
    your study.
        Ms. Jackson. Well, we have already seen a couple of cases
    where we can't get the data because it is confidential. So we
    don't have all the chemicals that are being injected in the
    wells.
        Mr. Markey. The gentleman's time has expired.
        Mr. Sullivan. Thank you, I do appreciate being here.
        Mr. Markey. All members of the subcommittee have asked
    questions, and I am sure everyone remembers vividly the
    unanimous consent request which I made 3 hours ago that Mr.
    Latta, if he appeared as a member of the full committee, would
    be allowed to ask questions of our witness.
        The gentleman from Ohio is recognized for that purpose.
        Mr. Latta. I appreciate the chairman's graciousness and
    unanimous consent and for being around to participate here
    today. Thank you very much. And also to our ranking member,
    thank you very much for allowing me to be here. And I
    appreciate the opportunity, Administrator, to--I think last
    time we had a discussion was on transportation infrastructure.
        But kind of to give a background again, I represent the
    largest manufacturing district in the State of Ohio and also
    the largest agricultural district. It is kind of an interesting
    vein that I run on. And Ohio, with our neighbors just to my
    west Indiana, we get 87 percent of our energy is coal-based,
    and Indiana 94 percent coal-based. And the reason I always
    bring up Indiana because I run halfway down the State of Ohio,
    along the Indiana line, so I have a lot of people working in
    Indiana and vice versa.
        As we are talking about the cap-and-trade legislation,
    especially as it is being renewed over in the Senate, as we are
    looking at it, how would this legislation benefit the farmers
    and the manufacturers and the citizens of my district? Because,
    again, when we look at the cost that is being associated with
    coal, what do I tell my folks back home? Because, again, I also
    have areas in my district that had over 18 percent unemployment
    because it is on the manufacturing sector.
        Ms. Jackson. Well, I am not going to speculate what the
    legislation in the Senate says because I haven't seen it yet. I
    can very briefly answer the question with respect to the
    legislation, for example, that passed this committee in the
    full House. And that is that because agriculture was exempt
    from much of the regulated activities, the activities, the
    agricultural industry would be able to use many actions like
    no-till farming as credits, as offsets. So there was actually
    an opportunity for farmers to make money off of decisions they
    would make about whether to keep acreage in agriculture or
    forests or how they tilled. I am certainly not an agricultural
    expert, but the opportunities were certainly there, I have
    heard Secretary Vilsack speak of them.
        Mr. Latta. Now briefly, no-till--a lot of our folks back
    home had gone to no-till, but a lot of them now are going out
    of no-till, because it is different ways of crop production
    that they are in right now. In some areas they find it is not
    conducive; they will always be in the no-till situation. So on
    a situation with credits there wouldn't be a lot of benefit.
        But we are looking at the unemployment rates, like I said,
    we have in our district. It is very, very difficult to attract
    jobs at this stage of the game out there to our area. Now, we
    have had some good news in the last week with some companies
    that are going to be expanding right now, but our fear out
    there as, I talk to people, there is a lot of angst especially
    on the business sector, small business or large business. It is
    kind of interesting, my businesses I have in my district go
    from either very, very large, from stamping plants all the way
    down to your mom and pop and tool and die jobs. A lot of folks
    out there I have talked to are very, very fearful about getting
    into increasing production or hiring people right now, because
    they just are very fearful of what could happen on the
    legislation right now.
        Again, as we do this and talk about this, it is folks back
    home that we talk to. But again it is highly, highly
    manufacture, again, in my district and folks are just very,
    very concerned.
        Ms. Jackson. Thank you. And I do appreciate that concern. I
    want you and them to know that that is something that I think
    certainly all of us as policymakers have to be quite sensitive
    to, the state of our economy. I certainly am. I do believe that
    to replace those manufacturing jobs, you need sectors to put
    them in. The ones that have gone, and gone overseas, when you
    ask yourself what we can be manufacturing, I think the clean
    cars of the future, clean energy, renewable energy. The
    President has talked about huge investments in nuclear power,
    and he also certainly talked about domestic energy resources.
    All of those are opportunities to replace those jobs. All of
    those are the kind of clean energy jobs that so many of us
    believe are part and parcel of this revolution.
        Mr. Latta. Let me ask, we were talking about on the
    manufacturing side, again, with the Chinese and Indians out
    there right now, because there is a lot of talk that they are
    not going to go down this path, and that is who our competitors
    are going to be. Again, the fear out there is that they will
    put us at an unfair disadvantage on the manufacturing side.
        But just coming off of the Budget Committee one of the
    things we have out there--thank you very much, Mr. Chairman, I
    yield back.
        Mr. Markey. No, I appreciate the gentleman. Thank you for
    your patience as well in waiting for the end of the hearing.
        Actually in the legislation, the Waxman-Markey bill, we
    exempt the agricultural sector from regulation, while providing
    opportunities are offset income; that is, it could be generated
    by practices engaged in by the farming community. So the
    exemption from being covered, combined with the economic
    opportunity of these new agricultural practices being adopted,
    we think makes it something that should be viewed by the
    farming community as a great opportunity.
        But we thank the gentleman for coming, and we also note
    that Ohio is now in the lead as a new solar technology
    manufacturing base for America. They have taken over the lead,
    so we are grateful for that as well.
        So we thank you, Madam Administrator. You did a marvelous
    job here with our committee today, and I think all members will
    say that they are impressed with your comprehensive knowledge
    of this subject.
        And again, I just want to restate the Supreme Court of the
    United States mandated that the EPA had to make a determination
    on this endangerment issue and that the Bush ERA sent arguably
    the most important climate e-mail of all time to the Bush White
    House, making this finding of endangerment, but that Dick
    Cheney was in denial and refused to accept the e-mail; which
    then necessitated you and the Obama administration having to go
    through that whole process again in order to make a
    determination, which we are now dealing with, but it is legally
    mandated by the Supreme Court of the United States.
        So it is I think it is helpful for us to know that, and to
    also know that on the decisions which are already made in
    conjunction with the White House, that any reversal of that
    would be objected to by the United Auto Workers and by the
    automotive manufacturers of the United States. And I think it
    is important for all of that to be out here and on the record.
        But we can't tell you how much we thank you for your
    appearance, how much we admire the work that you do, and we
    look forward to seeing you and your work here in the future.
    Thank you so much.
        Again, we apologize to the second panel. It was an
    incredibly distinguished panel. It actually should have its own
    day at 9:30 in the morning, with all the members here.
    Nonetheless, we are going to go right to it, and we know that
    members will return to participate in this hearing as well.

        STATEMENTS OF FRED SMITH, CHAIRMAN, PRESIDENT AND CHIEF
        EXECUTIVE OFFICER, FEDEX CORPORATION; JASON WOLF, VICE
       PRESIDENT FOR NORTH AMERICA BETTER PLACE; ROBERT DIAMOND,
    FORMER LIEUTENANT, U.S. NAVY, SECURITY FELLOW, TRUMAN NATIONAL
    SECURITY PROJECT; AND CHARLES DREVNA, PRESIDENT OF THE NATIONAL
                 PETROCHEMICAL AND REFINERS ASSOCIATION

        Mr. Markey. If the witnesses could take their seats we will
    begin by hearing from Mr. Fred Smith. Fred Smith is the
    Chairman, President, and CEO of Federal Express. He founded
    FedEx in 1971 and he has recently become one of our Nation's
    most important advocates for vehicle efficiency standards and
    for a national energy policy.
        Mr. Smith also serves as a member of the Electrification
    Coalition and as cochairman of the Energy Security Leadership
    Council. The Council brings together business and military
    leaders in support of a comprehensive long-term policy to
    reduce U.S. oil dependence and improve energy security.
        Mr. Smith, we are honored to have you here today and we
    welcome your testimony.

                        STATEMENT OF FRED SMITH

        Mr. Smith. Well, thank you very much, Mr. Chairman. I
    submitted testimony for the record. I am just going to make a
    few summary remarks.
        Mr. Markey. Without objection, so ordered. Your written
    testimony will be included in the record. I think you might
    have to turn on your microphone.
        Mr. Smith. Oh, sorry. Excuse me.
        As you mentioned, Mr. Chairman, I am the CEO of FedEx
    Corporation, which employs about 300,000 people in our four
    major operating units: Federal Express, FedEx Ground, FedEx
    Freight, and FedEx Office. We operate 670 airplanes, over
    70,000 vehicles. We deliver through our networks almost 8
    million shipments a day. So we have been extremely interested
    in the issue of energy consumption and energy independence. And
    as you mentioned I cochaired, with General P.X. Kelley, the
    Energy Security Leadership Council, which produced a series of
    recommendations, many of which were incorporated in the 2007
    act. And from that work came the Electrification Coalition,
    which is a group of companies which have significant interest
    in the matter of electrifying short-haul transportation in the
    United States.
        The reason that we got involved with the Electrification
    Coalition after the work that the Energy Security Leadership
    Council did is because we came to the conclusion that it was
    the most promising single area to reduce United States
    dependence on imported petroleum, and has been widely discussed
    here in this committee.
        We use about 20 million barrels of oil a day. We import now
    almost 60 percent of our oil. It was 30 percent when the first
    air embargo took place in 1973. And absent some significant
    change in our energy profile, we will continue to be subject to
    highly volatile energy prices like we experienced in the summer
    of 2008 when a barrel of oil went for $147 a barrel. And though
    it has come down today, it is still over $80 a barrel, and the
    potential for economic and national security challenges is very
    great because of that.
        We are very confident that the electrification of short-
    haul transportation, including in our industry sector, is very
    real, not the least reason of which I came over here today in a
    new FedEx Express, zero-emissions, electric-powered vehicle. It
    was made by JD of Modec, a European company which has supplied
    us 15 of these vehicles in Europe; and Navistar in Illinois;
    and the batteries are produced by A123 in Michigan. The vehicle
    has about a 100-mile range, has very low operating economics.
        The issue is simply the capital cost of the vehicle
    relative to conventional vehicles. We feel very strongly that
    the price of these batteries, contrary to some other people who
    have looked at the matter, are going to come down. And in fact
    we believe in the next 2 to 5 years, the price of these lithium
    ion batteries will be at least be halved, and significantly
    more energy production per unit of density as well.
        So we think for the industrial sector in which we operate,
    as well as personal short-haul transportation where the vast
    majority of it is conducted with less than 40 miles of
    utilization per vehicle per day, should be a national goal.
        We have laid out a series of recommendations in the report
    of the Electrification Coalition which we commend to the
    committee. It has an enormous payback for the Nation. It
    significantly reduces our need to import petroleum by millions
    of barrels per day.
        The scholarship has been verified by the University of
    Maryland, and we believe that it is a very promising area. And
    I think I will stop there, if it is acceptable to you, and
    answer questions or wait until after the other testimony.
        Mr. Markey. Thank you, sir, very much.
        [The prepared statement of Mr. Smith follows:]
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        Mr. Markey. Our next witness is Jason Wolf. He is the Vice
    President of North America, Better Place. Mr. Wolf is
    responsible for overseeing the company's electric vehicle
    efforts in California, Hawaii, Ontario, and other developing
    North American markets. We thank you, sir.
        From 1986 to 1993 he served as an officer in the Israeli
    military, a country notable for having no oil. And so,
    obviously, there is an imperative from the national security
    perspective to find a solution to that problem, and technology
    is the answer.
        So we welcome you, Mr. Wolf. Whenever you are ready, please
    begin.

                        STATEMENT OF JASON WOLF

        Mr. Wolf. Thank you. And my text says good morning, but I
    guess we ran a little late. So good afternoon, Chairman Markey,
    Ranking Member Upton and committee members, whoever is left.
        My name is Jason Wolf. As you said, I lead Better Place,
    North America.
        Mr. Markey. Mr. Wolf, you still have your C-SPAN audience,
    so do not assume that----
        Mr. Upton. Twenty-five million people.
        Mr. Wolf. No pressure.
        So Better Place is the global leader in electric vehicle
    networks and services, and our mission is to end dependence on
    oil.
        Thank you for the opportunity today to come and speak about
    how we can solve the U.S.'s dependence on oil by leading a
    global transition to electric vehicles and why it is imperative
    to do so right now.
        Two years ago our founder, Shai Agassi, was here; came
    before Congress, and described a choice for our country between
    continued reliance on a single strategically vulnerable source
    of energy that fuels, as people said to you, more than 95
    percent of our transportation and an imminently feasible
    alternative path of rapid transition to electric vehicles.
        Sadly, 2 years later, the U.S. remains paralyzed at the
    same juncture, while the rest of the world in many places are
    making tremendous progress towards electrification. For
    example, as you mentioned, Israel 2 years ago made a national
    commitment to end its commitment on oil. And since, there have
    been more charge spots installed for electric vehicles in
    Israel, a small country, as there are in the entire U.S. Over
    these 2 years.
        China plans to leap-frog the combustion engine directly to
    electric vehicles, and what we are seeing is that
    electrification is not only a solution, it is the only
    plausibly possible solution that is accepted across the board.
    But even more importantly, electrification is now globally
    inevitable.
        The question before you today is will the U.S. lead this
    inevitable transition or will we land behind China, France,
    Japan and other committees in capitalizing on this commercial
    opportunity.
        Better Place's business model really enables mass
    production of electric vehicles by removing the three key
    barriers of high cost: limited range and compromised
    convenience. As a validation of that business model--and it is
    not the only one--we have raised over $700 million in the last
    2 years from private investment. We partnered with Renault to
    deliver at least 100,000 vehicles in major markets around the
    world; and we have established operations in countries around
    the world, not only Israel, Denmark, but also Australia, the
    U.S., Canada, Japan and, recently, China and France.
        Just this last week we announced collaboration with Cherry
    Automotive, which is the largest auto independent manufacturer
    and exporter. This past Monday, we launched a taxi
    demonstration in Tokyo with switchable EVs that are working
    around the clock. What this shows us is that this inevitable
    transition to EVs means for the automotive industry that their
    future is settled. The next vehicle will be driven by
    electricity.
        So the question is no longer if, but how fast will this
    transition to EVs take, and who will lead the transition? What
    is critical to understand and what we are seeing around the
    world is that governments have made a conscious choice towards
    electrification. The primary motivations for each country
    differ, from oil independence, to automotive industry
    leadership, to integrating renewable electricity into the grid.
    But the conclusion is the same. Electrification enables all
    these benefits if done correctly at scale.
        Let's talk about how the U.S. can lead. If the U.S. was
    able to reflect the true cost of gasoline, private capital
    would no doubt flow to mass transportation solutions as were
    seen elsewhere. But we have not been able to do so as a
    country, so the only way forward is to make clear national
    commitment to electrification.
        First, set an explicit national electrification policy to
    signal the market and provide clear direction towards the
    massive option of EVs.
        Second, invest in regional EV ecosystems with the goal of
    catalyzing mass market deployments that address the three
    barriers I mentioned.
        Finally, continue to fund consumer and fleet EV purchases.
    And these should be done through the year 2015. As a country,
    we can wean ourselves off oil dependency at a fraction of the
    440 billion we export every year.
        I thank you and look forward to working with you to put the
    U.S. in the lead on what we think is an inevitable transition
    to electric vehicles.
        Mr. Markey. Thank you, Mr. Wolf, very much.
        [The prepared statement of Mr. Wolf follows:]
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        Mr. Markey. Our next witness is Mr. Robert Diamond, a
    Security Fellow at the Truman National Security Project. He is
    a former lieutenant in the United States Navy, and completed
    deployments in support of Operation Iraqi Freedom and Operation
    Enduring Freedom. We welcome you, sir.

                      STATEMENT OF ROBERT DIAMOND

        Lieutenant Diamond. Thank you, Mr. Chairman. And I
    respectfully request to submit my written testimony for the
    record.
        Mr. Markey. Without objection, so ordered.
        Lieutenant Diamond. Chairman Markey, Ranking Member Upton,
    members of the committee, I am deeply honored to have the
    opportunity to appear before this panel to discuss the
    critically important topic of promoting clean energy policies
    that will reduce America's dependence on oil and the impact
    that dependence is having on our national security.
        America's reliance on oil is our Achilles heel. I
    fundamentally believe that a comprehensive strategy, one that
    cuts our addiction to fossil fuels, boosts clean energy
    technology, and moves our Nation dramatically towards energy
    independence is vital to our national security, the safety of
    our men and women in uniform, and to the fight against
    terrorism. The bottom line is this: We must put America in
    control of the energy future.
        I make these arguments before you today as a fellow
    citizen, deeply concerned about ensuring the future prosperity
    and security our country.
        I am a Security Fellow with the Truman National Security
    Project and have been deeply engaged in the debate about our
    energy security. And I am a veteran in the United States
    military, having served as an officer in the Navy for 7 years.
        In 2004, I deployed to the northern Arabian Gulf. My ship,
    a guided missile destroyer, was assigned a mission of defending
    two Iraqi oil terminals just off the southern coast of that
    country. These two terminals are the economic crown jewels of
    that country, with 90-plus percent of Iraq's oil flowing
    through them onto supertankers to take that oil to the global
    market.
        It was no secret that these terminals would be prime
    targets for an insurgent attack. In April 2004, the attack came
    in the form of the wave of two suicide boats. We lost two U.S.
    Navy sailors and one U.S. Coastguardsman, as well as four other
    service members who sustained serious injuries. The oil
    terminals, however, were safely defended.
        I tell this story because it speaks directly to why we are
    here today. At the very core of my wartime deployment was an
    energy security mission. Brave sailors and coastguardsmen gave
    their lives defending a global oil infrastructure half a world
    away. My experience is just a recent chapter in the U.S.
    Military's decade-long role of defending our global oil
    supplies, and I am not alone in feeling this way.
        Over the course of the last year, I have been part of a
    national coalition of hundreds of veterans, called Operation
    Free. These veterans have criss-crossed the country by
    biodiesel powered bus, over 25,000 miles, with one simple
    message: Secure America with clean energy.
        Retired Vice Admiral Dennis McGinn captured the national
    security dangers of our addiction to oil in testimony he gave
    before the Senate last year. He said in 2008 we sent $386
    billion overseas for oil, much of it going to nations that wish
    us harm.
        This is an unprecedented and unsustainable transfer of
    wealth to other nations. It puts us in the untenable position
    of funding both sides of the conflict and directly undermines
    our fight against terror.
        Former CIA director Jim Woolsey explains it this way:
    Except for our own Civil War, this is the only war that we have
    fought where we are paying for both sides. We pay Saudi Arabia
    $160 billion a year for its oil, and 3- to 4 billion of that
    goes to Wahabbis who teach their children to hate. We are
    paying for these terrorists with our SUVs.
        A Truman project colleague of mine conducted an analysis
    which concluded that for every $5 rise in price of crude oil,
    Putin's Russia receives more than $18 billion annually;
    Ahmadinejad, Iran, an additional $7.9 billion annually; and
    Chavez's Venezuela an additional $4.7 billion annually.
        This is clearly not in our national interest. No one is
    more acutely aware of this problem than the Department of
    Defense, and they were actually leading the efforts on breaking
    our dependency on oil. DOD is the largest energy consumer in
    the Nation, and our Nation is the largest energy consumer in
    the world.
        For example, the Navy has set ambitious goals for shifting
    the fleet to renewable energy sources. Just last week on Earth
    Day, the Navy successfully conducted the first flight test of
    the Green Hornet, an SA-18 Super Hornet fighter jet that is
    still using a 50/50 blend of conventional fuel and biofuels.
    This test was the first step in achieving Secretary Mabus's
    goal of sailing by 2012 the Great Green Fleet, a carrier battle
    group entirely powered by sustainable renewable fuel sources,
    including nuclear power. But that is just the military.
        When it comes to the rest of our Nation, frankly we are
    simply not doing enough. Congress must act. Without legislation
    from Congress too many sectors of our economy and our country
    will continue to stagger along, using the dirty fuels of our
    past. This is not a problem that can wait for future
    generations to solve. It is imperative that you, our elected
    officials, solve this problem now and enact comprehensive clean
    energy legislation that will put American power back to work.
        Part of that solution also involves making sure that our
    regulatory agencies like EPA continue to have the tools and
    authority necessary to drive this transition to a clean energy
    economy. It makes no sense to me to deny these agencies the
    robust regulatory authority they need. Doing so is the
    equivalent of pulling your troops off the battlefield before
    the reinforcements arrive; in other words, it is surrendering
    the fight.
        I close with this simple request: Help us build a new clean
    energy economy. It will make our country more prosperous, it
    will help make us more secure, and, once and for all, put
    America back in control of the energy future. Thank you, Mr.
    Chairman.
        Mr. Markey. Thank you.
        [The prepared statement of Mr. Diamond follows:]
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        Mr. Markey. Our final witness is Mr. Charles Drevna, the
    President of the National Petrochemical and Refiners
    Association. He has served as its president since 2007. We
    welcome you, sir.

                     STATEMENT OF CHARLES T. DREVNA

        Mr. Drevna. Good afternoon, Chairman Markey, Ranking Member
    Upton, and the rest of the committee. I really appreciate the
    opportunity to be here to testify on such critical issues.
    While the title of this hearing is ``Clean Energy Policies that
    Reduce our Dependence on Oil,'' I respectfully suggest that you
    focus on affordable and economically sensible clean energy
    policies.
        Such policies should favor getting more energy of all types
    from the United States and from reliable sources abroad. With
    the level playing field, the best, most efficient, and most
    effective forms in energy will triumph in the marketplace. That
    means the form of energy that delivers the BTU at the lowest
    economic cost will win.
        Most economists believe that oil and oil-based products
    provide the winning form of energy for many of our needs today,
    particularly for transportation. We and the rest of the globe
    will continue to rely on petroleum-based transportation for
    much of this century.
        We rely on petrochemicals that are the vital ingredients in
    thousands of products today and far into the future. Some
    people believe we can end our reliance on oil by simply saying
    that is what we want to do. They embrace our energy sources
    like starry-eyed lovers seeing perfection and ignoring the
    flaws. Unfortunately, there is no miracle source of energy that
    is clean, affordable, and abundant with no downside. If such a
    source existed, our Nation would have embraced it long ago and
    we would all be using it today.
        Those who say the United States must show leadership on
    climate change and related issues are absolutely correct. But
    we have to lead intelligently to find the way of a bright and
    prosperous energy and economic future. Leading recklessly in
    the wrong direction, based on homes and dreams rather than
    reality, is a plan for failure. We don't want to make a
    headlong rush into disaster modeled after Pickett's Charge.
        America is the land of ideas and freedom and has long been
    the world's leader in innovation. The government has oftentimes
    served as a catalyst to stimulate new inventions and new
    processes. But government leaders have been wise enough to step
    aside to give private sector entrepreneurs the freedom to
    transform these good ideas into reality. When governments have
    tried to pick economic winners by handing out ill-advised and
    usually expensive subsidies funded by taxpayers, the kind of
    subsidies some forms of energy depend upon today, the cost has
    far outweighed the benefits to their citizens.
        Thomas Edison literally electrified the world because of
    the tremendous benefit his light bulbs brought, not because he
    got funding on a tax on oil lamps, candles, or fireplaces.
    Alexander Graham Bell succeeded because his telephone
    revolutionized communications, not because government gave him
    cash generated by a stamp tax or tax on telegrams. And
    companies and the Internet have been able to transform our
    lives without relying on government subsidies paid for by taxes
    on telephones, typewriters, pens or other printed publications
        NPRA members embrace a future where the best ideas and the
    best products triumph in a free and fair competition and they
    embrace change. They are not against green jobs. They want to
    continue to provide jobs that are well-paying, long-lasting,
    and strengthen our Nation's economy.
        The operators of refineries and petrochemical plants want
    to keep their U.S. manufacturing operations and manufacturing
    by others in our country strong and thriving. In addition, we
    recognize a global climate change must be addressed globally.
    If the Environmental Protection Agency tries to regulate
    greenhouse gases in our Nation through the Clean Air Act, it
    risks inflicting a crippling blow to our economy. Many American
    manufacturers will take your jobs and move to foreign nations
    to escape carbon limits that limit their growth, their
    productivity, and their profitability. Those foreign
    facilities, many with emission controls far less stringent than
    ours, will generate greenhouse gases that go into the
    atmosphere shared by every Nation on Earth. The end result: No
    reduction in global carbon emissions and all gain, no pain, for
    the American people.
        For the refining and petrochemical industries, the question
    that Congress must now ask itself: Do we want gasoline, diesel
    fuel, and plastics and other products to continue being
    manufactured in the United States, or do we want this
    manufacturing outsourced so that we increase reliance on
    foreign sources of supply.
        I don't believe Congress wants to overtax and overregulate
    the domestic refining and petrochemical industry, or any other
    industry, into extinction. But overzealous policies could lead
    to disastrous effects and become a self-inflicted wound as our
    country tries to struggle to climb out of this recession. That
    would be an American tragedy that I ask you help avert.
        Thank you for allowing me the opportunity to testify today,
    and I look forward to any questions that you may have.
        Mr. Markey. OK, the gentleman's time has expired.
        [The prepared statement of Mr. Drevna follows:]
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        Mr. Markey. The chair now recognizes the gentleman from
    Washington State, Mr. Inslee.
        Mr. Inslee. Thank you, Mr. Drevna. What I want is the
    electric cars to be built here and not just in China. I am
    overjoyed to see the opening of the first manufacturing plant
    of lithium ion batteries in Holland, Michigan, which is going
    to open with Johnson Controls this fall, due to the Federal
    policy that we adopted in the stimulus bill this February.
        I am also overjoyed to tell you that on Earth Day, the 40th
    anniversary, I got to drive the first production model of the
    Chevrolet Volt which we manufactured in America. It is a plug-
    in car. You plug it in, you go 40 miles on total electricity,
    which would cover 60 percent of all our trips on an average
    American day.
        The Ford Focus under Alan Mulally's leadership is coming
    out in a while. Having driven that car, tremendous
    acceleration. If you want to drive a rocket, drive the Tesla.
    And if you want a car that is on the market right now, the
    Renault Leaf. There are great things happening. We just have to
    make sure it happens here and not in China.
        Mr. Wolf and Mr. Smith, I want to ask you about sort of
    what you see as the slope of technology and cost associated
    with electric drivetrains. We know every technology has a path
    it goes on where we get better technology and decreasing costs.
    And I would just like to address what you foresee in electric
    drivetrains in the next couple of decades as far as costs. Mr.
    Wolf--you guys decide who starts.
        Mr. Wolf. I will start, actually. Mr. Smith mentioned one
    thing in his remarks about the cost of the batteries. The cost
    of the battery in the electric vehicle is the most expensive
    component, 30 percent; 50 to 60 percent in the higher, bigger
    truck-type deployment. But what we are seeing today is, if a
    year ago or 2 years ago people were talking about $1,000 per
    kilowatt hour--that is how they measured the density of the
    energy--those prices are already, 2 or 3 years later, in half.
    And the projection by DOE, not ourselves, is to $350 and below.
        Mr. Inslee. Mr. Smith, you are a hard-headed businessman.
    What do you think of those projections?
        Mr. Smith. We concur. The vehicle that I drove over here
    today, and which is all electric, as I mentioned built, by
    Navistar with the 123 battery, about 70 percent--is that
    right--about 70 percent of the cost is the battery. It is a
    very sturdy industrialized vehicle so there is no issue with
    the vehicle. We have been operating similar vehicles in Europe
    for a couple of years.
        We also operate 300 hybrids which we develop. It is just
    simply a cost of the batteries, and our guess is that in the
    next 2 to 5 years the cost of the batteries will come down,
    just as Mr. Wolf said. And at that point in time, that vehicle
    will be very cost-effective on a straight ROI basis. In other
    words, you will be able to afford it without any other
    incentive other than the fact that the reduction in fossil fuel
    consumption and the low maintenance cost of the vehicle will
    drive you to buy it.
        Mr. Inslee. Thank you for your leadership. Mr. Drevna, I
    wondered if you could put up the picture of the Terrapods
    again. I appreciate it.
        I want to ask an issue of Mr. Drevna about ocean
    acidification. Mr. Drevna, you represent the National
    Petrochemical and Refiners Association. There are a lot of
    great people who work in your organization; hardworking,
    diligent Americans. We respect their work.
        But I want to ask you about the consequences of our burning
    of oil, for our oceans specifically. The scientific community
    that I am talking to are telling me that when you burn oil,
    carbon dioxide goes out of your tailpipe; it goes into the
    atmosphere and into the oceans and into solution in the oceans.
    And when it goes into solution in the oceans it makes acid. And
    the scientific community that I have talked to said it is
    scientifically, absolutely clear, with zero doubt, that our
    oceans are 30 percent more acidic than they were before we
    started to burn fossil fuels, and that there is a likelihood of
    disruption in certain critters of the sea that could be very,
    very significant.
        We had a picture I showed earlier of what happens when you
    expose the very base of the food chain. It melts, because the
    waters are becoming so acidic by the year 2100. I guess the
    question is: Does your industry recognize ocean acidification
    as a problem, and do you agree that the science is clear in
    this regard that carbon dioxide does acidify the ocean, and it
    comes in part from your industry?
        Mr. Drevna. Mr. Inslee, I am not a climate scientist and
    never portrayed myself as one. What I am discussing today is
    what we have to do in, I believe, a systematic approach on
    energy policy. I think the question has to be asked. And I
    could maybe categorically state if this were a Lower 48 climate
    problem, perhaps some of these things that we are talking about
    today would be beneficial. It is a global--my understanding is
    it is global climate.
        My understanding also is that in EIA projections between
    now and the next 4, 5, 6 decades, the globe is going to
    continue to be dependent upon fossil fuels, including
    petroleum, to a great extent. Our position is, let's look at
    what makes economic sense for the country.
        I have described our energy policy here in the United
    States as a children's soccer team. We look at the energy
    source de jour, and we all gather around that. And 5 or 6 years
    ago, it was hydrogen; then it was ethanol.
        Hey, the electric vehicle, all these things have benefits;
    but let's do it in a systemic, economically viable way and not
    rush to get ourselves off on something the rest of the world is
    going to do, to our economic detriment.
        Mr. Inslee. Thank you. If you hear anything different than
    all the best of the world scientists, let me know because I
    think we have got a problem. Thanks.
        Mr. Markey. The gentleman's time has expired.
        The chair recognizes the gentleman from Michigan, Mr.
    Upton.
        Mr. Upton. Thank you. Mr. Smith welcome, nice to see you
    again. I am cochair of the Auto Caucus, second largest caucus,
    a bipartisan caucus, and I am a very strong supporter of
    electric hybrids. And for me--I stepped out briefly to talk to
    the president of Western Michigan University. He was in town,
    really on this issue to a degree, but one of the things that I
    have seen Western Michigan University do is they have begun to
    transform their utility fleet in fact to electric vehicles.
    They have their own power plant in Kalamazoo, they charge them
    up at night. They are perfectly quiet. I think they operate, as
    I recall, at about 2 cents a mile versus the old costs.
    Obviously they are perfectly quiet; they are able to do all of
    the activities within the campus, and it is a sizable campus.
    And the cost for these new vehicles was almost the same--
    meaning the initial cost, purchase price--as the older vehicles
    that they replaced.
        I am also very fortunate to have Eaton in my district, a
    very large truck engineering firm in Galesburgh, Michigan, just
    outside of Kalamazoo. I have gone to see their electric hybrids
    and what they want to do with the utilities, so you don't have
    to have the vehicle with the arm up as they are fixing the
    wires--or whatever it is that they are doing--running on that
    diesel all the time. It has got the hybrids and it is
    significant savings, but the cost is higher per vehicle.
        Mr. Smith, you have indicated about, what, 15 vehicles,
    electric hybrids, that are now within your operation?
        Mr. Smith. We have 15 all-electric, but----
        Mr. Upton. I know you have a zillion vehicles.
        Mr. Smith. We do have over 70,000 in our operation. But I
    am not sure you are aware of this; that the hybrid that you
    mentioned in Eaton was developed in partnership with FedEx.
        Mr. Upton. I have seen them.
        Mr. Smith. We have about 300 of those in service. We have
    one of our express pick-up and delivery locations in the New
    York City area which is completely hybrid. They are very----
        Mr. Upton. The range is 100 miles; is that right?
        Mr. Smith. The all-electric is a hundred miles. The hybrid
    electric is the same as the conventional powered vehicle. We
    get about 40 or 50 miles on the electrical charge, and then you
    use the conventional engine. The problem with the hybrid that
    we are just discussing is the capital costs, because you in
    essence have two power plants reciprocating. I mean, internal
    combustion and electric make the capital cost very difficult to
    overcome unless the price of diesel is up in the $5-1/2 area.
        The all electric, on the other hand, which would be
    obviously shorter range, the one I came over in here today, has
    about a 100-mile range. But presumably if the battery cost
    performance goes down on a curve, Mr. Wolf and I think that
    it--I should say, in my case, our experts think; he probably
    has real knowledge. I am just telling you what our people
    think. Then in about someplace between 2 to 4 years, the all-
    electric pick-up and delivery vehicle, utilized in an
    environment where its range is not an issue to us, would have a
    positive return on investment and be competitive pricewise when
    you take operating and capital costs. So the hybrid, like the
    Eaton FedEx truck, has a capital cost barrier that is hard to
    reach.
        Now, there is a third iteration, of course, which is the
    approach that Chevrolet has taken with the Volt. There you have
    the electric power as the primary engine, and you have a small
    internal combustion engine you use as a generator. I personally
    think that has an enormous amount of promise. And some
    combination of all-electrics and the Chevy Volt approach----
        Mr. Upton. They actually think the Volt will be a good
    number of them. Because of the range, it will never use an
    ounce of gasoline, and it will always be on the electricity
    because it uses the backup----
        Mr. Smith. Right.
        Mr. Upton. The question I wanted to get to, even with the
    Volt, 50,000 vehicles will be sold this year, particularly on
    the east and west coast and here Washington as well. They still
    predict that by the end of this decade, they are not going to--
    with all the electric hybrids--not be able to penetrate more
    than a 15 or 20 percent market share. And so we will still rely
    significantly then on the petroleum-based vehicle. So it is
    going to take some time to get where maybe a lot of us want to
    go.
        Last question, Mr. Drevna, and then I am out of time. We
    had this testimony last year from Lion Oil, that if the clean
    air bill goes through, 1,200 jobs that are going to be moving
    out to a new refinery in India. We all care about the planet,
    we all do. What is the cost of the regulation per unit of fuel
    in this country versus someplace else that won't have these
    regulations, that one of those jobs might go? Do you know?
        Mr. Drevna. I could hope to get that back to you in
    writing. I don't have that with me today. I can tell you,
    though, that the market is won and lost on pennies, and just
    driving up the cost of domestic production, given the state
    that the domestic refinery and petrochemical industries
    economic state we find ourselves in today, and for the
    foreseeable future, that it is no secret that India, with their
    plant in Reliance, are looking at the United States to export
    vast quantities of fuel at the domestic refiner's expense.
        Mr. Markey. The gentleman's time has expired. The gentleman
    from Vermont, Mr. Welsh.
        Mr. Welsh. Thank you very much, Mr. Chairman. A few
    questions, Mr. Drevna. I am sorry I wasn't here for your
    testimony, but had a chance to review it. I want to make sure I
    understand it.
        You did testify that the best energy policy is one that
    creates a level playing field; is that more or less right?
        Mr. Drevna. Absolutely, sir.
        Mr. Welsh. It allows the most cost-competitive form of
    energy to win out.
        Mr. Drevna. Correct.
        Mr. Welsh. Page 5 in your testimony stated: NPRA members
    paid billions of dollars in taxes rather than consume billions
    of taxpayers subsidies. Correct?
        Mr. Drevna. That is correct, sir.
        Mr. Welsh. So here is a question that I think a lot of us
    struggle with. I want to ask if NPRA would support the removing
    of several subsidies in the Tax Code which some folks think
    would provide a level playing field.
        Let me go through these. My understanding is that section
    199 of the domestic production incentive provides a tax rate
    reduction on refinery income; and that subsidy is, according to
    CBO, expected to cost taxpayers about 14.8 billion for 10 years
    for the oil and gas industry. Would your association support
    repeal of that tax subsidy as it applies to energy companies?
        Mr. Drevna. Absolutely not, sir. And let me tell you, if
    you recall the genesis of the section 199 credit, there was
    going to be a WTO charge against the United States on the
    subsidizing unfairly domestic manufacturing, of which refining
    is, all manufacturers, whether you are producing gasoline or
    loaves of bread. So in the Jobs Act----
        Mr. Welsh. Let me interrupt you, and welcome back. I just
    want to go down some of these. What I understand you saying is
    you think there is a reason----
        Mr. Drevna. There is a very valid reason.
        Mr. Welsh. So you oppose repeal?
        Mr. Drevna. Yes.
        Mr. Welsh. The Tax code, as you know, includes a bonus
    depreciation provision for oil refineries, and it allows
    refiners to immediately write off 50 percent of the capital
    cost of certain refinery expansions. That is the benefit that
    the CBO estimates will cost taxpayers 3.5 billion over the next
    5 years. Would your association support repeal of that energy
    tax subsidy?
        Mr. Drevna. No, sir. And the history of that was the EPAC
    05, in the negotiations in this very room on the best path
    forward to continue to provide domestic----
        Mr. Welsh. So you not only oppose repeal but you defend
    extension?
        Mr. Drevna. Yes, sir.
        Mr. Welsh. Finally, I understand that until recently a tax
    credit was available for complying with EPA's low-sulfur diesel
    requirements, and an extension of this credit is included in a
    pending Senate tax extenders bill, which I am sure you are
    aware of. That is estimated to be a $20 million cost to the
    taxpayers. Does your association oppose the extension of this
    energy tax subsidy.
        Mr. Drevna. Oppose the extension? No, sir.
        Mr. Welsh. So you like that one, too?
        Mr. Drevna. Again, sir, in a vacuum you look at each one of
    these things and say, what are they? But when you look at the
    history of them----
        Mr. Welsh. Well, I get it; you are here doing your job and
    you have a case to make for why these tax subsidies should be
    extended to your industry. And you are representing the
    refiners, and it is your job to help them look out for their
    viability and bottom line.
        Obviously, we in Congress, both sides of the aisle, have a
    broader set of concerns. The energy policies have to factor in
    the things you raise--national security, environmental
    protection and consumer protection. So what is one person's
    subsidy is a competitor's disadvantage.
        So the question that I think is begging is whether there is
    a level playing field when there are taxpayer subsidies that
    apply to one form of energy but are denied to another form of
    energy.
        Mr. Chairman, I yield back.
        Mr. Markey. The gentleman's time has expired. The chair
    recognizes the gentleman from Texas, Mr. Burgess.
        Mr. Burgess. Thank you. Mr. Smith, if I understood the
    figures you gave us a few minutes ago correctly, you have
    70,000 vehicles in your overall fleet and, of that, 300
    hybrids; is that correct?
        Mr. Smith. [Nonverbal response.]
        Mr. Burgess. Peterbilt Company in Denton, Texas makes a
    great hybrid. I would encourage you to look at that. They get
    great mileage, and they are quiet, and low-emission vehicles,
    which is critical in our part of the world, because we do have
    some air quality issues. Did you give us a figure on the number
    of total electric vehicles you currently have in your fleet?
        Mr. Smith. We have, I think, 15 in Europe that we are
    running experiments on in prototype, and we have four that we
    just put out in Los Angeles which we will be running the
    experiments on. Again, they are definitely not cost-effective
    from a capital standpoint at this point.
        Mr. Burgess. Out of curiosity, what is the cost currently
    of an all-electric vehicle for your purposes?
        Mr. Smith. I think we have a non-disclosure with the
    manufacturer, but let me put it this way. If you take an
    equivalent size van, which is roughly a Freightliner or
    Sprinter, and you take the all-electric vehicle, it is about 2-
    1/2 times the capital cost; but 70 percent, perhaps more, of
    all-electric is the battery cost. So if it comes down the price
    performance curve that we projected, you get out about 4 or 5
    years and you have a positive return from the all-electric.
        Mr. Burgess. Sure. The cost of chassis and the frame is not
    going to be any different.
        Mr. Smith. No, it is not any different.
        Mr. Burgess. And with electric vehicles, ultimately, at
    least in my part of the world, you are charging that with
    electricity; but the electricity is not a gift, it is generated
    by burning natural gas and coal in most Texas power plants.
        We have one nuclear plant in Comanche Peak which I
    understand is going to be expanded, and I am grateful for that.
    But we have lost 25 or 30 years of nuclear technology by taking
    ourselves out of that. And it would seem to me that a power
    grid, supplied by a nuclear plant which was providing the
    baseload, really would be--if we were talking about a carbon-
    neutral environment and a fleet that is of electric vehicles
    for the type of deliveries that you do, that would be the
    almost ideal situation, would it not?
        Mr. Smith. Well, in the Energy Security Leadership Council
    report that I referenced, we strongly endorse nuclear power.
    And you are completely correct that that would be a zero-
    emissions production of power and a zero-emissions from the
    vehicle that was powered by the nuclear power plant.
        But it is also important, which is in the Electrification
    Coalition's report that I mentioned, we have the capability in
    this country to power many, many millions of electric and
    hybrid electric vehicles with the off-peak power production
    that we already produce with the coal plants or natural gas
    plants or what have you. And the reason for that is that the
    power can't be stored during the night, so it is just a matter
    of relatively. And I don't mean to minimize the complexity of
    it. But it is relatively easy to modify the infrastructure and
    the charging stations at the homes or the apartment to do it.
        Mr. Burgess. Let me move on quickly now. Have you looked at
    those in your business--have you looked at the use of natural
    gas for your heavy vehicles, your cross-country vehicles?
        Mr. Smith. We have. And our belief is that the best use of
    natural gas is for heavy, centrally fueled vehicles, like
    garbage trucks, buses, and so forth, or for the generation of
    electric power. Long-haul truck transportation, whether it is
    fine products or Peterbilt or Freightliner or so forth, are
    probably better served, in our opinion, by the advanced diesel
    technologies because of the infrastructure problems.
        Mr. Burgess. But of course the infrastructure problem is
    something that, regardless of the fuel of the future and
    recognizing that hydrocarbons are going to be the transitional
    fuel for a while, but the fuel of the future is going to
    require an infrastructure investment. And whether we call it
    investment or subsidy, it is going to be required.
        But I do agree that we, in Congress, really should not try
    to pick winners and losers. That ultimately should be decisions
    based, just as you are doing it right now, based upon what is
    economically viable for your company. It is hard enough to make
    a living today without us complicating it for you.
        If I could just ask you one quick question. And we
    understand the problem with climate change is a global problem.
    And I certainly appreciate your service and appreciate the
    wisdom that you have brought for us today.
        When I visited with the Iraqi oil minister, I believe his
    name is Dr. Shahirstani, he is a Harvard-educated petroleum
    engineer, he assured me that none of Iraq's oil was going to
    be--was involved--there were no Chinese contracts involved with
    Iraqoil. And yet I hear from individuals like yourself coming
    back that the Chinese were all over Basra in 2005, 2006,
    looking to tie up oil contracts.
        Do you have any insight for us as to what is going on
    there?
        Lieutenant Diamond. I don't have any firsthand knowledge of
    Chinese presence on the ground in my time in the country, sir.
        Mr. Burgess. And, again, I appreciate the problem. We want
    to produce American energy for a security standpoint. But on a
    global standpoint, from the carbon production and the
    pollution, we do have to be mindful of what is happening in
    those other countries.
        Lieutenant Diamond. Absolutely. You see a Chinese Navy now
    that is looking to make a global presence and building itself
    aircraft carriers and submarines that are defending their own
    energy, free flow of energy around the world. Yes, sir.
        Mr. Burgess. Thank you, Mr. Chairman. I yield back.
        Mr. Markey. Great. The gentleman's time has expired. The
    chair recognizes himself for a round of questions.
        Let me ask you this, Mr. Smith. And I think it is important
    for us to say because the gentleman from Texas and the
    gentleman from Louisiana who are here obviously want to protect
    the oil industry and Texas and Louisiana. We don't have any
    problem with the 8 million barrels of oil a day that are
    produced here in the United States. Do we?
        Mr. Smith. No, Mr. Chairman. In the Energy Security
    Leadership Council report, which we produced--and, remember,
    there were 10 four-star generals and admirals who had spent a
    great percentage of their careers protecting the oil trade, as
    the Lieutenant exemplifies in more recent times, and the
    businesses were large energy consumers like us and Southwest
    Airlines, Royal Caribbean. The basis of the recommendations we
    made were, number one, maximize U.S. domestic production of oil
    and gas for sure. So it is definitely not in conflict with that
    at all.
        Mr. Markey. You support President Obama's decision to begin
    to open up additional parts of the Outer Continental Shelf?
        Mr. Smith. Absolutely.
        Mr. Markey. So your problem is with the OPEC oil.
        Mr. Smith. Our problem is that the oil market is not a free
    market. It is managed by OPEC in a manner which, if it were
    done in the United States, would be illegal with supplies
    withheld and the market price--with their attempt to set the
    market price. The problem is it then becomes a social
    geopolitical weapon or an issue between us and China. And, by
    the way, we have huge operations in China. Been there 25 years,
    fly many 777 flights there every day.
        So this oil problem for the first time is different,
    because it is being driven by demand increase and not just by
    supplies being withheld. And those are the seeds of a future
    confrontation among the nations of the world and why we need to
    minimize the importation of petroleum and fossil fuels in this
    country from potentially unfriendly regimes.
        Mr. Markey. So could you talk a little bit as a result
    about the economic impact on the United States of having the
    price of oil set overseas in terms of its equivalence from
    being attacks on individual Americans. Because I think that is
    an important translation for the American people to hear. They
    are economically impacted by having this price of oil set
    overseas.
        Mr. Smith. Well, the costs are incredible, really. The
    Department of Energy did a study, and the estimate in real
    dollars between 1970 and 2008 of our dependence on foreign
    petroleum was over $5 trillion. In 2008, when the price of oil
    ran up to $147 per barrel in the summer, the price that year
    was about $600 billion total to our economy, and it was $388
    billion in terms of adverse balance of trade and it was about
    56 percent of our total trade deficit. It was enormous.
        Mr. Markey. So this oil that we import--again, and this is
    just for the members from Louisiana or Texas or other oil
    producing States. We are not talking about that oil. None of
    this discussion is about Louisiana or about Texas. It is about
    Saudi Arabia, it is about other countries that we import the
    oil from. That is the strategy that we are trying to construct
    that deals with that issue. So we are not in any way trying to
    deal with this domestic industry.
        So talk a little bit, if you could, about what that balance
    of payments issue means in terms of the American economy as
    well. What is the economic impact on our country?
        Mr. Smith. Well, in the summer of 2008--people forget this,
    at their peril--while the great financial meltdown was because
    of the subprime mortgage situation, and that was the bonfire
    that almost consumed us, the match that lit it off was the run-
    up in fuel prices, where the subprime borrowers of these
    mortgages literally had to make the choice between making the
    mortgage payment or paying for the gas to go to and from work.
        It is also important to recognize that each of the four
    other major recessions that the United States has experienced
    from 1973 forward was precipitated by a significant run-up in
    oil prices.
        Mr. Markey. And you believe that the recession that we are
    still in was precipitated by that run-up to $147 a barrel?
        Mr. Smith. No question that that was, as I said, the match
    that lit off the financial meltdown in the summer of 2008.
        Mr. Markey. And, again, that didn't have anything to do
    with Louisiana or Texas or Arkansas' oil production. That had
    to do with what was going on overseas that put us at the mercy
    of OPEC.
        Mr. Smith. No question.
        Mr. Markey. So I just think that is important going
    forward, that we continually divide this question between the 8
    million barrels of oil that we produce here and the 11 or 12
    million barrels of oils a day that we import, again, as
    Lieutenant Diamond said, from places that we probably should
    not be importing them from.
        Lieutenant Diamond, would you care to comment?
        Lieutenant Diamond. Just a fact, Mr. Chairman, when you
    talk about cost, for every $5 increase in the price of a barrel
    of oil, that costs the Department of Defense $1.7 billion. That
    is larger than the procurement budget of the United States
    Marine Corps. So when you talk about the scope of price impact
    on the Department of Defense, it is tremendous.
        Mr. Markey. So repeat that again. And that goes right down
    to the American taxpayers.
        Lieutenant Diamond. Exactly.
        Mr. Markey. So explain that a little bit more.
        Lieutenant Diamond. So for every $5 increase in the price
    of a barrel of oil, that costs the Department of Defense an
    additional $1.7 billion in energy costs. That is more money
    just spent on energy costs than we actually are spending on
    procuring equipment and bullets and tanks for the Marine Corps.
        Mr. Markey. So that comes right out of our defense budget?
        Lieutenant Diamond. Right out of our troops' pockets, is
    what I am trying to say, sir.
        Mr. Markey. So that is terrible. So there is no question
    that we need a plan that we put in place to have a different
    pathway for our consumption of oil from a national security
    perspective.
        And, Mr. Wolf, Israel has made that decision: They do not
    want to import oil.
        Mr. Wolf. Israel has made the decision that, by 2020, to be
    oil independent, which doesn't mean that their local
    production, which someone said is zero, they have some
    production. It doesn't mean that they are going to stop
    producing locally.
        And one point to just clarify the linkage between economics
    and oil, in the last 12 months we have seen the most nascence
    of economic recoveries, and the price of oil has recovered 70
    percent in the last 12 months. So we have to see that linkage
    and ask ourselves, what is the size of the next stimulus that
    we have to put if we reach those heights that we did in 2008.
        Mr. Markey. My time has expired. Let me turn and recognize
    the gentleman from Louisiana, Mr. Scalise.
        Mr. Scalise. Thank you, Mr. Chairman. I am glad we are
    talking about this issue, because in fact many of the policies
    that are being proposed by this administration that are
    threatening America's energy security. And when we talk about
    wanting to reduce our dependence on foreign oil, and especially
    Middle Eastern oil, I strongly agree with that. The problem is,
    many of these policies, like cap-and-trade, this energy tax,
    like the removal of tax incentives to explore in America, are
    going to make us more dependent on foreign oil. And so some of
    the same people who keep saying, because it sounds good to
    them, I guess, that they want to reduce our dependence on
    foreign oil, are proposing policies that would make us more
    dependent on foreign oil. And so we have got to be clear about
    how the policies adversely affect our energy security. And we
    are seeing some of those things play out right now.
        And I want to ask Mr. Drevna, when we talk about this EPA
    finding--and we had EPA Administrator Jackson here earlier
    today--as they try to regulate greenhouse gases, what kind of
    impact does that have on American energy exploration?
        Mr. Drevna. Well, I can talk about what impact it will have
    on American domestic refinery production. What the--and the
    tailoring rule will do is naturally it will exempt for a while
    a lot of sources, and it will focus on larger sources. And we
    can debate whether that is legal or not and whether it is
    congressional intent or whatever.
        However, just to simply have a greenhouse gas
    CO2 requirement will automatically--on these
    resources and refineries and petrochemical facilities, it will
    automatically make you go through a PSD review. Now, PSDs are
    going to say, well, whatever you increase, whatever it is above
    that threshold, you have got to put the best available control
    technology on. Well, in a refinery or petrochemical facility,
    what is best available control technology for CO2?
        At the same time, where we are making cleaner and cleaner
    fuels that require more and more robust kinds of processes,
    hydro-treaters, that actually increase CO2.
        So we are caught in this vicious circle that says, OK, we
    are going to put back on a refinery that doesn't exist--that
    the back doesn't exist. But you are going to have to increase
    your CO2 emissions because we want you to make
    cleaner and cleaner fuels. There is only one way of doing it,
    and you are going to have to reduce production. And the
    question----
        Mr. Scalise. And if we reduce production, where would that
    go?
        Mr. Drevna. Well, it is going to go overseas.
        Mr. Scalise. What countries would be primarily the
    beneficiaries of a cap-and-trade energy tax?
        Mr. Drevna. As I said before, India and that Reliance
    Refinery there is a massive, massive facility with a target on
    the United States.
        Mr. Scalise. And so, in walking all the way through this,
    as countries like China and India take more of our jobs from
    these reckless policies, what are the environmental regulations
    that a country like India has on refining? Would they be
    refining with these same kind of emission standards?
        Mr. Drevna. Not when it comes to CO2 or not when
    it comes to the other myriad of environmental rules that we
    have here.
        Now, I am not saying that these plants aren't efficient and
    clean. But they don't have the myriad of rules that we do. And
    this is a good hearing to talk about this, because we are
    talking about reducing our reliance on foreign oil, but a lot
    of these policies are going to increase our reliance on foreign
    imported products, finished product, not crude oil, but the
    gasoline and the components that make up gasoline.
        Mr. Scalise. And the irony is the jobs that would go to
    those countries, I mean, we have seen numbers. National
    Association of Manufacturers says cap-and-trade energy tax or
    similarly some kind of EPA ruling would cost millions of jobs
    just in the first year that would leave our country. But the
    irony is, for the folks who say they want to go and reduce
    greenhouse gas emissions because that is destroying the planet
    with global warming, you would have increased greenhouse gas
    emissions, because when China gets those jobs, when India gets
    that refinery, they are actually going to be emitting more
    greenhouse gases than if that was done here in the United
    States.
        So we lose jobs and we lose billions of dollars in our
    economy, surely at a time when we want to be doing the
    opposite; we should be creating jobs. But what is worse is we
    have an increase in greenhouse gas emissions. So the folks that
    are running around saying manis destroying the earth, we need
    to have cap-and-trade, what they are going to do in effect is
    increase greenhouse gas emissions through their policies.
        And I know you have talked about it. We have other
    companies and industries that have come and laid it out, and we
    are seeing it. We are seeing companies already pull back and
    start moving operations overseas.
        In south Louisiana there is a steel plant that is going to
    go one of two places, they are going to go in south Louisiana
    or they are going to go to Brazil. And the irony is, in Brazil
    they would get over 700 good high-paying jobs that we otherwise
    would have had, $2 billion, with a B, $2 billion of private
    investment, not government bailouts, private investments. And
    it takes four times the amount of carbon--four times the amount
    of carbon--to produce steel in Brazil than it would in the
    United States under our current rules. And so you would
    actually increase emissions.
        And one last thing. The National Highway Traffic Safety
    Administration, they have said that they have the authority to
    establish their own CAFE standards without the EPA doing their
    own thing. I have got a letter from the National Automobile
    Dealers Association talking about that that I would like to
    have unanimous consent to enter it into the record. I know we
    don't have time to talk about it.
        Mr. Markey. Without objection, it will be included in the
    record.
        [The information was unavailable at the time of printing.]
        Mr. Scalise. Thank you. And I yield back.
        Mr. Markey. The chair recognizes the chairman of the full
    committee, the gentleman from California, Mr. Waxman.
        Mr. Waxman. Thank you very much, Mr. Chairman.
        I am trying to think through the cost to this country of
    ever increasing oil prices. Between 2001 and 2008, the average
    household doubled its spending on gasoline. That is 7 years.
    And many of us remember the soaring costs that we had in the
    fall of 2008 when gasoline prices reached more than $4 a
    gallon, and may be coming back as our economy improves.
        Now, there are companies that rely on oil in the course of
    their everyday business, and they certainly feel the impact. If
    these companies feel the impact, they have to figure out how to
    deal with it and may have to close up. That is a loss of jobs.
        Now, there is a cost not just to the individuals and the
    businesses, but to the taxpayers. For instance, the RAND
    Corporation estimated that the cost to American taxpayers of
    protecting oil interests abroad at between $67 billion and $83
    billion per year. That is a lot of money.
        So, Mr. Smith, let me start with you. You testified that
    while oil prices are lower today than they were last summer,
    many of the fundamentals that pushed oil prices up are still
    present today. Can you tell us how important fuel costs are to
    a company like yours and why it is in the Nation's economic
    interest to adopt a clean energy policy?
        Mr. Smith. Well, Mr. Chairman, FedEx Corporation is about a
    $36 billion corporation, and we are one of the largest fuel
    users in the country. I think combined jet fuel, obviously our
    express company is an enormous user of that. It is the biggest
    air transportation system in the world and certainly the
    biggest all-cargo network in the world. So we burn in excess of
    1.5 billion gallons of fuel every year, and the cost is a major
    consideration for us.
        But the consideration is much greater in the damage that it
    does when prices run up to the overall economy than to just our
    company, because what we do is we have an established fuel
    price and then we adjust it each month based on the run-up or
    the run-down on fuel prices. Now, over the years we have had to
    vastly increase that base price.
        But as I mentioned a moment ago, the difference this go-
    round compared to the other major oil crises since 1973--and I
    have lived through all of them. It is for the first time this
    is a demand-driven situation, where the rise of China and India
    and the other developing nations and geopolitical
    considerations mean that there is likely to be significant
    spikes in the price of oil like we experienced in 2008, right
    before the financial meltdown, or military confrontations over
    the issue. People forget at their peril that World War II for
    this country was triggered by the United States embargoing oil
    to the empire of Japan. That is what caused--the proximate
    cause of the war.
        So we need as a country to reduce our dependence on
    petroleum imported from unstable and unfriendly regimes in
    parts of the world. And with that, not only do you get
    increased national security, better economic productivity, but
    as far as we can see, the technologies that can do that will
    vastly improve the environment as well. So you get a troika
    there.
        Mr. Waxman. It is a win-win.
        Mr. Smith. It should be a win-win.
        Mr. Waxman. Do you buy this argument that Mr. Drevna is
    making that the oil companies will have to go overseas, they
    will have to locate overseas, we will lose domestic jobs?
        Mr. Smith. Well, I am not an expert on his sector. I think
    it is the chemical processing companies that are probably, and
    the refineries, that are most at risk.
        What we have advocated is maximization of U.S. oil and gas,
    as well as nuclear power, battery power, wind, solar. In fact,
    we have I think with our installation in New Jersey at our
    Woodbridge FedEx ground hub, I believe that is the largest
    solar industrial location in the country at present.
        So we have got to do all of those things. I just don't know
    enough to speak authoritatively about his sector.
        Mr. Waxman. Well, you are looking at it from the impact on
    your company and the economy and Mr. Wolf is looking at what it
    will cost consumers if we move away from oil, and it would be a
    huge benefit. And, Mr. Diamond, you have firsthand experience
    in the military guarding Iraqi oil terminals. And I want to
    commend you for your service to this country. I guess your
    salary was part of that what RAND estimates $83 billion per
    year protecting our access to oil. And I think, if we reduced
    our dependence on oil, that can mean a lot in terms of savings
    for the Armed Services and limiting our involvement in places
    where we will not need to be. Is that right?
        Lieutenant Diamond. Absolutely, Mr. Chairman. And also, not
    to sound over dramatic, but the military also measures its cost
    in human lives when you are talking about our involvement
    overseas, not just dollars or jobs.
        Mr. Waxman. Well, clean energy legislation would deprive
    Iran of $100 million a day in oil revenues. And what are they
    using that $100 million a day to do? It is not in our interest
    that they have that money to spend to become a military force
    that can threaten our allies like Israel and interests of the
    United States elsewhere in the Middle East, and maybe even the
    United States itself.
        Thank you very much, Mr. Chairman. I yield back the balance
    of my time.
        Mr. Markey. The gentleman's time has expired. The chair
    recognizes the ranking member of the full committee, Mr.
    Barton.
        Mr. Barton. Thank you, Mr. Chairman. The beauty of
    television, I could watch Mr. Waxman in my office and for once
    I timed it just right. I had a very nice lunch, too. So I am
    glad you all were here while I was eating lunch.
        Mr. Markey. I don't think our witnesses wanted to hear
    that.
        Mr. Barton. I know. We do appreciate each of you gentlemen
    being here. I know it has been a long day.
        I want to start with Mr. Drevna. You talked in your
    statement about the form of energy that delivers a BTU at the
    lowest economic cost and that a free market economy wins. Does
    economic growth in this country depend on the source of the BTU
    or the cost of the BTU?
        Mr. Drevna. I think it depends upon the cost. I mean, the
    American consumer deserves the most efficient, the least cost
    approach. So I would like to clarify something here. Let's make
    a difference between the imported crude and its effect on the
    economy.
        The domestic refining industry is the first customer to be
    impacted by high-priced oil, and you have seen the results of
    this impact and what the state of the industry has been since
    it went up to $147 a barrel, and then with the recession. You
    know, we don't like paying high prices for oil any more than
    the consumer at the pump.
        So, I mean, the programs--and I agree wholeheartedly with
    Mr. Smith's comment. I think I said it, and if I didn't state
    it clearly enough, I will try to repeat it. We have to cover
    the field. We have to make sure that the U.S. energy policy
    provides the proper incentives for the entrepreneurs to develop
    these kinds of technologies. But we can't flip a switch and
    automatically transform ourselves into a non-oil reliant
    country. We have plenty of resources here in the United States.
    Let's start using them and end that reliance on so much
    imported oil.
        But even at that, you have got to realize where the
    imported oil comes from. Most of it comes from North and South
    America. And if we do our own resources, we can put a big dent
    in that, in the rest of our imports.
        Mr. Barton. Mr. Smith, I didn't read your testimony, so I
    am kind of shooting in the dark here, which is not a good
    thing. You should know the answer to the question you ask
    before you ask it. But I know a lot of your reputation as a
    straight shooter, so I am going to take a shot and see how you
    respond.
        Have you followed the endangerment process that the EPA has
    used to come up with their endangerment finding?
        Mr. Smith. Not to the extent that I was exposed to it this
    morning. But I got a pretty good tutorial on it.
        Mr. Barton. Well, Administrator Jackson admitted that if
    you find that the endangerment finding is not done properly; in
    other words, if you repeal that or dispose of it, under current
    law the EPA does not have the authority to regulate
    CO2 as a pollutant under the Clean Air Act. If you
    put a price on carbon because of this endangerment finding, it
    is obvious that you are going to raise the price of doing
    business for a business like yours, which I don't know what
    your cost of aviation fuel is, but it has got to be--and your
    trucks on the ground, but it has got to be a considerable cost
    of business. So anything to regulates CO2 is going
    to raise your business cost.
        Do you feel you know enough to give an opinion whether the
    endangerment process that the EPA has used is appropriate or
    not?
        Mr. Smith. I am not qualified to make that statement one
    way or the other.
        Mr. Barton. That is fair. Did you put in your testimony
    anything about what the cost to your business would be of
    putting a price on carbon under the proposed Waxman-Markey
    bill?
        Mr. Smith. No. I didn't put anything in the testimony. I
    did say, when you were out of the room, though, that FedEx
    Corporation is roughly a $36 billion company, and we are the
    largest air cargo, air transportation system by far and we
    operate over 70,000 vehicles. So we burn north of 1.5 billion
    gallons of fuel. So anything that increases the cost of energy
    obviously would affect us. But, much more importantly, since
    the way we handle this is to have a base price of fuel in our
    rates and then pass along increases with fuel surcharges, the
    effect would be to our customers even more than us.
        Mr. Barton. Is there anything in the research phase that
    takes the place of hydrocarbon aviation fuels as a fuel source
    for your airplanes?
        Mr. Smith. Well, the answer to that is, from a technical
    standpoint, absolutely yes. The aviation industry has shown
    that jet fuel is made from Jatropha, from Camolina, and from
    algae can be intermixed with Jet-A. And the fuel efficiency, in
    other words per BTU of power produced by the gallon of the
    biojet, is actually greater than the Jet-A and it burns
    cleaner.
        So the technical issue is really not much in question. I
    think the Lieutenant mentioned that the Navy flew an F-18
    Hornet and they called it the Green Hornet just the other day.
        So from a technical standpoint it can be done. The issue is
    whether you can get the cost of production to a cost effective
    level.
        Mr. Barton. Thank you. Thank you, panelists, and thank you,
    Chairman Markey.
        Mr. Markey. Thank you, Mr. Chairman, very much.
        We were about to complete the hearing, but the gentleman
    from Illinois.
        Mr. Shimkus. Mr. Chairman, I said, with respect to you and
    the staff in the next hearing that is supposed to be starting
    in about 1 minute, I will forego any further questions.
        Mr. Markey. And will the gentleman from Kentucky also take
    that position?
        Then let's do this. We will wrap up the hearing this way.
    We are going to ask each one of you to give us the 1 minute you
    want us to remember from your testimony. We are going to do it
    in reverse order of your original testimony. We will begin with
    you, Mr. Drevna.
        Mr. Drevna. Thank you, Mr. Chairman. One minute. OK. I
    think that there is a lot of misunderstanding and
    miscommunication as to where the energy is going to come from
    for this country going forward. I think--I believe that, as I
    said before, we have got to make a decision: Do you want to
    continue a strong, robust domestic refining and petrochemical
    industry here? And, if we do, we can certainly work toward
    alternatives and we can certainly work toward supplements. But
    for a long time we are going to be dependent upon the
    hydrocarbon molecule. And the people who can deliver that
    molecule at the least cost are going to be the economic
    winners, and I sure hope it is the good old USA and not some
    foreign nation.
        Mr. Markey. Thank you, Mr. Drevna. Lieutenant Diamond.
        Lieutenant Diamond. It would certainly be the takeaway,
    sir, that, again, these current conflicts where America has put
    itself in a position of funding both sides of this war on
    terrorism due to its reliance on overseas energy supplies, sir.
        Mr. Markey. Thank you. Mr. Wolf.
        Mr. Wolf. I think the thing we might be missing here, which
    is important, is we are looking very internally focused on the
    U.S. The electric mile today versus a gasoline mile, which is
    that cost element that is so important, is actually cheaper in
    most of the world and is also cheaper in the U.S. today.
        So I would leave you with the fact that at $3 a gallon--
    even at $3 a gallon, which is half the price of Western Europe
    and a lot of developed countries that are moving ahead, the
    electric mile is cheaper. It is that history of infrastructure
    around gasoline that is not being developed. And once you
    develop that infrastructure, you can actually access those
    marginal electric miles.
        Mr. Markey. Thank you. And Mr. Smith.
        Mr. Smith. Well, I would simply reiterate that we feel
    strongly that the electrification of short-haul transportation
    with plug-in electric and hybrid electric vehicles offers a
    substantial opportunity for the United States if the
    Electrification Coalition's recommendations were adopted by the
    Congress to reduce our petroleum consumption per unit of GDP,
    reduce the emissions as a consequence of that even when looking
    at the power generation of the electrical power for the
    electrified vehicles; and, finally, would significantly reduce
    the economic and national security challenges that will
    undoubtedly occur if we do not take some very strong measures
    to accomplish the goals that we have been discussing today.
        Mr. Markey. Thank you, Mr. Smith, very much.
        And I would just like to say to you, Mr. Smith, that we
    very much appreciate your leadership in increasing the fuel
    economy standard from 25 to 35 miles a gallon. I don't think it
    would have happened without you and your organization, Mr.
    Diamond--the other Mr. Robert Diamond in the room behind you
    back in 2007. We had that fight in 2001 on the House floor,
    only 155 votes; 2003, 168 votes; 2005, 178 votes. I know,
    because I was making that amendment with Mr. Boehlert. When the
    price really started to spike in 2006, we were not allowed to
    have that vote up on the House floor. But because of you and
    your organization, we have made that breakthrough. And I think
    we have seen the technological revolution already unfold. And
    the same thing we saw in telecommunications. Alexander Graham
    Bell invented his phone, and we were all still using black
    rotary phone 100 years later. It was only after this committee
    and the Justice Department acted that we changed the incentives
    that moved us from black rotary dial phones to BlackBerries. It
    only happened in 10 years after everyone said we could not do
    it.
        So I think when America has a plan, America wins. And I saw
    you checking that BlackBerry in the course of this hearing.
    And, by the way, the members of the committee are very proud
    that you can check your BlackBerry.
        Mr. Smith. I was afraid I said something wrong, and Gene
    sent me a message saying shut up.
        Mr. Markey. No more tapping on the shoulder.
        Mr. Wolf. That is a Canadian technology. This is an
    American technology.
        Mr. Markey. But that revolution in telecom happened because
    we changed the policies in this committee. And what we are
    seeing in the automotive sector is the same thing. And I think
    if we just put together a plan America won't have to try to
    keep China out because we will be taking them on. We will have
    a plan, and we will win. America wins when it has a plan.
        Anyway, thank you all so much for your testimony today.
    With that, and with the thanks of the committee, this hearing
    is adjourned.
        [Whereupon, at 2:05 p.m., the subcommittee was adjourned.]
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