- EPA'S GREENHOUSE GAS REGULATIONS AND THEIR EFFECT ON AMERICAN JOBS

[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

EPA'S GREENHOUSE GAS REGULATIONS AND THEIR EFFECT ON AMERICAN JOBS

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

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER

OF THE

COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

MARCH 1, 2011

__________

Serial No. 112-12

Printed for the use of the Committee on Energy and Commerce

energycommerce.house.gov
?

U.S. GOVERNMENT PRINTING OFFICE
66-512 WASHINGTON : 2011
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, [email protected].

COMMITTEE ON ENERGY AND COMMERCE

FRED UPTON, Michigan
Chairman

JOE BARTON, Texas HENRY A. WAXMAN, California
Chairman Emeritus Ranking Member
CLIFF STEARNS, Florida JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky EDWARD J. MARKEY, Massachusetts
JOHN SHIMKUS, Illinois EDOLPHUS TOWNS, New York
JOSEPH R. PITTS, Pennsylvania FRANK PALLONE, Jr., New Jersey
MARY BONO MACK, California BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon ANNA G. ESHOO, California
LEE TERRY, Nebraska ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan GENE GREEN, Texas
SUE WILKINS MYRICK, North Carolina DIANA DeGETTE, Colorado
Vice Chair LOIS CAPPS, California
JOHN SULLIVAN, Oklahoma MICHAEL F. DOYLE, Pennsylvania
TIM MURPHY, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas CHARLES A. GONZALEZ, Texas
MARSHA BLACKBURN, Tennessee JAY INSLEE, Washington
BRIAN P. BILBRAY, California TAMMY BALDWIN, Wisconsin
CHARLES F. BASS, New Hampshire MIKE ROSS, Arkansas
PHIL GINGREY, Georgia ANTHONY D. WEINER, New York
STEVE SCALISE, Louisiana JIM MATHESON, Utah
ROBERT E. LATTA, Ohio G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington JOHN BARROW, Georgia
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin
BILL CASSIDY, Louisiana Islands
BRETT GUTHRIE, Kentucky
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

(ii)
Subcommittee on Energy and Power

ED WHITFIELD, Kentucky
Chairman
JOHN SULLIVAN, Oklahoma BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois
GREG WALDEN, Oregon JAY INSLEE, Washington
LEE TERRY, Nebraska JIM MATHESON, Utah
MICHAEL C. BURGESS, Texas JOHN D. DINGELL, Michigan
BRIAN P. BILBRAY, California EDWARD J. MARKEY, Massachusetts
STEVE SCALISE, Louisiana ELIOT L. ENGEL, New York
CATHY McMORRIS RODGERS, Washington GENE GREEN, Texas
PETE OLSON, Texas LOIS CAPPS, California
DAVID B. McKINLEY, West Virginia MICHAEL F. DOYLE, Pennsylvania
CORY GARDNER, Colorado HENRY A. WAXMAN, California (ex
MIKE POMPEO, Kansas officio)
H. MORGAN GRIFFITH, Virginia
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

C O N T E N T S

----------
Page
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 1
Prepared statement........................................... 3
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 4
Prepared statement........................................... 5
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 6
Prepared statement........................................... 7
Hon. Joe Barton, a Representative in Congress from the State of
Texas, prepared statement...................................... 8
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 9
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, prepared statement................................ 143
Hon. Cory Gardner, a Representative in Congress from the State of
Colorado, prepared statement................................... 145

Witnesses

Mike Carey, President, Ohio Coal Association..................... 15
Prepared statement........................................... 17
Paul N. Cicio, President, Industrial Energy Consumers of America. 28
Prepared statement........................................... 30
Hugh A. Joyce, President, James River Air Conditioning Company,
Inc............................................................ 34
Prepared statement........................................... 36
Forrest McConnell, National Automobile Dealers Association, and
President, McConnell Honda and Acura........................... 40
Prepared statement........................................... 42
W. David Montgomery, Vice President, Charles River Association... 52
Prepared statement........................................... 54
Answers to submitted questions............................... 156
Dan W. Reicher, Executive Director, Steyer-Taylor Center for
Energy Policy and Finance, Stanford University; Professor,
Stanford Law School; and Lecturer, Stanford Graduate School of
Business....................................................... 80
Prepared statement........................................... 83
Gina A. McCarthy, Assistant Administrator, Office of Air and
Radiation, United States Environmental Protection Agency....... 119
Prepared statement........................................... 122

Submitted Material

Letter of March 1, 2011, from Mr. Waxman to Mr. Whitfield........ 146
Letter of January 10, 2011, from American Iron and Steel
Institute to Hon. Darrell Issa.................................

EPA'S GREENHOUSE GAS REGULATIONS AND THEIR EFFECT ON AMERICAN JOBS

----------

TUESDAY, MARCH 1, 2011

House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 1:04 p.m., in
room 2322 of the Rayburn House Office Building, Hon. Ed
Whitfield (chairman of the subcommittee) presiding.
Members present: Representatives Whitfield, Shimkus,
Walden, Terry, Burgess, Bilbray, Scalise, McMorris Rodgers,
Olson, McKinley, Gardner, Pompeo, Griffith, Barton, Upton (ex
officio), Rush, Inslee, Markey, Green, and Waxman (ex officio).
Staff present: Gary Andres, Staff Director; Jim Barnette,
General Counsel; Michael Beckerman, Deputy Staff Director; Sean
Bonyun, Deputy Communications Director; Maryam Brown, Chief
Counsel, Energy and Power; Cory Hicks, Policy Coordinator,
Energy and Power; Ben Lieberman, Counsel, Energy and Power; Gib
Mullan, Chief Counsel, CMT; Mary Neumayr, Counsel, Oversight/
Energy; Katie Novaria, Legislative Clerk; Peter Spencer,
Professional Staff Member, Oversight; Jeff Baran, Democratic
Senior Counsel; Greg Dotson, Democratic Energy and Environment
Staff Director; Caitlin Haberman, Democratic Policy Analyst;
and Alexandra Teitz, Democratic Senior Counsel, Environment and
Energy.

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

Mr. Whitfield. I call this hearing to order this afternoon.
Today's hearing is entitled ``EPA's Greenhouse Gas Regulations
and Their Effect on American Jobs.''
Certainly, one of the major issues facing the American
people today is getting the economy stimulated, creating jobs
and one of the reasons all of us or at least many of us are
very much concerned about the activities of the EPA at this
particular time is that they have a queue of about 30
regulations that they are working on at EPA. We have great
concerns about these regulations, recognizing that all of us
are committed to protecting the environment but there is no
question that many of these regulations are having a dramatic
impact on job creation and I certainly recognize that there are
different philosophies on the way we precede.
The Obama Administration has placed great emphasis on green
energy. As a matter of fact, our energy policy today has been
simplified to the point where fossil fuel is bad and green
energy is good.
OK, thank you very much. I am sorry for the inconvenience
there. For those who heard me, I am sorry you are going to have
to listen to me again for a few minutes.
Today's hearing is entitled, ``EPA's Greenhouse Gas
Regulations and Their Effect on American Jobs.'' The American
people are primarily interested in stimulating their economy
today and creating jobs. One of the concerns that many of us on
this side of the aisle have as well as others on the other side
of the aisle is that the long list of regulations being
considered at EPA today, we have a very real concern that they
are going to have a significant impact on our ability to create
jobs. I might also say that the energy debate in America today
has been summed up in about six words and this is where we are,
fossil fuels are bad and green energy is good. And I think most
of us recognize that it is a lot more complicated than that and
we and certainly I recognize that in order to meet our
increased demands just on the electricity side we are going to
have to have electricity produced from all sources.
But the Obama Administration has placed so much emphasis on
green energy, billions of dollars from the Stimulus Fund has
gone for that. All sorts of tax incentives have gone for that
and the problem that I have with it is not that we are spending
taxpayers dollars to help develop green energy but I think the
American people are being misled on the role that green energy
can play in the immediate future. For example, the Obama
Administration recently came out with a ruling that they wanted
to reduce the 2005 greenhouse gas emissions by 83 percent by
the year 2035.
Now, when you think about that formula, it is kind of
complicated. What does that really mean? Why not just say we
are going to allow so many tons of emissions by this date?
Well, I think that it is being done because they don't want the
American people to recognize really what they are saying. If
you look at the numbers of reducing the 2005 emissions by 83
percent, what you are talking about you are taking America back
to 1920, in the 1920s. That is the last time we had emissions
that low and I will tell you what, in the 1920s only two
percent of rural homes in America had electricity. Around 50
percent of American homes in the rest of the country had
electricity. We didn't have any cellphones. We didn't have any
flat-screen TVs. We didn't have any Blackberrys. We didn't have
iPods or iPads. So to think that we are going to reduce by
2035, 87 percent of 2005 emissions, in my view is a pipedream.
Now, having said that, I know this Administration is making
the argument that green energy is going to carry out country
and that is where the jobs are going to be created. But in my
view and from the analysis that I have looked at and from all
of the hearings that I have sat through, through the years, I
don't think anyone realistically believes that green energy can
provide the electricity needs of America any time soon.
Fifty-two percent of our electricity still comes from coal.
Seventy percent of electricity produced in China comes from
coal. American railroads are taking more coal to the ports
today for export to China than at any time in its history. In
2006, 6.7 billion tons of coal were used worldwide. In 2010, it
was over 10 billion tons and they anticipate the additional
coal necessary just to meet the needs of China and India in the
next few years is going to increase another billion or so.
So yes, we need green energy. We need natural gas. We need
nuclear energy but we also are going to have to have coal to
meet the expected increase in demand. So the point that I would
simply try to like to make is let us be realistic here. Let us
not mislead the American people. Let us have an honest give and
take discussion, answer questions, ask questions and try to
come out with the right policy for the American people and that
is what these hearings are designed to do and we look forward
to the testimony today. I will introduce all of you a little
bit later right before you testify.
[The prepared statement of Mr. Whitfield follows:]

Prepared Statement of Hon. Ed Whitfield

The American people are primarily interested in stimulating
their economy today and creating jobs. One of the concerns that
many of us have is that the long list of regulations being
considered at the Environmental Protection Agency today will
have a significant impact on job creation.
The energy debate in America today has been summed up in
about six words, and this is where we are: fossil fuels bad,
green energy good. Many of us recognize that it's a lot more
complicated than that. However, in order to meet our increased
demands just on the electricity side, we are going to need
electricity produced from all sources.
The Obama administration has placed so much emphasis on
green energy. Billions of dollars in stimulus money and tax
incentives has gone for green energy. And the problem I have is
that I think the American people are being misled about the
role green energy can play in the immediate future as we use
taxpayer money to help develop green energy.
For example, the Obama administration recently came out
with a ruling that they want to reduce the 2005 greenhouse gas
emissions by 83 percent by the year 2035. Now many think that
this formula is complicated and wonder what it really means.
Why not just say, `we are going to allow a specific amount of
emissions by a specific date?' I think it is being done because
the Obama administration does not want the American people to
recognize what they are saying. If you look at the numbers of
reducing the 2005 emissions by 83 percent, that would be taking
American back to the 1920s. That was the last time the United
States had emissions that low.
By comparison, in the 1920s, only two percent of rural
homes in America had electricity. Around 50 percent of American
homes in the rest of the country had electricity. This was
before cell phones, flat screen televisions, Blackberries,
iPods, or iPads. To think that we are going to reduce by 2035
83 percent of 2005 emissions, in my view is unrealistic.
Now, having said that, I know this administration is making
the argument that green energy is going to carry our country
and that is the field in which jobs will be created. But in my
view, and in the analysis that I have read and the hearings
that have been held on this issue, I do not think that anyone
realistically believes that green energy alone can provide the
electricity needs of America anytime soon. 52 percent of our
electricity still comes from coal and 70 percent of electricity
produced in China comes from coal. American railroads are
taking more coal to the ports today for export to China than in
any time in history. In 2006, 6.7 billon tons of coal was used
worldwide and in 2010, it was over 10 billion tons. And it is
anticipated that the amount of coal needed to meet the needs of
China and India in the next fear years will increase even more.
Yes, we need green energy. We need natural gas, nuclear
energy. But we also need coal to meet the projected increase in
demand.
Let's be realistic and not mislead the American people but
rather have an honest give and take discussion and try to come
up with the right policy for the American people. And that is
what this and other hearings are designed to do.
I look forward to hearing from our witnesses and thank you
for being here today.

# # #

Mr. Whitfield. But at this time, I would recognize the
gentleman from Illinois for his opening statement.

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS

Mr. Rush. I want to thank you, Mr. Chairman, and I want to
thank all of the guests for attending today's hearing.
Mr. Chairman, there seems to be a concerted effort by many
of my colleagues on your side of the aisle to de-legitimatize
the science that says greenhouse gases are and therefore should
be regulated. Additionally, in an attempt to counteract all the
various respected peer review studies that show the
environmental protection industry actually creates jobs and
stimulates the economy as well as leads to a healthier and more
productive constituency.
Today we will hear testimony that will lead us to believe
that any policy that regulates greenhouse gases will
automatically lead to job loss. However, it is extremely
important for us to remember that just because it is possible
to find some within the scientific community to dispute what
the other 90 percent of scientists agree on that climate change
is manmade, does not make the lone dissenter the authority on
this very important issue. And just because different industry
sources pay to produce studies that show that regulating
greenhouse gases will be costly and yield little to no benefit,
doesn't make it true. My point here is that not all studies are
not equal and we should carefully vett those individuals who
disagree with the vast majority of respected scientists
worldwide on the causes of climate change as well as those who
refute the reports that say moving toward more efficient and
cleaner energy technologies will lead to substantially greater
cost without the added benefits.
In fact once again, Mr. Chairman, our side tried to invite
one scientist to sit on the witness panel today only to be
again revoked by the other side. I cannot imagine why this
committee will attempt to move such sweeping and regressive
legislation such as that will repeal EPA's ability to regulate
harmful greenhouse gases without hearing the scientific
evidence of how this will impact our economy, our environment
and the public health. I sincerely hope that we will be able to
hear from scientists at a future hearing so that we will be
able to make informed decisions before moving to any markup of
this legislation in this area. After all, just because we may
try to ignore the science behind greenhouse gas emissions and
how it affects climate changes does not mean it does not exist.
We know that since the inception of the Clean Air Act
opponents of the greenhouse view have been warning that
environmental regulations will kill jobs and lead to
outsourcing overseas. Clean air opponents falsely predicted
that electricity prices would skyrocket if the 1990 Clean Air
Act amendments were passed when in fact electricity prices
actually declined in the decade following 1990 by approximately
18 percent. While we hear that regulating greenhouse gases will
cripple our economy and destroy our manufacturing industry, he
U.S. Census Bureau conducted an annual survey of the U.S.
manufacturing sector and found a solution abatement. Operating
costs were only 0.4 percent on average of overall manufacturing
loss including not just air pollution controls but all other
abatement costs.
Mr. Chairman, actually the Clean Air Act has been one of
the most successful and bipartisan environmental laws enacted
in American history. Mr. Chairman, I would submit that history
has proven that we can protect our environment and also
strengthen our economy to sensible and balanced regulation that
helps create jobs and new technologies to protect the public
interests, increase worker productivity and promote clean air.
With that, I yield back the balance of my time.
[The prepared statement of Mr. Rush follows:]

Prepared Statement of Hon. Bobby L. Rush

Thank you, Mr. Chairman, and thank you to all of the guests
attending today's hearing.
Mr. Chairman, there seems to be a concerted effort by many
of my colleagues on your side of the aisle to delegitimize the
science that says that greenhouse gases are pollutants and,
therefore, should be regulated.
Additionally, in an attempt to counteract all of the
various respected, peer-reviewed studies that show the
environmental protection industry actually creates jobs and
stimulates the economy, as well as leads to a healthier and
more productive constituency, today we will hear mention of
several other studies that attempt to debunk these facts and
lead us to believe that any policy that regulates greenhouse
gases will automatically lead to job loss.
However, it is extremely important for us to remember that
just because it is possible to find some within the scientific
community to dispute what the other 90% of scientists agree on,
that climate change is man-made, does not make the lone
dissenters the authority on this issue.
And just because different industry sources pay to produce
studies that show that regulating greenhouse gases will be
costly and will yield little to no benefit, does not make it
true.
My point here is that all studies are not equal and we
should carefully vet those individuals who disagree with the
vast majority of respected scientists worldwide on the causes
of climate change, as well as those who dispute the reports
that say moving toward more efficient and cleaner energy
technologies will lead to substantially greater costs without
the added benefits.
In fact, once again, our side tried to invite a scientist
to sit on the witness panel today, only to be rebuffed. I
cannot imagine why this Committee would attempt to move such
sweeping and regressive legislation, such as the Upton-Inhofe
bill, that would repeal EPA's ability to regulate harmful
greenhouse gases, without hearing the scientific evidence of
how this would impact our economy, environment, and the public
health.
I sincerely hope that we will be able to hear from
scientists at a future hearing so that we are able to make
informed decisions before moving to any markup of legislation
in this area.
After all, just because we may try to ignore the science
behind greenhouse gas emissions and how it affects climate
change, does not mean it does not exist.
We know that since the inception of the Clean Air Act,
opponents of the bill have been warning that environmental
regulation will kill jobs and lead to outsourcing overseas.
Clean Air Act opponents falsely predicted that electricity
prices would skyrocket if the 1990 Clean Air Act amendments
were passed, when in fact, electricity prices actually declined
in the decade following 1990 by approximately 18%.
While we will hear that regulating greenhouse gases will
cripple our economy and destroy our manufacturing industry, the
U.S. Census Bureau conducted an annual survey of the U.S.
manufacturing sector and found that pollution abatement
operating costs were only 0.4%, on average, of overall
manufacturing costs, including not just air pollution controls
but all other abatement costs.
In fact, peer-reviewed articles in top economics journals
find little evidence that environmental regulations have
dampened U.S. competitiveness or led to outsourcing.
Though I am sure today we will hear testimony that allowing
EPA to move forward on plans to regulate greenhouse gases will
destroy the economy and kill jobs, I must point out that the
Clean Air Act has been one of the most successful and
bipartisan environmental laws enacted in American history.
In the 40 years since its enactment, the Clean Air Act has
decreased air pollutants by 60%, even as our economy has grown
by over 200%.
A peer-reviewed EPA study found that the Clean Air Act was
responsible for saving over 205,000 premature deaths, 22,000
cases of heart disease, and 674,000 cases of chronic
bronchitis, annually, between 1970-1990.
Additionally, the Clean Air Act has been a stimulant for
our economy, with estimates that it generated as much as $300
billion in revenues and $44 billion in exports, while
supporting close to 1.7 million American jobs by the year 2008.
In fact, when both direct employment and indirect
employment are taken into account, the environmental protection
industry is estimated to have created a range of 3.8 million to
5 million new jobs.
These jobs run the gamut from factory workers to engineers,
computer analysts, accountants, clerks, ecologists, truck
drivers, and consultants, among others.
Promoting cleaner technologies has the benefit of
protecting our citizens with cleaner air while also creating
jobs and investments for our economy.
The Office of Management and Budget examined ten Clean Air
Act regulations finalized in 2008, 2009, and 2010, and
concluded that all ten had benefits that exceeded costs, by a
ratio of 7 to 1 on average.
In fact, according to the Department of Commerce
International Trade Administration, environmental technology
exports have grown dramatically from less than $10 billion in
1990 to about $44 billion in 2008, and the U.S. share of
foreign environmental technology markets has been increasing.
In 2008, the U.S. had a net trade surplus of $11 billion in
environmental technologies, which helped the U.S. balance of
trade.
Additionally, according to many top CEOs, there could be a
great benefit for industry to have clear-cut rules of the road
in regards to clean energy and regulatory obligations moving
forward, rather than the piecemeal approach that is being
implemented by the States and regional authorities currently.
Mr. Chairman, I fear today's debate is being framed in a
way where we are presented with a false choice between ``job
killing'' EPA regulations and having environmental standards to
protect our citizens.
I would submit that, in fact, history has proven that we
can indeed protect our environment and also strengthen our
economy through sensible and balanced regulations that help
create jobs and new technologies, protects the public health,
increases worker productivity, and promotes clean air.
We've done precisely this before and it can be done again.
With that I yield the balance of my time.

Mr. Whitfield. Thank you, Mr. Rush.
At this time I recognize the chairman of the full
committee, Mr. Upton, for 5 minutes.

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

Mr. Upton. Well, thank you, Mr. Chairman.
This hearing is about jobs. Jobs and the economy, and to
imply anything otherwise is misleading. We had this debate in
the last Congress and studies estimated that a cap-and-trade
national energy tax would produce job losses in the hundreds of
thousands, if not millions, yet EPA is unilaterally acting to
impose the very same type of policies that Congress rejected in
the 111th Congress. Job losses that would come from a cap and
tax were not intended consequences. The whole point of
federally regulating greenhouse gas emissions is to drive up
energy costs so that consumers and businesses are forced to use
less.
As the President said, ``Under my plan, electricity prices
will necessarily skyrocket.'' Congress said no but now we face
an EPA trying to sneak regulations in through the back door.
The job losses will span many sectors in businesses large and
small.
We live in a global economy with global competition and
nations like China have absolutely no intention of similarly
burdening their industries. Manufacturing jobs will leave this
country unless EPA is stopped. Even for those who don't lose
their jobs, the news would not be good. EPA's agenda will boost
the price at the pump and drive up electricity bills. It will
make farming cost more and hike prices of food.
So let us dispel a myth. Air quality and public health will
not be harmed or affected in any way by efforts to slow and
then stop EPA's expansive global warming agenda under the Clean
Air Act. Since 1970, the Clean Air Act has targeted air
pollutants like particulates, ozone, lead, mercury, pollutants
known to have adverse health impacts. The result has been a
declining emission of these pollutants and we need to make sure
that they continue to decline. Absolutely none of these efforts
are impeded in any way under the Energy Tax Prevention Act
discussion draft. EPA's ability and obligation to regulate and
mitigate air pollutants like particulates that cause soot,
ozone that cause smog, carbon monoxide, lead, asbestos,
chloroform and almost 200 other air pollutants would be
protected and preserved. So we can stop the EPA from imposing
cap and tax and the Clean Air Act will continue to make our
families and communities healthier places.
So let us listen to the facts. This issue is not about air
quality and public health. It is about jobs. EPA is not looking
at the impact on jobs that the members of this committee should
and we must.
And I yield the balance of my time to Mr. Barton.
[The prepared statement Mr. Upton follows:]

Prepared Statement of Hon. Fred Upton

This is a hearing about jobs. Jobs and the economy. To
imply anything otherwise is misleading.
Scare tactics from the other side are meant as a diversion
from what EPA's greenhouse gas regulations would do to American
jobs.
We had this debate last Congress. Studies estimated that a
cap-and-trade national energy tax would produce job losses in
the millions.
Yet EPA is unilaterally acting to impose the very same
types of policies that Congress rejected in the 111th.
The job losses that would come from cap-and-tax were not
unintended consequences. The whole point of federally
regulating greenhouse gas emissions is to drive up energy costs
so that consumers and businesses are forced to use less. As the
President said, ``Under my plan, electricity prices will
necessarily skyrocket.'' Congress said no, but now we face an
EPA trying to sneak regulations in through the back door. The
job losses will span many sectors, and businesses large and
small.
We live in a global economy with global competition, and
nations like China have absolutely no intention of similarly
burdening their industries. Manufacturing jobs will leave this
country unless EPA is stopped.
Even for those who don't lose their jobs, the news would
not be good. EPA's agenda will boost the price at the pump and
drive up electricity bills. It'll make farming cost more, and
hike prices of food.
Let's dispel a myth. Air quality and public health will not
be harmed or affected in any way by efforts to slow and then
stop EPA's expansive global warming agenda under the Clean Air
Act. Let me repeat that: Air quality and public health will not
be harmed by stopping EPA's job-crushing global warming agenda.
Since 1970, the Clean Air Act has targeted air pollutants
like particulates, ozone, lead and mercury--pollutants known to
have adverse health impacts. The result has been declining
emissions of these pollutants, and we need to make sure they
continue to decline. Absolutely none of these efforts are
impeded in any way under the Energy Tax Prevention Act
Discussion Draft.
Let me say that again. EPA's ability and obligation to
regulate and mitigate air pollutants like particulates that
cause soot, ozone that cause smog, carbon monoxide, lead,
asbestos, chloroform, and almost 200 other air pollutants would
be protected and preserved. We can stop the EPA from imposing
cap-and-tax, and the Clean Air Act will continue to make our
families and communities healthier places.
Carbon dioxide is very different from the many pollutants
specifically listed and targeted for reduction under the Clean
Air Act. it is the stuff we exhale and that plants use as food.
Set aside the scare tactics. Listen to the facts. This
issue is not about air quality and public health. It's about
jobs. EPA is not looking at the impact on jobs, the Members of
this Committee should and we must.

Mr. Barton. Thank you, Chairman Upton, and we can tell that
when you speak, your opponents try to spam you so that your
message doesn't get out.
It is a good deal to have a hearing. I appreciate Chairman
Whitfield having this hearing on the EPA's greenhouse gas
regulation and their effect on American jobs.
The answer is self-obvious. If you have something that is
really not a pollutant with CO2 is not as I am
giving this speech, I am creating CO2 and you don't
have the technology to regulate and unless there has been a
miracle occurred in the last 2 or 3 days, if you burn stuff
with carbon in it you are going to create CO2. It is
a chemical fact so we don't have a technology that can control
it so if you regulate greenhouse gases or regulate
CO2, in effect you are going to by definition cost
jobs because you are going to shut down probably 40 percent of
our energy production economy in the United States, maybe 50
percent.
So, in spite of the hypothesis that CO2 is a
pollutant and in spite of the massive educational program to
try to convince the American people and the world that
CO2 is bad, the facts are otherwise and I am going
to be absolutely stunned if in this hearing we don't hear from
our industrial friends that if you really regulate
CO2 to the extent that Chairman Whitfield was
talking about in the Waxman-Markey bill, you are basically
shutting down the U.S. economy and that is tens of millions of
jobs and hundreds of billions of dollars. So this is a very
good hearing and I hope, Mr. Chairman, as a result of this
hearing we do begin to move the Whitfield-Upton bill and make
it explicitly clear that the Clean Air Act does not apply to
greenhouse gases.
And with that I yield back to Chairman Upton. I yield back
to the subcommittee chairman.
[The prepared statement of Mr. Barton follows:]

Prepared Statement of Hon. Joe Barton

Thank you Mr. Chairman. This Committee's commitment to
investigate and expose the effects of the Obama
Administration's regulations on jobs and our economy continues
today as we discuss the ways the Environmental Protection
Agency (EPA) plans to impose greenhouse gas regulations under
the Clean Air Act (CAA).
Two weeks ago, EPA Administrator Jackson testified before
this Committee and she and I went over the six criteria
pollutants regulated by EPA under the Clean Air Act, and
greenhouse gases are not and should not be one of them.
Congress has rejected such legislation, yet the EPA seems
determined to regulate greenhouse gasses without examining the
disastrous effects of these regulations on jobs and the
production and cost of energy.
On February 16th, Congress received a letter from more than
a dozen industry trade associations citing a study estimating
that EPA's greenhouse gas regulations could decrease capital
investments by $25 09 75 billion and result in an economy-wide
job loss of 476,000--1.4 million jobs. \1\ I look forward to
hearing from the first panel of witnesses comprised of industry
representatives about their reactions to this letter and other
potential effects of these regulations and the second panel
witness, Ms. McCarthy, from EPA's Office of Air and Radiation.
---------------------------------------------------------------------------
\1\ http://thehill.com/blogs/e2-wire/677-e2-wire/144613-oil-mining-
groups-urge-house-to-curtail-epa-climate-rules-in-cr

Mr. Whitfield. Thank you, Mr. Barton.
At this time I recognize the ranking member from
California, Mr. Waxman, for 5 minutes.

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

Mr. Waxman. Mr. Chairman, this hearing reminds me of an
article that appeared in the New York Times magazine on Sunday.
The article was titled, ``Fact-Free Science'' and it describes
how Washington has been infected by a mainstreaming and
radicalization of antiscientific thought. Today's hearing could
be an example A of antiscientific thought in this House where
falling down a rabbit hole into wonderland where the facts are
turned upside down and fiction is accepted as reality. The
premise of this hearing and the legislation that is being
reviewed is that climate change is a hoax and EPA's modest
efforts to reduce carbon pollution will imperil our economy.
These claims remind me of William James who once said, ``There
is nothing so absurd that it cannot be believed as truth if
repeated often enough.''
These are the facts: Climate change is real and our future
economic prosperity depends on investing in a new clean energy
economy. If we don't act to reduce carbon pollution and promote
clean energy, we will lose millions of clean energy jobs to the
countries that do. China understands this. The Chinese are
investing over $2 billion each week in renewable and other
green technologies and so does Europe, which is racing ahead of
us in reducing carbon emissions and developing advances in
solar energy and green buildings.
Last Congress, CEOs from our Nation's leading companies
like General Electric and Duke Power told us that billions of
dollars in private capital has been frozen because the United
States does not have a long-term plan for reducing carbon
emissions. The CEO of PG&E, one of the Nation's largest
utilities warned of an incredible lost opportunity if we don't
act now. He said there are these amazing developing new
technology sectors across the United States and we see those
jobs going overseas and technology superiority going overseas.
The cost of inaction is not just the loss of leadership in
the global economy. We also risk irreversible and potentially
catastrophic impacts. Our weather is getting more extreme and
more dangerous every year. Last year was the hottest and
wettest on record. Floods in Arkansas, Kentucky, Mississippi,
and Tennessee killed dozens. They submerged much of Pakistan
and Australia, and droughts in Russia and China are driving
food prices to record levels. The risks to our economy from
climate change are real and are potentially enormous and that
is why we cannot have an informed debate about the economic
cost of EPA regulation if we ignore these impacts. If we look
only at the cost of regulation without considering the cost of
doing nothing, we are looking at only half of the equation.
Ranking Member Rush and I have been urging that the
subcommittee consider the scientific evidence and we asked for
a leading scientific expert to be invited to testify today but
this request was denied. We asked for a hearing on two new
studies linking severe weather events to manmade climate change
but we have not yet received a response. For this reason, we
are invoking our rights under the House rules to request a
minority hearing with scientists. Last month we heard testimony
from Senator Inhofe that climate change is a hoax. We need to
hear from real scientists before we mark up the Upton-Inhofe
bill. Mr. Chairman, I ask that our letter requesting this
hearing be made a part of today's hearing.
Mr. Whitfield. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Waxman. I have one other concern about today's hearing
and that is the decision to put the EPA Assistant Administrator
Gina McCarthy on the second panel. This is inconsistent with
the practices of our committee. I raised my concern with
Chairman Upton earlier today. He agreed that the general rules
should be that the Administration witnesses testify first on
their own panel and has been the tradition, Democratic and
Republican Administrations but the Committee would proceed
differently. That wouldn't happen today. It is too late to
change the order of today's hearing but that the Committee
would proceed differently in the future hearings. I thank him
and, Mr. Chairman, I thank you for the courtesy to make this
statement and I look forward to working with you.
Mr. Whitfield. Thank you very much, Mr. Waxman.
And before I introduce the members of this panel who will
be testifying today, I did want to say that of course Congress,
we were not here last week and when I came back yesterday my
staff did give me a copy of the February 24 letter that you and
Mr. Rush wrote in which you did request convene a hearing to
discuss the new studies that you had indicated.
I might say that over the last two Congresses, we have had
in the Congress over 24 hearings on climate change and the
science relating to it which I do have a list of here. However,
I understand also that under the Rule 11 procedure you all are
entitled to a hearing with witnesses on the climate change
issue that you want to bring up. It is also my understanding
after talking to the Parliamentarian that as the chairman of
the subcommittee I would have the opportunity to set the date
for that hearing. And I would just in order to approach this in
a correct way and try to have regular order, I would be happy
to notice the hearing and we could notice it today for your two
witnesses that you would like, maybe we would bring in a
witness or two to maybe get a different view than your
witnesses might give and we could do it even next Tuesday. Now,
I said next Tuesday simply because we have looked at the
calendar out for 3 or 4 weeks and it is very, very full. We are
doing lots of hearings on all of the subcommittees but if you,
Mr. Waxman, and Mr. Rush would be willing to have this hearing
next Tuesday, you select your witnesses, we would notice it
today. I don't want to get involved myself in taking a lot of
time in determining who all these witnesses are just because of
the time constraints but if you all would be willing to give us
the name of those two witnesses, we could notice it today. We
can have the hearing next Tuesday.
Mr. Barton. Will the chairman yield?
Mr. Whitfield. Yes.
Mr. Barton. I appreciate the chairman yielding.
Before we commit to a specific date, I would encourage the
subcommittee chairman to enter into a discussion with Mr.
Waxman and Mr. Rush and Mr. Upton. Normally, when you--first of
all it is very rare to invoke a Rule 11 hearing but when it
does happen there normally is some discussion about timing so
that both the minority and the majority have adequate time to
prepare and also get adequate witnesses and at least in this
member's perspective, it would be very difficult to have an
appropriate proper hearing by next Tuesday given everything
that is happening this week and is scheduled to already happen
next week. But I do think that if you have a discussion with
our distinguished minority ranking members of the subcommittee
and full committee, you could very expeditiously schedule such
a hearing that helps both sides.
Mr. Whitfield. Mr. Barton, I really appreciate your
comments. I will say that we had a 1-hour meeting with staff
looking out at the calendar on this issue and of course I am
not speaking for Mr. Rush and Mr. Waxman, they may find next
Tuesday inconvenient but my understanding from reading the
letter and from discussions that I have had with our staff, we
were talking about maybe two witnesses on your side and I think
we have identified one or two. I think it could be done rather
quickly, however I am simply making the offer and yes, sir.
Mr. Waxman. Look, I just think it is important to hear from
scientists on this issue before we mark up this bill and I am
happy to discuss the schedule with you. I can't make any
promises at this point but I want to work with you in good
faith that we can have this hearing. It is an important part of
the debate and if we are going to pass legislation out of this
subcommittee, the subcommittee should have a hearing before we
do that. That is my only.
Mr. Whitfield. Well, I would be happy to do that. I am
offering you that we would do a hearing on Tuesday. I can't
commit.
Mr. Waxman. We will do our best for Tuesday.
Mr. Whitfield. Yes, let me just say I can't commit that we
will have a hearing before we have a markup but I don't know
that that date has been set.
Mr. Rush. Mr. Chairman, I think that is absolutely critical
that we on the outside be allowed to have this hearing based on
scientists of our choosing and I am sure you have scientists
also. We could have a hearing would be almost without any
meaning. I think the members of the subcommittee need to hear
from scientists. They need to hear from scientists of our
choosing about this important matter.
Mr. Whitfield. Well, and like I said we have had 24
hearings on the science.
Mr. Rush. Mr. Chairman, if I might I would just ask are you
planning on having a markup on this hearing next week?
Mr. Whitfield. I can say for myself that we have not
decided specifically on a date for a markup that I am aware of
however we do want to move quickly. I think we have made that
very clear in the beginning we want to move quickly on this and
I might say that I think our regular order has been much
better. Not to get into the health care bill of last year but
we didn't even have an opportunity to even offer an amendment
on the House floor on that bill but I am offering you all an
opportunity to do a hearing on Tuesday. And if not, I suppose
obviously you have the right to invoke a Rule 11 and go from
there.
Mr. Waxman. Mr. Chairman, let us notice your hearing for
next Tuesday. We will do our best to get the witnesses there.
Mr. Whitfield. OK so we will notice the hearing for next
Tuesday.
Mr. Shimkus. Mr. Chairman, would you yield for 1 second
just to fulfill this debate?
Mr. Whitfield. Yes.
Mr. Shimkus. If I remember correctly when we moved the
Waxman-Markey bill we continuously asked for an economic
analysis and we never had a hearing on that prior to the markup
of the bill. We did get a hearing 2 weeks after we marked up
the bill so, you know, what is good for the goose is good for
the gander and what we are trying to do here as we tried to do
a couple of weeks ago is talk about the economic impacts. So
let us understand the history behind this and we didn't get a
chance to deal with the economic aspects. Not a single hearing.
The bill was marked up and then 2 weeks later we had a hearing
on the economic impacts.
Mr. Waxman. Will the gentleman yield to me?
Mr. Shimkus. I will.
Mr. Waxman. We did have before there was a markup an EPA
analysis I think that the members wanted further analysis of it
but we did have that before the markup.
Mr. Shimkus. Reclaiming my time, we don't consider the EPA
the expert on economic impact especially when in our hearing of
2 weeks ago they readily admitted that they don't consider
economic impacts in their decision.
Mr. Waxman. Will the gentleman yield further?
Mr. Shimkus. I would be happy to.
Mr. Waxman. We could go back and forth. You did this. We
did that. We have asked for a hearing. The chairman has
suggested that we take next Tuesday. We are trying to
accommodate that request and I think it is helpful for all of
us to get all the information we need and I would think since
it is an important scientific controversy with members.
Mr. Shimkus. Just reclaiming my time and I agree with you.
I am just setting the record straight and I yield back.
Mr. Barton. Will the ranking member yield for a question if
it is his turn?
Mr. Waxman. I don't have time. It was the gentleman from
Illinois' time.
Mr. Barton. Would the chairman yield?
Mr. Whitfield. I recognize the gentleman.
Mr. Barton. I would like to ask my distinguished friend
from California are there some new studies that have come out
in the last week, month, even 6 months that you believe are
different than all the other studies that we have seen in the
last say 12 months?
Mr. Waxman. Well, I see six members attending this hearing
today who were not on the committee in previous Congress'. I
think it would be well for them to be informed. I think it is
well worth getting testimony. I think it is an essential part
of doing legislation.
Mr. Barton. But the answer is no? There is no new
information?
Mr. Waxman. There are new studies linking carbon emissions
to severe weather and I think that is an important part of what
we have been looking at around the world.
Mr. Rush. Will the gentleman yield just for a moment?
Mr. Barton. I think Chairman Whitfield is a saint.
Mr. Whitfield. Before--Mr. Waxman, you are not getting
ready to leave are you?
Mr. Waxman. No, no.
Mr. Whitfield. OK.
Mr. Barton. If I have the time, I am going to yield to my
friend from Chicago briefly before Chairman Whitfield reclaims
the gavel and moves the hearing forward.
Mr. Rush. Well, I thank the gentleman for yielding. I think
that it is absolutely essential for us to have this hearing
with these scientists because the matter before us is very
important and I think that it really would inform members.
There may be some amendments to this bill that we will be
discussing that will be initiated because of testimony and I do
possibly see that there might be some amendments that might
even be bipartisan once we hear the scientists. So I think this
is really absolutely necessary for us to move forward with this
hearing so that we can discuss this to its fullest effect.
Thank you, Mr. Chairman.
Mr. Waxman. Whoever has the time would you yield further to
me?
Mr. Barton. I do and I am going to yield one last time to
Chairman Waxman.
Mr. Waxman. I asked earlier today in my opening statement
that we make part of the record information on some new
studies. We pointed out in our letter to the chairman that
there are two new studies linking severe weather events to
manmade climate change and I think it is important for us to
hear about it even if you don't believe it is true.
Mr. Barton. I am happy to look at this new information.
Being a professional engineer I am always interested in the
truth and will be more than happy to.
Mr. Waxman. During the 111th Congress there was only one
scientist who testified that science didn't testify actually
and that was Patrick Michaels and as the chairman knows we are
currently examining whether he was fully forthcoming with the
committee. I don't think the only scientist, supposed scientist
witness on science should be Senator Inhofe.
Mr. Whitfield. Thank you all. I agree. I agree.
Mr. Waxman. Are you willing to take yes for an answer, Mr.
Chairman.
Mr. Whitfield. Let me just note we have votes on the floor.
We just have two votes and then we are going to come back
immediately because we want to hear your testimony but before
we break I just want to make sure that I understand here what
we have committed to. This is a regular hearing. Not an
invoking Rule 11 hearing. Notice today hearing scheduled for
Tuesday. You select your two witnesses regarding the studies
and we will get a witness or two.
Mr. Waxman. We want it to be a regular hearing. We may need
more than two witnesses. We will discuss that with you.
Mr. Whitfield. We would like to have the names of them
today though.
Mr. Waxman. We will do our best.
Mr. Whitfield. OK.
Mr. Waxman. We did send you a letter before the recess.
Mr. Whitfield. You did, you absolutely did.
Mr. Waxman. We are working with you in good faith. We just
think this is an important part of the process.
Mr. Whitfield. OK, now we are going to take about a 10 or
15 minute recess and then we will be back and I will introduce
this panel and hopefully the next part of this hearing will be
even more exciting than the first part.
[Recess.]
Mr. Whitfield. OK, thank you all so much for your patience
and at this time I would like to introduce the witnesses for
the first panel. First of all we have Mr. Mike Carey who is
president of the Ohio Coal Association. We have Mr. Paul Cicio,
President of Industrial Energy Consumers of America. Mr. Hugh
Joyce, President of the James River Air Conditioning Company.
Mr. Forrest McConnell, President of McConnell Honda and Acura.
Mr. David Montgomery, Vice-President, Charles River Associates
and Professor Dan Reicher who is professor law and director of
the Steyer-Taylor Center for Energy Policy at Stanford Law
School. So I extend a warm welcome to you all. We need your
assistance. We look forward to your testimony and I would
remind each of you that you have 5 minutes for your opening
statements. At the end of that time, once we have completed the
entire panel we will have questions from the members. So at
this point, Mr. Carey, I recognize you for a 5-minute opening
statement and we will go right down the line. Be sure and turn
your microphone on.

STATEMENTS OF MIKE CAREY, PRESIDENT, OHIO COAL ASSOCIATION;
PAUL CICIO, PRESIDENT, INDUSTRIAL ENERGY CONSUMERS OF AMERICA;
HUGH A. JOYCE, PRESIDENT, JAMES RIVER AIR CONDITIONING COMPANY,
INC.; FORREST MCCONNELL, NATIONAL AUTOMOBILE DEALERS
ASSOCIATION, AND PRESIDENT, MCCONNELL HONDA AND ACURA; W. DAVID
MONTGOMERY, VICE PRESIDENT, CHARLES RIVER ASSOCIATION; AND DAN
REICHER, EXECUTIVE DIRECTOR, STEYER-TAYLOR CENTER FOR ENERGY
POLICY AND FINANCE, STANFORD UNIVERSITY, PROFESSOR, STANFORD
LAW SCHOOL, AND LECTURER, STANFORD GRADUATE SCHOOL OF BUSINESS

STATEMENT OF MIKE CAREY

Mr. Carey. Chairman Whitfield, Ranking Member Rush and
members of the committee, good afternoon. I want to thank you
for inviting me for the opportunity to testify.
My name is Mike Carey. I am president of the Ohio Coal
Association. We are a trade organization that employs roughly
3,000 Americans in our Ohio coal mines and according to many
independent studies that number goes up to roughly 30,000
secondary jobs in the coal fields.
It is difficult for me to confine my remarks today on only
the greenhouse gas regulations because our industry nationwide
is facing an unprecedented onslaught of new rules that will
eliminate coal in the direct and indirect jobs associated with
it. To be clear, we are not advocating for a rollback or repeal
of the current existing Clean Air Act programs but what is
coming out of the Obama EPA is a host of new regulatory
proposals including the Clean Air Transport Rule and the
Utility Mac.
Already, because of threats from the Administration and the
EPA, United States power producing companies have announced
that they have plans to retire close to 14,000 megawatts of
coal-fired electric generation by 2011 and 2020. To be clear,
CO2 does not have a negative health impact. In fact,
a repeal is not a rollback of the Clean Air Act. Congress did
not intend for it to be regulated in 1990 and has not passed
cap and trade legislation.
It is also important to remember what EPA Director Lisa
Jackson said just 2 years ago when she was asked what
unilateral U.S. action on climate change would do. She said,
and I quote, ``It would have no significant impact on
atmospheric greenhouse gas levels.'' But the manufacturing jobs
in my home State of Ohio and those of the surrounding States of
West Virginia, Pennsylvania, Indiana, Kentucky, and Michigan
would ultimately see jobs go to China and India for no
environmental benefit.
In 2008, President Obama said, and I quote again, ``If
someone wants to build a new coal-fired power plant, they can
but it will bankrupt them because they will be charged a huge
sum for all the greenhouse gas that they are emitting.'' The
President couldn't have been clearer with his intentions and
his Administration is following forward on their war on the
American coal industry.
This legislation that we are discussing today recognizes
the logical starting point and that is that Congress never
intended greenhouse gases to be regulated under the Clean Air
Act. It is my hope that this committee will take action on all
legislation that will interpret this flood of regulations that
are an avert attack on our industry, not only just out industry
but the low-cost power producing facilities that consume our
products and ultimately the American manufacturing base.
We are already seeing some of the effects of the Obama
EPA's plan to regulate greenhouse gases. Domestic energy
resource companies that had plans to grow job-creating economic
development projects simply have moth-balled them and in many
ways companies cannot get access to the critical capital from
the lenders because of the uncertainty. As this committee
contemplates the regulating the specific of greenhouse gas over
a certain period of time like a 2-year time period should not
be a viable solution. I think those of us who have worked with
bureaucracies to try to obtain permits over the years or even a
direct answer know that a 2-year delay of greenhouse gas
regulations is nothing more than a political ploy and no one in
this industry is fooled by that tactic.
Why are these EPA regulations such a problem? First,
through the courts EPA has been given an unchecked arbitrary
authority over jobs through the Clean Air Act permitting. These
actions are unaccountable to anybody, including Congress. The
mere existence of the flawed illegal tailoring rule concept
shows that the EPA is redefining on their own, outside of
congressional authority who they believe should get special
consideration, much like the political waivers under the
healthcare law. Under present circumstances the EPA can
purposely err in granting a permit thereby allowing activists
to object and sue in court. Already we are seeing groups such
as the Center for Biological Diversity challenging dozens of
projects across this country on the grounds of climate under
NEPA.
What is ultimately needed is an independent review. I
believe that we need legislation that mandates that the House
and the Senate review and approve all significant rules or
regulations that are promulgated by the Executive Branch. We
have this in the State of Ohio and we have had it for many
years. The question really comes down to whether Congress wants
the EPA to unilaterally decide where economic development will
occur, in which industry and how much Americans will pay for
their energy.
Mr. Chairman, I thank you for the opportunity to testify
today and I stand ready to answer any of your questions. Thank
you.
[The prepared statement of Mr. Carey follows:]

[GRAPHIC] [TIFF OMITTED] T6512.006

[GRAPHIC] [TIFF OMITTED] T6512.007

[GRAPHIC] [TIFF OMITTED] T6512.008

[GRAPHIC] [TIFF OMITTED] T6512.009

[GRAPHIC] [TIFF OMITTED] T6512.010

[GRAPHIC] [TIFF OMITTED] T6512.011

[GRAPHIC] [TIFF OMITTED] T6512.012

[GRAPHIC] [TIFF OMITTED] T6512.013

[GRAPHIC] [TIFF OMITTED] T6512.014

[GRAPHIC] [TIFF OMITTED] T6512.015

[GRAPHIC] [TIFF OMITTED] T6512.016

Mr. Whitfield. Thank you, Mr. Carey.
Mr. Cicio, you are recognized for 5 minutes.

STATEMENT OF PAUL CICIO

Mr. Cicio. Thank you, Mr. Chairman, Ranking Member Rush. I
am privileged to be here.
IECA, the Industrial Energy Consumers of America is a
organization of manufacturing companies. We have no oil
companies, no coal companies, no natural gas companies and no
electric utilities. We are manufacturers that produce widgets.
While the manufacturing sector is rebounding, we continue
unfortunately to lose competitiveness. The Commerce Department
reported on February 11, that the 2010 trade deficit rose to
$498 billion dollars, a 32.8 percent increase, the largest in a
decade. China represented nearly 55 percent of the deficit.
Our country and we in manufacturing are locked in global
competition with other companies and their manufacturing
sectors and we are losing. We must once again become a country
that embraces manufacturing with policies that foster capital
investment, innovation, low relative energy costs and
regulations that are cost-effective and provide certainty.
The EPA greenhouse gas regulation is an example of
regulation that creates uncertainty and discourages investment
and when added to the many other new regulations it is
understandable why corporate America is sitting on $2 trillion
of cash. The irony is that the manufacturing sector places a
high priority on energy efficiency. We are the most energy
efficient. We spend more time and money on energy efficiency
than any other sector of the economy yet we disapprove of the
EPA greenhouse gas regulations that set a maximum achievable
control technology on energy efficiency. Especially when there
are positive and cost effective ways of achieving significant
energy efficiencies for greater use of combined heat and power,
or waste heat recovery, or energy efficiency in buildings and
building consume 40 percent of all the energy in the country.
A better way that we have proposed is what we call the
Sustainable Manufacturing Growth Initiative. It is policies
that will revitalize the manufacturing sector over 10 years by
improving industrial energy efficiency and it also improves
efficiency in buildings. And that modeling of what we are
proposing would reduce 10 percent of all U.S. greenhouse gas
emissions in 10 years, create 3.2 million man-year jobs and
unlock capital-fixed investment of $407 billion that would be
invested in the United States rather than in some other
country. This is an initiative that every manufacturer in the
country would support.
In contrast, I do not know at this time a single
manufacturer that produces products in the United States that
supports the EPA greenhouse gas regulation and the reason why
is that under EPA regulations, EPA takes decision-making out of
the hands of manufacturing. They mandate when capital must be
spent on energy efficiency technology projects. It mandates
what energy efficiency projects will be completed even if it is
inconsistent with the scope or timing of other manufacturing
production plans, or business strategies, or priorities. It
mandates what technology will be used even if that technology
is not cost-effective or desirable for the type or quality of
the products that that facility produces. It mandates what
manufacturing practices will be used to operate the facility,
taking decision-making out of the hands of manufacturing plant
operations people and putting it in the hands of the EPA.
Mr. Chairman, the U.S. manufacturing sector has lost 5.4
million manufacturing jobs in 10 years, 31 percent and unless
we work together, this Congress and with this Administration we
are not going to get those jobs back, and we look forward to
working with you to make that happen. Thank you.
[The prepared statement of Mr. Cicio follows:]

[GRAPHIC] [TIFF OMITTED] T6512.017

[GRAPHIC] [TIFF OMITTED] T6512.018

[GRAPHIC] [TIFF OMITTED] T6512.019

[GRAPHIC] [TIFF OMITTED] T6512.020

Mr. Whitfield. Thank you very much.
Mr. Joyce, you are recognized for 5 minutes.

STATEMENT OF HUGH A. JOYCE

Mr. Joyce. Good afternoon, Chairman Whitfield and Ranking
Member Rush and members of the subcommittee. Thank you for
giving me the opportunity to speak today.
I am the owner of James River Air Conditioning located in
Richmond, Virginia. We perform HVAC, plumbing, electrical,
solar and geothermal work on residential and commercial
construction and retrofit projects. We currently have 150 full-
time employees. My father started the company in 1967 and I
joined in 1977 while I was still in high school and worked my
way up to president and owner. I have always made it a priority
to conduct business with environmental consequences of my
decisions and actions kept in mind. I am a member of the U.S.
Green Building Council and manage LEED certified greenhousing
projects. In fact, we designed, supervised and constructed the
first LEED platinum house certified in Richmond. It was
completed in September, 2010, 95 percent of its energy comes
from solar power. It is also connected to Google PowerMeter
which gives it a daily efficiency rating.
We also focus on energy efficiency in our own office
building which generates 10 percent of its power with solar
panels on the roof. I am making these examples for two reasons.
One, I have bet the entire net worth and the future of my
business on conservation, green construction and reducing
greenhouse gases, and implementing green strategies for myself
and my clients. Secondly, efficiency and conservation make good
business sense and I want to leave the world in a better place
as a result of my work. Let me emphasize that I and many other
small business owners choose to run our companies this way
without government mandates.
Attempts by the EPA to regulate greenhouse gases under the
Clean Air Act will drive up our costs and will hinder economic
recovery particularly in the construction industry.
Construction impacts our economy significantly. Currently, new
construction is down 50 to 90 percent in my market. Some houses
and commercial buildings in Richmond are selling for less than
the raw cost of materials to rebuild them. It routinely takes
six months to plan and permit a project. A federal permit would
cause the process to take even longer. The cost of modeling,
and engineering, and reviewing, and pre-permitting, and cutting
through the EPA red tape to permit as the new finding rules
indicate would be the case could add one to four percent in
professional cost to the average construction job. Currently,
expenditures on material, labor and insurance are increasing,
yet buildings are selling for less. Any new permitting mandates
that increase costs like the EPA's regulatory plan would
further limit new construction good jobs. Simply put, more
confusion, greater uncertainty, means less work and fewer
construction jobs.
Due to the already heavily regulated nature of the
construction industry I have one full-time employee dedicated
to monitoring and ensuring compliance with regulations.
Additional employees contribute to regulatory compliance as
well. Regulation such as the EPA greenhouse gas rules would be
extremely burdensome for business and clients.
According to the SBA, small businesses spent 36 percent
more per employee on regulations than their larger
counterpoints and 360 percent more on environmental regulation.
Environmental regulations alone cost my business approximately
$150,000 a year. Combining that with other regulations, the
total regulatory cost for my business is nearly $250,000 a
year. As a small business owner my hope is the instead of
punitive government policies we can incentivize environmentally
friendly behavior. The EPA's own Energy Star program is one
such example.
When it comes to reducing greenhouse gases and pollution
and moving this country forward, I believe we can get more
sugar than we can with vinegar. Let us tap the power of
American innovation, new clean energy sources, incentives and
free market forces to win the battle against pollution. Please
help us avoid regulations that will increase costs and create
barriers to new jobs that will have little or no effect on
reducing overall global pollution.
Thank you for having me here today.
[The prepared statement of Mr. Joyce follows:]

[GRAPHIC] [TIFF OMITTED] T6512.021

[GRAPHIC] [TIFF OMITTED] T6512.022

[GRAPHIC] [TIFF OMITTED] T6512.023

[GRAPHIC] [TIFF OMITTED] T6512.024

Mr. Whitfield. Thank you, Mr. Joyce.
Mr. McConnell, you are recognized for 5 minutes.

STATEMENT OF FORREST MCCONNELL

Mr. McConnell. Mr. Chairman, Ranking Member Rush, my name
is Forrest McConnell. I am president of McConnell Honda and
Acura of Montgomery, Alabama and I am testifying on behalf of
the National Automobile Dealers Association.
Today there are three different fuel economy programs
administered by three different agencies under three different
standards pursuant to three different laws. America's auto
dealers support a single national fuel economy program under
CAFE beginning in model year 2017 as the best way to increase
fuel economy, protect jobs, preserve passenger safety and
reduce vehicle tailpipe CO2 emissions. Congress did
not intend fuel economy to be regulated by NHTSA, EPA and
California together when it passed a bipartisan Ten-in-Ten Fuel
Economy Act in 2007. It is paramount for Congress to reassert
its primacy over this area and return the still recovering auto
industry into a single national fuel economy standard.
There are numerous advantages to this approach. First, its
terms are set by you, Congress. Second, only CAFE mandates a
balancing of all the important considerations when setting fuel
economy standards, jobs, safety, customer choice and customer
acceptability. Third, CAFE was written specifically to regulate
fuel economy. The Clean Air Act for all its virtues was not.
California's regulation was written also to regulate fuel
economy but only in California. Its application in other States
results in what the EPA Administrator Jackson calls a patchwork
of State standards. Fourth, a single national fuel economy is
by definition uniformly consistent unlike what we have today.
While the next round of fuel economy rulemaking will not
take effect until model year 2017, the rules are being drafted
now in Sacramento and Washington. As a dealer, I am worried
about the challenges California's regulation would impose on my
industry and our customers. According to a recent New York
Times, a California official has indicated that CARB,
California Air Resource Board will implement its patchwork
regime in the California State in the next round of rulemaking
if necessary. This would be problematic for auto dealers and
customers because unlike CAFE, CARB's regulations will distort
the auto market and do nothing additional to decrease
greenhouse gas emissions or improve fuel economy on a national
basis. California's approach to fuel economy regulation
involves loopholes, exemptions, market distortions and does not
balance national factors. CAFE has none of these defects.
Congress needs to reaffirm that this body sets national fuel
economy policy, not California regulators.
Mr. Chairman, it is doubtful that Congress would ever enact
three competing fuel economy programs. State regulation is
unnecessary. Regulation of tailpipe CO2 emissions by
EPA is redundant as the only way to reduce such emissions is to
increase a vehicle's fuel economy which CAFE regulates.
America's auto dealers support a single national fuel economy
program and increases a fuel economy that makes sense to
customers. It is important that the structure of the fuel
economy program is sound so that the stringency of the fuel
economy standard will be correct. That structure must leverage,
not frustrate consumer demand. Unless customers actually buy
new vehicles the environmental and economic benefits will not
be realized. I urge Congress to return to a single national
fuel economy standard under CAFE to avoid that risk.
Thank you.
[The prepared statement of Mr. McConnell follows:]

[GRAPHIC] [TIFF OMITTED] T6512.025

[GRAPHIC] [TIFF OMITTED] T6512.026

[GRAPHIC] [TIFF OMITTED] T6512.027

[GRAPHIC] [TIFF OMITTED] T6512.028

[GRAPHIC] [TIFF OMITTED] T6512.029

[GRAPHIC] [TIFF OMITTED] T6512.030

[GRAPHIC] [TIFF OMITTED] T6512.031

[GRAPHIC] [TIFF OMITTED] T6512.032

[GRAPHIC] [TIFF OMITTED] T6512.033

[GRAPHIC] [TIFF OMITTED] T6512.034

Mr. Whitfield. Thank you, Mr. McConnell.
Mr. Montgomery, you are recognized for 5 minutes.

STATEMENT OF W. DAVID MONTGOMERY

Mr. Montgomery. Thank you, Mr. Chairman and members of the
subcommittee.
My name is David Montgomery. I am an economist and I have
been working on the topic of this hearing for more years than I
like to remember. I will be discussing my own opinions today as
an economist. I have formed them over many years. I have
numerous publications and peer review and professional journals
dealing with quantitative studies of the cost of greenhouse gas
regulations and related topics. I will be happy to discuss my
qualifications in questions if anyone has any questions about
my ability or my objectivity on this subject.
I will say that although I am discussing my own opinions
and not necessarily those of my employer or my client, I
believe, in fact I am certain that the vast majority of
economists working in this area will agree specifically with
the points that I am making today which is basically that there
will be costs to greenhouse regulations. Nevertheless, there
are studies that have circulated around Washington that claim
greenhouse gas regulations will increase total employment and
stimulate long-term green growth. These are the claims that
come from politically motivated fringe of the profession. They
reach these happy conclusions by simply leaving out half of the
story. They describe and count only the jobs associated with
regulatory compliance and ignore all the jobs lost in the rest
of the economy due to higher cost of doing business. They fail
to recognize that resources are limited and that money spent
with complying with regulations is money diverted away from
other productive purposes.
These studies are typified by a series of reports by the
Political Economy Research Institute that are sponsored by
politically powerful organizations known as PERI's and the
Center for American Progress. They use a simple procedure
called multiplier analysis but like the philosopher's stone,
turns the cost of compliance with regulations into the gold of
added jobs but it is fool's gold.
If these studies used any comprehensive model of the U.S.
economy it would be forced to account for where the resources
expended on regulatory compliance come from. When I did that, I
found that in 2015, adding even the most cost-effective forms
of greenhouse gas regulation and other pending EPA regulations
would increase wholesale electricity prices by 35 to 40
percent, would reduce average worker compensation by about $700
per year and would shrink all the factors of the economy. The
biggest hits would be on electricity, coal and energy-intensive
industries. I don't even need to repeat that the energy-
intensive industries face competition industries in other
countries and regions that are not bearing these kinds of added
costs and that they are quite vulnerable there. Other parts of
the economy, other industries would take up some of the slack
for sure but on the net effect on the whole economy of these
regulations would be that it would be growing less robustly.
Now, let us turn to impact on workers. Using this
comprehensive approach, total worker compensation I estimate
would be driven down in 2015 by about one-and-a-half percent.
If that reduction in compensation were to take the form of lost
jobs, you would imply the loss of close to two million jobs,
not the gains claimed by green jobs advocates. Or if our
variable markets work efficiently and wages adjust to lower
productivity, it would be a loss of about $700 per year in
compensation to each worker. Moreover, this is overly
optimistic.
Regulation of greenhouse gases under the Clean Air Act will
be much more costly than this. The reason is that in doing
these calculations I assumed an ideal system putting a price on
greenhouse gas emissions everywhere but EPA's proposal under
the Clean Air Act would use command control regulations
designed by bureaucrats who know next to nothing about the
circumstances of individual businesses. Therefore, there orders
cannot be possibly lead to solutions as cost-effective as those
that managers would find with their own additions as they face
the price on carbon.
It is hard for me to think of a worse design for greenhouse
gas policy than Clean Air Act authorities that were designed to
deal with localized emissions of trace contaminants. Not only
are these an excessively costly way to bring about wholesale
changes in our energy system, they will fall far short of what
would have to be done to stabilize global temperatures.
Pretending the EPA regulations are cost-free is only intended
to distract you from designing a policy response that avoids
unnecessary costs.
There are many other technical deficiencies and studies of
green jobs that I have described in my written testimony but I
will end with just really two simple points. Given the
looseness of green accounting, calculations of green jobs might
simply be adding up jobs that would exist with the EPA
regulations or without them so the claim of green jobs is
simply re-labeling. That clearly cannot create real economic
benefits though it doesn't do any harm and that is the best
case. If a new job slot is created for the sole purpose of
being green then these people represent a higher cost to their
employer while adding nothing to their output or revenues. If
green jobs are mandated to produce goods needed only because of
regulation like replacements for prematurely retired power
plants, they actually subtract from the present and future
economic well-being of the Nation.
Regulation might be justified if it produced environmental
gain that is worth these costs but that should not obscure the
fact that prematurely retiring power plants is a cost, not a
benefit. Yet the logic used by green job proponents implies
that the greater the unproductive investment caused by
regulation, the greater its beneficial impact on jobs. If that
logic was really valid, rather than seeking out cost-effective
regulation we should seek out the highest cost way to achieve
environmental goals. Businesses should hire as many workers
that they can fit on the jobsite for every project. The result
is absurd because the logic on which it is based is nonsense.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Montgomery follows:]

[GRAPHIC] [TIFF OMITTED] T6512.035

[GRAPHIC] [TIFF OMITTED] T6512.036

[GRAPHIC] [TIFF OMITTED] T6512.037

[GRAPHIC] [TIFF OMITTED] T6512.038

[GRAPHIC] [TIFF OMITTED] T6512.039

[GRAPHIC] [TIFF OMITTED] T6512.040

[GRAPHIC] [TIFF OMITTED] T6512.041

[GRAPHIC] [TIFF OMITTED] T6512.042

[GRAPHIC] [TIFF OMITTED] T6512.043

[GRAPHIC] [TIFF OMITTED] T6512.044

[GRAPHIC] [TIFF OMITTED] T6512.045

[GRAPHIC] [TIFF OMITTED] T6512.046

[GRAPHIC] [TIFF OMITTED] T6512.047

[GRAPHIC] [TIFF OMITTED] T6512.048

[GRAPHIC] [TIFF OMITTED] T6512.049

[GRAPHIC] [TIFF OMITTED] T6512.050

[GRAPHIC] [TIFF OMITTED] T6512.051

[GRAPHIC] [TIFF OMITTED] T6512.052

[GRAPHIC] [TIFF OMITTED] T6512.053

[GRAPHIC] [TIFF OMITTED] T6512.054

[GRAPHIC] [TIFF OMITTED] T6512.055

[GRAPHIC] [TIFF OMITTED] T6512.056

[GRAPHIC] [TIFF OMITTED] T6512.057

[GRAPHIC] [TIFF OMITTED] T6512.058

[GRAPHIC] [TIFF OMITTED] T6512.059

[GRAPHIC] [TIFF OMITTED] T6512.060

Mr. Whitfield. Thank you.
Mr. Reicher, you are recognized for 5 minutes.

STATEMENT OF DAN REICHER

Mr. Reicher. Chairman Whitfield, Ranking Member Rush, and
members of the committee, thank you for the opportunity to
testify.
My name is Dan Reicher. I am executive director of the
Steyer-Taylor Center for Energy Policy and Finance, a joint
center of the Stanford Law School and the Graduate School of
Business. Prior to Stanford, I was director of climate change
and energy initiatives at Google, president of a private equity
firm that invests in energy projects and executive vice
president of a venture-capital-backed renewable energy company,
and prior to these roles I was DOE assistant secretary for
energy efficiency and renewable energy and the Department's
chief of staff.
I would like to make two points today. First, controlling
U.S. carbon emissions along with other policy and investment
measures to address climate change and advanced clean energy
technology is critical to our Nation's economy, security,
health and environmental quality. Second, experience over the
last few decades makes clear that well-designed environmental
and energy regulation far from being an economic drag can spur
U.S. innovation, enhance competitiveness and often cut
development and operating costs.
Regarding the first point, we can debate the relative
merits of the various approaches to regulating carbon emissions
but the science tells us we need to act and the vast global
market for clean energy technology tell us it is in our best
economic and security interest to do so. We are unlikely to see
the enactment of comprehensive climate and energy legislation
any time soon, therefore EPA's current authority to regulate
carbon emission should be strongly supported building on the
agency's solid record of air regulation over the last four
decades as well as the Supreme Court's 2007 decision upholding
EPA's carbon regulatory authority.
Regarding the second point, Michael Porter, a top Harvard
economist and an economic policy advisor to the George W. Bush
campaign has been a champion of the view that well-designed and
executed regulation can induce efficiency, spur technological
innovation and enhance competitiveness. What Porter calls the
innovation effect makes processes and products more efficient
and achieves saving sufficient to compensate for both the cost
of compliance and the cost of innovation. Countries all over
the world from China to Germany to Japan have committed to
controlling carbon emissions through a variety of policy and
investment mechanisms, and in doing so have grown a massive
global clean energy industry measured in the trillions of
dollars and millions of jobs that was once led by the U.S.
We can advocate this market by turning back the clock in
carbon controls and related energy policy and investment or we
can seize the opportunity to lead the global clean energy
industry whether it is in nuclear power, or renewable energy or
advanced coal technologies, or natural gas. We need look no
further than China to see that clean energy technology industry
largely invented and once dominated by the U.S. slipping away.
As we have dithered in our country in recent years in setting
energy and climate policy, China has been working aggressively
to become the world's clean energy powerhouse. The Chinese have
set standards for power companies to produce more clean
electricity, shut down old power plants and outdated heavy
manufacturing capacity, established a program to improve the
efficiency of its 1,000 most energy consuming enterprises,
invested heavily in energy R&D, provided low-cost financing for
clean energy projects and made major investments in the
electricity gird, and importantly, set a target to reduce
carbon intensity 40 to 45 percent below 2005 levels by 2020.
Beyond China, other countries including Germany, Japan, South
Korea and Denmark are forging ahead with ambitious clean energy
policy and investment strategies and seeing significant,
significant job growth as a result.
In contrast, the U.S. has largely stayed on the sidelines
endlessly debating the need for an approach to a successful
clean energy strategy. That is the bad news. The good news is
that we can regain our leadership in clean energy. Among the
solutions, we should adopt a national clean energy standard
following the lead of many States that have set such standards.
I would note that Congressman Barton and 16 of his Republican
colleagues currently serving on the full committee supported an
amendment to the American Clean Energy Security Act that
included a detailed clean energy standard.
We should increase our investment in energy R&D. We should
support the DOE Loan Guaranty Program that is proving pivotal
in the deployment of clean energy technologies for renewables
to nuclear. Over time we should replace the DOE Loan Guaranty
Program with a new Clean Energy Deployment Administration that
was adopted last year by the full House and by the Senate
Energy Committee. We should extend federal tax credits that
have been so vital in encouraging private sector financing of
clean energy projects and most relevant to this hearing, we
should reject the proposal to withdraw EPA authority to
regulate carbon emissions under the Clean Air Act.
Mr. Chairman, I believe it is inevitable that we will put
strong controls on greenhouse gas emissions. The question of
U.S. carbon regulation is not whether but when and there is a
significant increasing portion of the business community that
agrees. A major reason they agree is that we have four decades
of evidence that the federal government will implement carbon
controls in a smart and cost-effective manner. For example, in
1990 power companies predicted that reducing sulfur dioxide to
address the acid rain problem under the Clean Air Act would
cost $1,000 to $1,500 per ton. In fact, the actual cost has
been between $100 and $200 per ton.
With regard to energy efficiency, as a result of a series
of federal and State standards, a typical refrigerator today
uses roughly a quarter of the electricity that it did in the
1970s and actually costs less in real terms. And with regard to
automobile fuel economy, in early 2009 the Administration
reached an agreement with the auto industry creating a single
national program for fuel economy and greenhouse gas emissions
that will increase fuel economy levels in new passenger
vehicles to 35-and-a-half miles per gallon, save consumers
roughly $3,000 over the life of the vehicle, drive fuel
consumption in new vehicles down by 30 percent and along with
similar efforts globally help lower oil demand and decrease oil
prices making us less vulnerable to oil price shocks from
international events like those occurring as we speak in the
Middle East.
Wrapping up, prior to my current position at Stanford I
spent 4 years at Google. Coming from the energy sector I was
struck by how innovation, investment and policy with great
leadership from the U.S. federal government came together so
effectively to build an entirely new game changing and job
creating industry, the Internet, led by our Nation. We must
take a similarly coordinated approach between the private
sector and the U.S. government in order to seize the
extraordinary opportunities in the next great industry, clean
energy technology. If we don't get our act together between our
government and the private sector other countries that are
taking the long view will be the winners of this marathon. A
prize worth trillions of dollars and millions of jobs hangs in
the balance.
Thank you for the opportunity to testify.
[The prepared statement of Mr. Reicher follows:]

[GRAPHIC] [TIFF OMITTED] T6512.061

[GRAPHIC] [TIFF OMITTED] T6512.062

[GRAPHIC] [TIFF OMITTED] T6512.063

[GRAPHIC] [TIFF OMITTED] T6512.064

[GRAPHIC] [TIFF OMITTED] T6512.065

[GRAPHIC] [TIFF OMITTED] T6512.066

[GRAPHIC] [TIFF OMITTED] T6512.067

[GRAPHIC] [TIFF OMITTED] T6512.068

Mr. Whitfield. Thank you, Mr. Reicher, and thank all of you
for your testimony.
Tthis testimony is so stimulating really because the
perspectives on this issue are really diametrically opposed
which is what makes this so interesting. We are not going to
get into the science and I am going to read this one sentence,
not for its truthfulness per se but just as a view. Now, this
was stated by Vaclav Claus, President of the European Union,
about this book which is written by Ian Plimer who has won
Australia's highest scientific honor twice and he says this is
a very powerful, clear, understandable and extremely useful
book. Plimer convincingly criticizes the United Nations, the
International Panel for Climate Change, UK, U.S., and European
Union politicians as well as Hollywood show business
celebrities. He strictly distinguishes science from
environmental activism, politics and opportunism. Now, like I
said I am not talking about the truthfulness of that but here
is the issue. When you have that kind of different views on
this very important subject and Congress on three separate
occasions has said no to EPA regulating greenhouse gases, and
when Lisa Jackson appeared before this committee a couple of
weeks and she was asked by Mr. Green of Texas, can we really
address climate change without strong, mandatory reductions by
other major emitters in other countries and Ms. Jackson said we
will not ultimately be able to change the amount of
CO2 that is accumulating in the atmosphere alone.
So listening to you gentlemen, many of you talk about the
additional cost that would be imposed upon American businesses
and that the fact that even Ms. Jackson herself has said there
would not be any dramatic improvement in CO2
reductions, how do draw this line? Mr. Carey, you said in your
testimony that EPA has indicated that they would be closing
down 14,000 megawatts of coal plants by 2011-2012. Now, all of
you are businessmen but how if you lose that kind of
electricity, how do you make it up at a cost that does not
increase the cost of American businesses? Can you answer that
for me, Mr. Carey?
Mr. Carey. Mr. Chairman, I should be clear that the studies
I am citing, there are several studies and they all vary from
about 75 gigawatts that would be lost under these proposals all
the way down to 60 gigawatts.
Mr. Whitfield. Gigawatts, OK, right.
Mr. Carey. Yes which is also the thousand megawatts so that
is where we get the number from but clearly for our industry
when you are shutting down coal-based power producing
facilities, much like with the Clean Air Act the rush was to
put on clean coal technology which at that time is scrubbers.
What we are looking at now is the baseline of CO2 in
the concept of carbon sequestration. So the ability for many of
these power producing facilities to actually meet the standard
under a carbon sequestration standard and ultimately be able to
get the carbon dioxide to the facility, the technology A is not
out and ultimately what could happen and who is responsible for
the carbon dioxide that goes into the ground. So those numbers
would reflect a tremendous drop in coal production and when you
drop the amount of coal as I stated before, Penn State said for
every one coal job, up to 10 supporting jobs, the secondary
jobs are due to that one coal job, you are looking at taking a
number from anywhere of shutting down 77 percent.
Mr. Whitfield. Except for Mr. Reicher, it seems like most
of you agree that businesses would experience higher costs and
there would be some job loss. Am I correct on that? OK,
everybody says that and Mr. Reicher feels like the green energy
would create additional jobs.
Mr. Reicher. Mr. Chairman, I would have to say that there
are costs but there are also benefits.
Mr. Whitfield. Yes and how do you determine what that line
is? That is the real question.
Mr. Reicher. That is where reasonable people will differ
and that is the essence of this debate.
Mr. Whitfield. Yes and, you know, I am glad we are going to
have Gina McCarthy with us today because she according to EPA
air chief Gina McCarthy applying the 100-250 tons per year
limit for greenhouse gases as mandated by the Clean Air Act
would require six million sources to obtain Title Five permits,
lead to 82,000 permitting actions under PSD, result in an
estimated combined cost of $22.5 billion just to the permitting
authorities and not to the businesses. So of course I know they
are depending on the tailoring rule but a lot of people believe
that tailoring rule be ruled illegal.
Well, I got off my message here and I am out of time so,
Mr. Rush, I will recognize you for 5 minutes.
Mr. Rush. Thank you, Mr. Chairman.
Mr. Reicher, how do you respond to the charge that many
studies show that EPA's regulation of greenhouse gases will
actually create jobs and stimulate growth in the economy are
incomplete and give a distorted picture?
Mr. Reicher. Could you repeat that? I am sorry, Mr. Rush.
Mr. Rush. How do you respond to the charge that many
studies that show EPA's regulation of greenhouse gases will
actually create jobs and stimulate growth in the economy, that
they are incomplete and they give a distorted picture?
Mr. Reicher. Mr. Rush, I would look around the world where
we are seeing a whole host of controls being put on carbon
emissions from China to the European Union and a whole host of
other countries where in fact clean energy industries are
taking off, jobs are being created in large, large numbers. So
I am--this has actually been a real net economic benefit in
many respects to countries that have taken this initial step to
begin to control carbon emissions.
Mr. Rush. Do you have any particular examples in mind that
you could?
Mr. Reicher. Germany is a great example, leading the world
in so many energy technologies right now and they have taken
and put into effect a set of rigorous standards to control the
emissions of greenhouse gas emissions over time, days in goes
in. They have set and with that has come a very robust industry
and a whole host of clean energy technologies from advanced
natural gas technologies to cogeneration to solar and wind, and
to the extent that they are actually jobs, there are actually
shortages of highly-skilled employees for certain of the
industries in that country.
Mr. Rush. Dr. Montgomery, you had some interesting remarks
in your testimony and you mentioned the PERI reports before as
an example of how some studies are incomplete and distorted in
regards to the effects of the regulation on job creation. In
fact, you draw on environmental economics and management which
are four of the most heavily regulated industries which are
pulp and paper refining, iron and steel and estimated a net
increase in employment of 1.5 jobs per $1 million and
environmental spending over alternative expenditures. The same
publication also found a net employment gain from environmental
spending noted that and I quote, ``Environmental protection is
rapidly to become a million sales generating job creating
industry, $300 million per year and five million direct and
indirect jobs in the 2003.'' Do you dispute those numbers and
if so on what basis do you dispute them?
Mr. Montgomery. Actually they make my point perfectly that
the environmental regulations increase the number of workers
that have to be employed in an industry. They have to file
forms. They have to operate pollution controls and that adds to
cost. Workers are a cost. It does not mention what happened to
the output of those industries compared to what it would have
been had they not been facing these costs. Yes, they have more
workers per dollar of output and they have less output because
of the effects of higher prices, shifting demand away from
those industries and into other substitutes and shifting demand
to other countries. Your second point which I believe was that
there are many jobs that are created in what you cited a number
of jobs that are created in industries producing pollution
control equipment. Absolutely, that is my point and those
workers are not available for producing other goods that
actually go directly into the consumption and satisfaction of
individuals. Those workers are not available for healthcare.
Those workers are not available for producing automobiles. We
are diverting resources away from other activities in the
economy and the study that you cited did not mention that in
any way.
Mr. Rush. So you would say then that if those were same
workers were not employed in the efficiency areas then those
workers would be at work selling cars and manufacturing cars
and other industries, is that what you are saying?
Mr. Montgomery. Well yes, that is clearly true in the long
run. Absolutely, the employment in this economy is determined
by the available labor force and aside from occasional
recessions we have done an extraordinarily good job under
Democratic and Republican Presidents of maintaining full
employment but it is a matter of macro-economic policy and you
don't improve on that policy by imposing costs through
environmental regulations. It is simply a different category of
policy decisions. For example, the PERI report that claims to
be talking about all of the total jobs that are going to be
created in the economy. It said well yes, there are some
offsetting job losses. The people who are going to be working
in those coal-fired power plants that are being shut down but
it didn't mention all of the workers in the coal industry that
were no longer going to be producing coal to go into the 60 or
so of gigawatts of coal-powered power plants. They absolutely
left it out.
Mr. Waxman. The gentleman yield to me. I want to ask you a
follow-up question. Do you ever see any benefit in regulation
to deal with pollution or is it all negative?
Mr. Montgomery. Absolutely, we have had tremendous benefits
from many of the environmental regulations. We have seen air
quality in Southern California. I lived in Pasadena for 8
years.
Mr. Waxman. How about in the jobs area?
Mr. Whitfield. Sorry, we are about a minute-and-a-half
over.
Mr. Rush. Thank you, Mr. Chairman, I yield back the balance
of my time.
Mr. Whitfield. Thank you for doing that.
Mr. Barton is next but it is my understanding, let us see.
Mr. Barton. I am going to yield I think to Mr. Griffith.
Mr. Whitfield. Mr. Griffith, I understand you have a
conflict on the floor so we will recognize you for 5 minutes.
Mr. Barton. I pass and I do want to ask questions but I
wanted to let him go first.
Mr. Griffith. I thank you, gentleman.
Mr. Whitfield. Without objection, Morgan.
Mr. Griffith. I appreciate it.
Mr. Reicher, in your written statements you indicate and in
your oral statements as well that China is well on its way to
having a green or a more green energy producing economy and
isn't it true though at this time that they actually produce
more of their electricity with coal than we do in the United
States?
Mr. Reicher. They produce a very significant amount of
their electricity with coal, absolutely but they also have been
growing their renewable energy industry in a very significant
way and now lead the world in renewables and now lead the world
in both solar and wind. They have also made huge strides in
energy efficiency. They are a quickly growing country as we
know. No dispute that they use a lot of coal but the point is,
the important is they have an accelerated renewable energy
industry that is really creating really large numbers of jobs.
Mr. Griffith. Isn't it their history that they do a lot of
things that we don't do? For example I think in your written
statement on page three you indicate that they have 27 nuclear
power plants under construction and is that accurate?
Mr. Reicher. They have--yes they have a large number of
nuclear power plants under construction.
Mr. Griffith. And you also indicated that they have a lot
of hydroelectric facilities that are under construction or in
the plans, is that correct?
Mr. Reicher. That is correct.
Mr. Griffith. And isn't it true that they pay a high price
for those hydroelectric generated electricity in those plants?
Mr. Reicher. Mr. Griffith, every energy technology, all of
them have their pluses and minuses, and along with hydro you
get those.
Mr. Griffith. Isn't it true that the Chinese have not paid
attention anywhere near the level of the United States towards
the environmental impact of so many of their facilities and I
am thinking of their hydroelectric in particular and the
functional extension of the Three River Gorge Yangtze River
Dolphin? Are you familiar with that?
Mr. Reicher. Yes, I am.
Mr. Griffith. And that would be accurate, is it not?
Mr. Reicher. There is no doubt that the development of
these kinds of facilities bring with it environmental problems
and there is no doubt that the Chinese have not adequately
attended to those in all cases. I have actually kayaked down
those Three Gorges and I know exactly what is there and what
has been lost, having said that, they have been making great
strides to become leaders in renewable energy. They are making
great strides to improve their energy efficiency and there are
increasing calls and I think increasing response to improve
their environmental performance but they have got a long way to
go, no doubt about it. But from an economic standpoint, they
are taking over this clean energy industry in a very
significant way.
Mr. Griffith. And from an economic standpoint do you think
that it is appropriate that we adopt that model because I kind
of got the impression you were holding them up as an example.
Mr. Reicher. I am holding them up as an example of a
country that has put a real priority on clean energy technology
research, demonstration, development and deployment. I am not
holding them up necessarily as a model for how you adequately
ensure all kind of environmental performance but on that front
I think there are improvements but they need to continue.
Mr. Griffith. And isn't it true that we have different
standards also on human rights and as a part of their
hydroelectric program they have actually moved 22 million
people from one location to another and offered such rich
financial rewards as $7 a lot?
Mr. Reicher. I don't know that at all. I am sorry.
Mr. Griffith. But you are aware of having kayaked in that
area that millions just for the Three River, just for the Three
Gorges Dam Project had to be moved?
Mr. Reicher. I don't know the exact number. Certainly there
were large displacements of people just as there have been all
over the world including in our own country when dams get
built. Let me not sit here today and tell you that hydropower
is without its major environmental, human and economic costs.
All technologies, all energy technologies have their pluses and
minuses and there are significant ones that we know well in
this country and that the Chinese are experiencing themselves
with respect to hydropower.
Mr. Griffith. And I like Mr. Montgomery's comments about
the fact they never take into consideration all the coal
workers and I wonder how you would address that because it is
not just the folks working at the power plants who work in coal
but it is all the folks who provide equipment for the coal
mines who make their livelihoods by supplying the miners
themselves and then of course the miners themselves. And in
that economic equation that you have made where you hold China
up as an example, did you calculate in all the lost jobs that
we would have in the energy field in this country, particularly
in the coal fields?
Mr. Reicher. There is always again got to be pluses and
minuses. You have got to look at what comes with a move from
one energy technology to the other. There is displacement.
There are positives. There are negatives.
Mr. Griffith. Thank you, Mr. Chairman.
Mr. Whitfield. Yes, sir.
Mr. Waxman, you are recognized for 5 minutes.
Mr. Waxman. Thank you very much, Mr. Chairman.
This is a panel of seven people, six of whom underscore and
confirm their views that are similar to the chair's and then
there is one that has a different opinion and I thank you very
much for letting this one witness testify. Yes, Mr. Barton was
telling me how he always thought the Minority got a third of
the witnesses.
Nevertheless, Republicans are talking about EPA's onerous,
burdensome regulations killing jobs. That is what this hearing
is all about but EPA is simply requiring when it comes down to
it energy efficiency when the largest polluting facilities in
the country are constructed or expanded and significantly
increase their pollution. That is what the EPA regulations do.
Mr. Reicher, are energy efficiency improvements at new
power plants, the melt kilns or the very largest manufacturing
facilities going to kill jobs.
Mr. Reicher. Mr. Waxman, I actually think improvements in
energy efficiency at plants like this number one, make keep
them online longer than they would otherwise operate. Number
two, the amount of equipment required to improve that
efficiency will create jobs. Workers will continue to be
employed so I think on balance if we do this the right way and
actually improve the efficiency of existing power plants this
could be a very net positive economic outcome.
Mr. Waxman. I must say from my 36 years in the Congress
every time we have had an idea proposed to reduce pollution the
industry representatives all come in and say they will be out
of business and can't function. The economy will suffer greatly
and then once the proposals are put into law they accomplish
the goal. They become even more efficient and therefore more
competitive.
Mr. Reicher. Mr. Waxman, if I could, Henry Ford, II,
commenting in 1966, on seatbelt and safety glass mandates for
automobiles said we will have to close down the industry.
Mr. Waxman. It is almost an article of faith among those
who oppose any efforts to reduce our carbon pollution that
China and the rest of the world aren't taking meaningful action
to reduce their emissions and they argue why should we be doing
anything that would disadvantage American companies if we take
steps to reduce our own emissions. Is this an accurate
statement? Is it true that China is taking no action to reduce
carbon emission?
Mr. Reicher. China has committed to reduce its carbon
intensity 40 to 45 percent below 2005 levels by 2020, and they
are actually expected this month, this in March to make that a
binding commitment domestically.
Mr. Waxman. Isn't it true that in China many of the people
do not speak English? My next question is China is not standing
still. That is the kind of question of isn't China bad on human
rights and therefore we shouldn't do what they are doing on
economic policy? The question then becomes is China standing
still? Are China's policies costing China jobs or are their
carbon and clean energy policies driving Chinese firms to
dominate the global market for clean energy technologies? What
do you think, Mr. Reicher?
Mr. Reicher. You know, Mr. Waxman, it is not just that they
are increasingly dominating in the manufacturing of these clean
energy technologies but in a way even scarier is how
increasingly they are beginning to dominate in research,
development and demonstration. We see large American companies
actually setting up their largest R&D facilities, Applied
Materials, Incorporated, one of the largest makers of solar
equipment manufacturing in the world is setting up a brand new
R&D facility in China.
Mr. Waxman. China is taking action to reduce its carbon
pollution and to build strong, competitive, clean energy
industries and the results are massive job gains or massive job
losses?
Mr. Reicher. The Chinese renewable energy industry has
grown fantastically in terms of jobs.
Mr. Waxman. They are the world's largest manufacturer of
solar panels. Their aggressive policies are in its economic
self-interest and we may not agree with other things they do
and we are certainly not interested in their economic self-
interest. We should be interested in our own but they are
acting in their economic self-interest. Mr. Reicher, if we do
nothing other than roll back EPA's modest steps to reduce
carbon emissions are we at risk at losing the clean energy jobs
race with China?
Mr. Reicher. Absolutely, we need to put in place a whole
host of mechanisms to really regain the lead that we once had.
We developed most of this industry so for example I do think
the clean energy standard makes a lot of sense to put in place.
I also think we should support the DOE Loan Guaranty Program
which has been so critical to building the next generation of
nuclear power plants, building breakthrough renewable energy
facilities and we should transition that to the Clean Energy
Deployment Administration that was adopted by the full house
and in the Senate Energy Committee on a bipartisan basis last
year.
Mr. Waxman. Thank you.
Mr. Whitfield. Mr. Barton, you are recognized for 5
minutes.
Mr. Barton. Thank you and it is a joy to watch the
coordination between the ranking member and the ranking
minority's witness. Is there any question that he didn't ask
exactly the way you wanted it asked, Mr. Reicher? I am sure we
will give him some more time if we need to do that?
Mr. Waxman. Does the gentleman find fault with any of my
questions?
Mr. Barton. No, I thought I don't find fault. I just think
it is a joy to watch the coordination. I think you all handled
that very well.
Mr. Waxman. Done with the other panelists.
Mr. Barton. I was giving you a compliment.
Mr. Waxman. I will accept it.
Mr. Barton. Very good.
Mr. Reicher. Mr. Barton, I have been asked questions like
this a lot so this is fairly straightforward.
Mr. Barton. Thank you.
My question to anybody on the panel, unscripted, is there a
control technology to control CO2 that is in
existence today and is cost effective?
Mr. McConnell. My understanding is there is not one.
Mr. Barton. There is not one and what about Mr. Cicio, are
you aware of any control technology that exists to control
CO2?
Mr. Cicio. No, there is no end of pipe technology that is
cost effective.
Mr. Barton. Mr. Reicher, do you share that?
Mr. Reicher. Well, the good news, Mr. Barton, is that
yesterday and this will be relevant to Mr. Shimkus and Mr.
Rush, a major project was announced in Illinois that would
build a carbon capture and sequestration facility under the
FutureGen Program.
Mr. Barton. I am very well aware of that.
Mr. Reicher. A billion dollar investment in the project and
a thousand construction jobs and a thousand service sector jobs
so we are making some progress.
Mr. Barton. In and of itself that technology is not cost
effective. It cost at least 30 percent of the cost of the power
generation just to sequester the carbon.
Mr. Reicher. We have got a long way to go no doubt. I guess
the most cost effective we got one we have is probably trees.
Mr. Barton. OK so the answer is by if not unanimous consent
by consensus, is that there is no existing technology to
control CO2.
Mr. Joyce. Well, yes it is nuclear power.
Mr. Reicher. You are talking about capturing
CO2.
Mr. Barton. You can burn hydrogen. Hydrogen doesn't create,
you know, if you burn hydrogen you get H2O, you get water
vapor. Nuclear power does not combust, it fissions. So there
are technologies out there but if you are going to use natural
gas, if you are going to use oil, if you are going to use coal,
if you are going to use even our famous biomass here, you are
going to create CO2 and there is no cost-effective
way currently to mitigate it.
Mr. McConnell. But one way to reduce CO2
emissions in our industry, the automobile industry is to have
one national standard, CAFE that Congress put into place that
takes into consideration cost. You know, we have to sell these
things. It may cost a billion dollars somewhere but ultimately
what I am the expert on is selling fuel-efficient cars since I
was 16 and right now we have three agencies, California, EPA
trying to tell us all what to do. We need one because they are
the only one that take into consideration customer
acceptability and choice and it doesn't do the economy any good
or jobs. Auto dealers employ a million people in this country.
If you have a product that sits on the lot that doesn't sell
because it is not priced right there are many businesses that
have been shuttered down and gone broke because they are not
giving the customer what they want and so that is the reason
our organization would like to see CAFE implemented.
Mr. Barton. Mr. Chairman, I am not sure what my time. I
never saw the clock start or stop.
Mr. Whitfield. Well, I am going to ask the official
timekeeper here.
Mr. Barton. Do I have time for one more question?
Mr. Waxman. Unanimous consent the gentleman be given 2
additional minutes.
Mr. Whitfield. Without objection.
Mr. Barton. Be careful, my side may object to that. The
unanimous consent things are shaky sometimes. I have one final
question and I appreciate my friend from California and the
chairman giving me some time.
Administrator Jackson has testified that greenhouse gas
best available technology most likely means that you just have
to use energy efficiency measures. Mr. Cicio, you represent the
largest energy users in America. Don't the companies that you
represent already do everything they can to be energy
efficient?
Mr. Cicio. Most certainly the industrial sector spends more
money and has had more success in improving energy efficiency
than any of the sectors of the economy. In this case the EPA
really has it backward. When a manufacturer decided--by the
way, if you are not aware manufacturing has probably hundreds
of thousands of combustion processes that are used to produce
widgets. When we make decisions in what process is used to make
a widget we take several things into consideration like how
many widgets can we produce in a time period? What is the cost
of a widget? What is the raw material flexibility to produce
the widget? What is the quality of the product with that
process? What is the flexibility of the manufacturing operating
processes, all that criteria in deciding what process plus
energy efficiency? How energy efficient is the process? EPA,
unfortunately with the new regulation starts with the premise
of what is the most energy efficient process and that is not
going to create a low-cost manufacturing widget process. That
is too limiting and it is going to lead to higher cost.
Mr. Barton. I thank the discretion of the chairman and
ranking member.
Mr. Whitfield. Mr. Green, you are recognized for 5 minutes.
Mr. Green. Thank you, Mr. Chairman.
First, I believe that controlling carbon shouldn't be EPA.
The Supreme Court said that. I want Congress to be able to make
those decisions because we can balance that economics and we
tried last Congress. It couldn't get through with the cap and
trade. I would hope our committee would look at it and that is
why I am a cosponsor of the 2-year delay so we can force
Congress to deal with it. Although the solution may be just to
encourage trees but we would probably have to go to the Natural
Resources Committee to do that.
Mr. Cicio, in May of 2010, the EPA finalized the tailoring
rule and until June 30 of this year only sources subject to the
prevention of significant determination for other pollutants
will be required to consider greenhouse gases in the permit.
From July 1 of 2011 to June 30 of 2013, new sources the emit at
least 100,000 tons of greenhouse gases per year or existing
sources seeking to increase pollution by 75,000 tons per year
will be required to obtain the PST permits. The EPA will
determine on July 1 of 2012, whether it will lower the
threshold further but it has committed that it will not
consider any level below 50,000 tons a year. Can you please
cite how many industrial manufacturers in our country are
affected by regulations at each of these three levels, 100,000
tons of GHGS a year, 75,000 or 50,000? Do you have any idea
from your association? I mean I represent refineries so.
Mr. Cicio. Oh yes, you have a lot of it in your backyard.
Unfortunately, I don't have those statistics and I would be
happy to try to craft something for you and provide that to
you.
Mr. Green. I would appreciate it because our testimony from
Administrator Jackson a few weeks ago was that they tailored it
so it would only cover the largest facilities and just see how
many and granted they are trying to start with the largest so
to see how many there are and appreciate you getting it back.
What sort of federal carbon controlling program if
developed by Congress and not the EPA could the industrial
manufacturers support?
Mr. Cicio. Well, thank you, that is a wonderful question.
We have actually addressed that in what we call our Sustainable
Manufacturing Growth Initiative because as manufacturers we put
together policies that we felt would incentivize and remove
regulatory barriers to even greater energy efficiency. And as
you heard in my testimony, implementation of that program would
result in 10 percent reduction of all greenhouse gas emissions
in 10 years and even more importantly it would create 3.2
million man-years of jobs and almost $500 billion of capital
investment in 10 years. That is capital investment that is not
happening today. So the best thing is that it utilizes existing
but more energy efficient technology and simply taking it off
the shelf and getting it in the ground today creating jobs and
investment.
Mr. Green. Well and I don't know who answered our former
chair of the committee, the ranking member that said nuclear
would be the solution for some of our carbon controls and we
are trying to do that because that is one of those solutions
because so much of our carbon comes from our electricity
producing plants. Again, I have those plants, I have coal
plants but I also have refineries and chemical plants that have
another issue. So but I think Congress ought to make those
decisions.
Mr. McConnell, California's fuel economy program exempts
until 2016 automakers who sell less than 60,000 vehicles per
year in California and manufacturers exempt in California are
also exempt from every CARB State regardless of how many
vehicles are sold outside California. After 2016, CARB has
intended to regulate these vehicles at a lower standard. If the
brands you sell are not exempt how will that impact on your
brand line because I know you have both Honda and Acura and I
think you have a U.S. model too although Honda is also a U.S.
model too.
Mr. McConnell. Well, first of all we believe the State of
California should not be setting national energy policy.
Mr. Green. Coming from Texas, I agree.
Mr. McConnell. So I appreciate your question. I will tell
you, you are absolutely right and I don't think some people
realize it. Selling Honda we are under the California which is
just a hodgepodge. There are three different people regulating.
What we want is one, CAFE which Congress laid out, a single
national standard. For example, you are right, Honda, Toyota,
Nissan, Ford, Chrysler, GM are covered. BMW is covered.
Mercedes is not covered. Hyundai is not covered. Kia is not
covered. Porsche is not covered. Volkswagon is not covered.
Jaguar is not covered. Suzuki, Mitsubishi, I could go on and
on, and potential that new Chinese and Indian automakers would
not be covered. That is why under CAFE they don't have all of
these crazy exemptions. So we want the one national standard.
It takes the most important thing to me, it take an
accountability, they are required that, the EPA is not,
California is not. Customer acceptability and choice because
ultimately the customer is the one that spends its own, the
family decides what do I want, what can I afford and if that is
in the case you will sell more new cars, create more jobs and
you will also get more fuel-efficient cars on the road which is
obviously a big goal.
Mr. Green. Thank you, Mr. Chairman, and the gavel is for us
not to ask any more questions, not for you all.
Mr. Whitfield. Mr. Shimkus, you are recognized for 5
minutes.
Mr. Shimkus. Thank you, Mr. Chairman.
This kind of follows-up in a hearing we had 2 weeks ago on
the environment and the economy. It is my subcommittee but we
have to accept the fact that the decisions we make or the
decision a regulator makes that there is a job aspect that
people ought to debate and discuss and I come to this with
great passion because and many of you have seen this before.
Mr. Carey, you have. Mr. Cicio, you have seen it. This is why
we killed Waxman-Markey because we made the argument that in
'92 on the Clean Air Act which was a legitimate debate on
cleaning the air these miners lost their jobs. This is just one
group of miners at a mine in my congressional district which is
closed now, 1,000 miners lost their jobs and by using this and
the reality is there are a lot of fossil fuel Democrats no
longer in Congress and do you know why, because they didn't
protect their jobs because of the greenhouse gas movement, the
Waxman-Markey threatened to destroy any remaining jobs.
Mr. Carey, you have testified before. How many coalminer
jobs are lost in the advent of the Clean Air Act?
Mr. Carey. Mr. Chairman and Congressman Shimkus, the idea
in Ohio and I think when I testified before we looked at the
amount of tonnage of coal we lessened it by half, take away
half that miners, those were roughly 3,000 miners, multiply a
fact of close to 10,000 or 10 for every one coal mining job so
3,000.
Mr. Shimkus. So your staff 35,000 jobs were lost and that
was in the Clean Air Act which a lot of us would say knock
socks particulate matter, some bad stuff that we really needed
to get out of, you know, out of the air. There is now a debate
about greenhouse gases and is it a pollutant, is it not and
that is why we need to move on this legislation to let us to
take into the aspect of what is the cost, what is the impact on
the economy. Why are we so fired up about this? Well, here is
just one rule from the EPA and they are quoted, ``The RIA for
this proposed rule does not include either qualitative or
quantitative estimation of the potential effects of the
proposed rule on economic productivity, economic growth,
employment, job creation or international economic
competitiveness.'' Now, Mr. Carey, don't you think we ought to
consider that when we are promulgating a rule or a regulation?
Mr. Carey. Mr. Chairman, Congressman, yes.
Mr. Shimkus. Mr. Cicio?
Mr. Cicio. Absolutely.
Mr. Shimkus. Mr. Joyce?
Mr. Joyce. Yes.
Mr. Shimkus. Mr. McConnell?
Mr. McConnell. Without question.
Mr. Shimkus. Mr. Montgomery?
Mr. Montgomery. Yes.
Mr. Shimkus. Mr. Reicher, do you think the EPA is wrong in
not considering the economic impact of a proposed rule?
Mr. Reicher. EPA is required to consider the economic
impact of a proposed rule.
Mr. Shimkus. This is from the EPA and I just read the
quote. Let me just quote another one, economic analysis on
another proposed EPA rule, let me read in subparagraph 9.2, .3,
.3, impacts on employment the chapters on benefits, chapter
seven and cost, chapter eight, point out that, ``The regulatory
induced employment impacts are not in general relevant for a
cost benefit analysis.''
Mr. Reicher. So, Mr. Shimkus, I would just urge you to take
a look at the Clean Air Act sections, the three sections that
relate to.
Mr. Shimkus. And I am going to reclaim my time. I am going
to reclaim my time, sir. Sir, I am going to reclaim my time.
My point is we are not disputing knock sock particulate
matter. We do dispute carbon dioxide. Now, I have got a 1,600
megawatt. Does everyone agree that if you raise the price of a
commodity product that the cost of good sold goes up?
Mr. Carey. Yes.
Mr. Shimkus. That is a yes. Mr. Cicio?
Mr. Cicio. Absolutely.
Mr. Shimkus. Mr. McConnell?
Mr. McConnell. Yes.
Mr. Shimkus. Mr. Joyce?
Mr. Joyce. Yes.
Mr. Shimkus. Mr. Montgomery?
Mr. Montgomery. Yes.
Mr. Shimkus. Mr. Reicher?
Mr. Reicher. Ask the question again?
Mr. Shimkus. I asked Administrator Jackson if she really
believe in the basic economic 101 supply and demand. If the
supply is constrained or the cost of the good goes up does that
mean that the price of the cost of the good goes up?
Mr. Reicher. Well, if you have to use the same amount of
that good of the product that has been improved.
Mr. Shimkus. That was a better answer than the
administrator gave and I appreciate that.
Mr. Reicher. To improve the efficiency of the manufacturing
process.
Mr. Shimkus. And which they do, that is the whole debate
that Mr. Cicio will say. It is not worth the manufacturers'
time, effort and energy to run inefficient plants. Now and let
me add, I am going to run out of time. Mr. Cicio, you said you
don't know of a single manufacturer that would not be harmed by
greenhouse gas and would lose jobs, is that true of both?
Mr. Cicio. What I said specifically is that I talked to
lots, many, many manufacturers that have facilities all over
the country. I do not know and have not heard of one that
support the EPA greenhouse gas regulations, yes, sir.
Mr. Shimkus. Thank you. I yield back.
Mr. Whitfield. Mr. Walden, you are recognized for 5
minutes.
Mr. Walden. Thank you very much.
I just want to ask I think it is Mr. Carey and anybody else
that wants to respond. Walk us through what you think the cost
of these regulations are on jobs and the economy in your part
of this debate because this is something I think people at home
care a lot about. I mean none of us wants dirty air. Most of us
in my part of the world in Oregon like renewable energy as long
as we kind of know what the costs and tradeoffs are although
some people are getting a little tired of the windmills.
Mr. Carey. Well, Congressman, what I think we are debating
is carbon dioxide and the role of the EPA in regulating carbon
dioxide under the Clean Air Act so if we take that off the
table, if you look at Ohio, West Virginia, Kentucky,
Pennsylvania. In Ohio, 90 percent, 89 percent of all the
electricity off of the grid comes from coal base so when you
relate that to heavy manufacturing anybody who is making a
widget understands that one of the large costs of making that
widget is energy so ultimately the price of that product would
go up and if it goes up possibly that product's production
would be moved overseas and ultimately then we would lose the
job there.
Mr. Walden. We are seeing in the northwest is some of the
renewable energy begins to feed into the system rate increases
of 10-15 percent as sort of the cost, additional cost. Now,
these are benefit tradeoffs we are talking about here because
you have got the renewable energy but there is this cost piece.
Mr. Carey. No doubt about it, Congressman. What was put in
place in Ohio was Advanced Energy Portfolio Standard.
Mr. Walden. Right.
Mr. Carey. And ultimately what you are seeing now is those
utilities can't meet the cost cap that was put in place by the
State legislature. So the idea that the price is going to go up
with those renewables is a fact and it is happening.
Mr. Walden. Mr. Cicio.
Mr. Cicio. Yes, on the subject of cost of regulation,
number one for those who have not, who want to invest in the
United States in a manufacturing facility to create jobs, a
rule like this is preventing investment. So these are jobs that
could have been and won't. Manufacturing is globally mobile. We
must produce in countries where we can have low costs and
thrive or we die as a company. So but for manufacturing
facilities that stay and have these higher costs then their
competitiveness is threatened and the potential for job loss
and plant shutdown.
Mr. Walden. Mr. Joyce.
Mr. Joyce. In the permitting process, you know, just adding
another layer of permits, you have got, you know, local and
State permits. When we, you know, as the tailoring bleeds off
and more and more buildings come under the control of EPA.
Mr. Walden. Right.
Mr. Joyce. And more and more permits, I mean a federal
permit, any federal work is daunting for a smaller project so
we have just great concern over the additional permitting in
the construction side of the house and what we think is a lot
of good projects is probably the straw that breaks the camel's
back. They just don't get done. So those are huge costs. They
are huge costs to jobs and job creation in the construction
sector.
Mr. Walden. And are those ever quantified? I mean the
project that never gets built probably never gets the big press
so you don't know the loss, right?
Mr. Joyce. There is soft cost and, you know, any type of a
labor paperwork intensive permitting process on a construction
job is bad right now at any time.
Mr. Walden. Yes, Mr. McConnell, do you want to comment on
this?
Mr. McConnell. One of the biggest problems that we have
because California has a waiver is they don't even have to
consider affordability outside of California.
Mr. Walden. Explain what you mean by that.
Mr. McConnell. Well, California has ability if they control
14 other States that signed up with them on so if they decide
that they don't want to participate in the national program, go
along and they take their ball and they go play with somebody
else, then what happens is they do not have to consider how
much it costs outside of the State. They only have to consider,
they are only looking at the State of California, not even
these other 14 States and the problem with that is it results
in a rationing of vehicles but the cost, you have got three
different people. You have got to know some certainty in the
automobile business to design cars in the future.
Mr. Walden. Right.
Mr. McConnell. How much cost is and they don't even have to
consider, the EPA does not even have to consider customer
acceptability.
Mr. Walden. Right.
Mr. McConnell. So they can stack on the cost but quite
frankly that is the problem and that is the reason, you know,
and you go back and forth with one national standard that this
body has for fuel economy.
Mr. Walden. Got it, I want to try and get to the other two.
Mr. Montgomery, I am running out of time.
Mr. Montgomery. I think the answer really comes down to
there is no such thing as a free lunch that in our economy we
have every incentive is for energy efficiency, using energy
wisely and minimizing the cost of production. That is not true
in China and that is why China can catch up so easily and since
there is no free lunch if we are expending more of our
resources on expensive energy like renewables, they are not
available for producing the other things that people desire to
live on and have quality of life.
Mr. Whitfield. Thank you.
Mr. Terry. I appreciate that, yes, whatever.
Mr. Whitfield. Your first name is Lee, right?
Mr. Terry. Yes, yes.
Mr. Whitfield. Thank you.
Mr. Terry. Mr. McConnell.
Mr. McConnell. Yes, sir.
Mr. Terry. I appreciate you being here even though you
referenced the CAFE.
Mr. McConnell. But I was aware of the name.
Mr. Terry. But that was a great process because A, it did
involve the already existing agency that has the expertise in
determining fuel efficiency in a very scientific way. Not a
political way and it was a byproduct of Congress, signed into
law by the President. That was very carefully crafted, pushing
the automobile industry as far as we could take it. Keeping in
mind safety, keeping in mind the desire to keep jobs in America
and the car industry and so that is probably part of my
discussion I will have with the EPA representative of why the
Administration and the EPA now wants to duplicate, replace,
undo what Congress did.
Mr. McConnell. Well, we certainly appreciate that. I will
say that the EPA is wasting millions of taxpayers' dollars on
duplicating NHTSA's research in fuel economy for tailpipe
emissions.
Mr. Terry. Probably creating a job.
Mr. McConnell. It is going to cost a lot of jobs.
Mr. Terry. Well, and you had mentioned that California that
you and Mr. Walden discussed but there was a statement by one
of the members that there is one national standard but yet that
is not what I hear and that doesn't seem to be what EPA is
striving for. Would you explain?
Mr. McConnell. Yes, there are, they are regulated by, there
are three agencies, three laws and three rules, and they have
termed this, I guess it is a pretty nifty thing they did was
they call three different standards one national program. I
mean it is a fiction. You have the correct one national program
and that is CAFE and it is implemented by NHTSA.
Mr. Terry. How does that affect the car dealers and auto
manufacturing in the United States?
Mr. McConnell. Well, first of all to me one of the biggest
things is you can't have one State setting the national
standard but it affects us because I buy the cars from the
manufacturer. They don't consign them to me. I have these cars
on my lot. If they are not, if you don't take into
consideration what your plan does, CAFE does, customer
acceptability and choice because the customer is the one that
makes the decision. They have a choice. They can just keep
riding in that car they have got and work on them and we are
super busy in our shop because that is what people have done
after the recession but it costs a lot of money and it is a lot
of duplication. You know, when you are in business and you are
planning, what you need is clear, concise guidance and I
believe that one national standard under CAFE with NHTSA
implementing with all of the safeguards, I think you will get
the CO2 reductions. You will get to the goal but you
will get to a goal that is realistic for the marketplace also.
Mr. Terry. That is part of our goal here. All right, I
appreciate that.
One last question to Dr. Montgomery because I felt like I
was in an alternative universe when we were having a discussion
about green jobs and how great a job that China is doing in
manufacturing all this equipment but the reality is it is being
manufactured over there because it is inefficient to
manufacture it in the United States where it was designed and
engineered. You answered that or brought that up in your
report. Would you expand on that? Do you think it is true that
China is just doing this altruistically?
Mr. Montgomery. No and I think there are probably two or
three points about China. The first one being, it is ironic
because 2 weeks ago I was testifying in the Senate hearing on
green jobs where one of the witnesses was from the steel
workers union which had filed the 301(b) trade complaint
against China's internal subsidy practices which were enabling
it to produce the wind and solar and other equipment that is
now being used around the world and in the United States, and
preventing U.S. firms from getting in there. So what we are
looking at is not environmental policy for China. It is
strategic trade policy as it has always been and do we want to
imitate that? Well, if China is in violation of the WTO for
subsidizing its industries, we would be as well but the real
point about all of that has nothing to do with environmental
regulation. China is not creating those industries by making
its own country clean. It is creating them by subsidizing their
exports as it has always done to create industries. And I think
the other point about China is that China has a state of
institution and I have been writing about this for years that
lead China in the past five times the energy use for dollar of
output as the United States. That is coming down but it is
coming down because it is so hideously inefficient it is in
their economic interest to do it. We have a well-functioning
state of markets here and we don't have that free lunch.
Mr. Whitfield. Thank you, Mr. Terry.
Unfortunately, we have votes on the floor. We have three
more and then that is it for the date but before we go, Dr.
Burgess, I am going to recognize you for 5 minutes.
Mr. Burgess. Thank you, Mr. Chairman.
Mr. Montgomery, just to stay with you for a moment, we are
going to hear on the next panel testimony about the health
hazards of carbon dioxide and do higher energy prices carry
with them any inherent health risk vis a vis keeping open
medical offices, health centers and this type of thing. Does
that affect the availability of medical care or health care?
Mr. Montgomery. Yes, it does and it is really a problem the
EPA refuses to do long risk analysis in this area. If we are
going to look at risks from greenhouse gas emissions, those are
highly speculative, highly uncertain and anything we do in the
United States will have only a miniscule effect on them. Carbon
dioxide is not like ozone. I mentioned ozone in Pasadena. Ozone
in Pasadena was created in Beverly Hills, blew across and ended
up in Pasadena and it produced tremendous health effects.
Greenhouse gas emissions are mixed in the entire atmosphere and
we are not going to change them through these regulations in a
way that is even worth bothering to try to calculate unless we
assume all of the rest of the world does what we are doing and
that is what EPA tends to do. And so there is a small health
benefit from actions that we actually take in the United States
but on the other side of it, you are absolutely right, higher
energy costs make air conditioning harder for people to afford.
We know that the lack of air conditioning has been the primary
reason for deaths during heat episodes in Chicago and other
places and it takes a risk, long risk analysis which EPA did
not do in determining that on balance the health risk justified
the standards.
Mr. Burgess. Of course, I suffer from asthma myself and I
know what triggers there are. I try to avoid them as best I can
but I have never associated carbon dioxide with an asthma
trigger. It just doesn't work out medically so I appreciate
your comments in that regard. On the, you know, you talked a
little bit about some of the multiplier effects. Is there a way
to apply the multiplier effect in reverse to this type of
situation?
Mr. Montgomery. It is interesting. There is a valid way to
do it and I think the work with Jorgenson and Wilcoxen and have
been doing and asking how do health effects of criteria
pollutants that cause asthma affect worker productivity and
they put that into their large kind of assessment of not
greenhouse gas regulations but the past Clean Air Act
regulations like the socks and ozone regulation clearly had
health benefits. There is a way to bring it and in terms of
dealing with greenhouse gas emissions, it really isn't
applicable because what we are talking about are health effects
that are dominated by temperature changes in tropical latitudes
that lead to increased kind of vector populations that cause
malaria and such diseases. So it is a global public health
problem but the solution for it is global public health
methods. For example, going back to DBP we could wipe out the
malaria vector, no matter what the temperature was.
Mr. Burgess. I see.
Mr. Montgomery. So there is an ironic point about
multiplier analysis because if you do the kind of multiplier
analysis that PERI is doing, they argue quite explicitly over
and over again that the reason they are getting increased jobs
is because greenhouse gas policies favor labor intensive
industries and they put more people to work that way. Well, if
we have a lot of illness in the country then businesses would
have to hire more workers to hire to replace their workers who
were sick in order to get the same level of output and so if
you applied their multiplier you would get the ridiculous
conclusion that who or health actually increases jobs. It is
not a reasonable conclusion for what you get out of that kind
of a multiplier analysis.
Mr. Burgess. Dr. Reicher, let me ask you a question if I
could. You were at Google previously? Is that correct?
Mr. Reicher. Yes.
Mr. Burgess. And when you were there, did your company ask
the Chinese government to institute the type of greenhouse gas
reductions like the cap and trade proposals that we had before
this committee 2 years ago?
Mr. Reicher. Could you repeat the question? I am sorry.
Mr. Burgess. When you were at Google did you or did Google
ask the Chinese, did your company, Google, ask the Chinese
government to institute any type of mandatory greenhouse gas
reductions such as would have been required under the Waxman-
Markey legislation that we debated in this committee 2 years
ago?
Mr. Reicher. I don't think the company is in the position
to.
Mr. Burgess. Well, you support or at least I got the
impression you support a cap and trade type proposal in this
country. Did you ever ask the Chinese government to institute a
cap and trade proposal?
Mr. Reicher. I did not ask the Chinese government to
institute a cap and trade proposal. I am in favor of
comprehensive energy and climate legislation. There are a whole
host of means to get there and I think we should get started
for economic reasons, and for security reasons, and for
environmental reasons.
Mr. Burgess. But you and Google at no time insisted that
the Chinese government follow the same type of protocol that
has been advocated?
Mr. Reicher. Again, I was not in conversations with the
Chinese government about greenhouse gas regulations.
Mr. Burgess. Thank you, Mr. Chairman. I yield back.
Mr. Whitfield. Well, once again I apologize to you all. I
hope that you maybe will be able to stay another 10 minutes or
so. We have three votes on the floor. I don't think it will
take long. We will be right back. Hopefully, I think most of
our members will be back that haven't asked questions so we
look forward to seeing you in a few minutes.
[Recess]
Mr. Whitfield. I call the hearing back to order.
At this time, I will recognize Mr. Gardner of Colorado for
5 minutes.
Mr. Gardner. Thank you, Mr. Chairman, and thank you to
everyone for putting up with the schedule today. I appreciate
your time and certainly your expertise.
A couple of weeks ago we had Administrator Lisa Jackson of
the EPA testify before the subcommittee and I want to read a
quote that she had in our dialog. She said and I quote, ``There
are tremendous opportunities in rural America for the economy
to continue to grow as it has thrived over the past several
years.'' This is just a couple of years ago as the economy had
in her belief, her opinion has thrived over the past couple of
years. So when I asked her to clarify and whether she really
meant the economy has thrived over the past several years her
response again and I quote was, ``Rural America's economy has
done fairly well as the rest of the country has seen the
housing market and economy really do poorly.'' Well, in 17 out
of the 64 counties in Colorado, they had a population decline,
all of them rural, most of them rural. And many of the counties
in my district, they have lost population and I am quite
disturbed actually that the nature of the assertion made by
Administrator Jackson really shows how out of touch the
administrator is when it comes to the economic well-being of
our, my State, my district and this country.
I wanted to get your thoughts quickly on what is happening
to our economy and economic policies in this Nation when it
comes specifically to some of the testimony that was given
today and some of the statements that were made. I wanted to,
excuse me, find it here. Some of the questions have been
offered a little bit about the nature of regulations, the
impact of those regulations and what it means for our rural
economies in particular. Do you think the greenhouse gas
regulations will impact our rural economy, Mr. Carey?
Mr. Carey. Congressman, yes, I do. There is no doubt about
it. The greenhouse gas will directly affect jobs.
Mr. Gardner. Mr. Cicio.
Mr. Cicio. Some of my companies are fertilizer producers.
About 75 percent of the cost of making fertilizer is the cost
of natural gas and these regulations would indeed increase
energy costs.
Mr. Gardner. Mr. Joyce.
Mr. Joyce. Yes, we would see it across the board,
particularly with the farmers and the livestock sector.
Mr. Gardner. Mr. McConnell.
Mr. McConnell. I don't think I have anything to add to
that.
Mr. Gardner. Mr. Montgomery.
Mr. Montgomery. Yes, I would agree with both that the costs
of agriculture inputs are going to go up and that cattle is
probably going to be suffering both because it uses other
grains, and I think the other part of this is that the EPA
regulations are not really, I don't see a way that they are
going to include activities like sequestration and other farm-
based activities that could potentially be profitable as a way
of providing offsets for greenhouse gas emissions under a
broader and more comprehensive policy.
Mr. Gardner. Mr. Reicher.
Mr. Reicher. Some of those impacts will be positive and
some of them will be negative. If you are in the wind business
it could be quite positive. If you are in the natural gas
business it could be quite positive.
Mr. Gardner. What if you are in farming and you grow crops?
Mr. Reicher. It all depends on what you are farming. The
opportunities around biomass for power for fuels are very
significant and so again like so many answers to so many of
these questions today, Mr. Gardner, depends on the specifics.
Mr. Gardner. Mr. Cicio, a statement by the EPA was made
earlier that said when it was talking about he pays authorities
to control carbon emissions that that bill would deprive
American industry of investment certainty and new incentives
for upgrading to advanced to clean energy technologies. Do your
members feel deprived and that they are not willing to make
investment because of this regulation, the lack of this
regulation?
Mr. Cicio. No, I have not heard anyone say that.
Mr. Gardner. Thank you.
Mr. Reicher, interested in your comments on the nuclear
power and I believe you talked about the need to actually
improve energy permitting projects and also nuclear power
permitting. What specifically do you think we could do to
increase the presence of nuclear power development and to
improve energy project permitting and site?
Mr. Reicher. Well, Mr. Gardner, I think one of the
challenges that advanced nuclear faces, advance renewables
face, a whole host of these technologies face is how you get
the first large-scale commercial plant financed and built in
this country. It is fairly straightforward to get the little
prototype built, venture capital.
Mr. Gardner. Well, finance is more than permitting. You
specifically said permitting.
Mr. Reicher. Oh you said well, it is two things. One is we
have got to get those first-of-a-kind commercial plants built.
That is where I think the clean air and the deployment
administration and its ability to finance.
Mr. Gardner. On nuclear power, what can we do for
permitting?
Mr. Reicher. Permitting, there is to issue them. The
Nuclear Regulatory Commission has taken quite a look at ways to
streamline permitting. I am not, I don't know the details of
the changes they propose but there are a whole host of things
but you are not going to get them built if you can't get them
financed and that is the real issue at this point.
Mr. Gardner. Do you think we should include hydropower as
part of the clean energy standard?
Mr. Reicher. I think a clean energy standard should be very
broad and should include all the renewables and it should
include energy.
Mr. Gardner. Including hydropower?
Mr. Reicher. Yes, including hydropower.
Mr. Whitfield. Mr. Inslee, you are recognized for 5
minutes.
Mr. Inslee. Thank you.
I want to ask Mr. Reicher about the public's belief about
this issue of whether or not we should stop the federal
government from doing its job. There is basically an effort
here which is pretty incredible to me to tell the Environmental
Protection Agency they can't enforce the provisions of the
Clean Air Act which is like telling the FBI they can't arrest
terrorists or cops that they can't arrest bank robbers. We are
intentionally--folks around here want to intentionally disable
the ability of the government to do its statutorily mandated
job. To me that is pretty amazing so I wondered what the
American people thought of that and we did a little looking and
the people I talked to where I live in the State of Washington
certainly don't think by huge majorities the people I talk to
don't think that is a very good idea to tell the federal
government it can't do its job, to intentionally shackle it and
put its handcuffs on and let polluters pollute. So to check out
whether I am just talking to the wrong people, I did a little
research and to what the polling would disclose Americans
think. It was pretty timely because the poll came out by the
public policy polling, NRDC, just the other day. It showed that
68 percent of Americans were opposed to delaying EPA reducing
carbon pollution by enormous majority, 68 to 32 percent. You
can't--it is hard to get 68 percent of Americans to agree that
baseball is the American sport but we got 68 percent of
Americans. Then you look at if you do it on a more grandular
level I saw another poll done by I believe the sustainable
business or I read about it at sustainablebusiness.com of 16,
excuse me, 19 congressional districts asking a very similar
question after asking both sort of arguments on both sides of
this very fair poll showed that in 19 congressional districts
represented by Republicans, in those Republican districts 66
percent of people including 45 percent of Republicans and 62
percent of Independents found that they didn't want the EPA to
be disabled. There is a third poll, I don't have the results
right in front of me but very similar results by almost two-to-
one margins Americans didn't want to disable the federal
government from doing its job to reduce pollution. Now, I have
some theories as to why Americans believe that. I think it is
because Americans are optimistic and know that we can do
innovations and create new jobs associated with these new ways
of reducing pollution but, Mr. Reicher, I just wondered if you
wanted to express thoughts about why you think Americans feel
so strongly that people are out to lunch who want to disable
the federal government here.
Mr. Reicher. Well, Mr. Inslee, I think it starts with the
fact that there is a basic understanding that climate is going
to have serious, serious impacts on human health and the
environment and you start with that presumption as we did with
all the other sort of pollutants we have been dealing with and
that motivates people to end of saying, you know, we want our
government to take action. I go from there to say the Supreme
Court said figure out whether carbon is a pollutant. The EPA
took that and figured out that it was and said what are we
supposed to do when it is determined to be pollutant? We are
supposed to go out and begin to put some controls on it so I
think the public recognizes that we are dealing with a serious
risk. The Supreme Court has weighed in. The relevant agency has
weighed in. Plus, and this is important, our investment
community Wall Street and Silicon Valley has said figure this
out. If you want money to stay in this country for clean energy
investments, figure out whether or not you are going to be
regulating this. Figure out whether you are going to put energy
standards in place, pollution standards in place to deal with
this carbon. As long as we are not going to make that decision,
we are going to see massive amounts of capital flow to other
countries where they have made that decision.
Mr. Inslee. So let me suggest one more reason huge
majorities of Americans think it is a bad idea to disable the
EPA, business people believe this. In the last 2 weeks I have
had two business groups in the State of Washington come to me
and tell me what climate change is doing to their business. The
people grow oysters and clams, their industry, their industrial
model is at risk today because of the ocean associated with
carbon dioxide pollution. They want a solution to this problem.
They are losing their industry in the west coast of the United
States. This is a long time industry that is important in Puget
Sound where I come from. This morning I had the berry growers
from the northwest come to tell me and tell me that 50 percent
of the actually it was grapes were essentially lost because of
it is either a fungus or a bacteria associated with changes in
climate they believe and they were asking me for help to solve
this problem. If we don't deal with this problem we are going
to lose jobs. This is a job creation engine like China gets and
we don't and I hope we will wake up in the next 4 seconds and
thank you, Mr. Reicher, thank you.
Mr. Reicher. Thank you, Mr. Inslee.
Mr. Whitfield. Thank you, Mr. Inslee.
At this time, I will recognize Mr. Bilbray for 5 minutes.
Mr. Bilbray. Thank you.
Mr. McConnell, you made a reference to CARB and in fact I
served 6 years on CARB. You made reference to the air resources
board in California and I served 6 years there and 10 years on
ARB district, two stints as chairman and I would like to remind
you that it was California that told Washington in 1992 that
the mandate that methanol was put in our fuel stream was not an
environmental option. It was environmentally damaging. So
Washington sometimes gets it wrong and we pointed out that
people who claimed to be environmentalists in Washington aren't
necessarily going to depend on in the long run and I think that
experiment history is going to show is a major, major mistake
and I wish the people that were so self-righteous then will now
look around and say maybe we ought to try to get our science
down first before we start making claims. And I think MTD and
the methanol in the fuel line, you know, has been proven again
and again that the so-called experts then in Washington, D.C.
were behind this at CARB.
But if I could propose to you, if the federal government
could pass a law today that would improve your fuel mileage and
reduce your emissions by 22.6 percent, what would be your
industry's response to that?
Mr. McConnell. Well, I don't represent the manufacturers.
Mr. Bilbray. But as someone selling the product.
Mr. McConnell. Well, I believe that California should have
a voice just as but no more than any other State, provide data,
political clout that they have but we feel like that we don't
have a problem with reducing CO2 emissions. We do
not.
Mr. Bilbray. OK, let me interrupt you. Look, Mr. McConnell,
if I could tell you again that I have a study that shows 22.6
percent reduction in emissions and fuel mileage and it will not
cost one cent to produce a car or no one more cent to produce a
car. If I could show you that study, would you be willing to
say maybe we ought to consider implementing these mandates if
it doesn't cost one more cent to produce an automobile in this
country?
Mr. McConnell. I would be happy to do look at the study.
What needs to happen though is CAFE is laid out.
Mr. Bilbray. Let me go to CAFE. Let us go to CAFE, are you
talking 100 percent of fossil fuel? Are you talking CAFE
standards with 10 percent ethanol? Are you talking 10 percent
algae fuel? What fuel mixture here because we have a lot of
fuel mixtures here and that is one thing when we talk about
CAFE that the renewable fuel mandate has actually reduced the
ability for automobiles to get mileage, something that nobody
wants to talk about in this town.
But let me go over to you, Mr. Reicher. Mr. Reicher, if we
could mandate 22.6 percent more fuel efficiency and emissions,
wouldn't you say that is something that we should be looking at
especially if we claim we are in a crisis?
Mr. Reicher. Sounds like a smart way to proceed.
Mr. Bilbray. The problem is what it does it is not a
mandate on the private sector. It is a mandate on government.
Traffic management, inappropriate traffic management, every
time you stop at a four-way stop, you remember you are
polluting five-times more than if you were allowed to roll
through with a yield sign. This town is quick at pointing
fingers at you and your industry but those of us in government
will walk away from something that studies have shown could be
major breakthroughs but because it is easier to be against the
business community and not the other way. And as somebody who
has worked on these issues for decades, I am frustrated with
the people that come out of Washington claiming that they are
going to save the world by turning corn into fuel or, you know,
taking methanol and converting it over, and not looking at the
longer impact. And I am sorry, I hear you attack CARB, the CARB
that I see today coming out is a political extension. We have
been, our science has been pretty darn good.
One of the things our scientists want to talk about is, Mr.
Reicher, the last I checked with the UN our--the Chinese
economy is about one-tenth of our economy, right?
Mr. Reicher. I don't know the specific statistics.
Mr. Bilbray. OK, well let us just say this China is
implementing 20 nuclear power plants. We are implementing two.
Does that well, let me just say on that, I can give you that
number and the executive secretary of the UN National Framework
and Convention on Climate Change says he has not seen a
credible scenario that does not have nuclear as a major part of
their mixture. In fact, even the report by the
Intergovernmental Panel on Climate Change states that a robust
mix of energy sources including nuclear must be included. Now,
do you believe that two out of an industry that is ten times as
big as China is a robust commitment to implementing clean air
strategies with nuclear power?
Mr. Reicher. Mr. Bilbray, I came in and testified in my
opening statement that we should adopt a clean energy standard
that includes most of these technologies.
Mr. Bilbray. Mr. Chairman, may I ask for 1 more minute on
this item please just to follow-up?
Mr. Whitfield. Without objection.
Mr. Bilbray. Mr. Reicher, the State of California does not
allow nuclear power today and my colleagues at the ARB are not
allowed to implement a robust nuclear program while we are
talking about the climate being in crisis. My concern is my
colleagues in California claim they care about the environment
and are willing to attack the private sector but are not
willing to do things like force government to change the way it
operates so we clean up our act. Your comment on that?
Mr. Reicher. Mr. Bilbray, in that regard I would urge you
to take a careful look at a national clean energy standard
because it could deal with some of these inconsistencies that
we have State to State over a whole range of technologies. That
is one way to proceed if you are bothered by the
inconsistencies State to State, take a look at what Mr. Barton
supported in his amendments last year.
Mr. Bilbray. Wouldn't you agree that it is one thing to
give a loan guaranty? It is another thing not to allow it to be
permitted, for government to outlaw it. In fact, let me say
this as somebody who has worked on environmental regs, we talk
about a Manhattan project for energy independence in this
country. Ladies and gentlemen, the Manhattan Project would not
be legal under existing law. You couldn't even site the test
site because of Endangered Species Act. That is the kind of
barrier that those of us in Washington who want to address this
crisis have to be willing to stand up and address. Thank you,
Mr. Chairman.
Mr. Whitfield. I recognize the gentleman, Mr. Olson from
Texas for 5 minutes.
Mr. Olson. I thank the chair.
Mr. Joyce, my first question is for you. First I want to
thank you for being part of the economic engine that drives
America, small business.
Mr. Joyce. It is my pleasure.
Mr. Olson. In your testimony you said that the
environmental regulations have cost your family business
upwards of $150,000. How many more people could you hire if you
didn't have that excessive cost and more importantly, how many
of your current jobs are at risk right now if greenhouse gas
regulations become law?
Mr. Joyce. We can hire two additional people if we weren't
doing those as required of us to do but our bigger concern is
the uncertainty and the misinformation surrounding what is
going on with the EPA regulations currently. We are so
concerned because right now they are starting big but we know
that will back up and we understand the difficulty of
permitting projects even at the State level so every time
something makes a project difficult, it makes it harder to get
it financed. It is very difficult to finance them now so we
think more and more projects theoretically could be taken off
the table. We have great concern about that but what our bigger
concern is and my concern as a citizen is we are in an energy
crisis and we need to look at every single option out there to
create more energy. And, you know, again I said I hung my hat
on green energy and we do a lot in that arena but it doesn't
work without new coal plants, without new nuclear plants,
without creating additional energy because we are still
birthing babies, we are still graduating people from college,
we are still building houses and we want to be a manufacturing
factor. So I sit here and I think to myself where is the
outrage? Where is the outrage and the Chinese are going to
corner the energy market sooner or later and we are not taking
steps to create power now and electricity is a key piece of it.
And I want to see our Nation look at ways to get every option
on the table now and that is our concern.
Mr. Olson. Yes, sir, what we call up here the all-vote
plan. Thank you for that answer, sir.
Mr. Montgomery, a question for you, sir. EPA Administrator
Jackson often touts the creation of jobs by implementing new
green control technologies. You have been in this field for
about 40 years. Will the mandate to comply with greenhouse gas
regulations produce a net job growth here in the United States
as Administrator Jackson claimed, yes or no?
Mr. Montgomery. No.
Mr. Olson. Do you want to elaborate on that?
Mr. Montgomery. OK, it will certainly produce a shift. It
will produce a shift or resources in industrial activity toward
producing that pollution control equipment but it will be
taking those resources away from producing other things that
people demand and contribute to our standard of living. It is
not to say it might not be worth it if you judge that the
benefits are large enough but it is clearly going to be a cost.
At best, it is going to involve moving people from one kind of
job to another and not creating net new jobs but on top of that
it is going to be a drag on productivity growth and investment
which is going to slow the rate of growth in the economy
overall. And this is something that has been seen by economists
who have studied this going all the way back to work that
Jorgenson and Wilcoxen did 20 years ago looking at the effect
of the Clean Air Act amendments themselves. They found that
yes, there were some industries that were doing quite well
producing that pollution control equipment but the regulations
were essentially a tax on capital investment so it slowed down
capital investment. It reduced the growth in worker
productivity because unlike the Luddites who do green job
studies, they actually know from looking at history that the
primary driver of productivity growth is increasing capital
investments to make workers more productive. So all of those
processes are slowed down by the higher costs that are imposed
on the economy by the regulations so that overall there is a
depressing effect on our rate of growth and internally there is
some shuffling around of jobs from doing one thing to doing
another.
Mr. Olson. So no new green technologies, thank you for that
answer and my final question is going to be for Mr. Carey. Mr.
Carey, coal provides about 45 percent of our electric power. If
the EPA regulations were to go forward as planned from what
your testimony earlier today that is about 75 gigawatts that
are at risk?
Mr. Carey. Within that range, Congressman.
Mr. Olson. How would we replace the capacity of the coal
industry?
Mr. Carey. That is the 64,000 not gigawatt question but
$64,000 question, Congressman. There is no way.
Mr. Olson. Any idea how many jobs it is going to cost us?
Mr. Carey. Well, if we are looking at a 70 percent
reduction in the amount of coal, it is a 70 percent reduction
in the amount of coal jobs with a multiplier of 10. So we are
in the hundreds of thousands.
Mr. Olson. Thank you for that answer.
Mr. Whitfield. Mr. McKinley of West Virginia, you are
recognized for 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman. It has been a long
day and we have broken twice. It sounds a little bit like
Groundhog Day. We are back here again for the third time to try
to get through all of this. After being towards the end of this
questioning it appears a lot of the questions have been asked
but so I just want to kind of summarize where I am so when I go
home tonight. It appears that there seems to be a consensus
that energy costs are going to rise if we have the greenhouse
gas regulated under the Clean Air Act. There is also a
consensus that that will have a negative impact on industry,
manufacturers. If they are negatively impacted, we are going to
lose jobs. I got a letter and there were comments made that
this is just a Republican thing but here's a letter from the
American Iron and Steel Institute and it is a long letter so I
am not going to go through it. I am going to ask that it be put
into the record.
Mr. Whitfield. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. McKinley. Thank you. And he goes on in his letter about
the, just talks about the new regulations will create
permitting obstacles in investing in new and renovated
facilities, impose significant additional cost on domestic
steel producers. The development of new environmental
regulatory proposals across the country it is obvious will have
a deleterious effect on them. But he goes on to say the
unprecedented speed of the EPA's effort to regulate the
greenhouse gases under the Clean Air Act threatens serious
economic disruption. The greenhouse gas emissions under the
Clean Air Act will create disincentives to invest, potential
for new project construction delay and increased litigation
risks. He goes on to say for the Institute that it is not
partisan. This is business. This is what it is all about here.
We have 15 million Americans out of work today and we are
letting the EPA continue to cause this kind of challenge. And
he goes on to say it will raise operating costs which will
place our American steel manufacturers at a competitive
disadvantage while allowing overseas competitors to continue to
increase their missions. The result would be limited
environmental gain but significant economic challenges
including further elimination of valuable American
manufacturing jobs especially for energy-intensive, trade-
sensitive industries.
I don't understand. I have only been here in Congress for
not even 60 days and I don't understand why they don't get it.
To me it is axiomatic. This is fundamental economics 101. Why
is it that they don't get it around here? Am I the one out of
step, Mr. Cicio?
Mr. Cicio. I have very diverse energy-intensive
manufacturers including some integrated steel companies plus
recycle steel companies and I can, there are lots and lots of
stories of truthful events where these steel companies have had
to shut facilities down because of a tenth of a cent increase
in the price of electricity. There are chemical companies that
compete on a global scale with companies halfway around the
world where they compete for a tenth of a cent per pound of a
product. We are gripped and this is what I said in my
testimony, our country and the manufacturing sector are gripped
in competition and many times our competition are governments
wrapped around companies but they are governments and they are
subsidized.
Mr. McKinley. But my question, why don't they get it? Why
doesn't when we have so many people out of work, we are
threatening possibly one more time another round of employment
losses at a time when we need our energy, coal, nuclear, all
and we are threatening ourselves. Yes, sir?
Mr. Montgomery. This is my personal opinion and but it is
this I think is a very good example of how Congress is not
working well and it is a very good example of how hard it is to
take on a big issue. I would say that the first lesson in
environmental economics is you have to compare the cost of a
regulation to the benefits that you get. Well, when the costs
of a regulation are large and the benefits are in the future,
it is very hard to convince your constituents that that is a
good thing to work for so the analysis instead of being an
objective description of what is likely to happen turns into a
claim this isn't a hard decision after all. There aren't any
costs because they go away and I am afraid that that is how I
see the debate being destroyed here.
Mr. McKinley. Thank you.
Mr. Whitfield. Mr. Scalise, you are recognized for 5
minutes.
Mr. Scalise. Thank you, Mr. Chairman.
The theme of today's hearing is the greenhouse gas
emissions and specifically the impact of these regulations on
American jobs and I think when we talk about American jobs we
had a hearing a few weeks ago. It has been referenced a few
times with EPA Administrator Jackson and then we had a panel
right after Administrator Jackson spoke and it was a panel of
business people, employers in this country and it was like
there was parallel universe. You had the head of EPA talking
about how the regulations that she is implementing are creating
jobs and then you literally had employer after employer after
employer talking about those very EPA regulations and the
uncertainty associated with it are costing American jobs. And
so maybe what the EPA Administrator Jackson is referring to
were the jobs she is creating in China, in India, in other
countries because when you talk to employer, they are actually
looking at real job losses. There was a company, a major steel
manufacturer that talked specifically about the burdensome
permitting requirements and rising energy costs, increasingly
industrial projects are no longer even being considered for
development in the United States. It doesn't mean they are not
being considered. They are just not being considered in the
United States. They further went on to talk specifically about
one of their projects, ``Due to the uncertainty created by
these regulations, we made the difficult decision to delay the
$2 billion investment also delaying the creation of 2,000
construction jobs and 500 permanent ones.'' This was one
company and we have heard this story over and over and over
again, jobs that are leaving our country.
And I want to ask Mr. Reicher, you know, we have heard
testimony in the past over this issue about carbon leakage and
the fact that let us say you are not building a steel mill here
in the United States. You are going to build it in Brazil which
is a viable option when people are looking at where they are
going to build it. So if they build it in Brazil you actually
have maybe four times the amount of carbon and greenhouse gases
emitted than if you would have built that plant today under
current environmental regulations in the United States, not to
mention the job loss. So first, do you recognize one, there is
real job loss going on out there in America? And number two,
that because of these regulations by EPA you are actually
emitting more carbon because they are building these plants in
other countries that actually have lower standards than us?
Mr. Reicher. Well, Mr. Scalise, responding to you and Mr.
McKinley, I think this issue of why ``they don't get it'' is
first, I think there are serious issues here with human health
and the environment and it can flow from these greenhouse gas
emissions. Secondly, there are in fact serious economic issues.
We are losing vast investment in this country.
Mr. Scalise. Because of these regulations and the
uncertainty.
Mr. Reicher. To countries where they have in fact decided
to control the emissions of greenhouse gases and other
pollutants, to the EU, increasingly to China, to places where
they are taking these issues seriously.
Mr. Scalise. Well, what you are saying they are taking them
seriously. They actually emit more greenhouse gases to do some
of these manufacturing jobs in those countries like China. Do
you recognize that?
Mr. Reicher. Fair question so all the more reason why we
have got to step up to it and the rest of the world does as
well. That is why we have international green age. That is why
we go and negotiate these.
Mr. Scalise. But do you recognize that the uncertainty
though of what is going on in this country is costing American
jobs? Will you at least acknowledge all of these, business
after business?
Mr. Reicher. Certainly, the uncertainty on Wall Street are
moving their money away from this country to countries where in
fact they are putting controls on greenhouse gas emissions.
Mr. Scalise. Well, Wall Street has done enough damage to
our economy already.
Let me ask Mr. Montgomery something because I am on limited
time and I apologize but, Mr. Montgomery, I am not sure if you
read there was a study about Spain's experiment with this
scheme of cap and trade, greenhouse gas emission regulation
where they said they are going to create all these green jobs.
What they found out later is for every green job they created
they lost 2.2 jobs but then when they dug deeper into that 90
percent of those jobs they created were part-time jobs. So in
essence for every green job they created they lost 22 full-time
jobs in their economy. I am not sure if you are familiar with
that Spain study or if you want to comment on that?
Mr. Montgomery. Yes, there have been some criticisms of the
study but I think it has made some very good points. One of
them is just how phony the accounting for green jobs can be
depending on what you are counting. The second one is that yes,
the cost of the mandate or a subsidy is borne by the country
that does it and Spain decided to put on huge subsidies and
that both decreased their own competitiveness across the board
and it attracted a lot of equipment to be built elsewhere.
Mr. Scalise. Like we are seeing here.
And I only have got a few seconds left and I want to ask
Mr. Joyce something because you talked about in your opening
testimony and then I don't know if this was on behalf of NFIB
or just your small business but you referred to a recent study
by the U.S. Small Business Administration that found that the
total cost of regulation on the American economy is $1.75
trillion per year and then further that the study reaffirmed
that small businesses actually bear a much larger percentage. I
think what, over 30 percent more of the cost than large
businesses so the uncertainty in these regulations are killing
small businesses primarily which is the real heart of our job
creation in this country. I want to ask you to comment further
on that.
Mr. Joyce. Yes, absolutely because they are smaller, you
know, smaller network of sales to diversify the cost of
implementing whatever the regulation is so little businesses
are widely more impacted with these regulations than big ones
who have got, you know, staffs that run it and they just blend
it in there and it goes away. This hits the little businesses
very, very significantly.
Mr. Scalise. Thank you, Mr. Chairman, I yield back.
Mr. Whitfield. I thank you and I want to thank the
witnesses very much. We appreciate your testimony and I know
you didn't plan to spend this much time with us but we hope
maybe you will come back someday and this panel is dismissed.
Mr. Bilbray. Mr. Chairman.
Mr. Whitfield. Yes.
Mr. Bilbray. I want to thank you for having this hearing
and let me just point out.
Mr. Whitfield. We are not through.
Mr. Bilbray. I know I just before they leave though I think
it is great to point out for 4 years there was an effort to
green the Capitol and try to reduce our footprint here but in 4
years Congress is still burning coal to fire up the lamps over
our head and I think that if that is any indication of the
progress we have made it is just good luck.
Mr. Whitfield. Well, of course I like coal myself but we
will call at this time on the second panel. we have Ms. Gina
McCarthy who is the assistant administrator for the Office of
Air and Radiation at the U.S. Environmental Protection Agency
and, Ms. McCarthy, we appreciate you being us today. I trust
that you have enjoyed yourself as much we have already and I
will tell you we have adopted a new policy and we are supposed
to start hearings at nine o'clock or 9:30 and we have no votes
so that we can go straight through before anyone has to leave.
So unfortunately it didn't work out that way today but we do
appreciate your patience and your being with us very much.
Ms. McCarthy. Thank you, Mr. Chairman, it is nice to be
here.
Mr. Whitfield. And with that, we will go on and recognize
you for your 5 minute opening statement, Ms. McCarthy.

STATEMENT OF GINA A. MCCARTHY, ASSISTANT ADMINISTRATOR, OFFICE
OF AIR AND RADIATION, UNITED STATES ENVIRONMENTAL PROTECTION
AGENCY

Ms. McCarthy. Thank you very much and again I want to thank
the chairman and the ranking member, Rush, for inviting me here
and the members of the committee to testify on this important
subject.
Let me get started. I know you have listened to a lot of
testimony so I will be as crisp as I can and then we can get to
questions and answers.
But EPA is just starting to update existing Clean Air Act
programs in order to address greenhouse gas emissions. The
Clean Air Act tools that we have been using are exactly the
same Clean Air Act tools that have been responsible for
achieving dramatically cleaner air and important public health
benefits at reasonable cost. With its 40 year history of
success the Clean Air Act continues to be one of this country's
greatest bipartisan achievements. Today EPA is releasing a peer
review study of the cost and benefits of the Clean Air Act
since 1990. It demonstrates both the Clean Air Act's tremendous
public health benefits and well how cleaner air strengthens the
economy. In the last year alone, programs implemented pursuant
to the Clean Air Act amendments of 1990, are estimated to have
reduced premature mortality risks equivalent to saving over
160,000 lives, to have spared Americans more than 100,000
hospital visits, prevented millions of cases of respiratory
problems like asthma, to have enhanced productivity by
preventing 13 million lost workdays, and have kids healthy and
in school avoiding 3.2 million lost school days due to
respiratory illnesses and other diseases that are either caused
or exacerbated by air pollution.
EPA can't monetize all the benefits from recent Clean Air
Act regulations but to the extent that we can this study tells
us that the Clean Air Act provides $2 trillion in benefits in
2020 alone. That is over $30 in benefits for every single
dollar that we spend. This is a tremendous value for the
American people. Most of the rules that gave us these huge
gains in public health were adopted amidst claims similar to
what we are hearing today, claims that they would be bad for
the economy and bad for employment. Some claim that the Clean
Air Act amendments of 1990 themselves would cost at least
200,000 or up to even 2 million jobs. In contrast to all of
those dire predictions, history has shown again and again that
we can clean up pollution. We can create jobs and we can grow
our economy all at the same time.
Since 1970, air pollution has actually declined 63 percent
while at the same time the economy has grown 204 percent.
Discussions of job impacts often overlook the jobs that come
from building and installing pollution control equipment. The
Institute for Clean Air Companies estimated that over the past
7 years the implementation of just one rule, the Clean Air Act
interstate rule resulted in 200,000 jobs in the air pollution
control industry. In a recent Wall Street Journal op-ed, eight
major utilities that will be affected by our greenhouse gas
regulation said that, ``Contrary to claims that EPA's agenda
will have negative economic consequences, our companies
experience complying with air quality regulations demonstrates
that they can yield important economic benefits including job
creation while maintaining the liability.''
The Clean Air Act has also helped spark world-class
innovations in the United States. For example, EPA vehicle
emissions standards led to the development and application of a
huge range of technologies like catalytic converters, onboard
computers, fuel-injection systems, even unleaded gasoline.
These innovations are now found throughout the global
automotive market. In the vehicle emission control industry now
employs approximately 65,000 Americans with domestic annual
sales of $26 million.
The environmental technology and services industry employed
1.7 million workers in 2008, and that taps into the global
market that is worth over $700 billion, and that is a market
the size of the aerospace or the pharmaceutical industry.
Globally, America can compete and lead in, I am sorry, can
compete and lead in the environmental and clean energy sectors
but only if we take steps at home to continue to innovate. As
we drive towards cleaner air and clean energy we need to
challenge innovation and challenge technology excellence.
We are now starting to achieve greenhouse gas, address
greenhouse gases by applying Clean Air Act regulatory tools
that have been used successfully now for 4 decades. EPA is
compelled to do so by the Clean Air Act, the Supreme Court's
decision, as well as sound science. These greenhouse gas tools
that we are going to use require the agency always to take cost
into consideration and they will allow the agency to move
forward using commonsense, reasonable, measured requirements.
The first greenhouse gas rule EPA issued is already
demonstrating how practical regulations can make sense for the
economy. Last April, EPA and the Department of Transportation
completed harmonized national standards to reduce greenhouse
gas pollution from new cars and trucks. The vehicles sold in
model years 2012 to 2016 will save 1.85 billion barrels of oil
while reducing greenhouse gas emissions by 962 million tons.
The rules were supported by both the auto workers as well as
the auto manufacturers who recognize that these standards help
them stay competitive in a global marketplace where fuel
efficiency increasingly matters. We will also save consumers
money. A 2016 model year vehicle will save you $3,000 over the
life of that vehicle.
The regulatory focus on improved efficiency isn't unique
just to motor vehicles. EPA is also focusing on energy
efficiency as the preferred method of meeting greenhouse gas
permit requirements for power plants and large industrial
facilities. And let us all be clear, these new greenhouse gas
permit requirements apply only when a facility is being a new
facility is being built or when a company is making major
modifications at an existing facility. The universe for these
greenhouse gas permits are large greenhouse gas emitters but
the universe is very small and it is manageable to achieve.
Leadership in new technologies combined with healthier
workers and fewer air-related health effects have laid the
foundation for robust, long-term economic growth and the
employment that comes along with it. We shouldn't pass up the
opportunity to use the Clean Air Act to promote efficiency,
energy security, to protect public health because of the same
inaccurate claims about job losses that have been leveled
against major actions under the Clean Air Act for 4 decades
now. Thank you very much.
[The prepared statement of Ms. McCarthy follows:]

[GRAPHIC] [TIFF OMITTED] T6512.077

[GRAPHIC] [TIFF OMITTED] T6512.078

[GRAPHIC] [TIFF OMITTED] T6512.079

[GRAPHIC] [TIFF OMITTED] T6512.080

[GRAPHIC] [TIFF OMITTED] T6512.081

Mr. Whitfield. Thank you, Ms. McCarthy. I was reading an
article recently of Duke University, the Nicholas Institute of
Environmental Policy Solutions and in there they quoted you and
you had said that if you apply the 100 09250 tons per year
limit for greenhouse gases that it would require six million
sources to obtain Title 5 permits and lead to 82,000 permitting
actions under PSD resulting in an estimated combined cost of
$22.5 billion to the permitting authorities alone. Now, I know
you have the tailoring rule but without referring to the
administrative necessity doctrine or the absurd results
doctrine, doesn't your tailoring act explicitly violate the
terms of the Clean Air Act as to the limits?
Ms. McCarthy. Mr. Chairman, I would tell you that your
quote is correct. That is the reason why the administration
puts together the tailoring rule and we believe that it is not
only a legally sound approach to making sure that we.
Mr. Whitfield. But without reference to the administrative
necessity or absurd result it does violate the precise wording
of the Clean Air Act?
Ms. McCarthy. I am trying to explain to you that we believe
that that is the best interpretation of Congress' intent when
it is a new pollutant.
Mr. Whitfield. But you do recognize it does violate the
explicit terms of the Clean Air Act?
Ms. McCarthy. I do not believe that it violates the Clean
Air Act.
Mr. Whitfield. Well, your limits are above the 100 to 250
tons per year.
Ms. McCarthy. They certainly are and we approach it in a
very measured way to make sure that we don't.
Mr. Whitfield. Thank you. Now, let me make ask you did your
agency conduct a comprehensive economic or job analysis of the
impact of the greenhouse gas regulations?
Ms. McCarthy. I am sorry. Could you say that again, Mr.
Chairman?
Mr. Whitfield. Did your agency conduct an analysis of the
impact of the greenhouse gas rules on jobs and the economy?
Ms. McCarthy. Yes, the greenhouse gas rules certainly we
did with the light duty vehicle rule we have talked about that
a little bit.
Mr. Whitfield. But on stationary sources.
Ms. McCarthy. On stationary sources the way in which the
Clean Air Act works is that we are not setting a standard for
permitting. Those permitting decisions are rightly.
Mr. Whitfield. So is your answer no?
Ms. McCarthy. My answer is that States do that in the
course of doing the best available control technology
permitting process.
Mr. Whitfield. But the EPA, you do not do that then?
Ms. McCarthy. Well, we do not know businesses' intent.
Mr. Whitfield. Do you all do any sort of analysis on how
you are going to replace lost electricity generating capacity
from any of the regulations?''
Ms. McCarthy. I do not anticipate the greenhouse gases will
result the greenhouse gas regulations will result in any lost
electricity generation?
Mr. Whitfield. So you don't think the regulations will
cause the loss of any capacity?
Ms. McCarthy. In terms of electric generating, no, I do
not.
Mr. Whitfield. OK, that bell wasn't my time but I am going
to at this point recognize Mr. Rush for 5 minutes.
Mr. Rush. Thank you, Mr. Chairman.
Ms. McCarthy, I really want to apologize first of all that
you had to wait this long and most of the members have gone and
we have suspended the activities on our floor and the media for
the most part has left during your testimony so I apologize for
that but necessarily we have to do what we have to do here.
Let me just ask you while today's hearing focused on the
jobs impacted by greenhouse gas regulations under the Clean Air
Act and there is no question that this Congress must focus on
job creation. Unemployment rates are exceptionally high and
joblessness is taking its terrible toll on our Nation and in
your professional opinion what would be some of the
consequences particularly economically but also environmentally
and in the area of public health if Congress did enact such a
bill as the Upton-Inhofe bill where the EPA ability to regulate
greenhouse gases would be repealed without any type of
legislative alternative that has been presented to us, can you?
Ms. McCarthy. Yes, I can speak to that and I appreciate the
question. We are very concerned with the bill in terms of what
it might do for our ability to make sure that businesses that
want to actually be constructed or businesses that want to
modify being able to make sure that those Clean Air Act permits
are available to them. So we are very concerned that we protect
the interests of the Clean Air Act, that we protect our ability
to issue permits when permits should be required and deserved
and that we move forward with the Clean Air Act as it was
intended. Carbon pollution is a pollutant. It is a pollutant
under the Act. It is a danger to public health and welfare. We
believe we can take measured approaches to controlling that
pollutant into making sure that as new facilities are
constructed and major modifications are done that we minimize
the kind of greenhouse gas emissions that are additionally
emitted into the atmosphere.
Mr. Rush. The idea that the Clean Air Act requirements can
control carbon pollution have anything to do with unemployment
problems to me is a sheer fantasy. We are suffering a worldwide
global recession. Normally, the regulations don't cause
anything. On the contrary they actually will benefit
regulations caused the financial meltdown. All right, you
testified that EPA recently prepared a white paper highlighting
information which are the Clean Air Act and jobs and the
economic in the United States. Are the findings highlighted in
that paper based on peer review literature?
Ms. McCarthy. Yes, they are.
Mr. Rush. And what did these peer review studies findings
actually take on Clean Air Act regulations on jobs and the
economy?
Ms. McCarthy. Well, what it found and it is rather
remarkable is that when the economists looked at some of the
most heavily regulated industry they did not find evidence that
regulation leads to larger job losses. For example, there was
an article by Morgan Stern that looked at four of the most
heavily regulated industries and it found that increased
environmental spending does not cause a significant change in
employment in those regulated industries. On average there was
a gain of 1.5 jobs for every $1 million in additional
environmental spending. Now, that doesn't mean that the Clean
Air Act is a jobs act. It is clearly a public health act but
the most remarkable thing is that for every dollar that you
spend in order to clean up the air under the Clean Air Act, you
get $30 in health benefits so it is a significantly effective
public health measure. But the great thing is that it does have
ancillary benefits of job growth and there is no evidence that
it is a factor in significant job losses in the economy, in
fact just the opposite.
Mr. Rush. Can you give us some examples of the types of
jobs created when we clean up the environment?
Ms. McCarthy. Sure, someone when they have to design and
build and run and maintain pollution control equipment, those
some ones are jobs. For example, installing a scrubber on a
power plant can create up to a thousand construction jobs and a
hundred permanent jobs. In addition, scrubbers require steel.
That creates jobs as well. There was a study by the U.S.
boilermakers that looked at jobs between '99 and 2001 and it
found that their jobs grew by 35 percent that is 6,700 jobs. So
what we find now is there is a thriving environmental
protection industry. In 2008, that was $300 billion in revenues
were generated from that industry sector, 1.7 million jobs,
American jobs in that sector and they were exporting $44
billion worth of equipment and technology. We think that is
rather a good success story.
Mr. Barton. [Presiding] The gentleman's time has expired.
The chair now recognizes himself for 5 minutes.
Welcome, Assistant Administrator. Just for the record, are
you a presidential appointee or a civil servant?
Ms. McCarthy. I am a presidential appointee.
Mr. Barton. OK and how long have you held the position?
Ms. McCarthy. Since June of 2009.
Mr. Barton. Thank you and what was your prior position
within the Administration, if any?
Ms. McCarthy. It was not. I did not work for the
Administration. I worked for the Connecticut Department of
Environmental Protection. I was the commissioner of that
agency.
Mr. Barton. OK, thank you very much. Your opening in your
statement in your testimony, prepared testimony talks about all
the things that are the benefit of the Clean Air Act. It may
surprise you but I was a supporter and voted for the Clean Air
Act back in 1990. I mean it was bipartisan. I would say that
the attempt to tie greenhouse gas regulation to the Clean Air
Act is a stretch because in my opinion I don't believe that
CO2 is a pollutant under the definition of the Clean
Air Act nor do I believe that it is a health hazard. Do you
have any statistics that indicate CO2 has caused any
kind of a poisoning that requires emergency room assistance or
anything like that?
Ms. McCarthy. CO2 is not a toxic pollutant.
Mr. Barton. So in terms of when you are talking in your
testimony about the benefits of the Clean Air Act you talked
about premature mortality savings and things like that, those
types of criteria would not apply to CO2.
Ms. McCarthy. No, Mr. Barton, that is where I would differ.
I would tell you that CO2 is very much a pollutant
that impacts public health and welfare. I would tell you that
CO2 actually does contribute to ozone pollution
which is a significant health hazard and I would tell you that
the Supreme Court that really interprets Congress' intent for
the rest of us told us that we had to consider greenhouse gas
as a pollutant.
Mr. Barton. Well, actually the Supreme Court said that the
EPA had to make a decision whether it should be regulated.
Ms. McCarthy. That is correct, consider it.
Mr. Barton. OK, do you know what the level of
CO2 right now generally speaking is in the
atmosphere?
Ms. McCarthy. Actually, I don't have that figure.
Mr. Barton. If I was to say it was around 380 parts per
million would you accept that in the ballpark?
Ms. McCarthy. That is probably right.
Mr. Barton. OK, do you know what a greenhouse that grows
plants and food within a greenhouse, do you know what the
average CO2 parts per million is in a greenhouse?
Ms. McCarthy. I am sure you will tell me.
Mr. Barton. You don't have any idea?
Ms. McCarthy. No.
Mr. Barton. So if I say it is around a thousand which is
what it is you won't dispute that?
Ms. McCarthy. No.
Mr. Barton. Do you know what you create in CO2
when you answer my questions? Do you know what the amount of
CO2 coming out when you answer a question is? We
have about 380 parts per million in the atmosphere. Commercial
greenhouse gases exist in about a thousand parts per million
and when you answer a question or when I ask you a question, I
expel CO2 at the rate of about 40,000 parts per
billion. So how in the world can that be a pollutant? If it is,
my good friend Bobby Rush would be gasping for breath right now
and turning red in the face and my good friend, Mr. Waxman, I
mean the fact is under any definition greenhouse gas if
CO2 is one are necessary for life.
Ms. McCarthy. No one is disputing that.
Mr. Barton. So I know you are here to be the good soldier
and I know there is a massive world debate about the greenhouse
gases but when we try to apply the Clean Air Act which I voted
for and which a majority of the Republicans on this committee,
in fact I think all but one or two voted for that were on the
committee, it just doesn't work. It just the definitional terms
are different so we have a difference of opinion on our side in
terms of whether this is a necessary thing. Why do you need the
tailoring rule to implement greenhouse gas regulations?
Ms. McCarthy. Greenhouse gas is as you know a new pollutant
under the Clean Air Act. We took a look to ensure that the
application of the Clean Air Act to the greenhouse gas
pollutants was done in a reasoned, commonsense way. We wanted
to make sure that we phased in the greenhouse gas regulations
in a way that made sense, in a way that was manageable, in a
way that would meet the intent of Congress. When we looked at
that we decided and the Administrator clearly made a
determination that their were many small sources that could
potentially be regulated like greenhouse gases, she made a
determination that that didn't make sense under the law and so
we issued the tailoring rule so that we got at the vast
majority of greenhouse gases by regulating a minimum of the
largest sources first.
Mr. Barton. My time has expired. Before I recognize the
next witness or I mean the next questioner, would you submit
for the record the EPA's official position on the control
technology if any that is best able right now to actually
regulate greenhouse gases, if there is such a technology?
Ms. McCarthy. There are many technologies for greenhouse
gases.
Mr. Barton. Would you submit for the record those
technologies and their cost effectiveness if you have that
information?
Ms. McCarthy. I could certainly provide you a range of
technology choices that we have put out in white papers to help
guide a decision that are efficient technologies that help
advance reductions in greenhouse gases.
Mr. Barton. Thank you.
The chair inquires of the Minority Mr. Markey was the one
here closest but Mr. Waxman is the ranking member. Who should?
OK, the chair would recognize Mr. Waxman for 5 minutes.
Mr. Waxman. Thank you very much.
Ms. McCarthy, we have heard a lot today about the
greenhouse gas regulations that went into effect in January and
we have heard from witnesses today that these regulations will
be ``nearly impossible to meet.'' Yet this committee has also
received testimony from industry that EPA's approach has been
``reasonable and does not impose undo hardship.'' I would like
to ask you some questions to help me understand exactly what is
required under these new regulations for stationary sources.
First, can you confirm that only new sources or existing
sources that expand and significantly increase emissions are
currently subject to any requirements?
Ms. McCarthy. That is correct.
Mr. Waxman. Thank you. So for example, if I own a power
plant that is already up and running and I don't make any
changes I don't have to do anything differently, do I?
Ms. McCarthy. No.
Ms. Waxman. But new facilities will have to go through a
technology review process to determine best available control
technology or BACT to limit carbon pollution at the facility.
In most of the country this review is carried out by State or
local permitting agencies not by EPA itself. Are you aware that
the National Association of Clean Air Agencies has surveyed its
members and most States reported that they only expect to do
zero, one or two permits this year?
Ms. McCarthy. Yes.
Mr. Waxman. Members of the National Association of Clean
Air Agencies recently briefed House staff on some of the permit
reviews they have already begun. In the examples they share
they concluded that energy efficiency would likely be all that
was needed. I would like to use an example that New York State
shared in order to ask if this is consistent with EPA's
guidance. In New York, a Lafarge cement plant volunteered to go
through the process. The State began by identifying all
available technologies that might limit carbon pollution. This
initial list included carbon capture and sequestration but did
not include switching to a different type of fuel. Is this
consistent with EPA's guidance?
Ms. McCarthy. Entirely, yes.
Mr. Waxman. The State then quickly eliminated CCS as
technically infeasible. The State indicated that because no
geologic formation existed close to the cement plant, CCS would
not be feasible. Is this consistent with the guidance?
Ms. McCarthy. Yes.
Mr. Waxman. The State then ranked the various options for
limiting emissions and eliminated options that were too
expensive. Finally, the State selected the technologies that it
thought would be required. The State determined that the cement
plant could reduce its carbon pollution by 12 percent by
installing several types of energy efficiency equipment
including high-efficiency motors, fans and burners. These
efficiency features would constitute BACT. Is this the type of
determination appropriate under EPA's guidance?
Ms. McCarthy. Yes.
Mr. Waxman. It sounds to me like this was a logical,
reasonable process and I understand that Lefarge Cement expects
that these efficiency improvements will reduce their operating
costs and save them money. Is it fair to assume that many other
facilities may actually save money too?
Ms. McCarthy. Yes.
Mr. Waxman. I hope the other States will follow this
commonsense example and find ways to reduce pollution and
improve efficiency. I have some time remaining if any of my
colleagues wish me to yield to them, otherwise I will yield
back my time. Mr. Green.
Mr. Green. I thank my friend.
Ms. McCarthy, yesterday my good friend in the Senate who
served on this committee, Sherrod Brown from Ohio called on
President Obama to direct EPA to implement a plan to provide
financial and technical transition assistance protecting U.S.
manufacturing as we move forward with the greenhouse gas
regulations. Last Congress when this chamber considered cap and
trade I was equally concerned about the issue and working hard.
Can you comment on what the Administration is doing to address
these concerns moving forward with these regulations?
Ms. McCarthy. Yes, I would be happy to. We have taken great
pains as we begin to regulate greenhouse gases to work with the
States and work with the permitting entities. We have provided
a wealth of technical assistance. We have produced guidance
documents that help walk them through this process. We have put
white papers out that explain the cost effective technologies
available in all of the major industry sectors that could be
potentially regulated. We are also having listening sessions
before we move forward with additional regulation to make sure
that we understand the needs of the company and that we can
effectively reduce greenhouse gases in ways that are cost
effective. Every rule that we have available to us under the
Clean Air Act that is suitable for greenhouse gas regulations
requires us to look at cost so we will go out of our way to
make sure that we use not just a commonsense approach but one
that reduces cost to the fullest extent we can and still
achieve the required reductions under the Clean Air Act.
Mr. Green. I know that time has expired and I have a
question I would like to submit about how good natural gas is
to replace the problem we have with carbon, Mr. Chairman.
Mr. Barton. Well, certainly without objection I will
support that.
Mr. Green. OK, thank you, thank you.
Mr. Barton. The gentleman's time has expired.
The gentleman from Texas, Dr. Burgess is recognized for 5
minutes.
Mr. Burgess. Thank you, Mr. Chairman.
Ms. McCarthy, thank you for being here. In Phoenix in fact
just about a month ago at the Fourteenth Annual Energy Utility
and Environmental Conference in Phoenix, it says that you were
involved or advocating a not just a tweaking of current energy
use but a fundamental overhaul of the Nation's production use
of energy. EPA is ready, willing and able to drive this
overhaul, you emphasized in a quote here, ``We must transform
the power sector in a way that meets the needs of the 21st
century.'' You repeatedly use the word transform to describe
EPA's goal for the Nation's energy use so I guess a question
that would come up where in the statute does the EPA get the
authority to transform the power sector?
Ms. McCarthy. That was, if I may, just to give you the
background for the conference. That was a conference of
technology developers. What we were referring to was the range
of Clean Air Act actions that are impacting the utility sector
and we were talking about the fleet that is out there in the
utility sector and the extreme inefficiency of many of the
units that out there. In the Clean Air Act implications of
having those facilities install current technology, technology
that is available currently and has been available for 30 years
that can actually clean them up and move towards a cleaner
fleet.
Mr. Burgess. But fundamentally it is the job of the
legislative branch to come to those conclusions in conjunction
with the development of a national energy policy so
transformation of the power sector of America really should be
a legislative initiative, not an Administrative initiative or
an Executive Branch initiative.
Ms. McCarthy. I am not sure if that was a direct quote but
what I was there to talk about was our opportunity, our
opportunity to achieve significant public health protection for
American families by looking at how we could provide certainty
in the regulated community so investments would flow to
utilities. Those that are inefficient would be able to upgrade.
Those that are inefficient would know what their regulatory
obligation was.
Mr. Burgess. Let me just ask a question before the time
expires. In a transformed power sector, how much coal would we
be able to use in a transformed power sector? Do you have a
figure in mind for that? Is it along the same lines that Gene
Green just asked the question about natural gas? How much coal?
How much natural gas? How much nuclear?
Ms. McCarthy. No, we EPA is rightly not in the business of
choosing fuels. We are in the business of regulating pollutants
and what we have done with the greenhouse gas rules is we have
made sure that if you are building a coal facility, you should
be as clean as a coal facility can get. We have not suggested
that a different fuel needs to be used. Again, we are trying to
provide certainty for businesses as they need to be permitted
that are coming in new and making major modifications.
Mr. Burgess. Well, speaking in terms of certainty, you were
here a year ago or just right after the deep water horizon
started causing problems and the subject that day was a
briefing. It wasn't a hearing so there is no record of it
unfortunately but the subject was on the Environmental
Protection Agency going to a new standard of 15 percent ethanol
in motor fuels and gasoline.
Ms. McCarthy. Yes.
Mr. Burgess. And I don't know if you recall or not but I
asked you and the Department of Energy who was there with you
that day about where were the studies that we could look at
that shows that this indeed was a reasonable thing to do and
that in fact people who had snow blowers and two-cycle engines
would not have damage to their equipment by a 15 percent
ethanol mixture. Do you recall that briefing that we had?
Ms. McCarthy. I do.
Mr. Burgess. And you know, I never got any information from
either EPA or the Department of Energy about the testing that
was done or supposedly done. In fact, it almost seemed to be
finger pointing one agency pointing at the other saying well
the other guy is responsible for this but as we come up with
this mandate that was described in Congress in December, 2007,
the amount of ethanol that has to be offloaded into the
Nation's fuel supply is I believe what was driving the, no pun
intended, what was driving the concerns to bump the amount up
to 15 percent. Is that correct?
Ms. McCarthy. Not on the part of EPA. EPA was responding to
waiver requests.
Mr. Burgess. But where are we?
Mr. Barton. The gentleman's time just expired.
Mr. Burgess. Do we have those studies available?
Ms. McCarthy. We do and I apologize if we weren't as
responsive as we should be. We will send you the waiver
decisions that were made and incorporate all of the scientific
information in them.
Mr. Burgess. Thank you, Mr. Chairman.
Mr. Barton. OK, the gentleman from Massachusetts, Mr.
Markey for 5 minutes.
Mr. Markey. Thank you, Mr. Chairman, very much.
Gasoline prices went up almost 20 cents in the last week,
the biggest weekly jump in prices since Hurricane Katrina. In
1975, we imported six million barrels of oil per day. Today
that number is nearly 12 million barrels per day. Prices have
risen by a factor of 13 since 1975. Foreign oil purchases
account for roughly one-half of the United States' trade
deficit, just to input that oil largely from OPEC. Oil money
supports Iran's nuclear program, roadside bombs in Iraq,
rockets for Hezbollah and Hamas, and hate filled Wahhabi
teachings in Saudi Arabia. Now, the Republicans are busy
raising the specter of the Clean Air Act's devastating economic
impacts despite reports showing that the Clean Air Act has
historically led to increases in jobs and will provide $2
trillion in benefits in 2020. But what the Republicans are
planning in order to address this fabricated threat is likely
to create a real danger for the United States. This committee
may soon take up a bill that would tie EPA's hands and prevent
it from taking any steps to reduce dangerous global warming
pollution under the Clean Air Act. What the legislation would
also do is prevent EPA from taking any steps to reduce our
dangerous dependence on foreign oil.
Ms. McCarthy, the legislation this committee may soon act
on could open up the existing car and light truck oil saving
standards to legal challenge and will prevent further standards
from being set. It will prevent further implementation of the
renewable fuels standard and it will prevent EPA from doing
anything to reduce oil use from planes, trains, boats and other
industrial sources. In fact, this bill could result in an
increase in our oil dependence of more than five million
barrels of oil a day by the year 2030, more than we currently
import from OPEC. Do you agree that this legislation could
dangerously increase our dependence on foreign oil by
preventing EPA from being able to take any steps to reduce
demands?
Ms. McCarthy. I would agree.
Mr. Markey. Two weeks ago, the House passed a continuing
resolution for spending for the rest of 2011 and that
legislation was containing a rider that would block the EPA
from using any funds to move forward in any way on curbing
global warming pollution. For the landmark car and light truck
efficiency standards to be fully implemented, EPA still has to
sign off on California's plan to allow companies that are
complying with the national standard to be deemed compliant
with California standards. If EPA is not allowed to sign off on
California's compliance plan could that put the entire fuel
economy agreement that is supported by all stakeholders in
jeopardy?
Ms. McCarthy. It could.
Mr. Markey. The President recently issued an executive
order that requires federal agencies to propose regulations
only after seeking the views of those who might be impacted by
them. Can you give me an example of how EPA is complying with
this directive in its efforts to regulate global warming
pollution?
Ms. McCarthy. Very quickly, we have the Administrator has
charged us and we have gone out and done listening sessions
even before we begin the regulatory process to look at new
source performance standards for greenhouse gases.
Mr. Markey. The President's executive order also requires
agencies to take the special needs of small businesses into
account while developing regulations. Can you give me an
example of how EPA has complied with this directive as it
contemplates regulations to reduce global warming pollution?
Ms. McCarthy. The greenhouse gas tailoring rule eliminated
the need to permit six million small facilities.
Mr. Markey. The threat to our economy is the threat that is
coming from a dramatic spike in oil. That usually signals the
return of a recession. That is where we lose the jobs. If we
tie the hands of EPA from taking the kind of bold action which
they should take in order to reduce our dependence on imported
oil, in the long run we are going to repeat this cycle of job
destruction that has been our relationship with imported oil
going all the way back to 1973. How many times do we have to
re-learn this lesson? 1973, 1979-80, 1991-92, on and on right
up to the $4 a gallon gasoline in 2008 that foreshadowed this
economic catastrophe. It is imperative that we defeat this
Republican effort to tie the hands of the EPA from ensuring
that the renewable fuel standard that the fuel economy
standards are in place that increase using technology our
ability to tell OPEC we don't need their oil anymore than we
need their sand.
Thank you, Mr. Chairman.
Mr. Barton. We thank the gentleman.
It shows Mr. Olson is next, is that your understanding? OK,
we are going to go with Mr. Olson and then Mr. Bilbray and then
Mr. McKinley. What is your timeframe, Madam Administrator? Are
you OK for another 15 minutes or so?
Ms. McCarthy. I am here for you, Mr. Chairman.
Mr. Barton. OK, thank you, ma'am.
Mr. Olson. I thank the chair.
Ms. McCarthy, as you know jobs are the biggest concerns of
the American people right now, that 10 percent unemployment for
about 2 years, and EPA Administration Jackson touts the job
creation of the new green control technologies. When I asked
one of our previous witnesses if she was right or wrong about
creating these great jobs, he said wrong. Are you aware of any
analysis done by EPA to determine the economic impact
specifically with regard to jobs of the EPA's greenhouse gas
regulations?
Ms. McCarthy. No.
Mr. Olson. Don't you think EPA should look at jobs in
proposing some greenhouse gas regulations?
Ms. McCarthy. Let me just expand on that. The greenhouse
gas tools that we are using, the tools we are using to regulate
greenhouse gases are the same tools that we have used in the
Clean Air Program for 40 years and what we have found is that
those tools actually provide cost-effective, public health
measures that actually grow the economy and in many ways
provide one of the most significant public health benefits that
are available to us. So for every dollar we spend on clean air,
we get $40 in public health benefits and so we believe that our
job is to deliver public health to the people in this country
but we are not insensitive to the cost impacts and the job
impacts. And what I would say is the other point I would really
like to make is that the Clean Air Act because of the public
health benefits it creates in terms of making sure that people
can get to work means that people can be productive and keep
their jobs. What it means in terms of kids staying healthy,
staying in school is incredibly important if you are a single
parent or if you are parents where both need to work. We are
providing opportunities for clean air. We are providing
opportunities to keep people healthy, that certainly keeps
people productive.
Mr. Olson. Yes, ma'am. I ask you to submit further answer
for the record please, ma'am.
Ms. McCarthy. Yes.
Mr. Olson. I have little time here. Would you be opposed to
an inclusion of a detailed job statement and an impact
statement any time EPA proposes new regulations? Would you be
opposed to that?
Ms. McCarthy. We already do a detailed regulatory impact
assessment with the Office of Management and Budget for our
rules.
Mr. Olson. Something that we could include the private
sector in to get their opinion as well?
Ms. McCarthy. We actually do peer review of all our
methodologies. That includes going to the private sector using
economists and scientists so everything we do is peer reviewed
in terms of the methodology, the data is transparent and we
believe we do a very good job.
Mr. Olson. Well, thank you then I will put you down as a
big yes for having a more determinative jobs' impact statement
from EPA when they propose to change regulations. And coming
down the home stretch here, I want to talk about a problem my
home State is having with the EPA regarding the permitting
process that has been done by the Texas Council on
Environmental Quality for the last 15 years. Basically, EPA is
taking over the regulation of the power generation and
refineries in our State and again, it has been going on for the
last 15 years. Our State had a SIP approved 15 years ago, three
Administrations, two Democrat, one Republican that Texas
operated under and again approved by the EPA. Essentially it
achieves its clean air goals by giving Texas the flexibility to
establish caps for all emitting facilities at a plant instead
of each individual piece of equipment. EPA is hurting Texas
economy and jobs right now by taking over this permitting
process. Just as example what has happened since EPA has done
that in late-December, a major refinery has spent $4 million to
``deflex.'' The problem I have with all of this is the flexible
permitting process has worked. Since 1999, flexible permitting
has achieved a 22 percent decrease in ozone, a 53 percent
decrease it nitrous oxide compared to the national average of
15 percent for ozone and 27 percent for nitrous oxide. So Texas
22 percent in ozone, the Nation 15 percent, Texas 53 percent in
ozone and the Nation 29 percent. We are doing all of this while
adding 3.5 million people and creating half the private sector
jobs in America since our country went into recession in 2009.
Mr. Barton. The gentleman's time expires and he needs to--
--
Mr. Olson. I will wrap up real quickly. The point of the
Clean Air Act is clean air. Texas has done better than most.
Why is EPA taking this over?
Ms. McCarthy. I would just have to object to the phrase
that we are taking anything over, Mr. Olson. I believe we are
doing the best job that we can to work with TCEQ to make sure
that the permits they issue are federally enforceable, that
provide a sound platform for your businesses to operate with
confidence. We do not believe that the flexible air permits are
enforceable under federal law. We believe they put those
businesses at risk. We believe they are not transparent enough
for the communities that live around those facilities to know
that they are on a level playing field with the way that every
other State issues its permit and does business.
Mr. Barton. And why did it take 18 years to come to that
conclusion?
Ms. McCarthy. I believe that it was under the Bush
Administration that first raised the issue that these flexible
air permits need to be fixed.
Mr. Barton. Then you don't dispute that for 18 years EPA
you said it was--well they didn't positively say it was OK.
They didn't choose to say it was not OK and they only decided
that it was not OK this last year?
Ms. McCarthy. Well, we have made a concerted effort to try
to work with the State and work with the industries to switch
what we believe is not an appropriate and federally
enforceable.
Mr. Barton. Is there any other State that has had the
success in actually reducing the criteria pollutants like Texas
has?
Ms. McCarthy. We have had many areas that have had great
success and I am not disputing that Texas hasn't had reductions
in air pollution. What I will say is they don't use a process
that even EPA can figure out what is going on in those
facilities and ensure that they are complying with federal.
Mr. Barton. And that is a subject for another hearing. The
gentleman's time has expired.
The gentleman from California, Mr. Bilbray, is recognized.
Mr. Bilbray. Ms. McCarthy, the CAFE standard.
Ms. McCarthy. Yes.
Mr. Bilbray. Is the CAFE standard set with 100 percent
fossil fuel gasoline, 10 percent or 15 percent ethanol? What is
the fuel mixture that is used to set the CAFE standard?
Ms. McCarthy. The CAFE standard isn't based on the fuel
mixture, it is based on fuel efficiency. It is based on the
efficiency of the vehicle.
Mr. Bilbray. So I was the guy who had the emissions put on
the sticker next to the mileage but when the consumer gets the
mileage reading.
Ms. McCarthy. Right, it is based on zero. It is based fuel
without any ethanol if that is your question.
Mr. Bilbray. OK.
Ms. McCarthy. That is our certification code.
Mr. Bilbray. So if you are using 100 percent fossil fuel as
your standard for CAFE.
Ms. McCarthy. That is correct.
Mr. Bilbray. And is there a reason why you don't use
ethanol in the mixture?
Ms. McCarthy. It just hasn't been updated of late to
recognize the fact that there is ethanol in most of the fuel.
Mr. Bilbray. And ethanol has an impact on fuel mileage,
right?
Ms. McCarthy. It does.
Mr. Bilbray. What is your number, 66 percent, 70 percent of
diesel, I mean of gasoline?
Ms. McCarthy. I don't have that on the top of my head. It
depends on certainly the amount of ethanol in the mix.
Mr. Bilbray. Well no, I am talking about ethanol as
compared to gasoline.
Ms. McCarthy. Yes.
Mr. Bilbray. The carbon chain is 66 percent, 70 percent?
Ms. McCarthy. I don't know the answer.
Mr. Bilbray. OK, I think that is a critical component I
would like to talk to you about because as somebody who has
worked at the local level on it when we talk about if you we
are going to address that issue, first of all the consumer is
not allowed in the United States to use 100 percent gasoline in
the fuel system because the retailer is not allowed to sell it
to the consumer without 10 percent.
Ms. McCarthy. No, that is incorrect.
Mr. Bilbray. OK, I can go buy real straight gasoline?
Ms. McCarthy. It depends on where you live and what time of
the year.
Mr. Bilbray. OK, that is astonishing I will just tell you
because that we get into it. California fought for years to try
to oppose this and you remember that battle. A lot of your
State agencies supported us on this. Let me get back to and oh
by the way, in California we are paying $6 a comparable gallon
for ethanol. Now, when we talk about something that has only
the energy of 70 percent, let us give them 70 percent of
gasoline, wouldn't you agree that our content mandate should
reflect real useable energy and not just volume? Are you
following what I am saying? In other words, there are certain
green fuels that can produce 100 percent equity with gasoline.
You have right now on the market a green fuel that only
provides 66 to 70 percent of the energy of traditional fossil
fuel. Don't you think that it would be much more real world
standard if we allowed the BTUs to be the content requirement
rather than by volume?
Ms. McCarthy. Actually, I would have to say that what we
regulate are air emissions. We don't force particular mixtures
of fuels. We force those fuels to meet certain.
Mr. Bilbray. Ma'am, no wait a second. I have got to call
you down on that because we have got study on study that the
CARB fuel was cheaper and cleaner than the oxidated fuel with
ethanol. We have standards after standard in California. EPA,
before you showed up, held us off for years. We had a cleaner,
cheaper fuel. We are mandated in California to put ethanol into
our fuel. All I am asking you is this, seeing that that mandate
requires that only 70 percent of the or comparable seven
percent, not 10 percent but 7 percent of the energy in that
tank is renewable, don't you think that it would be more
reasonable to reflect that that we allow the standard to be
either 10 percent by volume or seven percent by energy because
it is the energy? Wouldn't you agree that energy is what
matters, not the volume?
Ms. McCarthy. I understand exactly what you are saying and
all I would suggest is that I am unprepared for this
conversation. I am here to talk about greenhouse gases. If you
would like to carry on this conversation I am certainly happy
to do that and we will bring our technical expert.
Mr. Bilbray. My point is the fact that the standard that is
touted so much by my colleague from Massachusetts has major
problems that need to be corrected and ought to be corrected
through legislation if the EPA can't address it. That fact that
the consumer is actually losing out 30 percent of the energy
for, you know, for ethanol that you do not get gasoline and
this is what my point is on this from the emissions point of
view, emission standards are set per gallon, not per BTU.
Ms. McCarthy. I understand.
Mr. Bilbray. So now you have got this stuff hiding as equal
to gasoline when it doesn't give you the energy of gasoline but
has as they are trying to compare apples and oranges and this
is a major problem we need to address.
Mr. Barton. The gentleman's time is just about to expire.
We appreciate the gentleman's questions on ethanol and fuel
standards. The gentle lady is right, this is a greenhouse gas
hearing on CO2 but those were very good questions.
Mr. Bilbray. Well, Mr. Chairman, let me just say that the
issue here though is that mandating the fuel as part of it, the
emissions issue is hidden.
Mr. Barton. That is true.
Mr. Bilbray. Because when you talk the fact that the
efficiency of the fuel is so deficient, you are now hiding this
huge pollutant that is being brought into it in volume rather
than talking about the true emissions per mile driven.
Mr. Barton. OK, the gentleman's time has expired. We don't
want to let you pull an Ed Markey on us here.
Mr. Bilbray. OK.
Mr. Barton. So we also appreciate the gentle lady's
refreshing candor in answering the questions. This thing with
the gentleman from West Virginia is going to be the last
questions unless Mr. Rush has some questions.
Mr. McKinley. Thank you, Mr. Chairman.
I read through your remarks your opening statement several
times and highlighted some features too. I think what I am
gathering from your remarks is that the regulation of the
greenhouse gases through the Clean Air Act is going to create
jobs. It is going to offset the jobs that it is going to cost
and I have gone through it and it talks about how by the year
2020, we are going to have $2 trillion in benefits. A $30
benefit for every dollar spent, that the economy is billions of
dollars larger today because of the Clean Air Act. In the past
7 years, 200,000 jobs have been created in the air pollution
industry, air pollution control industry. I can go on. It was
very interesting but I come from West Virginia and with all due
respect I don't want to see us take risk that you are posing
with that analysis and they appear as fantasy. What I believe
and what I deal with, I am engineer and what I deal with is in
reality and the reality is the jobs you describe, they are not
going to be in West Virginia. When you crush our economy with
over 50 percent of the revenue for their operators comes from
coal we heard testimony earlier from some of your other
compatriots that when you take away that we are either going to
have in West Virginia the State government is either going to
have to cut services or raise taxes and that is going to
discourage a lot of investment in West Virginia. There is a
steel company in Weirton and one in Wheeling that combined used
to have over 30,000 employees that because of your over-
regulations and what has happened overseas, they are down to
only 2,000 employees. They are just a shadow of what they were
and when you talk to them it is all because of government and
the regulations and the lack of control of what is going in
from overseas. So when I go back on the weekends, I meet with
the steel workers. I meet with the coal miners. They are scared
to death of what Washington is doing and what the EPA is doing.
They don't know how they are going to have a job tomorrow. They
don't know how they are going to have a roof over their heads
for their children and what their future is. They are scared to
death of what the EPA, their more over-regulation with it. A
good remark they said why can't, you know, our families have
the same enjoyment that the EPA families are having with what
they are doing to us? So these realities that I have referred
to, they are coming from the people in my district. They are
scared. They are worried about the government and the over-
regulation. When I went through your report, it is all based so
much of it based on your own funded studies rather than
independent scientific. It is your reports that you are quoting
and then you refer to the B-rated Environmental Journal that is
used. Not even one of the top ones in the country that
worldwide, globally is respected. You are using a B-rated
journal to use as to shore-up your argument of why you should
do these kinds of things. I am just asking, madam, with a
straight face how can you honestly say that the enforcement of
the greenhouse gases are going to create jobs and the people in
West Virginia are going to be OK?
Ms. McCarthy. Well, you have hit many, many different
issues.
Mr. McKinley. You should speak up a little louder please.
Ms. McCarthy. I am sorry. You have addressed a number of
issues and let me try to get at these. I have been in the
environmental business so to speak as a regulator for 30 years.
I came from a working-class family as well. I do not believe
that in this day and age we need to make a choice between clean
jobs, good jobs and breathing clean air. I think we have proven
in 40 years.
Mr. McKinley. Just show me how you are going to create the
jobs. Tell me what is going happen?
Ms. McCarthy. In 40 years of history of the Clean Air Act--
--
Mr. McKinley. I don't want the fantasy. I want to know
specifically are we going to replace those jobs because those
jobs are being lost.
Ms. McCarthy. I do not believe that the approach we are
taking on greenhouse gases because it is done in a commonsense,
phased, measured way that is doing anything other than trying
to identify the most cost-effective ways for new businesses to
get permits and to do their business.
Mr. McKinley. Did you not hear the testimony from the
people that were just here the 2 or 3 hours prior to you?
Ms. McCarthy. I did.
Mr. Barton. The gentleman's time has expired but we will
let the administrator answer the question.
Ms. McCarthy. Let me just make a couple of points and one
is that the permit requirements only are dealing with the
largest sources of greenhouse gas emissions. They are only
looking at the best technology to make them efficient when new
ones are coming on line or when they are making major
modifications. That is what we are doing and the data that I
have in my testimony is all based on peer-reviewed science. It
is not just EPA studies. It is all transparent. What I listen
to are many people with ideas and concerns. I appreciate those
but there were some documents that you are listening to that I
don't think are transparent, that I don't think have been peer-
reviewed and I think the one thing that I am trying to do is to
present you with information so that you can make the
appropriate decisions and I do believe that there is a wealth
of scientific data that says we need to take action to reduce
greenhouse gases that is one of our most significant public
health challenges and that the Clean Air Act for 40 years has
been a premier opportunity to actually reduce pollution like
carbon pollution in ways that is cost-effective.
Mr. Barton. Does Mr. Rush wish to ask any wrap-up
questions?
Mr. Rush. No, Mr. Chairman, I don't have any additional
questions.
Mr. Barton. OK, let me--just for clarification before we
adjourn as I understand the Obama Administration approach on
greenhouse gases that you elaborated on, you are not going to
set a standard based on fuel. You are not trying to set an
emission level based on coal or an emission level based on
natural gas or an emission level based on an alternative.
Ms. McCarthy. No, our greenhouse gas permitting process
starts with the proposal on the table. If it starts with a coal
facility, those are the technologies.
Mr. Barton. So if I have in Ohio a coal-fired power plant
that is 50 years old and I want to maintain that plant as is, I
am not going to have to do anything under your regulatory
approach?
Ms. McCarthy. On the greenhouse gases if you are not you
don't need a permit unless conducting a major modification.
Mr. Barton. But if I freeze my technology and let us say I
am going to use the same fuel source and I am going to use the
same plant equipment at the same location and I have a 400-
megawatt coal-fired power plant, I don't have to do anything
under the regulatory approach that you all are proposing?
Ms. McCarthy. You would not need to get a greenhouse gas
permit. We would not be looking at your facility in terms of
that.
Mr. Barton. You are only going to look at facilities that
are under renovation or under permitting as new source, new
stationary sources?
Ms. McCarthy. That is correct and only when you are a very
large facility and you are making a large increase in
greenhouse gases as a result, and even then all you are looking
at are building efficiencies into the system.
Mr. Barton. Seeing no further members present wishing to
ask questions, we thank the gentlelady for her time and this
subcommittee is adjourned.
[Whereupon, at 6:06 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]

[GRAPHIC] [TIFF OMITTED] T6512.003

[GRAPHIC] [TIFF OMITTED] T6512.004

[GRAPHIC] [TIFF OMITTED] T6512.005

[GRAPHIC] [TIFF OMITTED] T6512.001

[GRAPHIC] [TIFF OMITTED] T6512.002

[GRAPHIC] [TIFF OMITTED] T6512.069

[GRAPHIC] [TIFF OMITTED] T6512.070

[GRAPHIC] [TIFF OMITTED] T6512.071

[GRAPHIC] [TIFF OMITTED] T6512.072

[GRAPHIC] [TIFF OMITTED] T6512.073

[GRAPHIC] [TIFF OMITTED] T6512.074

[GRAPHIC] [TIFF OMITTED] T6512.075

[GRAPHIC] [TIFF OMITTED] T6512.076

[GRAPHIC] [TIFF OMITTED] T6512.082

[GRAPHIC] [TIFF OMITTED] T6512.083

[GRAPHIC] [TIFF OMITTED] T6512.084