[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
LIGHTS OUT: HOW EPA REGULATIONS THREATEN AFFORDABLE POWER AND JOB
SUBCOMMITTEE ON REGULATORY AFFAIRS,
STIMULUS OVERSIGHT AND GOVERNMENT SPENDING
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
JULY 26, 2011
Serial No. 112-74
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.fdsys.gov
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland,
JOHN L. MICA, Florida Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee PETER WELCH, Vermont
JOE WALSH, Illinois JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Robert Borden, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
Subcommittee on Regulatory Affairs, Stimulus Oversight and Government
JIM JORDAN, Ohio, Chairman
ANN MARIE BUERKLE, New York, Vice DENNIS J. KUCINICH, Ohio, Ranking
Chairwoman Minority Member
CONNIE MACK, Florida JIM COOPER, Tennessee
RAUL R. LABRADOR, Idaho JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee BRUCE L. BRALEY, Iowa
FRANK C. GUINTA, New Hampshire
MIKE KELLY, Pennsylvania
C O N T E N T S
Hearing held on July 26, 2011.................................... 1
Henry, Janet, deputy general counsel, American Electric
Power; Joel Schwartz, professor of environmental
epidemiology, Harvard School of Public Health; and Mike
Carey, president, Ohio Coal Association.................... 28
Carey, Mike.............................................. 47
Henry, Janet............................................. 28
Schwartz, Joel........................................... 52
Perciasepe, Robert, Deputy Administrator, Environmental
Protection Agency.......................................... 6
Letters, statements, etc., submitted for the record by:
Carey, Mike, president, Ohio Coal Association, prepared
statement of............................................... 49
Henry, Janet, deputy general counsel, American Electric
Power, prepared statement of............................... 30
Jordan, Hon. Jim, a Representative in Congress from the State
of Ohio, prepared statement of............................. 4
Kucinich, Hon. Dennis J., a Representative in Congress from
the State of Ohio, letter dated August 16, 2011............ 79
Perciasepe, Robert, Deputy Administrator, Environmental
Protection Agency, prepared statement of................... 9
Schwartz, Joel, professor of environmental epidemiology,
Harvard School of Public Health, prepared statement of..... 54
LIGHTS OUT: HOW EPA REGULATIONS THREATEN AFFORDABLE POWER AND JOB
TUESDAY, JULY 26, 2011
House of Representatives,
Subcommittee on Regulatory Affairs, Stimulus
Oversight and Government Spending,
Committee on Oversight and Government Reform,
The subcommittee met, pursuant to notice, at 3:20 p.m., in
room 2154, Rayburn House Office Building, Hon. Jim Jordan
(chairman of the subcommittee) presiding.
Present: Representatives Jordan, Buerkle, Labrador, and
Staff present: Ali Ahmad, communications advisor; Michael
R. Bebeau, assistant clerk; Joseph A. Brazauskas, counsel; Drew
Colliatie, staff assistant; Adam P. Fromm, director of Member
services and committee operations; Linda Good, chief clerk;
Ryan M. Hambleton, professional staff member; Christopher
Hixon, deputy chief counsel, oversight; Mark D. Marin, senior
professional staff member; Kristina M. Moore, senior counsel;
Michael Whatley, professional staff member; Ronald Allen,
minority staff assistant; Claire Coleman, minority counsel; and
Carla Hultberg, minority chief clerk.
Mr. Jordan. The Subcommittee on Regulatory Affairs will get
rolling here. I will start with an opening statement, and then,
obviously, the ranking member will have an opening statement,
and then we will get right to our witness. We want to thank the
deputy for being here today.
Earlier this month, we learned that the unemployment rate
rose to 9.2 percent. Americans are struggling because there
just aren't enough jobs. As I have said many times before in
this subcommittee, one reason explaining the stagnant jobs
numbers is the administration's stubborn determination to issue
multiple onerous regulations all at once. The cumulative
impacts of these regulations are preventing American job
creators from putting people back to work.
As part of the committee's ongoing commitment to promote
job creation, today's hearing continues our examination into
Federal regulations that are holding back economic growth and
keeping employers from getting Americans back employed, back to
At the last hearing, this subcommittee focused on EPA's
permatorium on Appalachian coal and the impact it is having on
jobs in that region. Today's hearing will examine the
cumulative effect of a series of EPA regulations that will
impact the Nation's power supply and will hit particularly hard
the areas of the country that rely on coal for energy.
I am especially concerned about my home State of Ohio,
which is the Nation's fourth largest consumer of coal, and
depends on it to provide power for its manufacturing base.
These regulations have been collectively referred to as EPA's
train wreck. They include changing the standards of Cooling
Water Intake Structures, altering the mercury and air toxic
standards for power plants, known as utility MATS, and the
Cross-State Air Pollution Rule, also known as the Transport
Rule, the new regulations of coal ash, and finally lowering the
national ambient air quality standard for ozone, among other
rules. We have a chart that shows how all this is coming
together in the next few years. We will seek to get at the
impact this is going to have on employers.
The job-killing threat posed by these regulations comes
from the timing and expense of the various mandates. By EPA's
own analysis, these are some of the most expensive rules on
record. For example, EPA estimates that the Utility MACT Rule
is projected to cost $10.9 billion in 2016, and the Cooling
Water Intake Rule could cost as much as $4.8 billion a year.
NAAQS for ozone is projected to cost a staggering $1 trillion
in costs to manufacturers and, according to the National
Association of Manufacturers, lead to 7.3 million jobs lost
between 2020 and 2030.
The committee is deeply concerned as EPA developed these
regulations, it never took into account the cumulative impact
of its actions. The North American Electric Reliability Corp.,
an organization charged with ensuring the reliability of
America's bulk power system, warns that the EPA's regulations
will remove as much as 76 gigawatts of electrical capacity by
2018. To put this in perspective, this is enough electricity to
power approximately 23 million homes forever.
Moreover, according to another study, just the Utility MACT
and Clean Air Transport Rules alone will eliminate 1.44 million
jobs from 2013 to 2020 due to the rising costs of energy. In
fact, this same study estimates that nationwide electricity
costs will increase by 11.5 percent. Our State of Ohio and
other Midwestern States will be hit even harder.
EPA should have considered the cumulative impact of these
rules before acting in order to minimize these negative
Let's make one thing clear: No one wants dirty air. That is
not what this hearing is about. However, we do need to be smart
about the regulations that we as a country issue. It appears
from the lack of analysis on cumulative regulatory effects
conducted by the EPA that there is a high chance the left hand
doesn't know what the right one is doing at the Environmental
The testimony we hear today will help us examine what can
be done better to avoid these regulatory train wreck
situations. Our economy has been in trouble for a long time
now. And the least we can do here in Washington is make sure
the government is not causing the problem. Americans want to
get back to work, and we need to be certain that we are not
stopping them. I thank the witnesses for appearing. I look
forward to hearing from our all witnesses today.
With that, I will now recognize my good friend and
distinguished Member from Ohio, Mr. Kucinich.
[The prepared statement of Hon. Jim Jordan follows:]
Mr. Kucinich. Thank you very much, Mr. Chairman.
I want to thank all the witnesses who will be testifying
today about a critical issue facing America, the protection of
clean air and clean water, on which we depend every single day.
Today, we will once again take a look at the role the EPA
plays in supporting these goals. Air toxics from coal-fired
power plants cause or contribute to devastating health
problems, ranging from asthma attacks to premature death from
cardiovascular disease, stroke, and cancer. One air toxic,
mercury, damages the developing brains of fetuses, infants, and
small children, robbing them of the opportunity to fully
develop intellectually and physically.
Coal-burning emissions of sulfur oxides and nitrogen oxides
help fuel our Nation's asthma problem and can increase heart
attacks. The burning of coal is also a major contributor to the
environmental, national security, and economic crisis that is
global climate change. The combustion of coal produces a
tremendous amount of carbon dioxide, a greenhouse gas that
contributes to increased trapping of heat in our atmosphere.
In fact, coal accounts for approximately 20 percent of all
our greenhouse gas emissions. It would be difficult to
underestimate the urgency of shutting down coal power plants
immediately for this reason alone.
These health and environmental consequences from toxic
pollution are why the EPA is developing tougher safeguards to
protect Americans. One proposed rule on mercury and air toxics
alone would be estimated to save as many as 17,000 lives every
year by 2015, to prevent up to 120,000 cases of childhood
One of the witnesses here to testify today represents the
American Electric Power Co., which is headquartered in
Columbus, Ohio. AEP is also one of our Nation's biggest
polluters. Another one of Ohio's polluters, First Energy Corp.,
which owns the Lakeshore Plant in Cleveland, near my own
district, is identified as the Nation's sixth most harmful
plant for low-income communities and communities of color.
Thanks in part to AEP and First Energy, the State of Ohio
has more coal-fired generating capacity than any other State in
Ohio's electric sector also has the dubious honor of
ranking first in the amount of toxic air pollution emitted in
2009, emitting more than 44.5 million tons of harmful
chemicals, which accounted for 65 percent of the State's
pollution and 12 percent of toxic pollution from all U.S. power
Ohio also ranked third among all States in mercury air
pollution from power plants, with about 3,980 pounds emitted in
2009, which accounted for 76 percent of the State's mercury air
pollution and 6 percent of the U.S. electric sector pollution.
AEP has also lobbied against the Environmental Protection
Agency's current efforts to regulate power plant pollution and
is pushing legislation to weaken and delay these regulations.
I look forward to hearing from AEP today about how they can
justify the tragic and destructive side effects that coal-fired
power plants wreak upon us, as well as what steps they are
taking to curb emissions of toxic air pollution.
While it is consistent with the history of big business to
kick and scream about having to minimize social and
environmental harms they cause, we should not underestimate the
entrepreneurial ability of America's electric sector to invest,
retrofit, and construct clean energy generation while
maintaining system reliability.
In fact, when they upgrade our Nation's electric generation
infrastructure to comply with new regulations, their capital
investments will help drive economic growth and create jobs.
According to a study by the Political Economy Research
Institute at the University of Massachusetts, two of the
proposed EPA regulations, Clean Air Transport Rule and the new
Mercury and Air Toxic Standards, could stimulate the creation
of 1.4 million jobs over the next 5 years in the pollution
controls, engineering, and construction fields.
Congress passed the Clean Air Act and the Clean Water Act
because the American public demanded it. The American people
demanded it because they didn't like their children to inhale
and drink and die from toxic compounds from which even the most
diligent parent can't protect his or her child. Nothing about
this equation has changed.
We must allow the EPA to continue to fulfill its mandate to
protect our water and the air. And I look forward to hearing
from the EPA today about how it continues to fulfill its
We can't get into a position where it is either jobs or a
clean environment. We have to insist that we have to have both.
And the approach of the 21st century that is going to be
economically viable and economically successful and that will
help grow our economy is to be able to catch the wave of new
technologies that can help use the resources we have now and do
it in such a way that we protect the quality of the air and the
With that, I want to thank the chair, and I yield back.
Mr. Jordan. I thank the gentleman.
Members have 7 days to submit opening statements.
We now welcome our first witness, Mr. Bob Perciasepe.
Great name to say, like saying Sheboygan, or one of those
names you like to say.
Mr. Kucinich. Like Kucinich.
Mr. Jordan. Like Kucinich. Exactly.
He is the deputy administrator of the Environmental
We feel privileged to have you here today, Mr. Perciasepe.
And pursuant to the rules of the committee, all witnesses
are sworn in. So please rise and raise your right hand.
Mr. Jordan. Answer in the affirmative. Let the record show
that the witness has answered in the affirmative.
And the floor is yours, Mr. Administrator. Go ahead.
STATEMENT OF ROBERT PERCIASEPE, DEPUTY ADMINISTRATOR,
ENVIRONMENTAL PROTECTION AGENCY
Mr. Perciasepe. Thank you, Mr. Chairman, and Ranking Member
Mr. Kucinich. Would the gentleman please speak directly
into the mic? That would be helpful.
Mr. Perciasepe. Yes, sir. I will get a little closer there.
I see what you are talking about. I want to thank you for
inviting me today. And I appreciate the opportunity to appear
When you ask whether EPA regulations will cause the lights
to go out, I want to be able to assure you that the answer is
no. We do not have to choose between breathing clean air and
running an air conditioner or turning on the lights at night.
The power plant rules that EPA is developing are necessary
to protect public health and the environment from pollution
produced by these plants, especially the oldest, dirtiest, and
least efficient of them.
We are not the first administration to recognize the need
to clean up power plants and to issue rules to address that
need. In fact, since 1989, when President George H.W. Bush
proposed what became the Clean Air Act amendments of 1990,
power plant cleanup has been the continuous policy of the U.S.
Government under two Democratic and two Republican Presidents.
While past EPA rules have made progress in reducing the
harmful effects of pollution, more remains to be done to ensure
that all Americans have the clean environment to which they are
EPA's recent and upcoming actions to control pollution from
power plants will achieve major public health benefits for
Americans that are significantly greater than the costs. These
pollution-reducing rules are affordable, and they are
There is tremendous public support for moving forward with
these rules. For instance, since March, we have received over
800,000 comments from across the country in support of
regulatory mercury emission controls from power plants.
The Cross-State Air Pollution Rule finalized earlier this
month illustrates significant health benefits from reducing
power plant pollution. In a single year, 2014, this rule is
projected to produce benefits valued at over $120 billion to up
to $280 billion and to avoid up to 34,000 premature deaths.
Our analysis and past experience indicate that warnings
from some of dire economic consequences of moving forward with
these important rules are exaggerated at best. A publicly
available analysis shows that these rules are affordable. This
is corroborated by other outside groups and by some in industry
who recognize that issuing the rules in the same timeframe
helps provide power companies with the certainty they need to
make smart and cost-effective investments.
As we did more than two decades ago, we are also hearing
claims that our rules will lead to potential adverse effects on
electric reliability. EPA's analysis projects that the agency's
rules will result in only a modest level of retirements and
that these retirements are not expected to have adverse impact
on electric generation and resource adequacy.
Our rules will not cause the lights to go out.
These studies are often based on incorrect assumptions
about the requirements of EPA rules and are inconsistent with
the actual proposals that come out. In most cases, the analyses
were performed before many of the regulations were even
proposed. Simply put, many of these studies are not based on
the reality of what the agency is actually proposing to do.
In closing, I would like to suggest that the subcommittee
should be clear about what is at stake here, as those who have
stalled in cleaning up their pollution for further delays.
Delay encourages companies to keep cash on the sidelines
instead of spending it and putting people to work modernizing
their facilities. And most importantly, delay means public
health benefits of reducing harmful pollution are not realized.
Thank you for allowing this opening comment. I look forward
to your questions.
[The prepared statement of Mr. Perciasepe follows:]
Mr. Jordan. Thank you, Mr. Deputy.
Let me just start with one of the things that the ranking
member referenced in his opening statement, and I think you
alluded to it as well, was the jobs that can be created when
you have to refit and retool and make changes.
But what do you say--and did you look at this, this idea
that there can also be job loss? As I pointed out in my opening
statement, the National Association of Manufacturers, they cite
the number 7.3 million jobs they believe that can be lost
between 2020 and 2030. So did EPA look at all at the other
Obviously, we know if you have to retool something, there
has to be someone to come in and go to work, putting that
structure together in a different way, retrofitting, doing what
needs to be done. Obviously, that is pretty easy to calculate.
But did you look at the other side of the ledger?
Mr. Perciasepe. Yes. When we look at the cost of rules, we
look at all the different aspects of it under the OMB
regulations that we are required to use. And I might say that
American industry and in particular the American power industry
has been becoming more and more efficient. Over the last 10
years, even without these rules, the amount of megawatts that
are produced continues to go up.
Mr. Jordan. Every business has been doing that.
Mr. Perciasepe. Every business is doing this. Oil
refineries, power plants, the amount of output continues to go
up, but the number of employees continues to go down as they
become more and more efficient over time with more efficient
plants. And some of the transition that takes place when we
enact these rules is creating a more efficient fleet of power-
Mr. Jordan. But I just want to be clear, did you do what
the executive order requires you to do, which is a cumulative
impact study on--I mean, I am reading right here from the
executive order, each agency shall tailor its regulations to
impose the least burden on society, including businesses and
individuals, including businesses of differing sizes. Did you
comply with the Executive order?
Mr. Perciasepe. Yes. Yes. Excuse me.
When we propose a rule, like let's say the Mercury and Air
Toxics Rule, we start from the base that includes the rules
that have already been done. And then we want to be able to
make sure we specify what the current rule that we are
proposing is actually going to do for transparency purposes so
we can look at how that builds on the cumulative impact of what
has gone before.
Mr. Jordan. Can you look at the statement then on the
screen? It should be in front of you there on your screen.
Mr. Perciasepe. Which RIA are we talking about?
Mr. Jordan. Coal ash. The coal ash rule.
Mr. Perciasepe. I see at the bottom. I am sorry. That
proposal is out--has been out, and we have put out some
additional requests for information on that. That is quite a
ways away from being finalized.
Mr. Jordan. Okay. Let me ask you this. Do you think,
though, that, a more general question, do you think that there
is ever a point where regulation can in fact be a strong
impediment to job growth, and actually be--actually cost jobs,
actually result in the reduction of jobs? Do you think that is
something that should be kept clear in mind as we are proposing
Mr. Perciasepe. Well, I think we have to look at the
economic impact of rules under the executive order, as you have
pointed out. And that is what we do. And we also try to do it
based on the foundation of what has already gone by.
But EPA also goes beyond that, particularly under the Clean
Air Act. We look at the cumulative benefits and costs of the
rule--of all the rules all together since the Clean Air Act--
the amendments at least of 1990. So let's say going back 20
years. Under section 812, I think it is, of the Clean Air Act,
we do a cumulative benefit and cost analysis on the entire
implementation of the Clean Air Act. And the cost and benefits
so far, since 1990, are about ahead by about 30 to 1.
Mr. Jordan. Can you take a look at this statement? Because
of these complexities, as well as the limited time and
resources within the expedited schedule, we are limited in our
ability to quantify the cost and benefits of obtaining separate
secondary NAAQS for ozone for this proposal. So that would seem
to indicate to me that you did not do a full cumulative impact
study because you say right in your statement, cost and
benefits. That is what we are looking at. That is the whole
cumulative issue there. You seem to say you are not complying
with it in that statement there.
Mr. Perciasepe. Yes. So the National Ambient Air Quality
Standard is a standard. It is not self-implementing. What it
does is it sets in motion a planning process that goes on for a
number of years to identify where those areas are in the
country that would not be meeting that standard, and then, what
are the implementation mechanisms that are used to implement or
to achieve that standard? Each one of those requires that kind
of detailed analysis once we get to that point. But the
standard itself is a science-based standard based on what----
Mr. Jordan. And does the EPA have any idea what that
standard is going to cost when implemented? That is the point.
Mr. Perciasepe. We do a regulatory impact analysis that
looks at the best estimate we could make, because all the
implementation comes years later. We look at the best----
Mr. Jordan. And what was your best estimate for this, for
Mr. Perciasepe. Our estimates of benefits and cost went,
depending on all the different standards that were proposed by
Mr. Jordan. Can you give us a number? On one hand, you are
saying you are going to create jobs for retrofitting the
facilities, but we want to know overall if you did an estimate,
what was the estimate on what it was going to do to job
creation or job loss?
Mr. Perciasepe. We did the overall cost of the rule. And
the overall cost of the rule, I will have to look it up for you
Mr. Jordan. And obviously cost means----
Mr. Perciasepe. We did the costs and the benefits in our
Mr. Jordan. But additional costs to business means it is
going to be tougher to create jobs. You would agree with that
statement, wouldn't you? Particularly if it is a big number,
which you can't give me.
Mr. Perciasepe. Well, it depends on what the final standard
is, which we haven't yet decided on. We haven't yet promulgated
Mr. Jordan. One last question and then I want to yield to
our ranking member. Wouldn't you agree, though, that all this
coming at once--I mean you think about over the next several
years we have Cooling Water Intake Structures, Utility MACT,
the Transport Rule, Coal Combustion Residuals, the ozone, I
mean all these different things, some starting now but some
more coming online soon, don't you think that's a real cause
for concern and that it is critical that you be able to provide
an estimate and do the full cumulative? I mean, you can
obviously see the concern that folks in this industry and this
business, which is so crucial to manufacturing and a host of
others, you can obviously see their concern.
Mr. Perciasepe. Yeah. Many of these rules you just
mentioned were actually proposed in the past, and they were
sent back to EPA by the courts. The Air Transport Rule that you
mentioned, the air toxics--Utility Air Toxic Rule, those were
proposed in the past in the last decade, and now they have been
coming back and having to be reproposed. Things like the ozone
standard you mentioned get implemented over a long period of
time into the future. And some of them, like the water intake--
the water intake rules under the Clean Water Act or the coal
combustion rules under the Resource Conservation Act, those
haven't been finalized yet.
Mr. Jordan. But the point is it is all coming and it is
coming pretty quickly. Even if they may have been proposed and
they are gradual, they are phasing in and phasing in at
different levels or higher levels, that's a concern.
Mr. Perciasepe. Well, I will just respectfully say I
probably don't agree with that chart that you just had up
Mr. Jordan. I will yield to the gentleman from Ohio.
Mr. Kucinich. Thank you very much, Mr. Chairman.
I think it is fair to say that the utility industry is
hysterical with claims that the new EPA regulations are job
killing. In contrast, as the slide I would like to put up on
the screen shows, a report from the University of Massachusetts
entitled New Jobs, Cleaner Air, says the home States of each
member of the Subcommittee on the Eastern Power Grid would fare
very well with respect to jobs created by the new investment
and capital improvements. Our own State of Ohio will gain as
many as 76,240 jobs to build the capacity to implement the new
regulations in the first 5 years. So I would like to ask Mr.
Perciasepe how does the EPA's own risk assessment analysis
square up with these findings from the University of
Mr. Perciasepe. I have to say I haven't looked at this
Mr. Kucinich. Okay. You don't have to comment on it. Will
your regulations destroy more jobs or create more jobs?
Mr. Perciasepe. Our analysis shows, particularly on these
utility rules, that it will create jobs.
Mr. Kucinich. Okay. We are going to hear from industry
representatives in the next panel that claim that compliance
with the new Mercury and Air Toxic Standards and the Transport
Rule is not achievable and not cost-effective. These industry
advocates are making claims of dire economic consequences if we
move forward with these rules. Some of our witnesses today will
say that environmental protections will cost too much money,
kill too many jobs, end their competitiveness. This is
familiar. Industry always claims the sky will fall if they have
to minimize the health and environmental harms their business
practices cause. We heard the same thing from the auto industry
when air bags were required. We heard the same hysteria when
the Clean Air Act rules were passed in 1990.
Ford Motor Co. said in 1990, we just don't have the
technology to comply with, ``the tailpipe requirement set forth
in the amendments.'' And yet they started making cars that
complied with the tailpipe requirements in 1993.
Now, Mr. Perciasepe, can you talk about how industry fared
after the 1990 amendments? Are there any lessons to be drawn
here with the new proposed rules? From your perspective, is
industry exaggerating the detrimental impacts of the
Mr. Perciasepe. Well, some of the studies that we have been
able to review have a number of--that they have done that
demonstrate these impacts have some significant flaws to them.
First of all, and I mentioned this in my opening comments, they
make assumptions about rules that we haven't finalized yet. For
instance, on the cooling water regulation that we have been
talking about, some of those studies have assumed that every
power plant would have to install a closed loop cooling system
or a cooling tower.
That is not what we proposed, and we still haven't even
finalized that rule. So these end up causing exaggerated
estimates of what the costs of the rule would be. They don't
differentiate between plants that are getting old and need to
close or for economic and business reasons, need to be phased
out as new generating capacity comes out versus ones that might
be associated with a rule that EPA is proposing. They also
don't include the flexibilities that are in the Clean Air Act
that when you get--when you actually implement these rules,
there are certain flexibilities that are included in the Clean
Air Act that are not considered in these studies. So, by
definition, then, they come up with an exaggerated estimate of
what the impact would be.
Mr. Kucinich. On July 20, 2011, the Washington Times ran an
op-ed by Steve Milloy, the publisher of junkscience.com titled
``Show Us the Bodies, EPA.'' The subtitle reads, ``Green agency
uses phony death statistics to justify job killing rules.''
The op-ed described a TV ad run by the Environmental
Defense Fund, saying, the TV ad for this theme features a young
girl in a hospital bed supposedly having an asthma attack.
She's wearing a nebulizer face mask and chest compression
device that is rhythmically but disturbingly squeezing the
child, giving the appearance that she is in severe respiratory
distress, by implication from air pollution. But like the EPA's
17,000-lives-saved statistical fabrication, the ad's a fake.
Now, Mr. Perciasepe, I would like to give you a chance to
respond to this op-ed. It is apparently aimed at EPA's proposed
air toxics rule. Are EPA's estimated benefits from the proposed
rule a statistical fabrication?
Mr. Perciasepe. They are based on peer-reviewed science.
They are not a statistical fabrication. And you are not going
to see on somebody's death certificate, they died of air
pollution. They are going to die of the diseases that air
pollution exacerbates and causes premature impacts. Even
healthy people are impacted. But people who are more
vulnerable, like retired folks, are going to be even more
vulnerable to these things, so the impact of the damage on the
lungs and the cardiovascular system.
So I know you have other witnesses that will go into the
science of this in more detail, but these are not fabricated.
They are based on peer-reviewed science, both clinical and
Mr. Kucinich. Mr. Milloy's op-ed also questioned the public
health impacts of mercury pollution. He wrote, ``but there is
no evidence that ambient levels of mercury or mercury emissions
from U.S. power plants have harmed anyone.'' Now, Mr.
Perciasepe, isn't there clear evidence showing that mercury
impairs the brain development of infants and children?
Mr. Perciasepe. There are mercury warnings in every State
for fish contaminated with mercury. Mercury causes damage to
developing brains in children and fetuses.
Mr. Kucinich. So is that a yes?
Mr. Perciasepe. So yes.
Mr. Kucinich. Okay. Can you describe why it is important to
control mercury pollution from domestic power plants? Isn't
there a disproportionate impact on communities near plants that
emit mercury pollution?
Mr. Perciasepe. The mercury emissions from the power plants
in the United States are the largest remaining source in the
United States of mercury emissions. And they are--they affect
the water. And the mercury bio-accumulates in fish. And then
fish get eaten by humans.
But I want to point out one last thing on this point. The
mercury and toxics rule is not just mercury. It includes acid
gases, arsenic, nickel, cadmium, all these other metals and
acid gases that also have health effects are included, which is
why you have to look at the broad impact of all those different
toxics, not just mercury, although mercury is very important.
Mr. Kucinich. Thank you very much. Mr. Chairman, yield
Mr. Jordan. Thank the gentleman.
Mr. Deputy, do you think your rules could result in a
higher cost for energy?
Mr. Perciasepe. When we analyzed the cost of our rules, and
let's just use the air toxics, the Utility MACT as you call it
here, of the Mercury and Air Toxics Rule, we do estimate that
it will have an increase in electric rates and an increase in
natural gas rates. Those increases are expected to be in the
variability of historic levels of these----
Mr. Jordan. I just want to be clear. So the U.S.
Environmental Protection Agency admits that the rule changes
will result in higher electricity costs.
Mr. Perciasepe. A very small increase in electric costs.
But actually, the electric costs even with this rule----
Mr. Jordan. Let me be clear. You say there is going to be
an increase in cost for energy.
Mr. Perciasepe. The increase in costs will still--the cost
of electricity will be less----
Mr. Jordan. Is the answer yes or no to increased energy?
Mr. Perciasepe. If I could just answer it, to answer your
first question, it will be--the costs of electricity will still
be less than it was in 2009, even with the increase.
Mr. Jordan. Then if there is going to be increased energy
costs, do you think that can also translate into lost jobs or
maybe not as many jobs being created as otherwise would have
Mr. Perciasepe. I say----
Mr. Jordan. And we are talking, obviously, we are talking
people who use the energy.
Mr. Perciasepe. I understand that. And I want to be really
clear, the baseline that people currently pay for electricity
is less than it was several years ago. And this increase will
keep it, it still will be less than it was several years ago.
We do not see it having an impact----
Mr. Jordan. Maybe you are missing the point. What they are
paying now, are your rules going to make it--I am not worried
about 2009. I am worried about now. We have 9.2 percent
unemployment now. So what they are paying now, are the rules
you are proposing going to mean energy costs more? I thought
the answer was yes. Is that what you are saying? So,
furthermore, if the answer is yes, which it is, then there
could be some other results or ramifications down the road for
job creators and businesses across the country at a time we
have 9.2 percent unemployment.
Mr. Perciasepe. We do not see the small increase in the
price of electricity from this rule, which is not different
than the normal variation in the prices over the last decade,
to have any significant impact.
Mr. Jordan. You may not, but my guess is small business
owners, my guess is manufacturers probably do. When they are
faced with the tough decision can I keep these families, these
individuals employed who their families are relying on this,
and I got to make decisions, look at my bottom line, look at my
fixed costs, look at everything else, they probably do see it
as important. You may see it as not important and negligible,
but they probably do. Let me ask you another question here.
Mr. Kucinich had the jobs created to retrofit and retool.
And you pointed to that, too. But I guess I want to ask, this
is the old basic economics principle opportunity costs. If you
are not spending those dollars to retrofit and retool your
facility, you are probably using them some other way, maybe to
create jobs, maybe to do other things. So would you agree that
while, sure, they are going to have to--there might be some
jobs that are created to retool and refit, that is money that
they could have used somewhere else but for the fact that you
are making them retool and refit.
Mr. Perciasepe. Well, first, it creates jobs and permanent
jobs, and second, it creates all those health benefits I just
mentioned. It is hard to get that double benefit from other
Mr. Jordan. But you would also agree with the opportunity
costs. When money is spent one place, it can't be spent
Mr. Perciasepe. The cost-benefit ratio of this kind of
expenditure is more than 5 to 1, 10 to 1. Small businesses who
could in theory be impacted from small prices increase, this is
such a small increase, that it could be well within their
ability to make energy-efficiency controls.
Mr. Jordan. Again, it is always easy for government to say
that. It is much tougher for the individual or the family or
the business owners that actually have to implement it.
Mr. Perciasepe. They would actually save money and be able
to invest it in their business.
Mr. Jordan. So wait a minute. So now you are saying
increased energy costs are actually going to be a savings? How
does that work?
Mr. Perciasepe. Well, if they implement certain very simple
energy efficiency measures in their own business that most
business people are looking at----
Mr. Jordan. I am sure they are doing that if it makes sense
on their own. They don't need the government to tell them that
to do that.
Mr. Perciasepe. That is right. I am just saying that this
is what normally would happen in the normal business world.
Mr. Jordan. I didn't expect to take 5 minutes. I will be
happy to yield back to the ranking member. I am good on time. I
can go to you or I can go to the vice chair of the committee.
Okay. I thank the gentleman. We will now yield to the vice
chair of the committee, who is actually going to take over for
the chairman. Thank you.
Ms. Buerkle. Thank you, Mr. Chairman.
And I apologize for missing the first round of questions.
Thank you for being here today and your willingness to testify.
In your analysis for Utility MACT, you estimated that it could
lead to pollution control-related capital investment of $45
billion to $50 billion and that this could create 35,000 jobs
per year by 2015.
Mr. Perciasepe. I think our estimate is, it is about $10
billion, I am sorry, in our final rule. And our estimate is $10
billion, and our estimate is about 31,000 temporary jobs and
about 9,000 permanent jobs.
I think I am right on that. I want to make sure.
Total annual cost is $10.9 billion. The annual benefits are
about $59 billion to $140 billion. So it is a 5 to 1 cost-
benefit ratio or 13 to 1 cost-benefit ratio. I think I have the
job analysis right. I am sorry. I wanted to make sure I gave
the numbers that we had there.
Ms. Buerkle [presiding]. Okay. So you are saying----
Mr. Perciasepe. This could have been in the proposal. But I
am happy to dig into this here for you, if I can.
Ms. Buerkle. Well, if you would like to elaborate or
explain, because that is the information we had. And you can
see the cost per job----
Mr. Perciasepe. I see that.
Ms. Buerkle [continuing]. Is ridiculous.
Mr. Perciasepe. I would like to be able to provide some
information for you on that.
Ms. Buerkle. Okay. Can you provide that information today,
or would you like to provide it----
Mr. Perciasepe. I have to--I have to go look at the
technical support document and see where--but what I just gave
you are the numbers in the final proposal, $10.9 million--I am
sorry, billion a year; 31,000 temporary jobs; 9,000 permanent
jobs. Benefits of $50 billion to $100 billion, including 7,000
to 17,000 premature deaths avoided, 11,000 nonfatal heart
attacks avoided. I am not going to read them all. But this is
what was the in the final rule. The cost-benefit of this is
about 5 to 1, or at the high end of the range 13 to 1.
Ms. Buerkle. So what is your estimate that the cost is per
Mr. Perciasepe. The annual cost of the rule is $10.9
billion, with ultimately around 9,000 permanent jobs.
Ms. Buerkle. What does that cost per job?
Mr. Perciasepe. Well, the purpose of the rule is to achieve
17--avoid premature deaths for 17,000 adults, 11,000 nonfatal
heart attacks, 5,300 hospital admissions, 6,900 emergency room
admissions, 4,500 cases of chronic bronchitis, 11,000 cases of
acute bronchitis. Those are the things that we add as the
Ms. Buerkle. I understand all that. But if you are using it
as a justification because it creates jobs, we have to look at
the cost per job and say, does that even make sense?
Mr. Perciasepe. Well, we are looking at the benefits of all
these health benefits.
Ms. Buerkle. I want to get onto just a different topic
Recently, the EPA announced that it is going to reconsider
the ozone NAAQS standards established in 2007. Can you explain
or tell me why the EPA decided to review and actually on an
expedited schedule? They are not really ready; the 2012 would
be the appropriate time.
Mr. Perciasepe. The ozone standard was last proposed in
2008. And it was--there was litigation about it. And the
standard that was proposed was outside the range of the Clean
Air Act Scientific Advisory Committee that was set up by the
Clean Air Act. We saw that as legally vulnerable, and so it was
remanded back to EPA by the court back in that timeframe. We
have been working on it ever since. We have proposed it, but we
haven't yet finalized it. It is in agency review right now. But
we haven't finalized the reconsideration of the ozone standard.
Ms. Buerkle. Are you under court order to expedite the
Mr. Perciasepe. There is a stay on the litigation that
eventually probably will be lifted by the judge. But right now,
we are acting under a stay on the litigation, and with the
understanding that we would propose it by the end of July. We
have told the litigants as early as this week that we are not
going to be able to make that July 29th deadline, and that we
are still in the interagency review process. We are going to do
it as soon as possible, but it is still going to take some
Ms. Buerkle. My concern with that is that the
environmentalists, rather than EPA and the appropriate branches
of government, are establishing our environmental policy.
Mr. Perciasepe. Well, we were sued by all different
Ms. Buerkle. My time has expired.
I yield 5 minutes to the ranking member, Mr. Kucinich.
Mr. Kucinich. Thank you very much, Madam Chair.
Mr. Perciasepe, the House is currently debating H.R. 2584,
an appropriations act that included a rider that blocks the EPA
from implementing its rule to control air toxic emissions, as
well as the Cross-State Air Pollution Rule, controlling
interstate transportation of nitrogen oxides and particulate
matter emissions from power plants.
Sir, if this legislation became law, what impact would it
have on EPA's ability to fulfill its mandateunder the Clean Air
Act and implement the air pollution rules covering pollution
from power plants?
Mr. Perciasepe. Well, if you make the assumption that those
riders would not allow us to spend funds in the budget on
finishing the work under those rules, it will delay further--it
has already been delayed almost a decade--the health benefits
and the certainty that industry has said that they want.
Mr. Kucinich. Can you quantify what those health benefits
Mr. Perciasepe. I just listed the ones for the--which I
think is already in the record in the answer to the vice chair.
I will get here in a minute from my able assistant the actual
numbers for the--I probably have some of them.
Mr. Kucinich. While your able assistant is gathering those
Mr. Perciasepe. From the Cross-State Air Pollution----
Mr. Kucinich. Right. I would just like to go over those
numbers. Here we go. Number, please.
Mr. Perciasepe. Thank you. It is 13,000 to 34,000 premature
mortalities; 15,000 nonfatal heart attacks; 19,000 hospital
emergency department visits; 19,000 acute bronchitis events;
420,000 upper and lower respiratory symptoms; 400,000
aggravated asthma; and 1.8 million days when people will miss
work or school. Those are the benefits that will be delayed,
along with the ones that----
Mr. Kucinich. Is that delayed on an annual basis, or is
that delayed on a 10-year basis, or what?
Mr. Perciasepe. Annual. Annual. Yes.
Mr. Kucinich. Has EPA ever done a quantification of that in
terms of the dollar cost to the economy then if people are
sick? You know, it is expensive.
Mr. Perciasepe. Well, the monetized benefits from those
annualized health benefits I just listed, and that was for the
Cross-State Rule, are $120 billion to $280 billion a year.
Mr. Kucinich. So what is the monetized cost to public
health? So you are saying that that is the cost of the benefit
if you have the rule and the rule goes into place; people's
health is protected. And on the other side, if you don't have
the rule, that represents a loss or a cost that is being
absorbed by people in terms of an attack on their health. So in
a way--and that is what you are saying, right?
Mr. Perciasepe. Yes.
Mr. Kucinich. Okay. So let's look at it this way. I mean,
this is the way I look at it anyway. If these rules don't go
into place, $128 billion, is it, annually?
Mr. Perciasepe. That is the low end.
Mr. Kucinich. The low end, $128 billion annually, is the
cost in terms of human health. Or as you said, if it is correct
that it is a benefit. But it is a cost now because the rules
aren't in place. So these companies are making profits. And
here is the point. If you have environmental conditions that
are aggravating human health, and the EPA is trying to mitigate
those conditions with a rule, and those conditions are not
resolved and the industry keeps building their profit margins
while having not to make any investments at all in cleaning up
the environment so there wouldn't be these untoward health
effects, what you actually have is a direct transfer of wealth
in terms of the cost of human health from the mass of people to
This, I think, is one of the underlying problems that I
have with the fact that utilities refuse to abide by rules that
protect human health. Because people pay for it. People
actually subsidize the profits of the utilities with the
public's health. So that $128 million--or billion ends up a
payment that people make with their health. And in a sense, it
is a transfer of wealth to the utilities. That is just not
fair. It just isn't. And it is manifestly unjust. I find it
morally offensive. And while I am with my colleagues in being
concerned about jobs, look, how many people and their families
have to spend so much of their time taking care of the illness
of a loved one who may have their illness exacerbated because
of air pollution?
I yield back.
Ms. Buerkle. Thank you, Ranking Member Mr. Kucinich.
I have a couple more questions. And I just want to say
something about what the ranking member just brought up. And I
think, you know, I have spent my whole life in the health--I am
a nurse. I was a health care attorney. So I am very concerned
about health, public health. And I don't think anyone on either
side of the aisle is saying we don't need regulations.
But what we need is reasonable regulations, regulations
that encourage people to be entrepreneurial, encourage people
to take a risk, not thinking that they will be beat down, and
when they do comply with regulations that, you know, around the
next corner, those regulations are changed, so then they have
to retrofit and they have to recomply.
The cost of compliance, as I talk to small businesses
throughout the district, it is exorbitant. And it really is a
deterrent for people to take the risk and to go into business.
So I think all we are talking about here and we are asking the
EPA is to be reasonable, to understand that every one of those
new regulations, every one of those regulations that get put
into a book have an effect. They filter down to some poor small
business owner whose bottom line and his profit margin is very
slim. And one more change or one more law to comply with, or
one more regulation may be what puts him over.
And I think that is more--and if we look at it that way, we
are talking about public health, but we are also balancing it
with a 9.2 unemployment rate in this country. We have to look
at this thing in its entirety. You look like you wanted to
Mr. Perciasepe. You know, those are very reasonable words.
And I think we share the desire to make sure these rules are
implemented in an appropriate way. We are trying to provide
time in the rules, flexibility with trading, allowance trading.
EPA has other flexibilities if things get tight on a
The other side of the coin is also trying to make sure that
there is a clear path. These rules have been lingering for a
decade. And we are in this parallel universe of people saying
we need certainty so we can make investments, but if we create
the certainty, then there is too much that we think we might
have to do.
And the truth of the matter is you need know where you--you
need have that path of where to go, but at the same time, we
need to have the flexibilities that are available in the Clean
And I think this country can do it. It has been able to do
it. GDP has gone up 205 percent since the Clean Air Act was
enacted, while pollution has gone down almost 60--over 60
percent. These last increments are really going to pay
dividends in public health. And we need to make sure we do use
the flexibilities that are in the Clean Air Act.
Ms. Buerkle. Thank you.
I only have 2 minutes left, so I have one more question
The Assistant Secretary of Energy James Wood stated that,
number one, electric rates are going to go up. And I would like
you to comment on that. I mean, do you agree with him that
electric rates are going to go up? And I will enter Mr. Wood's
article into the record, without any objection.
Mr. Perciasepe. Well, our regulatory impact analysis that
we have done on let's just say these two rules indicate that
electric rates will go up from a base that is lower than it was
in the last decade. So the variability in the electric rates
are going to be small compared to the variability of the
electric rates we had before these rules were out there.
That said, when we do--when we did work on some of these
rules, we definitely used the small business panels to help us
look at the impact on small business, how the rule--how small
business could accommodate the rule. So we have looked at those
things as well. But there is a slight increase in the electric
rates on an average across the country. And we have identified
that in our regulatory impact. We are not hiding that fact. We
are trying to put it in context.
Ms. Buerkle. I don't mean to interrupt, but my time is
clicking away here.
I will say your estimate came in the lowest of anyone's
estimate as to what their electrical rates will do. And again,
that goes back to jobs and job creation and small businesses. I
mean, it may be a few pennies, but it may not be a few pennies.
It may be more than that. And that may be the one single factor
that pushes--either deters someone from going into business,
the cost of doing business, or worse yet, it forces them out of
business because they can't meet their bottom line.
With that, my time has expired.
We are going to do another round of questions.
I yield 5 minutes to the ranking member.
Mr. Kucinich. Mr. Perciasepe, American Electric Power
claims the cost of complying with the regulations affecting
power plants will result in an increase in electricity prices
of 10 to 35 percent. According to EPA's own regulatory impact
analysis for the final Transport Rule, the agency's economic
model suggests an average national price increase for energy is
0.16 percent, just a fraction of 1 percent.
Under the Toxics Rule, the agency's economic model suggests
the average national price increase for energy is 0.8 percent.
This is a long way off from 10 to 35 percent. Can you explain
the discrepancy between AEP's figures and your own?
Mr. Perciasepe. I haven't studied how they came up with
But I would say that EPA has been historically able to
estimate impacts of our rules, and we are even conservative in
our impacts on how we estimate our impacts on rules. So it
could have been any number of things that they have included in
their assumptions that we would have to look at.
Mr. Kucinich. Well, why don't you obtain the information
and get back to this subcommittee so that we can make an
evaluation of their claim?
Thank you. I yield back.
Ms. Buerkle. Thank you.
With that, we will all our second panel to the witness
table. And thank you very much for being here today and for
offering your testimony and your information to us.
Mr. Perciasepe. Thank you both, and thank the chairman.
Ms. Buerkle. Good afternoon.
Thank you for being here. Our second panel consists of Ms.
Janet Henry, who is the deputy general counsel for American
Electric Power; Dr. Joel Schwartz, professor of environmental
epidemiology, Harvard School of Public Health; and Mr. Mike
Carey, president of the Ohio Coal Association.
Good afternoon and welcome to all of you. Pursuant to the
rules of the Oversight and Government Reform Committee, if I
could ask you to stand and please raise your right hands.
Ms. Buerkle. Let the record reflect that the witnesses
answered in the affirmative.
Thank you very much.
I would ask that each of our witnesses if you could limit
your opening statements to 5 minutes. I know that the ranking
member has an amendment to offer on the floor, and I would like
to give him the opportunity to lead off the first round of
questions before he has to leave.
So, Ms. Henry, if you would proceed, I would appreciate it.
STATEMENTS OF JANET HENRY, DEPUTY GENERAL COUNSEL, AMERICAN
ELECTRIC POWER; JOEL SCHWARTZ, PROFESSOR OF ENVIRONMENTAL
EPIDEMIOLOGY, HARVARD SCHOOL OF PUBLIC HEALTH; AND MIKE CAREY,
PRESIDENT, OHIO COAL ASSOCIATION
STATEMENT OF JANET HENRY
Ms. Henry. Thank you Vice Chairman Buerkle, Ranking Member
Kucinich and members of the subcommittee. Thank you for giving
me the opportunity to testify regarding the impacts of EPA's
suite of new regulatory requirements for the public utility
AEP is one of the Nation's largest generators with nearly
38,000 megawatts of generating capacity and serves more than 5
million retail customers in 11 States. We employ diverse kinds
of generating of energy sources, including coal, nuclear,
hydroelectric, natural gas, oil and wind power. But coal is
important in our States, and approximately two-thirds of our
generating capacity utilizes coal to generate electricity.
We believe that the current regulatory track being pursued
by the EPA will have damaging impacts on our Nation's
electricity system, as well as broader negative employment and
economic implications. Together they will require very large
capital utility investments on a very short timeframe.
AEP has already achieved substantial SO50 and
NO120 reductions over the past two decades beginning
with the acid rain program in the 1990's and continuing with
the NO120 SIP Call in the Clean Air Interstate Rule.
AEP's SO50 emissions have been reduced by over 1.1
million tons. That's about a 73 percent reduction in emissions.
And our NO120 emissions have been reduced by 80
percent over that same time period.
In just the past 10 years, AEP has invested over $5 billion
in emissions control equipment on our coal units to reduce
SO50 and NO120 . About two-thirds of our
fleet is currently equipped with the most efficient
SO50 controls and about three-quarters of the fleet
in the eastern system has the most advanced NO120
Two projects were completed in the last 18 months at our
Amos power plant, and we are preparing to submit applications
for regulatory approvals to install additional controls in
Indiana. We expect this transformation to continue and our
emissions to continue to decline.
We are committed to working with EPA in the development of
future control requirements, but we have concerns about EPA's
proposals. They include the infeasibility of the compliance
deadlines. The Cross-State Air Pollution Rule will take effect
in less than 6 months, and the reductions in several States
required by 2012 represent more than a 30 percent reduction in
emissions over 2010 emission levels. Multiple regulatory
programs are going to be taking effect in a very compressed
timeframe, resulting in unprecedented capital expenditures,
mostly before 2015. There would be two to three times as much
capital spent in the United States to comply with these new EPA
rules by 2020 as has been spent over the past 20 years.
Abrupt and significant power plant retirements are likely
to occur due to high costs and infeasible compliance deadlines.
We expect that between 50 and 110 gigawatts of coal-fired
generating capacity will retire due to the proposed EPA rules.
And with those retirements come increased risks of
unanticipated electric grid reliability problems, particularly
during the 2014 to 2016 period.
The greatest capacity reductions are anticipated to occur
in the PJM region, which recently experienced an all-time high
peak, and the SERC region, which is in the southeastern portion
of the country.
But both ERCOT and SPP have also expressed concerns about
the localized effects on the electric grid. There will be very
high electricity rate increases, as has been observed by the
committee members, and significant job losses associated with
the implementation of these rules.
According to a recent study by NERA, the Cross-State Rule
and the Utility MACT rule will result in over 1.4 million net
job losses in the United States.
There's a better way. We would like to see more holistic
analysis of EPA's regulatory programs in an effort to
coordinate the implementation of these requirements that can be
phased in reasonably over a slightly more extended period of
time and achieve the same environmental outcomes. That time
will reduce the impact on our customers and the economy. Thank
[The prepared statement of Ms. Henry follows:]
Ms. Buerkle. Thank you, Ms. Henry.
STATEMENT OF MIKE CAREY
Mr. Carey. Chairman Jordan, Ranking Member Kucinich,
members of the committee, good afternoon. Thank you for
inviting me to testify today at this very important hearing.
The effects the EPA's pending and planned proposals will
have on electricity prices, employers, domestic workers will be
devastating. My name is Mike Carey. I am president of the Ohio
Coal Association. We are an association that provides a voice
for the many thousands of citizens working in Ohio's coal
sector. Cheap affordable coal is what powers the manufacturing
base and maintains our families across the Midwest and other
regions of America.
The companies we represent, both large and small, are proud
to directly employ over 3,000 individuals as well as the 30,000
additional secondary jobs that depend on our sector. These jobs
and hundreds of more or thousands more are at risk directly
because of the decisions under way by the EPA.
In particular, it is my hope that this committee will
undertake a serious review of the work being conducted by the
EPA as it relates to the following proposals: The Cross-State
Air Pollution Rule, formerly known as the Clean Air Transport
Rule; the Air Toxic Standards for Utilities or Utility MACT;
the New Source Performance Standard Changes, the New Ozone
Particular Matter Standards; Regulation for Coal Combustion
Residuals; and the Power Plant Cooling Water Intake Structure
Members of this body have probably heard this grouping of
proposals called the EPA Train Wreck. The regulatory wave
embodied in these new mandates and rules above stands to cause
great harm not only to Ohio but to the rest of the American
economy. Today coal is mined in over 27 States across the
Nation and is consumed in over 48 as reliable and affordable
I will focus my time today on the two most harmful EPA
proposals. The first the Cross-State Air Pollution Rule. The
underlying assumption of this proposal, Mr. Chairman, is that
our customers, the electric utilities, like American Electric
Power, like First Energy and Duke Energy, will simply move to a
lower sulfur content coal. That assumes that companies will
even continue to use coal in the first place. They could fuel
switch to natural gas. This ultimately could disrupt the
natural gas markets.
This administration proposes to sacrifice these 33,000
primary and secondary jobs that we create, and that is as
simple as it gets. EPA's complex rule creates a system of
allowances and trading that is much less flexible than the
current regulatory framework. Winners and losers are thus
clearly chosen, and Ohio is a loser. The only option for those
producing electricity in our state, as we have already seen in
many cases, is to shut down or potentially shut down their
The second most harmful proposal in our view is the Utility
MACT Rule. When the proposals are both finalized the national
and regional impacts will be devastating. Ohio alone will lose
53,000 jobs, and electricity prices could certainly spur and
hurt the middle and lower class Americans, which already pay
almost 16 to 22 percent of their annual after-tax income on
energy costs annually.
The future of Midwestern jobs and access to affordable
energy depends on demanding that the EPA examine the cumulative
impacts of their regulatory proposals. Oversight for how these
flawed proposals are costly, unworkable and harmful to the U.S.
economy should continue. In the interim, Congress must seek to
enact policies that address the flaws in the EPA's proposals
that I have outlined.
EPA's war on coal will also be harmful to the homeowners
across the country. As the studies have shown, in the Train
Wreck will result in electricity prices that would increase 13
percent in Ohio, 23 percent in Tennessee and 17 percent in
Pennsylvania. Now, I understand that this week the House will
take up the spending measures that will reduce the EPA's
funding by 18 percent. My concern is that the EPA will simply
find a way to shuffle around the funds, and such a cut will not
stop their plans to move forward with the Train Wreck.
It is the belief of the Ohio Coal Association that Congress
must be bolder, delay these rules immediately. It is critical,
and the House must then act to write legislation that makes
these rules more reasonable. Without a clear direction from
Congress in this fashion, EPA will continue its toward pace of
piling on new job crushing policies. I want to thank you for
the opportunity to testify, and I stand ready to answer any
questions the committee may have.
[The prepared statement of Mr. Carey follows:]
Ms. Buerkle. Thank you, Mr. Carey.
Dr. Schwartz, if you would proceed.
STATEMENT OF JOEL SCHWARTZ
Mr. Schwartz. Thank you, Madam Chairman, Mr. Kucinich.
Certainly the regulations that we have heard about, like
the Transport Rule, will impose significant costs on industry,
but they will also produce significant health benefits, and I
would like to talk a bit about that.
Particulate matter is one of the largest avoidable causes
of death in the United States. To put that in perspective,
particulate matter kills more people each year in the United
States than AIDS, breast cancer and prostate cancer put
together. That is a big number. And the difference is we don't
know how to cure AIDS, breast cancer and prostate cancer, but
we do know how to put scrubbers on coal-burning power plants.
And so it is important to think about it in that respect.
And this is not just my opinion, this is a worldwide
scientific consensus. In 2005, the World Health Organization
said that particulate matter killed 800,000 people a year in
the world's cities alone. The American Medical Association has
endorsed these conclusions, as has the American Thoracic
Society, the American Cancer Society, the American Heart
The Clean Air Scientific Advisory Committee has extensively
reviewed EPA's science assessment for particles over the last
several years and concluded that the association with mortality
was causal, that the risk assessment was sound, except they
said that what EPA cited as their high estimate was actually a
mid-range estimate because there were lots of studies that
showed bigger effects. The National Academy of Sciences in the
United States has endorsed this conclusion in two separate
In 2005, the European Union proposed the strategy to reduce
particles because their scientific review concluded it killed a
lot of people, and their strategy was to impose an 82 percent
reduction in SO50 emissions, primarily by
retrofitting scrubbers on coal-burning power plants.
So this is really a consensus view of the worldwide
scientific community. And the reasons they believe that are
simple. We have lots of studies in the scientific literature to
support this. We have studies that compare death rates in more
polluted towns and less polluted towns, and they are higher in
more polluted towns.
We have studies that have looked at changes in particle
concentrations in cities and changes in their death rates. And
the more the particle concentrations drop, the more the death
rates drop in those locations. We have studies that have then
said, well, let's forget about those downward trends and let's
look at just year-to-year fluctuations around the downward
trend in particles, and year-to-year fluctuations in death
rates went with those changes in particles. We have studies
that looked at strikes and found that death rates fell when
major industries that were important sources of air pollution
were shut down, and went back up when they were turned on
And then buttressing all of this we have studies from
animals that show that if you expose animals over a period of
months to particles compared to filtered air, that they develop
much more atherosclerosis and the atherosclerotic plaques
become much less stable and more likely to rupture, and it has
been done in multiple studies. We have animal studies showing
that if you produce ischemia in animals and expose them to
particles, the blood flow to the heart is reduced further
compared to one's breathing filtered air. We have studies
showing that you can produce arrhythmias in animals by exposing
them to particles.
So, in addition to all of the human studies, we have a
great deal of toxicology that backs this up. And this is why
review committee after review committee and scientific body and
medical body after medical body have all come to the conclusion
that this is really happening. And the numbers that we are
talking about are quite large. So the mid-range number from
EPA's expert elicitation or from what Case Act said, says that
the Transport Rule will save 34,000 early deaths per year. That
is a really big deal. And yes, it costs money, but actually,
the cost per life saved is about $100,000 a life, and that is
actually pretty cheap among public health interventions that
are available to us.
So I think that these are important issues, but it is
important to realize that there are very important public
health benefits that will result from putting these controls
on. Thank you.
[The prepared statement of Mr. Schwartz follows:]
Ms. Buerkle. Thank you, Dr. Schwartz.
I am going to yield the ranking member 5 minutes for
Mr. Kucinich. I want to thank the gentlelady for her
indulgence. I am going to have to leave as soon as I am through
with the questions. I am offering an amendment on the floor. I
am very grateful for your kindness.
At a June 1, 2011, meeting with investors when discussing
the risk of closures to plants as a result of EPA rules, the
chairman of AEP Michael Morris told investors the following: As
you know, those are high-cost plants. Throughout almost all of
2009 those plants probably didn't run 5 percent of the time
because of natural gas prices. When we shut those down, there
will be some cost savings as well, and on balance, we think
that is the appropriate way to go.
That is the sum and substance of what was said. Now, what
CEO Morris is saying is that AEP has already had to shut down
certain coal-burning power plants due to competitive pressure
from lower cost natural gas. These are the same plants that
would have to be retrofitted or shut down to comply with EPA
Now, Ms. Henry, if AEP is already shutting down these same
plants because they are high cost and are uncompetitive in the
market, how can you come here today and portray EPA's rules as
infeasible and blame the EPA for forcing a large number of
premature power plant requirements?
Ms. Henry. Thank you, Ranking Member Kucinich.
The plants referred to in the chairman's remarks and the
plants referred to in the studies that have been conducted as a
result of EPA's rules are not necessarily the same plants. I
think that we will need to go back and look at the plants that
the chairman was referring to.
Mr. Kucinich. So you are saying you really don't know which
plants he is talking about, is that right?
Ms. Henry. I am not certain of the universe of plants he's
Mr. Kucinich. Okay. We would like you to provide that
information to this committee.
Ms. Henry. If I could respond.
Mr. Kucinich. No. You don't know the answer, so I am going
to ask my next question.
If the price of natural gas relative to coal stays where it
was at the time your CEO is explaining his decision to close
certain plants and that price stays the same through 2014,
isn't it a fact that AEP will keep those plants closed through
Ms. Henry. If the price of natural gas stays at the current
Mr. Kucinich. Right. At the time--right.
Ms. Henry. As the time the chairman was making----
Mr. Kucinich. Will those plants stay closed?
Ms. Henry. The plants were running at low-capacity factors;
they were not closed. And those plants run during times of peak
energy demand and are used to respond to needs for additional
power on days like we experienced this past week. Having those
plants available to respond to those peak demands is critical
to the integrity of the electrical grid.
Mr. Kucinich. So what you are saying is that those plants
are specifically part of meeting peak demands and they are
otherwise totally efficient and not subject to market
fluctuations that would come about as a result of natural gas
Ms. Henry. Certainly if the price of natural gas were to
increase significantly, their capacity factors might go up
because their dispatch might be more economic than the gas
plants that run also at peak periods of time. But I think that
the critical point is that the plants provide both that peak
capacity reserve and also supply----
Mr. Kucinich. Well, if natural gas costs more. But what if
natural gas costs less? Would it likely be that those plants
would be out of capacity because they are not able to compete
with natural gas?
Ms. Henry. That would depend upon the availability of those
plants and other plants on the system to respond to that peak.
Mr. Kucinich. Did AEP lay off those workers at the plants
that had to close due to lower-priced natural gas, or did you
find other assignments for them?
Ms. Henry. Some of the workers were part of a voluntary
severance program that we conducted last year in response----
Mr. Kucinich. So they were voluntarily separated, they
weren't laid off, is that what you are saying?
Ms. Henry. That is right.
Mr. Kucinich. So they lost their jobs?
Ms. Henry. There will be an additional 600 jobs lost when
those plants are finally closed.
Mr. Kucinich. Ms. Henry, AEP is the author of a bill
entitled Electric Power Regulatory Coordination Act of 2011, is
Ms. Henry. I don't think there is----
Mr. Kucinich. You haven't heard that? Okay. Are you
familiar with a bill by that name?
Ms. Henry. I am not familiar with a bill by that name.
Mr. Kucinich. Madam Chair, I am going to ask unanimous
consent to put this report by the NACP and other groups in
about the situation in Ohio with respect to coal and electric
Ms. Buerkle. Without objection.
Mr. Kucinich. Are you familiar Ms. Henry with a draft,
discussion draft circulated that has been dubbed the Electric
Power Regulatory Coordination Act of 2011, that would halt
implementation of the Nation's clean air laws?
Ms. Henry. I am not familiar with the specific draft that
you are referring to.
Mr. Kucinich. You never heard of that?
Ms. Henry. No.
Mr. Kucinich. You have no knowledge whatsoever of any kind
of discussion draft that relates to a bill by that name?
Ms. Henry. I know that AEP assisted in the preparation of
some suggested language for legislation that might have had
Mr. Kucinich. That is what I am talking about. This bill
proposes to wait another 6 years before we limit toxic mercury
from some power plants as well as delaying limits on a host of
other dangerous pollutants, is that not correct?
Ms. Henry. That would be an incorrect characterization.
Mr. Kucinich. Pardon?
Ms. Henry. That would be an incorrect characterization of
the language that AEP proposed.
Mr. Kucinich. Wait. You just told me--are you familiar with
this bill or not? Do you know the bill or don't you? You are
just giving me a response that it is an incorrect
characterization of a bill that you weren't really sure about.
Ms. Henry. I said I am not familiar with whatever----
Mr. Kucinich. Okay. I withdraw my question, Madam Chair.
I am going to submit questions in writing so that Ms. Henry
can become familiar with the questions that we are concerned
about. And also she can familiarize herself with her own
understanding of this draft discussion that I am asking about.
I appreciate it. Thank you.
Ms. Buerkle. Without objection.
[The information referred to follows:]
Ms. Buerkle. Okay. I will yield myself 5 minutes for
First of all, Ms. Henry, I want to give you the
opportunity, it seemed to me you had an answer to the ranking
member's question that you weren't allowed to give. If you
wanted to--early in his line of questioning, he was speaking to
Ms. Henry. If I could continue my response, I would
appreciate it. Thank you.
The legislation that AEP was discussing with certain
Members of Congress would have provided for a phased-in program
to allow sufficient time in order for all of the controls that
are required by the various EPA proposals to be phased in over
a slightly longer period of time than is proposed under the
Cross-State Air Pollution Rule and the Utility MACT Rule.
Instead of having all of the requirements become final and
effective in 2014, there would have been an extension through
2020 and a phased-in program with specific levels of control
required to be achieved throughout that time period.
Ms. Buerkle. Thank you.
And this question is for Ms. Henry, as well as Mr. Carey.
The EPA time lines to comply with these regulations, is it
realistic or unrealistic?
Ms. Henry. Based on our experience, it is an unrealistic
timeframe for the installation of the very sophisticated
controls that are necessary to control the types of coals that
are produced in many of our States, including Ohio. FGD
systems, flue gas desulfurization systems, and SCR systems are
required to achieve the levels that are set forth in the EPA
regulations for SO50 and NO120 and also
to achieve the co-benefits of mercury reductions from those
same power plants.
Ms. Buerkle. Thank you.
Ms. Henry. And those require about 4 and a half to 5 years
Ms. Buerkle. Mr. Carey.
Mr. Carey. I would agree with--I would agree with her
analysis of how that would affect the power-producing
facilities. And what that actually would do for the coal
producers of the State would be a removal of us from the
marketplace because they simply could not meet the timeframes,
as I mentioned, go to a lower sulfur coal and/or possibly
switching to natural gas.
Ms. Buerkle. Can each of you comment just briefly, because
I want to get to this line of questioning with regards to these
compliance timelines, how many jobs can you estimate would be
Ms. Henry. Based on the comprehensive analysis that was
done by NERA, we estimate that about 1.4 million net job losses
would occur in the United States through the time period 2020
as a result of these regulations. And the two regulations we
are talking about are the Cross-State Air Pollution Rule and
the Utility MACT Rule. The impacts are probably more severe
than that based on the final rule because NERA did its analysis
on the proposed rule and not the final rule.
Ms. Buerkle. And if you had more time to comply, would that
affect the number of jobs lost?
Ms. Henry. Yes, it would because we would be able to
moderate the electricity rate increases associated with the
installation of the controls and spread that over a longer
period of time.
Ms. Buerkle. Thank you.
And the same two questions to you, Mr. Carey.
Mr. Carey. According--Madam Chair, according to the NERA
study, it alone, that loss of those jobs just because of those
two proposals, would be 53,000 direct jobs in the State, of
which many of those jobs would come from the Appalachian coal
fields because of the direct jobs in the mining industry and
the up to 11 spin-off jobs that occur from one coal mining job,
so the numbers would be significant in that region.
Ms. Buerkle. And again, if there is longer time for
compliance, will that affect the number of jobs lost?
Mr. Carey. Madam Chair, I think certainly that could affect
ultimately the amount of coal that we could continue to put
into those power producing facilities, so yes.
Ms. Buerkle. Thank you.
Now, can either or both of you actually comment on what
this will do to electricity rates? You heard in the previous
panel of the testimony that it will raise slightly, but I would
like to hear your thoughts about what it will do to the
Ms. Henry. Well, the EPA analysis has been done on an
average basis nationwide and not on an individual company
basis. Obviously, those companies that are most dramatically
impacted by the rules bear the highest cost of compliance, and
their rates increase the most.
For the AEP companies, the rate increases we have estimated
range from 10 percent at the lowest end of the range to almost
35 percent in those areas most highly impacted.
Ms. Buerkle. Thank you.
Mr. Carey. Madam Chair, I think if you look at--in my
testimony, I outline what NERA also said, was that if you break
it down by State, the average cost for electric rates for
certain States across the country, in particular, Ohio is at 13
percent; 23 percent in Tennessee; and 17 percent in
Pennsylvania. So you can just go down the list and all of the
States would see there will be regional variances in the cost
of the electricity increase, but definitely all increasing.
Ms. Buerkle. Thank you.
I want to ask one more question of the two of you, and then
Dr. Schwartz, I don't want you to feel left out here this
The EPA is a singular regulatory body and yet we see so
many regulations coming out of it from so many various agencies
and departments. I would like for you to comment--and Mr.
Carey, I can start with you, and then Ms. Henry--have you seen
any signs that there is a coordination of or a look at how all
of these regulations affect businesses? I mean one regulation
by itself may not be bad, but cumulatively, they may devastate
businesses, and that is why we are here today, our concern for
what this cumulative effect is doing for jobs and job creation.
So if you could comment on that, I would appreciate it.
Mr. Carey. Certainly, Madam Chair. I don't think there is
any doubt that we are seeing in the coal fields of not just
Ohio, but I think West Virginia, Pennsylvania, Illinois,
Kentucky, you are seeing a coordinated attack because the new
restrictions on certain coal permits, the fact that the U.S.
EPA is getting involved in a lot of the processes that normally
would have taken place under the State EPA--or the State
permitting program. You are seeing that Federal, that Federal
go into the States, start revoking permits, as happened in the
State of West Virginia. So what you have is systematically, you
have the U.S. EPA not allowing for coal to be permitted to get
out of the ground and then ultimately trying to take away the
market that the coal could go to. So I guess you could say that
the EPA believes that they can control both the laws of supply
and demand ultimately to the detriment of the entire country.
Ms. Buerkle. Thank you.
Ms. Henry. The EPA regulations are analyzed in a silo.
Each individual requirement is analyzed only for its
individual cost and benefits, and there is no comprehensive
analysis undertaken. That results in a failure to consider the
cumulative impacts at any individual facility, let alone across
an industrial sector.
And for an example, the suite of regulations that are
currently before us include not only the air pollution
regulations, but also the cooling tower requirements and the
coal combustion residuals rulemaking. Each of those rules has
its own costs, and all of them would be considered by a utility
before any investment would be made to determine whether the
long-term viability of the facility is justified. So it is
essential that EPA not only do cumulative analyses within an
individual office or division, like the air division, but that
it take a holistic view of all of the regulatory programs that
are coming out of the various offices within EPA.
Ms. Buerkle. Thank you very much.
Dr. Schwartz, in your testimony, you talk a lot about the
negative health effects of particulate matter. And I want to
clarify if primarily particulate matter is regulated by MACTs?
Is that correct?
Mr. Schwartz. Well, there is a MACT for particulate matter,
but then there are also new source performance standards and,
you know, best available control technology and a bunch of
other regulations as well.
The transport rule is primarily being put out to help
States come into attainment with the MACTs because we know that
particles don't actually stop at State borders. And so the
Clean Air Interstate Rule that was originally proposed was for
the purpose of doing that. The MACT, I think, is an entirely
different thing that has nothing to do with the ambient air
Ms. Buerkle. Well, the concern is that there was a
duplication in the count of particulate matter, you know, to
make the case, you know.
Mr. Schwartz. Oh. So, I mean, I haven't read every document
that EPA has produced, but certainly when EPA did the
regulatory impact analysis for the ongoing round of revision of
the ambient air quality standards for particles, they said,
what if we got particle levels down to some point and what
might be the costs and the benefits of that in their risk
They didn't specifically propose rules that would
accomplish that, but they implicitly assumed that one of the
rules that was going to be providing a lot of the help was the
transport rule. So if you looked at the benefits of those two
things and added them up, that would be incorrect. It would
also be incorrect if you looked at the cost of those two things
and added it up. The transport rule is one of the strategies
that EPA is proposing to help come into attainment with the
current MACTs and with any future MACTs. And so it should be a
sub category under there for both costs and benefits.
Ms. Buerkle. Thank you.
Ms. Henry, I want you to comment if you could on whether it
is fair that the EPA essentially double counted the benefits.
Ms. Henry. Madam Vice Chair, I think that the primary
objection that we have to EPA's benefits analysis is that for
the Cross-State Air Pollution Rule, EPA assumed that current
requirements that apply to our facilities under the Clean Air
Interstate Rule don't exist, so they started from an artificial
baseline and overstated the benefits that would be achieved
through the Cross-State Rule.
With respect to the Utility MACT Rule the benefits that are
affiliated with reducing the hazardous and toxics air emissions
under that rule amount to negligible benefits compared to the
costs. The costs are, as I think the chairman stated
previously, about $10.7 billion per year, and the benefits are
around $50 million associated with reductions in mercury.
EPA claimed it could not quantify any benefits associated
with any other individual hazardous air pollutant, but they did
quantify benefits associated with reductions in particulate
matter, and those are the benefits that they claim are achieved
through the reductions of the Utility MACT Rule.
Ms. Buerkle. Thank you. Mr. Carey would you like to comment
Well, with that, since there are no other members here for
questioning, I would like to thank all three of you for being
here this afternoon for being willing to answer our questions
and to testify.
I think the chairman called this committee. Our concern is
always that regulations are putting such burdens on businesses
in our country. And given the unemployment rate, we have a
responsibility to act responsibly.
And as I mentioned to the previous panel, that no one is
saying we don't need regulations, but we need reasonable
regulations that don't put companies out of business, that
create barriers to their success, that you know, we see
compliance and then we see new regulations that require
retrofitting. So I thank you all for being here today.
And with that, this hearing is adjourned. Thank you.
[Whereupon, at 4:58 p.m., the subcommittee was adjourned.]