[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
ARE EXCESSIVE ENERGY REGULATIONS AND POLICIES LIMITING ENERGY
INDEPENDENCE, KILLING JOBS AND INCREASING PRICES FOR CONSUMERS?
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HEARING
before the
SUBCOMMITTEE ON
AGRICULTURE, ENERGY AND TRADE
of the
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 19, 2011
__________
_____
U.S. GOVERNMENT PRINTING OFFICE
71-325 WASHINGTON : 2011
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Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
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Small Business Committee Document Number 112-035
Available via the GPO Website: www.fdsys.gov
HOUSE COMMITTEE ON SMALL BUSINESS
SAM GRAVES, Missouri, Chairman
ROSCOE BARTLETT, Maryland
STEVE CHABOT, Ohio
STEVE KING, Iowa
MIKE COFFMAN, Colorado
MICK MULVANEY, South Carolina
SCOTT TIPTON, Colorado
JEFF LANDRY, Louisiana
JAIME HERRERA BEUTLER, Washington
ALLEN WEST, Florida
RENEE ELLMERS, North Carolina
JOE WALSH, Illinois
LOU BARLETTA, Pennsylvania
RICHARD HANNA, New York
ROBERT SCHILLING, Illinois
NYDIA VELAZQUEZ, New York, Ranking Member
KURT SCHRADER, Oregon
MARK CRITZ, Pennsylvania
JASON ALTMIRE, Pennsylvania
YVETTE CLARKE, New York
JUDY CHU, California
DAVID CICILLINE, Rhode Island
CEDRIC RICHMOND, Louisiana
JANICE HAHN, California
GARY PETERS, Michigan
BILL OWENS, New York
BILL KEATING, Massachusetts
Lori Salley, Staff Director
Paul Sass, Deputy Staff Director
Barry Pineles, Chief Counsel
Michael Day, Minority Staff Director
C O N T E N T S
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OPENING STATEMENTS
Page
Tipton, Hon. Scott............................................... 1
Critz, Mark...................................................... 4
WITNESSES
Mr. James Martin, Administrator, Region 8, U.S. Environmental
Protection Agency.............................................. 6
Ms. Helen Hankins, Colorado State Director, U.S. Bureau of Land
Management..................................................... 8
Mr. David White, County Commissioner, Montrose, CO............... 27
Mr. David Ludlam, Director, West Slope COGA, Grand Junction, CO.. 28
Ms. Jennifer Bredt, Development Manager, RES Americas,
Broomfield, CO................................................. 32
Mr. James A. Kiger, Environmental Manager, Oxbow Mining, LLC, Elk
Creek Mine, Somerset, CO....................................... 33
Mr. Dick Welle, Manager, White River Electric, Meeker, CO........ 36
APPENDIX
Prepared Statements:
Mr. James Martin, Administrator, Region 8, U.S. Environmental
Protection Agency.......................................... 55
Ms. Helen Hankins, Colorado State Director, U.S. Bureau of
Land Management............................................ 58
Mr. David White, County Commissioner, Montrose, CO........... 63
Mr. David Ludlam, Director, West Slope COGA, Grand Junction,
CO......................................................... 69
Ms. Jennifer Bredt, Development Manager, RES Americas,
Broomfield, CO............................................. 74
Mr. James A. Kiger, Environmental Manager, Oxbow Mining, LLC,
Elk Creek Mine, Somerset, CO............................... 76
Mr. Dick Welle, Manager, White River Electric, Meeker, CO.... 87
Questions for the Record:
None
Answers for the Record:
None
Additional Materials for the Record:
``Mesa County's job outlook poor'' Durango County Herald..... 50
RES Americas Statement for the Record........................ 52
FY 1984-2010 Energy Lease Chart.............................. 54
ARE EXCESSIVE ENERGY REGULATIONS AND POLICIES LIMITING ENERGY
INDEPENDENCE, KILLING JOBS AND INCREASING PRICES FOR CONSUMERS?
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MONDAY, SEPTEMBER 19, 2011
House of Representatives,
Subcommittee on Agriculture, Energy and Trade,
Committee on Small Business,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:02 a.m., in
City Hall Auditorium, 250 North 5th Street, Hon. Scott Tipton
(chairman of the Subcommittee) presiding.
Present: Representatives Tipton and Critz.
Chairman Tipton. Well, good morning, everyone. We thank you
for joining us this morning, and our hearing will now come to
order.
I want to especially today thank each of our witnesses for
being with us and taking time out of their busy schedules, and
I look forward to your testimony.
Also joining us today is the Ranking Member of the
Subcommittee on Small Business over at Energy, Ag and Trade,
Representative Mark Critz of Pennsylvania. Although Mark and I
come from different parts of the country and we are of
different parties, I know that he shares my passion for
removing the hurdles that limit the growth and prosperity of
America's entrepreneurs, and both of our districts have vast
amounts of natural resources that make our country's uses of
productive energy just that much more important.
Mark, I really appreciate you making the trip out here
today.
And I do want to recognize, as Mark came in to Colorado, he
was looking forward to having a good dinner, and by the time he
got here last night he had to go to a gas station and get
wiener schnitzel. [Laughter.]
But he said it was great.
So welcome to Western Colorado, Mark. We appreciate that.
The purpose of today's hearing is to examine excessive
Federal regulations and policies that are harming energy
production in our country, killing jobs and increasing costs on
all small businesses and consumers. The United States has been
blessed with abundant energy resources and the technological
capabilities to utilize these resources in an environmentally
sound manner. Our growing dependence on foreign sources of
energy, combined with intolerably high unemployment, demands
that policymakers adopt an all-of-the-above approach to harness
our domestic energy potential and create hundreds of thousands
of desperately needed jobs in our country.
Just last week, the House Resources Water and Power
Subcommittee held a hearing on legislation that I recently
introduced, the Bureau of Reclamation Small Conduit Hydropower
Development and Rural Jobs Act, that I believe is just one part
of the all-of-the-above solution.
The people and small businesses of the 3rd Congressional
District need jobs and affordable energy, and we need them now.
Last Tuesday, the United States Bureau of Economic Analysis
released a report ranking the unemployment situation in Grand
Junction 362 out of 366, among the worst for the U.S.
metropolitan areas in 2010.
Unfortunately, there seems to be a disconnect between
what's going on in Washington and on the ground in our
communities. Several witnesses testifying before the Committee
today will discuss how they would create jobs if only the
government agencies would stop standing in the way.
Additionally, business owners need long-term certainty from
government in order to take the risks and to be able to make
the investments necessary to create new jobs. More needs to be
done to provide that certainty, because right now small
businesses are scared to hire new employees, and investors are
sitting on the sidelines.
Congress and President Obama have our roles to play as
well, and I am sincere in saying that it is important that we
work together on real solutions to our nation's job and energy
challenges. The President could contribute to this process by
coming to terms with promises that he has made to reduce
regulatory burdens on small businesses, with the onslaught of
regulations that he and his administration keep proposing.
More than 43 new major regulations were proposed last year,
and another 219 regulations are in the pipeline, each costing
more than $100 million. Additionally, the Administration
proposed this year seven new regulations that would cost the
United States economy, if implemented, more than $1 billion or
more annually. Four of these were put forward by the EPA. A
recent study showed regulation burdens to the American people
cost about $1.75 trillion annually, with the cost to U.S.
businesses of any size being approximately $160,000 each year,
and the costs associated with small businesses for each
employee to be on average $10,585 annually.
Clearly, in too many instances, these regulations impose
onerous burdens and costs on small businesses.
Recently, my Colorado colleague, Congressman Corey Gardner,
asked Assistant Administrator Mathy Stanislaus of the EPA if
the agency's economic analysis appropriately considered the
impact of proposed regulations on jobs. His answer? ``Not
directly.'' Unfortunately, this is not the only instance, nor
is the EPA the only government agency to have failed adequately
to consider the effect of their proposals on small businesses
and jobs.
In Western Colorado, a number of small energy firms,
including renewable energy firms, have reported that the Bureau
of Land Management is implementing new regulatory burdens and
barriers to producing energy on Federal lands. In a chart that
I have submitted for the record from the BLM website, you will
see that the number of new leases in Colorado in 2009 and 2010
were the lowest totals in a 26-year analysis. The same trend
can be seen nationally.
[The information follows on page 54.]
Experts in the industry tell me that this permitting
process is slow, costly, and burdensome, often taking several
years to be able to complete. Certain policies and procedures
have held up development seven to eight months on an 11-month
lease. This defies common sense. You wouldn't lease a car for
11 months that you could only drive for the last three months
of the year.
I would now like to point out an article that I submitted
for the record from the Durango Herald that featured unemployed
oil and gas workers who used to earn upwards of $80,000 a year
and were laid off as a result of new government regulations and
policies.
[The information follows on page 50.]
These workers ate at our local restaurants, stayed at our
local hotels, purchased pick-up trucks at our local dealerships
and, most importantly, provided good-paying jobs for our local
residents.
In May of this year, Karen Kerrigan, president and CEO of
the Small Business and Entrepreneur Council, testified before a
House subcommittee that ``nearly three-quarters of small
business owners report that hard times at the pump are
affecting them and their consumers.'' Karen also stated that
high gas prices are ``making it very challenging for small
businesses to compete, to grow, and even to be able to survive
in what remains a very difficult economic environment.''
It is critical that we bring an economic conscience to the
debate about environmental regulation. Environmental regulation
does not have to kill jobs and raise energy costs for the
American people. We all care about the environment, the impact
of energy exploration and production. But it is essential,
especially during these tough and difficult economic times,
that we work toward practical solutions to protecting our
environment while decreasing our dependence on foreign sources
of energy. The Federal Government should foster an environment
for increasing access to America's energy sources that promotes
an all-of-the-above response and commonsense growth approach.
We are fortunate to have appearing before the Committee
witnesses who will testify to real-world examples of how
onerous and duplicative regulations are harming opportunities
for small businesses and local communities. The issues they
will discuss are very important to small businesses. I would
like to remind my colleagues that small businesses create four
out of five new jobs in our economy. They are the engine for
innovation and job creation.
Again, I would like to thank each of you for being with us
here today, and I would now like to yield to Ranking Member
Critz for his opening statement.
Mr. Critz. Thank you, Mr. Chairman. Just one quick comment.
The chili dog and the chili burger I had at the wiener
schnitzel was very good. I appreciate the breakfast at the
Dream Cafe. I had a nice stay at the Main Street, and you have
a wonderful town here. This is a beautiful--I have never been
to Colorado, and Grand Junction is beautiful, a wonderful
streetscape, although when you come in at 10:30 at night
sometimes, there's not a whole lot open to go see. But with
that, I appreciate you having me out here. It's a pleasure to
be here.
And with that, promoting a clean environment is critical,
and nowhere is that more evident than here in Grand Junction.
Like the people in my state of Pennsylvania, it is clear that--
I hope I'm saying this right--Coloradoans? Or is it Coloradans?
Chairman Tipton. Whichever way you'd like.
Mr. Critz. Okay. It is clear that the people of Colorado
place a high value on protecting land, air and water. This is
not only a quality of life issue but also makes good business
sense in areas like Colorado, where outdoor activities are
integral to the economy. Pursuing these objectives must be done
cautiously, making certain we balance benefits against costs.
Unfortunately, in the areas of environmental land
management regulation, this has not always been the case. Too
often, environmental regulations saddle small businesses with
new burdens. Firms with fewer than 20 employees spend more than
$4,000 annually complying with environmental regulations. This
takes money out of entrepreneurs' pockets, diverting resources
from business expansion.
There are laws on the books to address this problem, and
while they have mitigated the impact of some rules, more must
be done. Today we will examine a few notable examples at both
the EPA and BLM.
It has become clear that in developing its recent
greenhouse gas rules, the EPA did not follow the law. This shut
out small firms from being heard and deprived EPA the benefits
of small business perspective. The agency's rationale for
skipping this step was that they would instead write the rule
in a manner sensitive to small firms.
Despite those efforts, SBA's Office of Advocacy estimates
that 1,200 small businesses would still be subject to the
greenhouse gas rules. In a few years, this effect and the
overall cost on small firms could become even more significant.
This is the case for another critical matter which I know
is a concern here in Colorado, as well as my home state of
Pennsylvania. The EPA, in its consideration of regulations for
coal combustion waste, has failed to consider the impact it
could have on firms that recycle and use coal ash. Many
entrepreneurs have found ways to incorporate coal ash into
building and construction products. If EPA designates this
waste stream as hazardous, it would stop such recycling
enterprises. I have seen firsthand the benefits, including
green spaces, that were replanted and reclaimed, and EPA could
not be more wrong on this subject.
While these problems deal with specific regulations, there
is another matter I look forward to discussing with EPA and
BLM. Like here in Colorado, in Pennsylvania we have discovered
large reserves of subterranean natural gas. Bringing these
resources online has the potential to make the U.S. less
dependent on foreign energy. This, in turn, could reduce energy
prices, a top concern for entrepreneurs.
In a recent PNC Economic Outlook survey of small firms, 72
percent responded a sustained rise in energy prices would
negatively impact their business, potentially restraining
growth. However, two issues could block natural gas from taking
hold: continued bureaucratic delays in the issuance of drilling
permits, and the potential for Federal preemption of state
regulation.
On the latter topic, we need EPA to work with the states,
not overrule them in their own backyard. If handled improperly,
this could halt gas exploration, leaving our nation more
dependent on foreign energy.
Although there are laws on the books, we have recently
passed legislation requiring the EPA to examine the full cost
of regulations. This would ensure the agency considers the
burden not just on those emitting greenhouse gases, but also
those that would see higher energy costs. It is critical this
information be available as the discussion on greenhouse gases
continues.
We also took steps to extend these reviews to land
management plans, bringing greater attention to BLM actions.
Under the bill, agencies would have to consider the impact of
regulations on energy prices for small businesses. By
strengthening these protections, we can have regulations that
not only protect our communities but also limit costs imposed
on businesses.
During today's hearing we will listen not only to
regulators, but also to entrepreneurs who can describe their
experiences with Federal agencies. Hearing small firms'
concerns is critical. I hope EPA and BLM will take similar
actions to expand this type of outreach.
With small businesses generating two-thirds of new jobs, or
I think Scott said 80 percent, it is essential that the Federal
Government carefully balance the costs and benefits of
environmental and land management regulations so that economic
progress is not slowed.
I want to thank the witnesses for being here, and with
that, I yield back the balance of my time.
Chairman Tipton. Thank you, Congressman Critz.
Now I would like to explain--we have our lighting system in
front, and explain how the lights work. Each of you will have
five minutes for your testimony. The light will start out as
green, and when you have one minute remaining, the light will
re-turn yellow, and finally it will turn red, and at the end of
your five minutes, if you could wrap up as quickly as possible,
we would appreciate it, and we will try to be respectful of
your time as well.
Leading off our first panel is James V. Martin, who is
Administrator for the EPA's Region 8, comprising Colorado,
Montana, North Dakota, South Dakota, Utah, Wyoming, and 27
tribal nations. He has worked in the environmental field for
nearly 30 years, most recently as the Executive Director of the
Colorado Department of Natural Resources and the Executive
Director of the Colorado Department of Public Health and
Environment.
Prior to his career in public service, he managed a non-
profit focused on energy, public lands, and water issues, and
spent a decade as a senior attorney for the Environmental
Defense Council. He also headed the Natural Resources Law
Center at the University of Colorado School of Law. Mr. Martin
has a Bachelor's degree from Knox College and a law degree from
Northwestern Law School, Lewis and Clark College.
Thank you for being with us today, Mr. Martin. If you would
like to go ahead with your testimony.
STATEMENTS OF JAMES MARTIN, ADMINISTRATOR, REGION 8, U.S.
ENVIRONMENTAL PROTECTION AGENCY; HELEN HANKINS, COLORADO STATE
DIRECTOR, U.S. BUREAU OF LAND MANAGEMENT
STATEMENT OF JAMES MARTIN
Mr. Martin. Chairman Tipton, Ranking Member Critz, thank
you for inviting me to testify about the effects on small
businesses and communities of certain EPA regulations. And I
might add, welcome to Colorado, Congressman Critz. I appreciate
the opportunity to discuss some of EPA's proposals and to try
to clear up some common misunderstandings about those efforts.
First, with regard to coal combustion residuals, or CCRs,
the EPA proposed last year to regulate the disposal of those
materials to address the risks from disposal of such wastes in
landfills and surface impoundments generated from the
combustion of coal at electric utilities and independent power
producers. That is an effort that was precipitated in no small
part by the breach of a significant impoundment in Tennessee
which led to the contamination of many acres and clean-up costs
of several hundred million dollars.
The agency proposed for public comment two options for the
regulation of those materials. Neither option would change the
May 2000 Regulatory Determination, commonly known as the Bevill
exclusion, for CCRs or coal combustion residuals that are
beneficially used. EPA continues to support the safe and
protected, beneficial uses of CCRs.
At this time, the agency is reviewing and evaluating more
than 450,000 public comments that were received as a result of
that proposal, and we are going to carefully review and examine
all of those before deciding on the approach to take in the
final rule.
Second, with regard to power plants, EPA has proposed
Mercury and Air Toxic Standards to control emissions of toxic
air pollutants from power plants. Mercury, depending upon the
form and dose, may cause neurological damage, including lost
I.Q. points in children who are exposed before birth. As
proposed, the Mercury and Air Toxic Standards would prevent
17,000 premature deaths and 12,000 emergency room visits and
hospital admissions annually. These proposed standards are
affordable, they are achievable within the time for compliance
outlined in the proposed rule, and they are roughly a decade
behind schedule. Moreover, the investments in a cleaner energy
sector required by these standards will keep people working and
create jobs.
With regard to greenhouse gas emissions, the agency is
taking a commonsense, phased approach to meet our obligations
under the Clean Air Act to reduce carbon pollution. Our focus
is not on small sources, and I want to emphasize our focus is
not on small sources and small businesses but solely on the
largest emitters, and for the most part on the sectors that are
responsible for the largest share of greenhouse gas emissions
to the environment.
Contrary to any claims you may be hearing, small sources
are not covered by the greenhouse gas permitting program. In
fact, EPA adopted regulations last year that will ensure that
small sources are not subject to greenhouse gas permitting
requirements.
It is worth noting that the only greenhouse gas standards
that EPA has issued under its current or its existing Clean Air
Act authority will result in savings rather than increased
costs for small businesses. Last year, EPA and the Department
of Transportation issued greenhouse gas emissions and fuel
efficiency standards for cars and light trucks for model years
2012 through 2016. By ensuring that new vehicles are more fuel
efficient, these standards will save American drivers money at
the pump while reducing America's gas consumption, or oil
consumption rather, by 1.8 billion barrels over the life of
those vehicles. We estimate that the average American
purchasing one of these vehicles will have a net savings of
$3,000 over the lifetime of that vehicle.
Finally, with regard to natural gas extraction, while
natural gas is an important and growing part of our energy
resource portfolio, we believe it is imperative that we access
this resource in a way that protects human health and the
environment. EPA has an important role in ensuring
environmental protection and in working with Federal, state,
and local partners to manage the benefits and risks of
unconventional gas production, though I hasten to add only in
the case of the use of diesel as part of the fracking fluid do
we issue permits.
We are committed to effectively addressing these concerns
about the consequences of gas development using the best
science and technology available. We believe that by doing so,
as a nation we can establish a sound framework that allows for
the safe and responsible development of a significant domestic
energy resource with important national security,
environmental, and climate benefits.
I recognize--I would like you to acknowledge, sir, that I
beat your schedule. I look forward to taking your questions.
That is the sum and substance of my comments for this morning.
[The statement of Mr. Martin follows on page 55.]
Chairman Tipton. All right, Mr. Martin. Thank you.
Our next witness is Bureau of Land Management Colorado
State Director Helen Hankins. A native of Council, Idaho, Ms.
Hankins joined the BLM in Albuquerque, New Mexico, serving as a
clerk typist in the agency's student work study program in
1970. She went on to serve in increasingly responsible
positions in Durango, Colorado; Anchorage and Fairbanks,
Alaska; Washington, D.C.; Elko, Nevada; and Phoenix, Arizona.
Ms. Hankins oversees 800 employees and administers 8.3
million acres of BLM public lands, and 27 million acres of
mineral estate, which are concentrated primarily right here in
my congressional district.
She earned a Bachelor's degree in geology from the
University of New Mexico and was one of the first two women to
complete the BLM's five-month-long minerals law school program.
Ms. Hankins, welcome back to our Subcommittee, and I
appreciate you taking the time to be here, and we look forward
to your testimony.
STATEMENT OF HELEN HANKINS
Ms. Hankins. Thank you, Representative Tipton. And,
Representative Critz, it is a pleasure to meet you also. I
appreciate the opportunity to speak before the Subcommittee on
Agriculture, Energy and Trade.
BLM is responsible for the management of 240 million
surface acres and more than 700 million subsurface acres across
the country. Activities on these public lands and associated
with Federal mineral resources are very important to the
quality of our nation and to the economic health of our country
and to rural communities across the West.
Earlier this year, Department of the Interior published a
report about the economic impacts of activities on public lands
to the country. This is a summary of that report. I would like
to address briefly those data related to the country as a
whole, and also to Colorado. In my opening remarks, I will also
touch very briefly on oil and gas leasing reform. More detailed
remarks are in the written testimony previously submitted.
With respect to conventional energy in our country, it is
estimated that the economic impact is valued at $100 billion
for activities related to coal and oil and gas exploration and
development, resulting in some 420,000 jobs. $2.5 billion in
royalties were taken in last year, and almost half of that was
returned to the states where the activities occurred. In
Colorado, that amount was about $112 million.
Hard rock mining is also an important contributor to our
country's economy, $14 billion in economic impact and some
59,000 jobs.
Oil and gas development is very important. It is important
to us economically, and it is important to our path to energy
independence. But economic development must be balanced with
environmental concerns. Earlier this year, the BLM initiated
oil and gas leasing reform. The purpose of this reform, which
is a policy, not a regulation, is to provide a more open and
environmentally sound approach to oil and gas leasing on public
lands. The public has an opportunity to be involved much
earlier in the process of determining whether we will lease or
not lease a parcel.
We believe that these reforms will lead to increased
certainty for both the public and industry, and will also
reduce the number of protests. In the last decade, protests on
our oil and gas lease sales have gone from 1 percent to 49
percent of the parcels. I believe you can understand that it is
very costly to deal with protests and litigation on this scale.
Early indications of the implementation of these reforms is
that we are seeing a reduction in protests and a higher level
of leases being able to be successfully issued.
I would like to speak briefly now about Colorado. It is
truly, as we all know, an amazing place. Public lands here are
used for recreation, and many people gain their livelihood from
public lands, whether it is ranchers, people in the mining
industry, or in the oil and gas or coal industry.
In Colorado last year, more than 3.8 million barrels of oil
were produced, and more than 279 million mcf of natural gas.
The economic impact of these activities to our economy was $4.8
billion and some 17,000 direct and indirect jobs.
It is important to note, though, that only about 10 percent
of oil and gas exploration and development in Colorado occurs
on Federal mineral estate. By far, the majority is on either
state or private land.
On the other hand, with respect to coal, 80 percent of the
coal produced in Colorado comes from nine mines on Federal
lands or Federal mineral estate. The economic impact of coal
development in Colorado is about $1.2 billion, resulting in
some 5,500 direct and indirect jobs.
Hard rock mining is also important here, contributing some
$26 million and some 5,000 jobs.
Clearly, in Colorado, energy development is important, as
is recreational use, livestock grazing, and other activities.
In summary, approximately $6 billion is the economic impact
of activities on public land in Colorado, and some 28,000 jobs.
Thank you for the opportunity to participate in your hearing.
[The statement of Ms. Hankins follows on page 58.]
Chairman Tipton. Thank you, Ms. Hankins, for your
testimony. We appreciate that.
We will now start our question period, and I will begin.
Mr. Martin, I would like to direct my first question to
you, if I may. The Craig Power Station in Moffat County, the
nuclear power station in Montrose County currently store dry
coal ash. Are you aware that the coal ash is regulated as a
hazardous material under the Resource Conservation and Recovery
Act of the EPA, as they propose to do? The cost to operate
these plants would increase significantly.
And also are you aware, concerning these costs, there seems
to be actually very little benefit associated with that? This
would be passed on to rural electric consumers all over the
Western Slope of Colorado in the form of higher electric
prices.
Before you answer, I would like to be able to convey to you
just how important these facilities are to the Western Slope
communities in which they reside. The Craig Power Plant is an
example that employs 306 folks and 442 jobs in the Trapper Mine
and surrounding area that are directly related to Craig's
continued operation. Craig also generates $8.9 million in tax
revenue for Moffat County and other local government entities.
The nuclear station is one of the largest private employers in
Montrose County. It employs 60 people with wages and benefits
amounting to about $7.2 million annually. The nuclear generates
about $1.1 million for Montrose County and other local
government regions in the industry.
Can you see really the benefit of some of this regulation
going through, particularly when there is beneficial use for
some of that ash?
Mr. Martin. Well, Mr. Chairman, you covered a lot of ground
in that question. I will do my best to respond.
I visited with both Tristate and Xcel about the proposed
rule and the two different avenues that the agency has to
choose from in managing these wastes. I visited the Trapper
Mine. I think I visited all of those different power plants at
one time or another in my career, so I am familiar with their
operations.
I have conveyed to my colleagues in Washington, D.C. what I
have learned from those conversations. I know that the
Administrator is very carefully weighing and considering all of
the factors that are involved here. She is committed to
assuring that, in fact, we can continue beneficial use of these
residuals, and I have explained to her that in most cases in
the West we don't use wet scrubbers, we use dry scrubbers, and
that makes for a situation different than is encountered
elsewhere; for example, at the site in Tennessee where they
experienced that very significant breach and the resulting
impacts to both land and water resources and the expenditure of
several hundred million dollars in clean-up costs.
I know the Administrator is weighing all of those things. I
will convey to her again the concerns that you have expressed
on behalf of--well, I guess on Tristate's behalf.
Chairman Tipton. I think that is absolutely critical
because we are seeing a continued impact locally here in terms
of some of the costs, and a lot of us, myself, and I'm sure
Congressman Critz assures this, when it gets down to the
ultimate consumer, senior citizens on fixed incomes, struggling
families, as we have regulations that are increasing those
costs on a per kilowatt hour basis, we are seeing real impacts
that are coming through. And so I would appreciate you passing
that on.
Next question to you, Mr. Martin, is a number of
stakeholders have questioned the agency's findings regarding
the health benefits of the utility MACT rule. How does the
agency determine the cost versus benefits of the proposed clean
air rules?
Mr. Martin. With respect, Mr. Chairman, principally to the
Air Toxics proposal, or the MACT for utilities?
Chairman Tipton. Yes.
Mr. Martin. Okay. Well, over the course of a long period of
time, the agency's process for identifying both costs and
benefits associated with rules like this, and often with some
significant assistance from the Office of Management and
Budget, it has evolved and it has become progressively more
sophisticated, I believe, and more precise.
I would like to mention that back in the year 2000, it was
a decision from the Environmental Protection Agency at that
time that it was necessary to control mercury emissions in
power plants. The last administration adopted a proposal for
dealing with those emissions, and that was subsequently
challenged in the D.C. Circuit. That is where these kinds of
challenges are required to go, and the D.C. Circuit vacated
that proposal, finding that it was inconsistent with the Clean
Air Act.
So we are actually doing our best to try and implement this
statutory requirement, that should have gone into effect in
2002, as carefully and thoughtfully as we can. I believe that
the science of exposure to mercury and to other toxic gases is
clear, and I believe that we have a very clear sense of which
facilities are controlled and which are not. Forty percent are
not; 56 percent are. We have controlled the other major sources
of mercury, both medical, municipal waste combustors and
medical waste incinerators. I think we can identify with a fair
degree of confidence both the benefits, which range from $59 to
$140 billion. So every dollar in investment yields about $5 to
$13 in health benefits, and those range from reduced number of
visits to emergency rooms to preventing that loss of IQ in
fetuses that are exposed to mercury before birth.
So there are significant health benefits both locally and
at some distance from the source of mercury emissions. I know
that during my term, tenure as Director of the Colorado
Department of Public Health and Environment, one of my least
pleasant tasks was to post lakes and streams, lakes
principally, across the State of Colorado with warnings to
pregnant women and others to limit their consumption of fish
from those lakes. And we know for a fact that long-distance
transport of mercury is one of the causes of that problem.
So we are hopeful that as these regulations go into effect,
we will be able to protect or prevent those health effects both
in the immediate area around these particular sources, as well
as some distance downwind.
Chairman Tipton. I think we would all have unanimity of
opinion that that is something we want to address. I was
interested reading through some of your written testimony and
other information that we have had available in terms of cross-
state transportation, some of the heavy metals, and we are
doing this on a science-based level.
What is the suspension time for those heavy metals? How
long can they stay up in the air? This may be unfair. You may
not know the specifics.
Mr. Martin. I confess I don't know the answer to that
question with any kind of precision. I would be happy to try
and find the answer for you.
Chairman Tipton. I guess what I am really curious about is,
you know, when we look at some of the industrial development,
we have made great advances, great improvements here in the
United States. But when we see some of the industrial
development that is going on in China, India, are we seeing
some of that residue coming in, and we are paying the price for
it in the United States, expecting our industry to pay the
bill? It is not ignoring the problem that may exist but putting
pressure on those foreign countries to be able to address their
operations.
Mr. Martin. You may very well be right, Congressman, Mr.
Chairman.
Chairman Tipton. Does that enter into any of the
consideration when we are asking our industry to be able to
increase their ability to be able to screen out and to be able
to filter impacts that are coming in that we simply are not
able to control, and we would have a nominal impact in terms of
increasing regulations on our industry? Does any of that in
consideration?
Mr. Martin. Mr. Chairman, with all due deference, I would
beg to differ. I think that the proposal for reductions in
emissions, air toxins from power plants, will have a
significant effect on the burden both near the sites and long-
distance from mercury and other toxics that are emitted from
coal-fired power plants. So while it is clearly a global
problem, these regulations will have a very significant
beneficial effect in reducing----
Chairman Tipton. Do you have a percentage on that?
Mr. Martin. I'm sorry, sir?
Chairman Tipton. Do you have a percentage of impact?
Mr. Martin. I don't, but I am happy to get it for you, Mr.
Chairman.
Chairman Tipton. Okay. I think that would be interesting,
and I would be interested to know if you can help us maybe
achieve some of that, some of the impacts that we are feeling
on our country coming in from outside of the United States, and
the impacts actually on our businesses.
When we are talking about some of the EPA's greenhouse
emissions, during your testimony you were saying that there is
going to be some cost/benefit ultimately to the consumer. This
goes back a little bit to my opening statement when Gardner had
asked the question do we do a cost/benefit analysis, and you
were talking about the benefit of increased gas mileage,
reducing some of the barrels of oil.
How much will the new regulation be reflected in the cost
of a new car that is passed on to the consumer?
Mr. Martin. Mr. Chairman, I am not sure I understood your
question.
Chairman Tipton. Well, we are going to have a new
regulation that cars are going to have to meet a certain
standard. How much is that going to increase the cost of cars?
We have $10,000 cars now. Are they going to cost $10,500,
$10,250, $11,000? What is the cost to the consumer in terms of
that vehicle?
Mr. Martin. Mr. Chairman, I confess that I knew the answer
to that question at one point, and if you give me a moment, I
will try to dig it out. If I cannot find it in my briefing
materials, I will submit that for the record as soon as we can
find it. I know we have that data.
Chairman Tipton. Okay. I think that is going to be, when we
are looking at cost analysis, cost/benefit analysis, we need to
make sure that some of those costs are included as well.
Going on, when you are saying that the regs, going back to
some of the mercury, heavy metals and what-not, in your
statement you made the comment that the regs, the regulations
are going to be affordable. What is going to be the increased
cost to the consumer?
Mr. Martin. For the Air Toxics Rule, Mr. Chairman?
Chairman Tipton. Yes.
Mr. Martin. For the consumer?
Chairman Tipton. Yes.
Mr. Martin. I don't remember, Mr. Chairman. I am happy to
look it up for you if you give me a moment.
Chairman Tipton. Okay. Yes, if we could find that out, I
would appreciate that.
And then when we are going a little bit into some of the
fracking issues that are going on, just recently Governor
Hickenlooper, he is a former petroleum geologist. He came to
the Colorado Oil and Gas annual conference. This is his
statement. He said, ``Everybody in this room understands that
hydraulic fracturing doesn't connect to the groundwater. It's
almost inconceivable that we would ever contaminate through the
fracking process the groundwater.'' The governor went on to
blame inaccuracies and misinformation on this subject being
reported by the media, and he even called out the New York
Times.
Is it your opinion, do you agree with the governor? Was he
accurate in his comments, and do you have any knowledge of any
Federal regulations that may be proposed regarding fracking?
Mr. Martin. I'm sorry. What was the last part of your
question, Mr. Chairman?
Chairman Tipton. Are you aware of any regulations that are
being proposed or considered under the Federal Government that
will be addressing fracking?
Mr. Martin. The only regulations of which I am aware, Mr.
Chairman--actually, they are not regulations, but we are
working to identify the appropriate permitting structure for
fracking operations that employ diesel, which is not part of
the exemption adopted by the Congress when it otherwise
exempted those kinds of activities from coverage under the Safe
Drinking Water Act. But I am not aware of any other regulatory
programs that are in the offing, Mr. Chairman.
Chairman Tipton. And would you accept, do you embrace the
governor's assessment of that process?
Mr. Martin. I would have to take a closer look at what the
governor said. I am not in the habit of disagreeing with any of
my political leaders, but I have not had a chance to look more
precisely at what the governor said. I know that he did
accompany his statement with a recommendation that the Oil and
Gas Commission here in Colorado adopt some fracking disclosure
rules. I do not believe those have yet been proposed in any
kind of definitive form, but we look forward to working with
all of our state partners in dealing with all of these issues
here in the West.
Chairman Tipton. But would you concur that that probably is
something better administered at the state as opposed to the
Federal level?
Mr. Martin. I believe that Federal, state and local
governments all have a role here, and that I believe we are
working in partnership with the states on these issues. But
there are some issues where, for example, air emissions from
the completion that follows fracking that are more likely more
amenable to a national standard than to a local standard, Mr.
Chairman. So I do not believe it is amenable to a yes or no
answer.
Chairman Tipton. Thank you, and I would like to now yield
to Congressman Critz if he wanted to, and I have some questions
for Ms. Hankins as well. But I will yield to Congressman Critz.
Mr. Critz. Thank you, Mr. Chairman.
And just so you folks know where I come from, I am from
Southwest Pennsylvania, a long history of steel-making and coal
mining. When I grew up, we had orange skies and orange streams,
and we thought it was okay. But at some point, someone realized
that that wasn't really good for our health. And in the years
since, we have blue skies, we have clean streams that are now
fishable, and we are doing really one heck of a job, and I
think that you hit on it, Mr. Martin. It is everyone sort of
working together. It is the Federal, the state, the local, it
is industry, it is environmental, it is academia trying to work
together to come up with solutions. And like I said, we have
clean streams now. We have trails. Southwest Pennsylvania is a
beautiful place to live.
And also, the Clean Air Act actually started because of
what was called the Donora smog in Southwest Pennsylvania, when
several people died because of some sort of a blow-out at a
local plant. So we are sort of the test case, and we have come
a long way, and that is where I come to this point.
And I have a couple of quick questions, just to make sure I
understand. When we talk about the mercury rules, is the rule
going to be that the mercury has to be in parts per billion? Is
that correct, that it goes down, it is reduced to a parts per
billion number?
Mr. Martin. I believe that is correct, Mr. Chairman. We are
talking about relatively small quantities. I'm sorry, Mr.
Critz.
Mr. Critz. That's okay. You can call me Mr. Chairman.
[Laughter.]
We have an agreement.
Mr. Martin. We are talking about relatively small total
quantities of mercury but which have significant effects on
both the biology, the biota and humans. So I believe it is
measured in parts per billion.
Mr. Critz. Now let me ask you this, because what I have
been told is that there is no way to measure parts per billion.
Is that correct?
Mr. Martin. Mr. Chairman, I don't--I'm sorry, Congressman
Critz. I'm sorry, I don't believe that is correct. During my
time at the Department of Public Health and Environment, we
worked with a number of utilities, including Xcel Energy, to
install continuous emission monitors, as well as to begin to
install mercury controls, principally injected carbon, and I
believe they were able to detect the quantities of mercury in
the flue stream and to install effective emission controls. And
for the benefit of the Coloradans in the room, that is a
technology that was developed here in Colorado and which is now
being marketed around the world.
Mr. Critz. Okay. So it is--okay. So that is misinformation
that I received.
Mr. Martin. I would hesitate to suggest that it is
misinformation. But we believe that you can detect mercury in
the flue stream, and you can efficiently and relatively cost-
effectively capture the mercury before it is emitted into the
atmosphere.
Mr. Critz. Okay. I like how you said ``relatively cost
effective.'' But anyway, as I told you where I am from, talking
about the MACT rule that is going to be implemented, one of the
results of a heavy industry which we have had in Western
Pennsylvania, we have giant piles of waste coal sitting all
around our neighborhoods. And for those of you who don't know,
in Pennsylvania what would happen is when a mine would open, a
little town would pop up around it, and we would call them
patches. So we have lots of patch towns all across Western
Pennsylvania, and I know we have waste coal dumps across this
country.
And we have actually power plants that use that waste coal
to generate electricity. And this MACT rule is going to shut
those plants down because there is no way they can get that
final--they clean up about 95 percent of the sulfur, but they
cannot get the rest to meet the requirement based on the
technology and cost-effectiveness. They cannot afford to do it.
And what I would ask you is, is this picking winners and
losers? In other words, we are going to shut these plants down
because of the sulfur that they emit, but in the interim, or
what that means really is that we are going to condemn all
those people that live close to those coal ash piles, that they
are going to have to live with them for generations to come. Is
that a logical process that I thought through there, that those
coal ash piles aren't going anywhere when these plants shut
down?
Mr. Martin. Congressman Critz, this is an issue that I have
never been aware of before.
Mr. Critz. Okay.
Mr. Martin. I appreciate you bringing it to my attention. I
will be sure to----
Mr. Critz. Do you have waste coal piles out this way? Okay.
So there are waste coal piles in your region.
Mr. Martin. None that I am aware of, sir.
Mr. Critz. Oh, is that right?
Mr. Martin. I could be wrong, but none that I am aware of.
Mr. Critz. Okay, okay. I thought there was. That is why I
brought it up, because we have plants that burn them, but I
will just move on.
In answering actually your question, Mr. Chairman, about
does the government take into account air quality that is being
blown in off of our shores, we are experiencing actually in
Western Pennsylvania, especially because we are right on the
Ohio border, that a lot of the power plants that are in Ohio,
the emissions that they create blow into Pennsylvania, and it
actually affects what we are allowed to do in Pennsylvania.
So I can't imagine that we are taking into account what is
blowing across the ocean from China and India that is blowing
into Washington and Oregon if we can't even do it state to
state, because that is an EPA-regulated event as well. So I
would investigate that, and I would be curious to hear if EPA
is really taking into account what is blowing across the ocean
when we talk about China, the pollution that they are creating,
because we know that there is an impact in Washington, and I
know that across state lines it is impacting what we are
allowed to do in Pennsylvania, just what is based in Ohio.
But also moving on to fracking now, when fracking first
really became prevalent was in the late `60s, and they used a
load of diesel to do the fracking process. Over the years they
have really cleaned that up and it is a much more--we will call
it a concoction of many, many items, diesel being I think--I
don't know if diesel is even a part of it anymore. It might be
somewhat of a part of it, but I don't know.
But I was looking through some testimony, and I believe it
was in 2004 the EPA reported that the risk was very small for
hydraulic fracturing. Are you aware of this report?
Mr. Martin. I am, Congressman Critz. It was a report
prepared by the Environmental Protection Agency related
principally, I believe, if not solely to coal bed methane and
the use of fracking to access that particular resource. So it
was not examining shale gas or other unconventional gas
resources.
Mr. Critz. But the fracturing is the same process, though,
wouldn't it be?
Mr. Martin. It has been my experience, Congressman Critz,
having served on the Oil and Gas Conservation Commission in
Colorado for almost four years, that different structures,
different target zones, different operations all pose different
risks and different benefits, and it is difficult to generalize
across the spectrum of different unconventional gas resources.
Mr. Critz. Okay, okay. Well, the reason I bring it up is
that, you know, I try to make sure that, as you may be aware,
and I think the Chairman mentioned it, or maybe he didn't, I
mentioned it in my testimony that in Western Pennsylvania,
actually in New York, Western Pennsylvania, Ohio, West
Virginia, through the Appalachian region, we have the Marcellus
Shale gas, and fracturing, hydraulic fracturing has become a
huge sort of political football. And what I try to tell my
constituency is that when you drill a hole--and I think in
Western Pennsylvania we have sort of an understanding of this,
is that it is heavy industry. This is not--they are not
building a drill. They are drilling a hole in the ground to
bring up natural gas. It is heavy industry, and there are going
to be accidents. There are going to be--probably someone is
going to die. Someone is going to get killed at some point or
another. I mean, everyone doesn't want that to happen, but it
is heavy industry. You don't drill a hole in the ground,
flowers come out of it. I mean, that is the way it is.
But it is in the industry's best interest not to have it
contaminate the well through the water table or whatever,
because it is a $5 to $7 million investment that then goes out
the window if it is somehow fouled. So I think that, or my
impression and what I have seen is that the industry is working
very diligently not to have accidents, but it is going to
happen.
And it brings me back to the Tennessee coal ash issue, that
that was a terrible issue, a terrible problem. I mean, when
that impound burst through and contaminated, and you said $100
million worth of clean-up, I mean, that is absolutely terrible.
Does it make sense to change the regulations for an entire
industry because of one incident, or is it smarter to make the
enforcement and the penalty for not following the current
regulations make more sense? You know, we have a tendency at
this level to do a one-size-fits-all solution, and it rarely
works at every level.
So my question to you is, because of the Tennessee blow-
out, did the regulations need to be changed because of that, or
should the enforcement and the penalty for what happened be
stronger so that it would prevent people from violating the
regulations that already exist?
Mr. Martin. Congressman Critz, that is precisely the
question that the Administrator, my boss, is struggling with
right now. We are going to carefully review all 450,000
comments that we received. We are certainly taking a hard look
at the comments we received from industry, as well as the
industry that beneficially uses coal ash. There are clearly
two, at least two options in front of the Administrator,
neither of which will upset the Bevill Amendment, the 2000
Bevill exception for these materials. But I can't, I honestly
can't tell you what the Administrator is going to decide
because she has not reached that point. I don't expect her to
until into next year.
Mr. Critz. Okay, all right. And just one last question and
I will turn it back over to the Chairman because, Ms. Hankins,
you have had a free ride, so we have got to do something here.
[Laughter.]
But I was reading that BLM is congressionally mandated to
issue a permit 60 days after a competitive bid process, and I
was curious if BLM is meeting that requirement out here in your
section. And then I am going to ask both of you to answer a
question, because we see sometimes in the industries that we
are talking about permits taking multiple years to be issued,
which if you are in business, I don't know how you project your
costs, what the market is going to be when you get those
permits, and I just want to find out from you what is a better
way that we can address these ridiculously long permitting
times.
Ms. Hankins. When you say competitive bid process and a 60-
day timeframe, are you talking about lease by application for
coal, or are you talking about oil and gas? I'm not sure,
because----
Mr. Critz. Sided with oil and natural gas producers in
ruling that while the Department of the Interior Secretary's
discretion in issuing oil and gas leases still must comply with
a 60-day time deadline established by Congress.
Ms. Hankins. Okay. I believe you are referring to
requirements in the Energy Policy Act of 2005, and there are
several factors that affect the rate at which we can issue a
permit. The first one is how complete is that permit
application when we receive it, and we have 10 days to review
it and identify to the applicant if there are any deficiencies
in their permit. Once we do that, then they have a 45-day
period to address any issues that we raise, and at the end of
that time or whenever we get a complete permit from the
applicant, we are expected to process that in 30 days.
That includes an environmental review. It can also include
litigation. And so sometimes we do not meet that 60-day
timeframe for a variety of reasons. But I do understand that
that is the requirement in the Energy Policy Act.
Mr. Critz. Would you say that you meet it 50 percent of the
time?
Ms. Hankins. You know, I don't have that figure. Some of
our offices meet it 100 percent of the time. Some I don't think
meet it to that degree. But I can certainly provide you the
data.
Mr. Critz. Okay. But your estimation is that you do a
pretty good job and you don't have ones sitting out there 120,
150 a year?
Ms. Hankins. There are individual instances for some of the
reasons I stated that have been pending for more than the
period of time you stated. But generally speaking, there are
other factors that cause that. Sometimes, as I said, the
application is incomplete. Sometimes there is other information
we need. Sometimes there are environmental reviews that need
more time. So there are a variety of factors why they may take
more time, but there are a few instances where the period is a
long time.
Mr. Critz. Okay. Mr. Martin.
Mr. Martin. Yes, sir.
Mr. Critz. I have a lot of coal mining in my district. We
have permits that were applied for five, six years ago. I don't
understand. I mean, I don't understand how it could take that
long to get a permit issued for a coal mine that will probably
operate for two years.
So in your region, do you have a set date that you have set
that we need permits issued within two years, or we need
permits issued--we either deny or we approve permits?
Mr. Martin. Congressman Critz, we don't typically issue
permits for coal mines other than for----
Mr. Critz. Well, I mean any of your permitting issues.
Mr. Martin. More generally?
Mr. Critz. Yeah.
Mr. Martin. The Clean Air Act, I believe, sets an outside
limit of one year. We work very hard to efficiently process
permit applications. We are a direct implementer in a number of
places, including all of the American Indian reservations in
our region. We have a significant permit burden, but we are
working very hard at eliminating backlogs and processing them
as effectively and efficiently as we can.
We are actually the direct implementer for PSD for
greenhouse gases in Wyoming, and I believe we are going to meet
our goal of processing that part of the PSD permits in tandem
with the state as it evaluates conventional air pollutants, and
we will assure that there is no delay for those major sources.
I think we have objectively been very efficient in evaluating
other greenhouse gas air permits within our region.
So that is my goal. We are a customer service agency, and I
take that very seriously.
Mr. Critz. Thank you.
Mr. Chairman.
Chairman Tipton. Thank you, Mr. Chairman. [Laughter.]
I would like to drop back just a little bit. Just a couple
more questions came to mind here, Mr. Martin. When you were
talking about the 450,000 comments that came in, on specific
instances were you receiving--if you had a comment on Prake,
were you receiving comment coming in from New York on that, or
do you give weight to local input more?
Mr. Martin. Mr. Chairman, we weigh every comment equally.
Sometimes we get the same comment from multiple individuals or
multiple entities, and then we count that as a single comment.
But we weigh every comment as seriously as every other comment.
And if you don't mind, Mr. Chairman, I found the reference
to at least one of the questions you asked me. You were
inquiring about the cost impact of the Mercury Air Toxics
Standards, and what I discovered is that we did, in fact,
analyze that precise question, and our conclusion is that the
MATS, the Mercury Air Toxic Standards, would raise electricity
rates an average of 3.7 percent in 2015, and that would drop to
2.6 percent by 2020. And as a result of that relatively small
change in average retail prices of electricity, they would
continue to be at or below 2009 levels even after absorbing
those costs.
Chairman Tipton. Okay. Just kind of curious. Have you ever
seen prices go down once they go up, in reality, on your bill?
I haven't either. So it's kind of a rhetorical question, I
guess.
Let's see. I had one other question, and it is going back
to some of the mercury standards. It is a problem. We know
there are some issues with mercury and what-not, but I do have
a concern in terms of how much we attempt to look to the United
States to fix the world's problems when we have a very
responsible industry here in this country.
Do we have any percentages of what Congressman Critz had
asked on this again? I just wanted to clarify how much is
coming in from foreign countries that is in our air impacting
us. Is it half of what is up there? Seventy-five percent? Ten
percent? Do we have any figures on that?
Mr. Martin. Mr. Chairman, I am hesitant to hazard a guess.
That is a number that we will get to you. I have written it
down. It is a number that we will get to you. From my own
experience at the Department of Public Health and Environment,
I would say it is a much lower number, that this is principally
a national and local issue here in Colorado.
And I would like to add that here in Colorado during the
debate during the last administration over how to structure
that mercury regulatory package, the State of Colorado moved
ahead. We put together a stakeholder process. I believe we had
consensus from all of the utilities in the state, and we
developed a mercury standard that is in the process of being
implemented here in Colorado. We were ahead of the
Environmental Protection Agency in that instance, and I don't
believe we have encountered any significant obstacles in
getting that done.
We have had the ancillary benefit of stimulating the
development of that industry here in Colorado that specializes
in installing that carbon injection technology that does not
require significant changes in the system in order to achieve
very significant emissions reductions.
Chairman Tipton. If you could get that number, I think that
is important for us to know and to be able to reflect on.
Mr. Martin. Be happy to do it.
Chairman Tipton. Thank you. Appreciate that.
Ms. Hankins, I don't want you to feel left out either. I
did have a couple of questions.
When I was reading through your testimony, you were talking
about in terms of onshore production from public lands, in the
year 2010 that production had increased by 5 million barrels
from the previous fiscal year. More than 114 million barrels of
oil were produced from BLM managed mineral estates, the most
since fiscal year 1997.
I was kind of curious about that given the comment that we
continue to hear, particularly here in the Third Congressional
District. Those producing facilities, when were those
actually--when were the leases made, and when were they
permitted?
Ms. Hankins. I will respond to your question in a couple of
different ways. The figures that you quoted are, of course,
national figures, not specific to Colorado.
You know, the main thing that controls how many leases we
issue and how many wells are drilled is determined by the
market and by the national demand for energy and the price of
gas and the price of oil. And so those are factors in why we
have seen less requests for leases and less proposals for
applications for permits to drill in the last few years.
And so I think it is important to keep those market
conditions in mind. There are many reasons that industry has,
and I think you have industry representatives later on your
other panels that can talk about that as to when and where they
choose to drill. But what we are seeing is that only about 70
percent of the leases issued at the present time are being
drilled, and those are choices that industry makes, not the
BLM.
So I think there are a range of factors, much driven by
industry in terms of when they seek the lease, when they choose
to submit an application for permit to drill, and when they
decide to actually drill a well.
Chairman Tipton. Right now, you know, I understand what you
are saying. Since we are in the 3rd District in Colorado, this
is your area. What are the Colorado numbers?
Ms. Hankins. In terms of number of leases issued?
Chairman Tipton. Productivity. In terms of that
productivity. You were saying these are national statistics.
What do we have for Colorado?
Ms. Hankins. I don't have those immediately in my head, and
I can certainly provide them. But our statistics, overall we
have issued fewer leases in the last three or four years than,
say, eight or ten years ago. We are also seeing less
applications for permit to drill for some of the same reasons
that I talked about nationally, and I will be happy to give you
those exact numbers.
Chairman Tipton. I think that is probably not fair for you
to even have to comment on because it was a product of Colorado
State Legislature in terms of oil and gas regulations. We see
our friends in North Dakota with 3 percent unemployment right
now. They simply left our state, because I think we can
certainly make a profound argument at the gas pump. I filled up
my truck the other day, you know, $80 bucks, and it had a
quarter of a tank and then topped it off. The costs are there,
and given the rationale that it is market driven, that is a way
to be able to drive down actually some of those costs.
I would like to go back a little bit to some of your
testimony that you submitted to us in regards to coal. You said
the BLM is currently processing six applications for
competitive coal leases in Colorado. Can you tell us where
those are at now?
Ms. Hankins. I can provide you a detailed table that gives
you the status of each one of those, but generally they are in
some phase of the environmental review process: Some, the
environmental review has been completed; some, it is ongoing.
In one case, we completed the review, made the decision, and it
is now being litigated. So it is variable, but I can present
you a table that gives you the details for each one.
Chairman Tipton. Okay. Yes, because I think that
particularly when we get down to the coal industry, if you have
a moving wall--we were talking about that--once you stop, it
gets incredibly hard to get that going. So that permitting
process and being able to expedite that and do it responsibly
is obviously incredibly critical for us there.
Ms. Hankins, a lot of people in our congressional district
and across the nation feel that our country, and we see it
right here in Mesa County in particular, 10.5 percent
unemployment. We are experiencing both a job and an employment
crisis, and in terms of an energy crisis as well for this
country. A little later, and I would certainly invite and hope
that both of you might be able to just listen in to some of the
follow-up testimony from our next panel as well, because I
think it is going to be insightful. The rules and regulations
have real impacts on real people, real jobs, real costs,
impacting consumers at home.
But they will be testifying on the second panel, and they
claim that we have the potential to rapidly create thousands of
jobs and bring new energy supply to the market. But there are
onerous and changing Federal policies, including those
instituted by the BLM that are a barrier, and I think you
understand that. There are issues, and we understand your
mission.
But what is the BLM doing to be able to reduce permitting
times? We currently have an average of 206 days to the 30 days
required, going to your question, Congressman Critz, required
by the Energy Policy Act of 2005, 206 days versus the
requirement of 30 days in terms of that permitting process. You
have the lease. You have to be permitted to eventually turn
that into production, a big span of time.
So what is the BLM doing to reduce those permitting times
right now, and how can the BLM enable job creation and economic
development when we continue to have these extensive
bureaucratic delays?
Ms. Hankins. I will be happy to address that question. I
don't believe that the figures that I have seen for the amount
of time, once we have a complete application for permit to
drill, are as high as you indicate, but I will verify that and
send you the information that we have.
With respect to issuing new leases and then subsequently
processing applications for permit to drill, I think it is
important to think about one of the reasons that we undertook
oil and gas leasing reform, and that is that nearly half of the
leases that we were offering for sale were being protested and
in some cases litigated. When that happens, then we are not
able to issue a lease or at least allow the company to exercise
their rights under a lease until we resolve that protest or
litigation.
And so we were finding nationwide that that was a
significant hindrance to issuing these leases because of all
the protests and litigation that was occurring. We undertook
oil and gas leasing reform with the idea that if we could
involve the public earlier in the process and get their input
on whether we should recommend a parcel for lease or not, and I
stress get their input because the decision still rests with
the agency, it has been our hope that that would reduce the
number of protests.
We have seen some indications in both Wyoming and Montana
that that is the case. The percent of parcels being protested I
believe in Wyoming is about 12 percent. In Colorado we are
still in the process of implementing oil and gas leasing
reform. Our situation is a little bit different than some of
the other states because we are doing a lot of land use plans,
and some of those are far enough along that until we actually
get to the final decision about resource allocation in those
plans, we won't be leasing some areas. So our situation is
slightly different.
But I think when we think about what leases we make
available and where we can have drilling, first we have to
think about oil and gas leasing reform is intended to make that
process work better and more efficiently so that when we do put
a parcel up for sale, then we don't get the opposition and we
are able to proceed with presenting it.
Once those leases are issued, another step I have taken
since I have been here in the last 18 months is I have looked
at the numbers for how efficient our offices are and have asked
for an internal review. I received some of the preliminary
feedback last week, although I don't have a report yet, and
what that review tells me, as I indicated earlier, is in some
of our offices we are doing exceedingly well in the processing
of proposed parcels and the processing of APDs. In some other
offices, I believe we need to increase our efficiencies, and it
is my intention to work with those managers to help them do
that.
So it is front-end loading, the leasing process, and it is
taking some steps internally to increase our efficiencies. So
those are two things we are doing, I think, to help expedite
the permitting.
Chairman Tipton. Since you brought up the litigation end of
it, I am just kind of curious. How much of the BLM's budget is
consumed by litigation? Do you have a percentage?
Ms. Hankins. No, I don't, although I wish I did. We have
talked about that nationally because I can tell you that it is
substantial. When we look at costs associated with responding
to Freedom of Information Act requests, and then all the work
associated with preparing administrative records, which is all
the documentation related to a particular action, and then
attorney time, both our solicitors and Department of Justice,
plus whatever time in court or trying to work through
settlements, it is extensive.
Chairman Tipton. Is anyone running a study on that to try
and find that out, just extract the numbers?
Ms. Hankins. We have been talking about it at BLM at the
national level, and they are starting to put together a
database that will help us get at that information, but we
don't currently have that. But I can tell you----
Chairman Tipton. Just maybe one other thought when you are
kind of pursuing that number, it might also be interesting,
just given your comments in terms of some of the oil and gas
reform, to be able to expedite these, if we could label it
defensive medicine, to try and inoculate yourself a little bit,
not just paying for the lawsuit. How much of your valuable
resources which might be better used elsewhere are being drawn
off to try and defend yourself, that we could actually get to
address some of the permitting, to be able to expedite that,
take it from 206 days down to the 30 days, to be able to
achieve that.
Ms. Hankins. That is a good comment.
Chairman Tipton. Just a bit of a thought that you might
want to look at.
In 2007, the Department of Interior established a Federal
advisory panel comprised of a number of government and non-
government stakeholders and made recommendations on siting wind
turbines on Federal lands. This advisory panel reached a
consensus recommendation in 2010. In its recently issued draft
guidance, the agency appears to have jettisoned actually many
of the recommendations.
Can you explain to us why the agency took this step and why
the Federal agency's advisory committee's consensus
recommendations are being ignored?
Ms. Hankins. I don't have specific information about that.
But what I can tell you is that the BLM completed a Wind Energy
Programmatic Environmental Impact Statement approximately five
years ago, and in that document we identified some 20 million
acres of land the BLM manages that are suitable for wind energy
development. Here in Colorado, we have had several requests for
rights of way to conduct wind testing to put up meteorological
towers to evaluate wind velocities in constancy and so forth,
and most of those have been in southern Colorado but some in
Western Colorado.
To my knowledge, so far we have not received a single
application from either an individual or a company to develop a
wind farm in Colorado, and we certainly would be open to that.
So I don't know that industry has defined that that is
something that is economically viable for them here, but I
would certainly be interested in seeing a proposal.
Chairman Tipton. Okay. Again, if you could maybe get back
with us in terms of--I guess I would like to know why, when
some recommendations are made, it seems that the advisory
committee is just going in the other direction.
Ms. Hankins. Sure, I will be glad to.
Chairman Tipton. Just one last question for you. I am kind
of curious, when we are talking about the big scope, the
obligations of your agency and the EPA nationwide. We have an
energy project, say, in Colorado, and we receive public comment
coming in. I am just curious. When you receive comment from,
say, Pennsylvania in regards to a project going on in
Colorado--and this is the same question I actually asked Mr.
Martin as well--do we give more consideration to the local
communities, the local input, as opposed to someone who may
live 2,000 miles from us, commenting on whether or not a
project should proceed?
Ms. Hankins. You know, that is a question that I have been
asked since I began with the BLM as a geologist and then as I
moved into various management positions, because I think there
is always a hope and a desire on the part of people who live
closest to public lands that they should be the primary
determiner for what should happen on those public lands.
But the public lands that the BLM manages, they truly are
the lands that belong to all of the American people. It is the
taxpayers of all of our country who fund the management of
these lands and who pay for improvements; for example,
recreational facilities or other amenities.
And so when we manage them, because they do belong to all
of the American people, it is important that we get the input
and consider, as Mr. Martin said, we consider the input of all
Americans in our decisions. Sometimes local people have much
more detailed knowledge of a particular proposal or a
particular piece of ground, and so we clearly can factor that
in in a different way because it is data and information that
people from a distance don't have. But we, like the EPA, must
consider all comments equally and evaluate them in the context
of any of our actions.
Chairman Tipton. Okay. I guess when you make the comment
that local people have better insight, are more knowledgeable
about it, but you are going to give equal value to somebody
from wherever--you are right, these are our public lands, they
have a right to comment. But I would certainly hope there would
be a little more value given to people that are on location and
their understanding of the situation that you are dealing with.
So thank you, and I yield to Congressman Critz.
Mr. Critz. Thank you. I just have one question. Ms.
Hankins, you mentioned something that I think needs
clarification, and this is also for you, Mr. Martin, because I
guess the way to say this is what you were just commenting on
the public lands, that they are the entire nation's, and our
job, especially in this Subcommittee where we are looking about
small business, is that we represent the people of this
country, so we have an obligation to the people to protect, to
make sure where things are going, but we also have to look at
the big picture. So when you are issuing permits or you are
issuing regulations that drive up energy prices, we look at the
jobs picture. We look at companies that will not open here
because energy prices are too high. So we have to do our best
to balance things.
So you made a comment, Ms. Hankins, that from the point
when a permit application is complete. Now, I have heard from
industry that they say sometimes they don't know when their
application is complete only because they will fill out the
application and then the agency comes back and says we need
this, we need more, more than what they put in their initial
application.
And we are trying to be assets to both sides. We want to
help you. We want to help industry as well. We are trying to
balance these two things. So how do we help? And I am sort of a
bare-knuckles brawler kind of guy. Let's get to the answer.
What is the answer? If you are not going to issue a permit,
then deny it. If you are going to issue a permit, then let's
get to it.
So how do we get to the point where it is not this
adversarial relationship between the people who are after the
permits and those of you who are issuing it? How do we shorten
that timeframe efficiently? Not to miss anything, we do not
want to miss anything, but how can we help you move that
process faster and turn this from this sort of give and take,
like okay, the industry applies, you give back comments, they
answer the comments, they get more comments. I mean, this is
where we find industry really complains, that you say from the
time when the permit application is complete. Well, for them,
it's from when they started, and that is where you get this
protracted timeframe.
So my question is how do we make this better, and how can
we help make this better?
Ms. Hankins. I think there are a few things that can
improve the process. One is based on this internal review that
I did, I think we need to educate some of our staff. We have a
lot of new employees that are still learning, and I think part
of our responsibility is to make sure they have the training
and knowledge and understand all of their requirements.
The other thing that I think is important is that old-
fashioned thing, communication. One of the things that is
sometimes problematic, not even just within the agency but with
people in general, is that we don't sit down and have a
complete conversation about many things, and I think when we
have a permit that we think is incomplete, a permit
application, then I think we need to sit down with that company
and have a face-to-face discussion, here are the areas that we
think need to be addressed in your application, and that needs
to be a conversation, not an email or some other impersonal way
of communicating.
And then industry has the chance to ask questions, clarify
what we want, and we have that same opportunity. So I think
that is something that is really important.
It wouldn't hurt to take a look at the regulatory
requirements and make sure that they are not ambiguous and so
that it is very clear what we want. I say that because I
haven't personally looked at those in some time, but I think
that is always an option, is to make sure what you are
requiring is crystal clear.
So those are three things I think we could all work on to
help improve the process, and that communication thing is a
two-way street. We have had some companies who have contacted
me and some of our district managers and say these are things
we think the BLM needs to address in a different fashion, and
those kinds of conversations are very helpful to me and to our
managers because then we are hearing directly from industry
what would be useful to them, and I would encourage that as
well.
Mr. Critz. Thank you.
Mr. Martin.
Mr. Martin. Congressman Critz, I guess I have two
observations. One is that under the statutes that the
Environmental Protection Agency administers, the vast majority
of permits are issued by state agencies under delegated
programs from our agency. So while we very carefully monitor
the permit backlogs that exist under different programs and in
different states, or in some cases on reservations, the
majority, the vast majority of the work is done at the state
level, and we are responsible for overseeing only the work that
they do.
Having done that, for those permits that are issued by the
regional office, we strongly encourage permit applicants to do
a pre-permit application meeting with us so that we can better
understand what they are proposing and make sure we do our best
to explain what would be required to be contained within a
permit. Throughout the permit process, we encourage a dialogue
between our staff and staff for the permit applicant. We work
as hard as we can to make sure that everybody understands what
everybody else is talking about so that once the permit
application is complete, we can process it relatively quickly
and relatively efficiently.
Sometimes, unfortunately, we have to say no, but we work
very hard at saying yes with the appropriate emissions controls
so that we can all move forward together.
Mr. Critz. Two comments. Do you want to come work at Region
3? No, just kidding. [Laughter.]
But the comment would be is that everyone likes to push
blame somewhere else, and one of the things that we try to do
is make smart decisions based on knowledge, not based on what
he said, she said.
One suggestion I would make, because this happens in my
area, is that everyone blames EPA for something that is going
on, and it is true, and I had forgotten about that point, that
most of the permitting happens at the state level, although
they blame EPA for delays because they kick it to EPA and say,
hey, EPA has had it for 60 days.
It might not be a bad idea that--I don't know if you can do
this--every time you get a permit, let the company know that
you just got it so that they know that it wasn't you that was
sitting on it, because sometimes the state agency might say,
hey, we got to them 30 days ago when, in fact, they didn't do
it.
We are trying to get to the bottom of this, and you can
obviously see from my questioning I have huge permitting
issues. I mean, we are talking about years of permitting, and I
don't understand how it could possibly take that long to issue
a permit. I mean, all the regulations are in place.
We do have some issues because it seems like regulations
seem to be changing, and the Chairman told a story about
sausage earlier today that sort of highlights. You have these
regulations. Ten years later, we have new regulations. Ten
years later, we have new regulations. In the meantime, industry
has spent half a billion dollars to upgrade their plant or
whatever, to meet regulations, and you come back, by the time
you finish that, they are being told they have to do more. It
is not a good formula.
But, okay. I am trying to figure this out, and I appreciate
your testimony.
That is all I have, Mr. Chairman.
Chairman Tipton. Well, thank you both very much for your
testimony here today. Again, I would invite you, or at least
have a member of your staff perhaps stay. I think our next
panel can provide, I think, some insights that you may not hear
on a regular basis. I appreciate your testimony.
And I would now like to call up our second panel, if we
may.
[Pause.]
Chairman Tipton. Thank you. I appreciate the second panel
being able to attend here today, and we will just get right to
it.
First up on our second panel is Mr. David White, Montrose
County Commissioner. He was elected to his position in 2008.
Prior to his service to Montrose County in this capacity, he
served as a member of the Montrose City Council from 2004 to
2008, and also served as mayor of Montrose from 2007 to 2008.
Commissioner White holds a Bachelor of Science degree in
Business Administration from Auburn University and has attended
graduate school in public affairs at the University of
Colorado.
So, David, Mr. White, appreciate you being here today.
STATEMENTS OF DAVID WHITE, COUNTY COMMISSIONER, MONTROSE, CO;
DAVID LUDLAM, DIRECTOR, WEST SLOPE COGA, GRAND JUNCTION, CO;
JENNIFER BREDT, DEVELOPMENT MANAGER, RES AMERICAS, BROOMFIELD,
CO; JAMES A. KIGER, ENVIRONMENTAL MANAGER, OXBOW MINING, LLC,
ELK CREEK MINE, SOMERSET, CO; DICK WELLE, MANAGER, WHITE RIVER
ELECTRIC, MEEKER, CO
STATEMENT OF DAVID WHITE
Mr. White. Thank you. I appreciate the opportunity to speak
with both of you.
Briefly, I would like to--I have submitted written
testimony, but to briefly go over what is going on in Montrose
County at this time.
A little background. Montrose County is home to 42,000
citizens, encompassing 2,242 square miles. We, fortunately or
unfortunately, depending on your point of view, see that about
69 percent of our county is controlled by Federal or state
agencies, BLM, U.S. Forest Service, et cetera.
Like so many areas of the country, we have experienced a
substantial economic downturn, and that is reflected throughout
Western Colorado and the 3rd Congressional District. Simply
put, we need more private sector employment because we all know
that county, city, state, and Federal governments are
financially strapped. We have to do things ourselves as local
citizens.
I have had the opportunity to hear from many of my
constituents firsthand about these problems. A classic example
that we are currently faced with, Energy Fuels Resources has
proposed building the Pinon Ridge uranium and vanadium
processing mill in Western Montrose County, which is in my
district. The new mill would create jobs that provide economic
prosperity to an area that has been hit hard for many years,
and many years before this current downturn.
Energy Fuels demonstrated that it can build and operate a
mill in a manner that is both protective of human health and
the environment. Montrose County issued a special use permit
for the mill after hours and hours of public testimony, after
reviewing dozens of documents and having studies performed.
The Colorado Department of Public Health and Environment
conducted a comprehensive review considering short and long
term impacts of the proposed mill, including radiological and
non-radiological impacts to water, air, and wildlife, as well
as economic, social, and transportation related impacts. CDPHE
approved the radioactive materials license in January of this
year.
Despite these findings and permits, the EPA reopened a
comment period on this proposal at the behest of an
organization based outside of our county. This has held up the
mill and caused unnecessary delays. CDPHE acted in conjunction
with agreements with the Department of Energy and the Nuclear
Regulatory Commission, yet EPA became involved.
This is unfortunate because Energy Fuels Resources has
indicated that the mill would directly employ close to 90
people, with annual salaries between $40,000 and $75,000. The
company also estimates 250 to 300 additional jobs. Yet we have
this conflict with the Environmental Protection Agency and
others.
I would like to reemphasize that the Pinon Ridge mill would
be built and would enforce safeguards mandated by current
regulations. Regulations that govern nuclear power generation
and its associated industries have been put into place by the
DOE and the NRC.
The point I'm trying to make is that with this, even when
businesses are successfully able to comply with mandated
regulations, additional interference from Federal agencies can
create unnecessary delays in the process and hampers
desperately needed job creation.
Next up is solar energy. Our community is home to
BrightLeaf Technologies, which is a company that has perfected
a new generation of concentrated photovoltaic cells that have
three times the efficiency of the chips found in solar flat
panel systems. Taken as a package, BrightLeaf Technologies has
performed very well with this new technology.
The company currently employs 25 people and expects to
staff up to 400 to 500 employees by 2015 in Montrose County.
The people of Montrose and the Montrose Economic Development
Corporation are excited about this opportunity. Yet again, the
biggest contract that BrightLeaf has is with Pinon Ridge Mill,
and until that mill is approved, those jobs will not be
created.
Lastly, we have in Montrose County Intermountain Resources,
which is the largest and last of the large timber mills in
Colorado. The Bureau of Land Management and the U.S. Forest
Service have, through their policies, created a problem for the
operation of the mill in that the mill is unable to obtain the
resources that it needs in order to continue to process. Again,
my written testimony outlines so much more of this.
I appreciate the opportunity to speak to you all today.
Thank you.
[The statement of Mr. White follows on page 63.]
Chairman Tipton. Thank you.
Our next is Mr. David Ludlam, Executive Director of the
Colorado Oil and Gas Association's West Slope chapter. As
Executive Director, Mr. Ludlam is responsible for promoting and
enhancing oil and natural gas production in the Piceance Basin.
In this role, he represents the member companies throughout
Western Colorado who operate in or provide services to natural
gas and oil production in Piceance Basin.
Prior to his current position, he worked as a public lands
consultant in the energy and tourism sectors. Mr. Ludlam is a
graduate of Mesa State College and resides here in Grand
Junction.
It is a pleasure to have you with us today here. Please
proceed.
STATEMENT OF DAVID LUDLAM
Mr. Ludlam. Thank you, Chairman Tipton and Ranking Member
Critz, for this opportunity to testify before you in the 3rd
Congressional District.
Congressman Critz, with 10 percent unemployment, I fear you
are not the only one who is going to be eating wiener schnitzel
here if we don't get these burdensome regulations fixed and get
our people here back to work. So thank you for coming to Grand
Junction.
Earlier this month the President of the United States
submitted to you all a jobs plan for America.
One of the things that really stood out for our
organization was that no mention was made, and no meaningful
policy was proposed, to allow America's energy sector to get
busy doing what we do best, and that's making energy and
creating jobs.
Our organization can deliver you a much more practical jobs
plan right now. It is simple. Appointed Federal agency heads in
Washington should remove and reverse roadblocks to energy
development in Western Colorado and throughout the West and
stop bridling their hard-working field offices with
implementing these roadblocks. That is a simple plan, and it
can deliver thousands of jobs, it can deliver billions in
revenue and help reduce the nation's trade imbalance, all the
while getting our community here back to work.
Colorado's Governor John Hickenlooper just engaged in a
statewide economic development planning process, and unlike the
White House's top-down jobs plan, the Governor's plan called
for a county by county, bottom-up planning process. This
refreshing project asked Colorado and its local communities a
very simple question: How can Colorado get out of the way of
job creation?
If only the Secretary of the Interior could take a cue from
the Governor and ask the same question.
Northwest Colorado responded to the Governor's bottom-up
process and our greatest need was made clear. The counties of
Northwest Colorado asked the state to help pressure the Federal
agencies to loosen their stranglehold on the expansion and
approval of domestic energy jobs, and I have a feeling that
your committee wants to help do the same thing.
As a business sector, we have always pointed out that
regulating for regulation's sake kills jobs, and there are some
who would always claim that such positions are merely industry
fear-mongering or posturing. But the Obama Administration's
September withdrawal of EPA's ozone regulations is an
affirmation of our point, and it is also a recognition by this
administration that wrong regulations at the wrong time can and
do prevent the creation of jobs.
I have also submitted for the congressional record another
document that liked the outcome of Governor Hickenlooper's
bottom-up plan that provides a litany of examples where Federal
regulations prohibit jobs and create uncertainty. This document
is the Blueprint for Western Energy Prosperity. It was
developed by the Western Energy Alliance. Released in July, the
blueprint clearly describes the roadblocks to energy job
creation in the West, and it proposes a way forward to remove
them. By implementing their policy directives, the Alliance
believes that America could create over half-a-million energy
jobs by 2020.
Stepping back for a moment, I imagine that part of the
reason you are in Grand Junction today is because we are quite
literally in the middle of the largest energy reserve in the
world. Just to the north are the nation's largest oil shale
deposit. To the south and west, as has been noted, are the
nation's best reserves of uranium and vanadium. Across the way
in Delta County, one of the nation's cleanest coal mines.
According to data from NREL, Western Colorado has immense
potential for geothermal and solar energy applications.
But most important to our organization are the natural gas
and oil deposits that exist in every direction from where we
sit today, a resource that, as I mentioned, continues to reveal
itself as an increasingly important catalyst for job creation.
Mr. Chairman, if your committee is looking for a poster
child of regulation and uncertainty standing in the way of job
creation, then I urge you to look no further than Northwest
Colorado. In Moffat County, the Department of Interior derailed
a local, bottom-up land use plan for the energy-rich Vermillion
Basin. It took seven years and a broad array of stakeholders in
Moffat County to create the compromise. It took 24 hours and an
interestingly timed press release to reverse it.
According to the county and state projections, this
decision alone eliminated the potential for $87 million in
Federal revenues and hundreds, if not thousands, of local jobs
in one of the most economically challenged regions of our
state.
In Garfield County, the Department of Interior has failed
to approve the most balanced, studied, and debated energy
compromise ever contemplated in Colorado, and likely the
nation. This project is within the former Naval Oil Shale
Reserve and is parochially known as the Roan Plateau
Compromise. This shovel-ready project would result, by the
agency's own analysis, in up to $1.3 billion in Federal revenue
and would create thousands of local jobs.
Rio Blanco County contains the richest oil shale reserves,
and as you know, the devastating uncertainty created by the
agency resulted in its own congressional field hearing last
month.
And in Mesa County and countless counties throughout the
Rockies, a recent Secretarial order, a top-down initiative,
would have created a de facto wilderness dubbed ``Wildlands''
in many areas of our region that have natural gas underlying
the surface.
More generally and sadly, there are times throughout
Western Colorado and, indeed, in the Rockies when even the most
basic environmental review can take years to complete, if not
decades. And policies aside, just the mere rhetoric from the
Department of the Interior alone has often worked at cross-
purposes for job creation.
Recently, the Department of the Interior sent out a press
release publically criticizing the industry for not developing
existing Federal leases. Industry trade groups like ours were
quick to note that it is the agency's own policies and
permitting schedules that limit lease and project development,
not the lack of will from the companies who risk their own
capital to invest in them.
But after the press release, the damage was done and the
message was quite clear. Federal leasing for minerals would and
has come to an intentional standstill.
In fact, each lease sale in Colorado since the new reform
act was instituted has been protested. Look no further than
Colorado's last three lease sales to understand our concern.
In March of 2011, two parcels were nominated. Both were
postponed and one was deferred and then removed from
consideration.
In May 2011, 12 parcels were nominated. Of these 12, 10
were deferred, all were protested.
In August 2011, five parcels nominated, four deferred.
And for the upcoming November 2011 lease sale, all of the
parcels will be protested, as reported by the Grand Junction
Daily Sentinel.
This spells bad news for future long-term planning and
investment for our member companies, who need certainty and who
need the availability of Federal acres to invest in our public
lands and create jobs.
In another area of unpredictable Federal policy, there is
potential to hamper job creation by limiting the use of one of
the nation's most important technological advancements in a
generation, hydraulic well stimulation or hydraulic fracturing.
Hydraulic fracturing is used in the development of 90 percent
of natural gas wells today in the United States, and any
regulation that reduces or prohibits the use of hydraulic
fracturing will reduce access to the country's vast energy
potential.
So as Federal agencies continue to analyze hydraulic
fracturing, I would note that states have made incredible
progress on hydraulic fracturing disclosure laws. Colorado,
Wyoming, New Mexico, Arkansas, Texas are just examples where
either a disclosure law exists or one is in the works, and
anything that removes regulatory authority from the states and
their experts and shifts to the Federal agencies we believe is
bad for the energy sector and bad for job creation.
While typically the voice of our organization stays within
the confines of the valleys, canyons and plateaus of Northwest
Colorado, our hope is that your committee advances our jobs
plan, our simple jobs plan throughout the halls of Congress. It
is a plan that doesn't require printing money. It is a proposal
that doesn't require any stimulus. In fact, it is a plan that,
when implemented, would create jobs in a matter of weeks and
not years, and to implement that plan, all the Federal agencies
have to do is allow our member companies to invest the capital
in our public lands and in our Federal mineral estate to make
energy and create jobs.
Thank you for this opportunity. Your presence here today
reinforces that some members of Congress are indeed committed
to real job creation, a commitment that recognizes that the
nation's energy sector must be at the foundation of our
economic recovery.
Thank you, and I look forward to your questions.
[The statement of Mr. Ludlam follows on page 69.]
Chairman Tipton. Thank you.
I would now like to introduce Jennifer--is that Bredt?
Okay, good. The Development Manager for Renewable Energy
Systems America.
Ms. Bredt has been in the renewable energy industry since
2004, and has been in her current position with RES Americas
since 2008. Her development region spans Western Electric
Coordinating Council's region with emphasis on Colorado and
Arizona. Prior to joining RES Americas, she worked for CH2M
Hill as a renewable energy project manager. She also spent over
three years working as a Tribal Renewable Resource Specialist
for the Assistant Secretary of Indian Affairs at the Division
of Energy and Mineral Development office in Lakewood.
Ms. Bredt holds a Bachelor of Arts in Geological Sciences
from the University of Colorado-Boulder, and a Master of
Science in Global Energy Management from the University of
Colorado-Denver.
Thanks for being with us today.
STATEMENT OF JENNIFER BREDT
Ms. Bredt. Thank you. Chairman Tipton, Ranking Member
Critz, and members of the Committee, thank you for the
opportunity to testify today. My name is Jennifer Bredt, and I
am a Development Manager with Renewable Energy Systems
Americas, also referred to as RES Americas in my testimony.
Headquartered in Colorado, RES Americas has 250 full-time
employees. We have built more than 10 percent of the operating
wind farms in the U.S., and we currently have several thousand
megawatts of wind and solar projects under development, which
is enough to supply the electricity needs of more than two
million average American homes.
The Committee has asked RES to provide a statement
regarding regulations that may be negatively affecting small
businesses in the wind industry. In June, RES' CEO, Susan
Riley, testified before the House Natural Resources Committee
at an oversight hearing on ``Identifying Roadblocks to Wind and
Solar Energy on Public Lands and Waters.'' RES' statement today
will echo that testimony, with a few updates.
We encounter many obstacles to developing renewable energy
projects, but the number one obstacle our industry faces is
uncertainty. When the uncertainty is created by an unclear
regulatory regime, the negative consequences are particularly
frustrating, because they could have been avoided.
A recent example is the regulatory uncertainty created by
the U.S. Fish and Wildlife Department's 2011 ``Draft Eagle
Conservation Plan Guidance'' and ``Land Based Guidelines for
Wind Energy.'' RES' written testimony from the June hearing
referenced above provides greater detail about the many
problems these two documents have created for the wind
industry.
Some progress has been made, particularly with regard to
the Land Based Guidelines; however, several serious issues
regarding the Eagle Guidance remain. Taken together, the eagle
regulatory program created by the Land Based Guidelines and the
Eagle Guidance affect wind projects throughout the contiguous
U.S., and has placed an estimated $68 billion, with a ``B'', in
wind energy investment at risk.
RES has already suffered financial losses due to the
uncertainty created by this eagle regulatory program, and those
impacts have consequences for many of the other small
businesses we employ in connection with our projects. It is not
uncommon for RES to utilize the services of 25 to 50
subcontractors and suppliers in the process of developing and
constructing a wind or solar facility, and payments to these
subcontractors and suppliers often run into the tens of
millions of dollars. The types of small businesses involved
span a wide range, from environmental consultants, to materials
and equipment suppliers, to firms that pour the concrete
foundations, build roads, build substations, and install
electrical collection systems, to name just a few.
RES Americas has several wind projects that are currently
being directly impacted by the uncertainty surrounding the
eagle regulatory program, and we believe that the changes to
the permitting process regarding eagles will ultimately impact
the majority of our projects, creating delays and millions of
dollars of additional costs. Many other developers report that
they are in a similar situation.
The wind industry is appreciative of the commitment shown
by Secretary Salazar and U.S. Fish and Wildlife Director Dan
Ashe to finding a resolution to the problems identified.
However, until the problems are actually resolved, our industry
will continue to be negatively affected by the uncertainty they
create.
In closing, I would like to emphasize RES Americas' strong
support for reasonable protections for wildlife. RES Americas'
business is developing and constructing renewable energy
projects that benefit the environment, and our corporate ethos
is grounded in sustainability. So this isn't about cutting
corners or trying to sidestep reasonable regulations, but the
key word is ``reasonable.'' Both conservation and renewable
energy are critical, but there has to be a balance between the
two agendas.
The American people want domestically produced, clean,
renewable energy, and we want to supply it to them. But our
industry faces market uncertainty at the national level, and we
are thwarted by regulatory uncertainty during the development
process. In the immediate term, the Eagle Guidance, combined
with the Land Based Guidelines, are significant obstacles to
our industry.
The renewable energy industry has the power to drive
investment--particularly in the manufacturing sector--and to
create tens, if not hundreds, of thousands of jobs.
Chairman Tipton, Ranking Member Critz, and other members of
the Committee, we thank you for your interest in, and attention
to, these issues, and look forward to any assistance you may be
able to provide.
[The statement of Ms. Bredt follows on page 74.]
Chairman Tipton. Thank you.
Our next witness, Mr. James Kiger, is Environmental Manager
at Oxbow Mining, LLC, Elk Creek Mine. He has 32 years of
environmental management experience in Colorado underground and
in the surface coal mining industry, dealing with
organizational management and diverse environmental mine
permitting, supervision, and reclamation issues.
His experience includes development and maintenance of
environmental programs and coal leasing programs to maintain
continuous compliance with the Clean Air and Water Acts, the
Resource Conservation Recovery Act, the Surface Mining Control
and Reclamation Act, and various other Federal, state and local
laws and regulations.
He received his Bachelor of Science in Wildlife and Range
Management from Humboldt State University, and his MBA from the
University of Phoenix.
Welcome to the Subcommittee, Mr. Kiger.
STATEMENT OF JAMES KIGER
Mr. Kiger. Thank you, Chairman Tipton and Ranking Member
Critz, for the opportunity to speak with you today.
Coal is an essential American industry that provides over
45 percent of America's electricity at reasonable prices and
provides 85 percent of the U.S. geo resource on a BTU basis.
Thus, it creates economic opportunity for millions of American
businesses and consumers.
What I would like to do today is talk about how a number of
agencies are creating head winds to the industry rather than
tail winds to help it out, to provide roadblocks or at least
hurdles to the development of our coal resources.
The EPA, either alone or along with other Federal agencies,
have launched a series of regulatory actions that directly
affect our coal mines in this nation.
Starting this year, we have had to start collecting
greenhouse gas inventory information from our methane drainage
that is used to ventilate the mines to provide a safe working
environment for our miners. We have had to start monitoring
those emissions, and we are understanding that next year we
will have to file for a Title 5 Air Emissions Permit with the
EPA and the State of Colorado. The outcome of that, we are not
sure what will happen, but we believe eventually it will impact
our ability to mine coal safely unless we put in retrofit
technologies.
Water quality standards are being modified, such as the
arsenic values, which are below the detection limit of .02
parts per billion. Many laboratories can't even analyze to
those levels, and that level is a thousand times higher than
drinking water standards. But that is an example of some of the
water quality standards that the mines are going to have to
start complying with in our discharge permits.
We are also looking at stringent stream conductivity
standards. We are looking at more stringent selenium values in
receiving stream standards.
The regulatory agencies are also pursuing more onerous
process water classifications of routine surface storm water
drainage from mining areas, which can impact our ability to get
permits.
The Corps of Engineers, along with being influenced by the
EPA, is pursuing suspension of the Nationwide Permit 21 for
surface mines in the Appalachian Region. Coal mines rely on
Nationwide Permit 21 and Nationwide Permit 50 for underground
mines to be able to meet Clean Water Act Section 404 permitting
requirements in an expedited manner.
The Office of Surface Mining has proposals that will
increase their oversight over state programs. They are looking
at doing inspections apart from when they used to inspect with
the state regulatory agencies. They are proposing to change the
10-day notice requirements to where they could revoke state
permits with a 10-day notice program.
OSM is looking at stream buffer zone requirement changes
which could affect basic mining activities of fills, stream
channel reconstruction, activities in ephemeral drainages, and
construction of refuse piles.
The EPA by itself, as you know, is working on changing
national standards. There is the Cross State Air Pollution
Rule, which requires 27 states to reduce air pollution. And we
understand that PJM is the eastern distributor of electrical
power. They are saying that this rule potentially could shut
down 25,000 megawatts of eastern power plants.
We as an industry here in Delta County in the North Fork
mines, we ship at least 10 million tons of coal to those
customers. So obviously that could impact our ability to mine
coal if our customer base is reduced.
EPA has revoked the 404 permit for the Spruce No. 1 mine in
West Virginia arbitrarily after a number of years of
environmental analysis and the mine had already opened. So
those kinds of activities to revoke permits are creating a lot
of uncertainty.
In my comments I have provided a table at the end,
compliments of Arch Coal, that kind of displays the train wreck
that can happen with all of these conflicting regulations and
timelines.
The EPA has proposed a coal combustion rule where ash from
power plants would be regulated, potentially regulated under
Subtitle C rather than Subtitle D of RCRA.
The EPA also entered into a consent agreement with the EPA
to establish greenhouse gas emissions for electric utilities.
But my understanding is now they have delayed that deadline,
which was originally September 30th, the end of this month.
Those kind of regulations will create uncertainties for the
future of coal mining and the burning of coal.
The efficiency of the Federal land management agencies has
been problematic. The Clinton Roadless Rule has caused us
issues when the rule itself has been enjoined by Federal court,
and it is now in the 10th Circuit Court of Appeals, but we are
still getting delays with the U.S. Forest Service on normal,
routine permitting matters in IRAs.
Nuisance lawsuits by the environmental community has
delayed permit approvals. The representative from the BLM
talked about a lawsuit that one of the mines is having to
fight, and that is our mine. We have a small LVA lease
application for merely 4 million tons of coal for one year of
longwall mining, and it has been appealed by the LBA, and we
are in the middle of that litigation.
We believe that nuisance lawsuits and appeals by the
environmental community need to be dealt with, and I think part
of that is the Equal Access to Justice Act which creates the
ability of many of these large attorney firms to fight these
issues and get their lawsuits paid for by the Federal
Government.
Chairman Tipton. Mr. Kiger, if I could, I apologize. So we
can stay kind of in some of our time commitments here, if we
could have you wrap up. We have got our little lighting system
there.
Mr. Kiger. Okay. Thank you.
That really takes care of my comments, and I do have my
written comments that you could review.
[The statement of Mr. Kiger follows on page 76.]
Chairman Tipton. Thank you so much.
Rounding out our second panel is Mr. Richard Welle, General
Manager of White River Electric Association, located in Meeker,
Colorado.
WREA is a rural distribution cooperative with 33 full-time
employees. He began his career at WREA in 1973, moving up
through the ranks from journeyman lineman to operations
manager, and in 2001 began his tenure as general manager.
Mr. Welle has guided the cooperative from a total asset
value of $16.2 million in 2001 to over $58 million in total
assets in 2011, and over the past 10 years annual electric
sales at WREA have grown from 138,243 megawatt hours to 977,862
megawatt hours.
Mr. Welle, thank you for testifying for the Subcommittee
today.
STATEMENT OF DAN WELLE
Mr. Welle. Thank you. Chairman Tipton and Ranking Member
Critz, thank you for the opportunity to testify today.
It is crucial for the U.S. House of Representatives and
other interested parties to fully appreciate how government
regulations affect the day to day lives of all Americans, and
specifically White River Electric consumers. With that said,
the answer to your question is yes, excessive energy regulation
and policies limit energy independence, kill jobs and increase
prices for consumers.
The White River Electric service territory is about the
size of the state of Delaware, with 935 miles of line, serving
approximately 2,500 members and about 3,248 electric meters.
These numbers result in an average of 3.46 consumers per mile.
The natural resource diversity in this region includes open
spaces, abundant fish and wildlife populations, lush forestry,
various mineral deposits accompanied by agricultural, coal, and
natural gas production. We live and electrically serve the
energy-rich United States in our territory at White River
Electric.
Our electric load profile reflects this type of diversity
with electric service to generational cattle and sheep ranches,
wheat farms, coalmines, oil and gas producers, and Meeker's
historical residential base.
White River Electric was formed in 1945 in response to a
national directive to electrify the rural west. The Federal
Government and the founding cooperative members believed that
reasonable and affordable access to safe and reliable
electricity was necessary for economic and social
sustainability and prosperity.
The mission of White River Electric is to work to provide
its member consumers with safe, reliable, and responsible
electric energy and other services at the most reasonable cost
possible, while remaining committed to customer and community
service.
Recently, in a customer satisfaction survey conducted in
our service territory, our members indicated a satisfaction
rate of 97 percent with White River Electric as an electric
utility. We are very proud of that mark. They also indicated
implicitly that they care about the environment and they wish
to see innovation in clean coal technology and renewable energy
sources, but they simply cannot afford to see their electric
rates increase.
The mandate for our leaders should not be how to regulate
an industry so that it kills the industry and punishes the
consumers. It should be how do our leaders create long-term
energy policy and market stability so that the resources can be
applied to energy innovation and job creation.
I am here today to give voice to our membership and our
mission in hopes that Congress hears our plea for balanced,
reasonable regulation that improves and incentivizes the
overall electric utility industry. Regulation that kills jobs,
the economy, and jeopardizes the societal and economic
prosperity that is at the historical heart of this industry is
unacceptable.
It is estimated that proposed EPA regulations will result
in the closure of coal-fired power plants across the country,
with an estimated capacity of 30 to 70 gigawatts. That is 10 to
22 percent of the total generation capacity available in the
U.S. today. Overreaching regulation that abandons scientific
and common sense will be a direct threat to Northwest
Colorado's economic stability and sustainability.
In the past 10 years, White River Electric's annual sales
have grown, as you had indicated earlier, to almost 10-fold of
what we served in 2001. Response to increases in electric
demand associated with natural resource extraction and
processing in the Piceance Basin resulted in the construction
of miles of new transmission lines and seven substations for
enhanced service and reliability. Rising to these challenges
and opportunities shows how a small company of 34 employees can
surpass expectations through hard work and a can-do attitude.
During my 10 years as general manager, White River Electric
has passed on seven wholesale power rate increases to its
membership. Wholesale rate increases since 1998 represent a 60
percent increase in the total cost of a residential kilowatt
hour. These increases impact every family's monthly bottom
line.
One general manager in the State of Colorado reports as
much as 20 percent of their retail rate is allocated toward
regulatory compliance.
Today, I hope I will leave you with the commonsense
philosophy of ``think before you vote.'' While the lofty goals
for regulation may be public interest, public safety and the
environment, every legislator should be challenged to ensure
that each vote for further regulation is necessary based on
common sense, and allows for industry innovation and excellence
without punishing the end consumer and the economy.
This balancing act is not easy. Our forefathers believed
that electricity was essential for economic and societal
stability and prosperity. We have the obligation to take that
light bulb into the future.
Thank you for your time today.
[The statement of Mr. Welle follows on page 87.]
Chairman Tipton. Thank you, sir.
Appreciate all of you taking the time out of your day to be
able to come in and testify.
I'll start off with the questioning, and I guess it would
be for Mr. White first, out of Montrose. Again, thanks for
being here.
Much of the land obviously in Montrose County, as we see
throughout the West Slope of Colorado, I think on average we
touch more of it, we can say with pretty good confidence that
70 percent of our lands are either Federal, state, or tribal
lands on the Western Slope of Colorado. When we are talking
about government-owned land, Federal Government land, much of
this land is obviously unavailable for direct development by
local communities, so that means that very few tax dollars are
generated to that local base. We are not able to count on
payments coming in on a regular basis as well.
So how important are the shared royalties that are provided
throughout multiple energy sources? How important are those
royalties for Montrose County?
Mr. White. Well, they certainly help defray the costs. When
you, again as we discussed, when you have 70 percent of your
land mass that is still required by the county to maintain
roads and other infrastructure, culverts and ditches and so on
and so forth, it has a distinct impact from a revenue
standpoint because the roads are still used by the public who
access Federal lands, whether they are natural forest or BLM.
The impact is also felt in some of the other districts, such as
fire districts. They have to provide service. They have to use
our roads to get there, and we don't have the revenue coming in
from these other sources, whether it is the Federal Government
or the royalties that are generated by mining activity that
would take place on these lands.
Chairman Tipton. And I wanted to follow up just a little
bit, if we can, because you were going through the Pinon Ridge
Mill Energy Fuels.
Mr. White. Right.
Chairman Tipton. And I just want to run through that again
just real quickly to make sure I understand it correctly. The
county, you approved it.
Mr. White. We did.
Chairman Tipton. You moved that forward. Then the Colorado
Department of Public Health and Environment, they approved it.
Mr. White. That's correct.
Chairman Tipton. And now it is being stopped by----
Mr. White. EPA.
Chairman Tipton [continuing]. By the EPA.
Mr. White. Correct. The CDPHE, as I mentioned, they have
agreements with the Department of Energy and the Nuclear
Regulatory Commission to, scientifically speaking, review all
of the data, make sure that it complies with all of those
agencies' requirements.
Chairman Tipton. Do you feel--you are a commissioner. You
live there. I know you. You care about the people that live
there. The State of Colorado, are they responsible? Can we
trust you to really care about our communities?
Mr. White. I would hope so. I believe so. The State of
Colorado certainly--as a former representative yourself, you
understand what goes into the process and how agencies are
structured, how they are regulated, and there are certainly
innumerable laws on the books in the State of Colorado to
protect the health and welfare of the citizens of this state,
and I don't believe that anything that has been done so far
would compromise the integrity of that process.
Chairman Tipton. Just kind of curious. Do you have a
general idea of--I don't want to put you on the spot--what the
unemployment rate is right now in Montrose County?
Mr. White. Well, it has certainly fluctuated. Right now it
is just below 10 percent, but if you factor in the unemployable
or the chronically unemployed, people that just quit looking
for work, our best estimates are that 13 or 14 percent is a
more accurate figure of the unemployment level.
Chairman Tipton. So with comprehensive due diligence,
concern for the community, you and the Colorado Department of
Health tried to facilitate an opportunity to be able to create
90 jobs, not to mention when we are talking about BrightLeaf
Technologies, 25 employees that they deal with, whose primary
customer, it is my understanding, their contract is with Pinon
Ridge Mill.
Mr. White. Right.
Chairman Tipton. What is that, 115 jobs off the top. Is
that important to Montrose County?
Mr. White. Absolutely. Given the unemployment rate, given
our population base, given the historical nature of the county
with mining and mineral extraction, everything we have in this
world, the monitor you are looking at, the desk you are sitting
at, the dais I should say, everything comes from the earth, and
we certainly have been and want to be good stewards of those
resources.
But at the same time, where are we going to be as a society
and locally? We can't--our Health and Human Services Department
is at capacity relative to the number of people that have
applied for food stamps and assistance. Where does it stop?
We have to bring our regulations into line, stop, put a
moratorium on new regulations. As we said earlier, just when
everybody is in compliance, here come some new regulations and
everybody is out of compliance.
Chairman Tipton. Moving goal posts.
I just wanted to make a comment when you were talking about
the timber mill. I know at our office, we have talked with the
BLM, the Forest Service on the importance of the mill not only
for jobs but for forest health, public safety, water quality,
in the event that we were to have a massive fire, to be able to
get in and be able to deal with that. So you brought up a very
important issue as well, and I respect the challenges that you
are certainly facing in Montrose. So thank you for being here.
Mr. White. Thank you.
Chairman Tipton. Mr. Ludlam, I would like to ask you. We
have a lot of critics of natural gas drilling, and frequently
the claim seems to be that the industry is essentially
unregulated and that people don't care. I have actually gone
out and toured some of the facilities, and I am seeing people
that live here, work here, eat here, drink the water, breathe
the air, they want to be able to do it right.
I was just wondering, could you just perhaps give myself
and Congressman Critz just a rundown of the Federal and state
environmental laws and agencies that regulate the companies
that you represent?
Mr. Ludlam. I will.
Chairman Tipton. A quick rundown?
Mr. Ludlam. Chairman Tipton, I think I also would point out
that very few sectors in the United States have come as far, as
fast, as the natural gas and oil sectors have in terms of using
technology to reduce environmental impacts and come up with new
best management practices to reduce those impacts.
As Daniel Yergen, the journalist and author of ``The Prize:
A History of the Oil and Gas Industry'' pointed out, we do need
strong regulation, and our industry agrees with that. We have
to have a strong regulatory authority for structure, continuity
of development, and to protect the public interest.
But there are a tremendous amount of overlapping
regulations that we deal with internationally, Federally, state
and local, and even at the municipal level that constantly
challenge.
To talk about some of those regulations, the heart of your
question, I think you would need a longer hearing. But I can
just simply say that the regulatory authorities that we deal
with at any given time would be the Forest Service, the BLM,
the U.S. Fish and Wildlife, Army Corps of Engineers, Colorado
Department of Public Health and Environment, county governments
with their land use code, and I could go on and on and on.
But I think the point to your question is that we are a
heavily regulated industry, and we should be. But regulations
have to have a measureable public health benefit, or otherwise
they are just regulations for regulations sake.
Chairman Tipton. Just a quick follow-up. It takes a lot of
money to be able to develop some of these resources. Does an
ever-changing regulatory environment impede the ability,
increase costs ultimately to the consumers in terms of the
products that we buy at the gas pump?
Mr. Ludlam. Perhaps more than any other factor, uncertainty
prohibits investment, more so than regulations that are
difficult to comply with, I think in some cases more so than
price, because both of those factors you can account for.
Uncertainty is the number one challenge we face in Western
Colorado, and I believe it is the number one challenge we face
nationally within our sector.
Chairman Tipton. Ms. Bredt was talking about that as well
in regards to hers.
Just one more question, if I may. You know, there is a lot
of talk particularly in Washington, and it is my sense,
Republican and Democrat, it makes no difference, we want to be
able to get America back to work, and part of the process, the
paths that we are going to go down in order to be able to get
Americans back to work right now is simply that important. But
a lot of talk recently was around shovel-ready projects.
When we are seeing here an opportunity to be able to
develop American resources on American soil, to be able to
create American jobs and to be able to get our people back to
work, and particularly here on the West Slope of Colorado and
in our state, how many jobs do you believe could be created if
the Department of Interior stopped throwing up regulatory
barriers to be able to develop jobs right now and get people
back to work?
Mr. Ludlam. Chairman Tipton, I can state with confidence
the examples that I gave you earlier in my testimony, that I
believe there would be thousands just right here in our region.
And if you extrapolate that to multiple basins in multiple
states, which the Western Energy Alliance has done in the
blueprint that I submitted for the record, I believe that, per
their recommendation, we could get up into the half-million
energy jobs by, I think--don't quote me on this, but if I look
at my testimony I think it was by 2020.
Chairman Tipton. Great. And I traveled this area so much. I
have walked Main Street in Grand Junction and Craig, and when
we are seeing businesses close up, it is not just the boots out
in the field but the collateral jobs that are created as well
that now are suffering that we could reinvigorate as well. So
thank you for that.
Ms. Bredt, could you go into a little more detail for us on
how small businesses, independent contractors are used in the
development of wind energy, and how some of the policy issues
that we are discussing today might impact some of those
businesses?
Ms. Bredt. Absolutely. I will start with the second part of
your question first. The bottom line is the uncertainty created
by the eagle regulatory program is jeopardizing an estimated
$68 billion in wind energy development, and that is a lot of
work for small businesses and independent contractors that
won't be created if those projects are not being created and
built.
Another sector I did not mention in my testimony is the
supply chain. A single wind turbine contains some 8,000 parts,
and many of these are manufactured by small businesses across
the country. So the negative consequences for job creation and
economic development are significant.
In terms of specific examples in the development stage,
qualified small businesses and independent contractors are used
where available to perform wildlife, cultural, socioeconomic,
and other development-related studies. During construction, RES
has a habit or a process of holding job fairs in the
communities in which we work to be able to use local content
whenever possible.
An example right here in Colorado which we are very proud
of is our recently completed 250-megawatt Cedar Point wind farm
which is located southeast of Denver, near Limon. This is a
$535 million project, and it created 365 construction jobs.
More than 230 vendors, including more than 30 local and
regional vendors, were used to complete this project, and many
of these are small businesses and independent contractors. An
estimated $35 million has been directly spent in Colorado
communities in relation to the Cedar Point wind farm, and
that's just one example of one wind farm in Limon, Colorado.
Chairman Tipton. Great. Thanks.
I would just like to get your opinion, if I may. The U.S.
Fish and Wildlife Agency drafted a siting guidance, an eagle
guidance. Do they create overlapping layers of regulation, in
your opinion?
Ms. Bredt. They do to a certain extent. We have to do--
similar to oil and gas, we have local permitting, state
permitting, and Federal. So depending on who wants to defer to
who, we could have overlap and kind of contradicting
regulations or guidance.
Chairman Tipton. I would like to open that maybe, if I may,
to everybody, if you have an example of that, because I know in
testimony before our Committee in Washington on natural
resources as well, one of the issues which often comes up is
you have one regulatory body with a set of regs that may be in
conflict or overlapping, and if it is overlapping when you are
trying to get an answer, you can never get an answer because
they defer to the other party, and it goes back and forth and
there is never a solution, never an answer.
Would any of the rest of you like to comment, or do you
have an example of that?
Mr. Kiger. In any of our coal leasing activities, we will
have to get input from Federal agencies like BLM, and
oftentimes they have to get information from Fish and Wildlife
Service on species or water use, those kinds of things. So one
agency may delay another agency, which will then end up
delaying state permitting and those kinds of things. So, yes,
it can happen.
Chairman Tipton. Has it been your experience when that
happens--Congressman Critz and I were talking about you have a
30-day requirement to be able to get a permit once it is in
process, and that is extended to 206 days. A little different
industry, obviously, but have you seen, because of those
overlapping regulations, that further extending your ability to
be able to get a project going and moving?
Mr. Kiger. The way it works with the state agencies when we
are permitting is that they have a time limit. But what they
will do is ask us to extend that time limit so that they can
get proper input from the agencies. So this can go on with
multiple extensions. The option is they deny your permit for
lack of information. So you have two choices, take it or leave
it.
Chairman Tipton. As long as you have your microphone on, I
did have another question there. According to the Americans for
Clean Coal Electricity, coal energy companies are expected to
invest $125 billion through 2015 to comply with current air
rules. That is investment that is coming out to comply. Do you
believe that further regulation will doom coal as an energy
resource?
Mr. Kiger. Well, it will substantially reduce its ability
to burn coal. The heartland is going to have to make an
economic decision as to whether or not they can afford to
retrofit and pass those costs on to their customers, or the
option may be fuel switching. So they are going to have to make
those decisions with all the power stations.
Chairman Tipton. I would like to follow up on that retrofit
or shut down. Are we in a position in this country right now?
Winter is coming. We are going to have to turn up the heat, and
we want the lights on. If we start having coal generation units
that are simply not going to be cost effective to be able to
retrofit, we are going to be able to shut this down, are we in
a position right now to be able to fill that energy void that
the American consumer frankly needs? And correct me if I am in
error, but I believe that your per kilowatt hour cost is among,
if not the most affordable energy source that we currently
have.
Mr. Kiger. Right. I think you are correct, that the cost
per kilowatt hour for coal at our plants is the cheapest in the
nation. I can't speak for all the power stations across the
U.S., and particularly the Eastern U.S., but my understanding
is that many of those grids are at their limit as far as
electrical production, and if they have to start shutting down
their power plants, that is going to create availability
problems for consistent electrical energy.
Chairman Tipton. We have some of the cleanest coal in the
world, don't we, right here in Colorado?
Mr. Kiger. Yes. We have low sulfur, super-compliant coal in
Colorado, less than 1.2 pounds of SO2 per million
BTUs, and it is also very low in mercury, and the coal in the
North Fork Valley is over 12,000 BTUs, and I have heard it
called the rocket fuel of coal.
And so, yes, we have some of the best coal in the United
States, and that is why it is in such high demand back East.
They can use it as a blending fuel to meet Clean Air Act
standards. But particularly like the MACT rule, it will require
maximum achievable control technology. So my understanding is
that will eliminate the ability to fuels blend. Rather than a
fuels blend with low-sulfur Western coal and low-mercury
Western coal, they will be required to absolutely place
expensive controls on their power plants, which makes that
decision non-economic.
Chairman Tipton. I am consistently concerned because when I
look at senior citizens on fixed incomes, young families trying
to provide for their families right now, and the energy costs,
do you think it would be fair to say, when we are talking about
some increased energy costs, that we are really seeing taxation
via regulation? It certainly gives me a lot of concern in terms
of driving up costs for the ultimate consumer. Right now when I
hear particularly some in Washington seem intent on just
eliminating coal as an energy fuels source at all.
Mr. Kiger. Well, there is no free lunch, and any time they
have to retrofit or spend capital to do what they need to do to
meet the new regulations, they have to pass those costs on, and
it is the ultimate consumer that turns on their light switch
that is going to pay the freight.
Chairman Tipton. You commented in your written testimony
that a member of your organization lost eight years on a ten-
year lease just trying to comply with preliminary environmental
review. Is there any recourse for companies when you lose that
much time?
Mr. Kiger. Well, there isn't. I mean, our particular
alliance----
Chairman Tipton. No extensions? Nothing?
Mr. Kiger. No. With our coal resource the way it is, we can
mine until about 2017, and then we are just done, and some of
the coal resources we have tried to permit are resources for
the end of the mine life. So rather than shutting down the mine
in 2018 or 2017, we may have to shut it down sooner. That is
your option.
Chairman Tipton. Well, that gives us some concern. You hear
concern right now about rolling blackouts across the country
given the grid and the importance that coal plays as a vital
clean energy source that we can actually be able to use in this
country. So I thank you for your comments.
Mr. Welle, from what sources do you get electricity?
Mr. Welle. We are a member of Tristate Generation and
Transmission here in Colorado. We are one of the 43 member
systems, and primarily Tristate is a coal-based utility for its
base load generation. I would say this year, probably 70 to 80
percent of the electricity transmitted and purchased from
Tristate was coal, probably 25 percent was hydro. There are
some renewables in that mix.
This was a big hydro year. Most of Western, Northwestern
Colorado at least provided a lot of snow melt and springtime
flows into the hydrology in that region. So those WAPA
allocations lie with Tristate, so this year was a pretty big
hydro year. But in general, 80 percent or greater would come
from coal.
Chairman Tipton. I think that is important. You may not be
aware of it. There are some who do not count hydroelectric
power as a clean, renewable energy source. In fact, legislation
that I just introduced hopefully will be able to help along
that on a variety of different levels, so that is interesting
to know.
Some have estimated that the EPA's greenhouse gas
regulations would substantially increase the cost of
electricity from coal-fired and natural gas generators. What
kind of an impact would this have on the rural coops?
Mr. Welle. As I indicated earlier, we have sustained about
a 60 percent increase in wholesale power costs in the last
decade. We are a non-profit, cost-based utility. So most of our
costs, especially in the last decade, have come from power
supply. So a lot of the costs that are being driven at the
power supply is the uncertainty of regulatory process and other
items.
Chairman Tipton. So when you have that 60 percent increase,
you are required, you have to pass that on.
Mr. Welle. Yes, we do. We have an all-power requirements
contract with Tristate. Obviously, we do have some influence
with Tristate. We have a member of our board sits on their
board, but it is cost-based as well. So that is a pass-through
type rate increase that directly affects end consumers.
Chairman Tipton. So a lot of the regulations, all of the
regulatory costs that we are seeing right now are being passed
on to the consumer, who is struggling to be able to pay their
bills. We are increasing their costs right now, and we have an
affordable energy resource.
Mr. Welle. That is correct.
Chairman Tipton. That is correct. Great.
In terms of renewable energy sources like wind and solar
energy, how forgiving is the grid to get these sources of
energy to consumers?
Mr. Welle. I think as Mr. Kiger interjected earlier, there
are a lot of constraints in the existing transmission grid
across the nation, and out here in the West, places that do
test really good for solar and wind have got challenges of
building transmission to get those resources to a market, and
we are seeing several examples of that in Colorado today. And
it doesn't have to be necessarily connected to renewable
resources.
Building transmission and getting renewables to a
marketplace, plus for the lack of storage technology is another
big roadblock for dispatchable electric type service in lieu of
base load generation. The capacity we were talking about
earlier of coal plants being shut down due to regulation, those
are base load facilities in most cases, and there is not much
base load generation capacity being built in this country right
now, no matter what flavor you would prefer.
So I think we are nearing a time where we are endangering
the reliability of the transmission grid by losing coal-based
resources at this time, especially due to regulatory mandates.
Chairman Tipton. Well, thank you all very much, and I now
yield to Mr. Critz for his questions.
Mr. Critz. Thank you, Mr. Chairman.
Mr. Welle, you had mentioned that 75 to 80 percent of the
power is generated by coal-fired power plants. That means that
anytime anyone uses electricity in your grid, 80 percent of
that electricity is probably coming from coal at some point.
Mr. Welle. Yes, sir.
Mr. Critz. Okay. Mr. Kiger, you had mentioned that you have
the rocket fuel of coal. Is that all of your mines? Is that
most of the mines?
Mr. Kiger. The three mines in the North Fork Valley, they
produce--with a thousand miners, they produce about 13 million
tons of coal a year. That's the best coal in the state. And so
that would be the North Fork Valley mines.
Mr. Critz. Okay. And you are selling the majority of that
to the East, or does it sort of spread around this area as
well?
Mr. Kiger. I am told about 85 percent of it goes east to
TVA or those kinds of customers back east. I don't believe this
year we will have any coal sold in Colorado. It mostly goes
east or southeast.
Mr. Critz. Okay. Now, you heard some of my earlier
questions to BLM and to the EPA folks about permitting issues
and the timing and all that, and I heard when you were
answering a question that the Chairman asked about the
reference to litigation at BLM is actually your mine. Could you
expound on that just a little bit?
Mr. Kiger. We have a lease application, and the BLM went
through the EA process, and they are prepared to go forward
with the competitive lease sale subject to their 30-day appeal
period, and an appeal was filed with the BLM. So now they are
tasked with defending their decision, and most of the comments
from the folks that filed the appeal, which is the
environmental community, most of the comments centered around
greenhouse gases and air emissions issues.
Mr. Critz. Okay. How about have you--let me figure out how
to phrase this. I have heard testimony from other sources that
the EPA is, I guess, becoming more strident in some of the
things they were doing. That has taken place really over the
last decade, that through the '90s it seemed like things were a
little more businesslike, and throughout the 2000s it is
becoming tougher and tougher to get permits through the EPA.
What is your impression?
Mr. Kiger. Clearly, the State of Colorado, through the
Department of Health, has to do a lot of the permitting issues.
Their policies can be driven certainly by EPA mandates. BLM has
had comments from EPA during the EA processes, recommending
they analyze for greenhouse gases, that greenhouse gases to the
EPA is an issue, so BLM has had to respond to that.
Like I said in the early part of my comments, we are in the
process of collecting greenhouse gas emissions information on
our fans and our methane drainage wells, and we anticipate
having to go through Title 5 air emission permits here in the
next couple of years. The impact of that is uncertain, but
clearly it is going to create some issues for us.
Mr. Critz. And I think that you mentioned the methane, and
I am assuming--I think I'm right in that a lot of that was
driven because of the Massey Mine explosion. Is that----
Mr. Kiger.That we ventilate the mine.
Mr. Critz. Right.
Mr. Kiger. And as we mine with longwall, the subsidence of
the overburden, most of our methane is above the coal. It is
not in the coal. So when we subside the overburden, a lot of
that gas then is released from those layers, and they come into
the mine. So what we do is, in addition to the normal mine
ventilation to exhaust the mine--we move about a million cubic
feet a minute--we also drill methane drainage bore holes on the
surface, which are slotted pipe, fitted with a pump that as we
mine through an area we can ventilate the subsided overburden
areas to get the gas up to the surface and out of the mine
rather than get it out of the mine through the ventilation
system.
Mr. Critz. Okay. Ms. Bredt, what has been the community
reaction? You were talking about the half-a-billion dollar
project you had to put up some turbines. What has been the
community reaction while you were placing these? Are these so
far out that they don't really impact residential areas or
anything like that?
Ms. Bredt. The community reaction varies from place to
place. I think that Limon has been extremely welcoming to wind.
Our project has 250 megawatts, and there is an additional 500
megawatts proposed in that same area. So the actual turbines
are being put in Lincoln County, and they are very receptive to
it. They have seen the construction impacts, and they are going
to start seeing tax payments, et cetera, coming in for the next
20 years of this project, and the other 500 megawatts
subsequent.
There are other communities where I think it is a lack of
understanding, really, of the wind industry because it is so
new. So it takes--from a developer standpoint, I need to go in
and educate and take what they have heard or what they have
been told and say you are right on that, or here is really what
is happening, here is really what we are going to do. So I
think a lot of the hesitation, community hesitation can be
fixed with education. It is just a simple unknowing fear that
the community has.
Mr. Critz. Well, the reason I bring it up is that we have
some--we are on the Appalachian mountain range, and there is
some rich talks that are being used, and we have actually had
some areas of very vehement pushback from residents who wanted
that beautiful blue sky and nothing in the way. And I thought
that was interesting, as we try to get more renewables online.
I have read that the goal is to get about 20 percent
renewable energy, 20 percent I think of wind energy, to
generate the electricity in the United States over the next
maybe 15 to 20 years. What percentage does RES consider they
will get? And I guess do you sell into the White River Electric
grid, or where does your electricity go?
Ms. Bredt. RES Americas has developed nationwide. So what
we will typically do is develop a project and sell that power
to a utility. So the Cedar Point wind farm in Limon, 100
percent of that power is being bought by Xcel, Public Service
Company of Colorado, and it varies from location to location.
We do sell to the local utility typically. Going forward you
might start to see power exported into the load areas of Vegas
and Southern California.
Mr. Critz. Okay, all right.
Ms. Bredt. Up to this point, it has been to the local
utility.
Mr. Critz. Okay. All right. Mr. Ludlam, how is the natural
gas industry--I don't know this area very well, so with you
being on the oil and gas, is the industry moving forward? I
think the price per cubic foot of gas right now is fairly low.
It is about $3.60 a cubic foot, something like that. So has
that had an impact on the industry here?
Mr. Ludlam. It has indeed had an impact, not as much as
regulatory uncertainty, but it has had an impact on operations
throughout all of our basins.
Mr. Critz. Okay. All right. Well, starting with Mr. Welle
and working my left to right, your right to left, do you think
that the U.S. government should play a role in subsidizing
different industries, and in this case the energy industry, to
give certain types of industry a leg up and get them started?
Mr. Welle. Well, I am kind of a free market guy, but I
understand that there are subsidies that exist in all energy
forms. I would more rather see that government subsidies be
utilized to definitely push forward technology and innovation.
I think we are running into mandates or using some energy
sources that will not sustain themselves in a free marketplace,
and I think that is probably a bad signal to be sending to the
American public.
I know there are subsidies in coal, there are subsidies in
other forms. It might be the time to start over and say no
subsidies for any energy source and let them be free market
based.
But I would like to see significant money put forth for,
like I indicated earlier, storage technologies for renewables
that would make them dispatchable, would make them actually a
base load resource instead of a variable resource, and I think
that is going to be the day that renewables will really start
taking a much larger role in the national electric supply.
Mr. Critz. Mr. Kiger.
Mr. Kiger. I am a free market kind of guy myself. A market
economy should determine the winners and losers and not
government. I do not believe that government should be making
decisions. There is a role for government in basic research in
technology to help out to move the research along through
universities and those kinds of things, but then let the free
market determine how best to use those technologies if they are
developed and if they are competitive.
Mr. Critz. Ms. Bredt.
Ms. Bredt. The production tax credit, which is what the
wind has primarily used, the one industry has primarily used,
has really helped the industry grow. When the production tax
credit is threatened, the wind industry slows down. So if we
don't see the production tax credit go forward, the wind
industry will--I don't want to say stand still because that
scares me from a job perspective, but it will tentatively come
to a halt, and that is seen in the graphs that show when the
PTC is extended for multiple years or single years. There is
hesitation on investment by the wind industry when they don't
know the future of that production tax credit. So the tax
credit has played an important role for our industry.
Mr. Critz. Thank you.
Mr. Ludlam.
Mr. Ludlam. Thank you, Congressman. I think that the
question speaks to a societal judgment that we are not
necessarily always in the business of making. We are committed
to producing clean natural gas for society to use in whatever
way and manner that society dictates is necessary and whatever
way the market calls for it.
Mr. Critz. Okay. Mr. Commissioner.
Mr. White. Well, in my world, which is probably not too
different than yours, it is called stop the spending, and that
is what we are being told. And so from my perspective, the free
markets should reign, and let the best source win, and I think
that will sort itself out, as it has historically.
One of the messages that is being sent from the
administration who is subsidizing the nuclear power industry
with two new plants in Georgia on one hand, on the other hand
agencies of that administration are interfering in the process
of the mineral extraction that is necessary for those power
plants to exist, and it is an energy policy decision on top of
it. So from a subsidy standpoint, until there is some
rationality coming from the Federal Government and from the
administration, the current administration in particular, I
don't see where anything is really going to change.
You gentlemen can certainly foster some change from that
standpoint, but markets will drive themselves if left alone.
Mr. Critz. Okay. Well, the reason I asked that is that many
people have seen the T. Boone Pickens plan to get more natural
gas online and talking about the government stepping in and
helping, and obviously with wind and solar subsidies as well,
coal is sort of the target, the elimination of coal as an
energy source, which I find unusual simply because we have so
much of it. If you start doing research and let's figure out
how to do it better, cleaner, more efficiently, I think there
is a road ahead.
And that is why I was curious, because we get a lot of--we
hear a lot of white noise, people saying we want this, we want
that, and we get it from all sides, and it is nice to see
people in different sectors of this industry wading through it
as well. It helps us make decisions.
With that, I yield back. Thank you, Mr. Chairman.
Chairman Tipton. I thank the Congressman.
I will just follow up, I guess, with one last question. Ms.
Bredt, if you could tell, do you know--and you may want to get
back to us. I am not familiar with it, about the Cedar Point
wind farm. Did that go through the permitting for that pretty
quickly?
Ms. Bredt. That wind farm--and I am glad you asked. That
wind farm is 100 percent on private land.
Chairman Tipton. On private land.
Ms. Bredt. And we also have, in addition to the wind farm,
which is 139 turbines, we have 41 miles of transmission, which
you heard Mr. Welle speak about how difficult it is to permit
transmission, and that is also on 100 percent private. Because
of that, permitting was facilitated. Federal would take much
longer.
Chairman Tipton. Thank you. Again, I would like to thank
all of you for taking the time today to give witness and
testimony here.
Energy production is vital for a nation's economic and
national security. The evidence presented here today will help
policymakers better understand the risks and challenges faced
by energy producers and how decisions in Washington will impact
our communities at the local level.
I would like to especially thank my colleague, Ranking
Member Critz, for making the trek out to Colorado. I look
forward soon to being able to reciprocate in Pennsylvania as
well. These are issues that impact us here at home, and in your
home as well, that we certainly need to be visiting on and
looking through a clear prism on.
I would like now to ask for unanimous consent that members
will have five legislative days to submit statements and
supporting materials for the record. With no objection, so
ordered. And our hearing is now adjourned. Thank you.
[Whereupon, at 12:40 p.m., the Subcommittee was adjourned.]