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

    THE AMERICAN ENERGY INITIATIVE, PART 15: WHAT EPA'S UTILITY MACT RULE
                            WILL COST U.S. CONSUMERS

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

                                    HEARING

                                   BEFORE THE

                        SUBCOMMITTEE ON ENERGY AND POWER

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 SECOND SESSION

                                   ----------

                                FEBRUARY 8, 2012

                                   ----------

                               Serial No. 112-113

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov
     THE AMERICAN ENERGY INITIATIVE, PART 15: WHAT EPA'S UTILITY MACT RULE
                            WILL COST U.S. CONSUMERS

     THE AMERICAN ENERGY INITIATIVE, PART 15: WHAT EPA'S UTILITY MACT RULE
                            WILL COST U.S. CONSUMERS

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

                                    HEARING

                                   BEFORE THE

                        SUBCOMMITTEE ON ENERGY AND POWER

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 SECOND SESSION

                                   __________

                                FEBRUARY 8, 2012

                                   __________

                               Serial No. 112-113

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

                      U.S. GOVERNMENT PRINTING OFFICE
    76-379                    WASHINGTON : 2012
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                        COMMITTEE ON ENERGY AND COMMERCE

                              FRED UPTON, Michigan
                                     Chairman

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

                                     7_____

                        Subcommittee on Energy and Power

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

                                      (ii)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Ed Whitfield, a Representative in Congress from the
      Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...............................................     3
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................     5
    Hon. Joe Barton, a Representative in Congress from the State of
      Texas, opening statement.......................................     6
        Prepared statement...........................................     8
    Hon. Mike Pompeo, a Representative in Congress from the State of
      Kansas, opening statement......................................    11
    Hon. Bobby L. Rush, a Representative in Congress from the State
      of Illinois, opening statement.................................    11

                                   Witnesses

    Gina McCarthy, Assistant Administrator for Air and Radiation,
      Environmental Protection Agency................................    13
        Prepared statement...........................................    15
        Answers to submitted questions...............................   343
    Darren MacDonald, Director of Energy, Gerdau Long Steel North
      America........................................................    56
        Prepared statement...........................................    58
    Ralph E. Roberson, President, RMB Consulting and Research, Inc...    71
        Prepared statement...........................................    73
    Harrison Tsosie, Attorney General, Navajo Nation.................    77
        Prepared statement...........................................    79
    The Reverend Mitchell C. Hescox, President and Chief Executive
      Officer, Evangelical Environmental Network.....................    87
        Prepared statement...........................................    89
        Response to request from Mr. Burgess.........................   214
    Julie E. Goodman, Principal, Gradient, and Adjunct Lecturer,
      Harvard School of Public Health................................   108
        Prepared statement...........................................   110
    Josh Bivens, Acting Research and Policy Director, Economic Policy
      Institute......................................................   136
        Prepared statement...........................................   139
    Anne E. Smith, Senior Vice President, NERA Economic Consulting...   160
        Prepared statement...........................................   162

                               Submitted Material

    Letter, dated December 21, 2011, from American Businesses for
      Clean Energy, et al., to President Barack Obama, submitted by
      Mr. Waxman.....................................................    41
    Statement, dated February 8, 2012, of Dr. Timothy D. Terrell,
      Associate Professor of Economics, Wofford College, and Senior
      Fellow, Cornwall Alliance for the Stewardship of Creation,
      submitted by Mr. Shimkus.......................................   196
    Statement, dated February 6, 2012, ``Protecting the Unborn and
      the Pro-Life Movement from a Misleading Environmentalist
      Tactic: A Joint Statement by Pro-Life Leaders,'' submitted by
      Mr. Shimkus....................................................   206
    Report, dated December 8, 2010, ``Potential Coal Plant
      Retirements Under Emerging Environmental Regulations,'' by The
      Brattle Group, submitted by Mr. McKinley.......................   218
    Report, dated May 3, 2011, from FirstEnergy Analyst Meeting,
      submitted by Mr. McKinley......................................   221
    Memorandum, dated March 31, 2011, on Employment Impacts
      Associated with the Manufacture, Installation, and Operation of
      Scrubbers, from Jason Price, et al., to Ellen Kurlansky,
      submitted by Mr. McKinley......................................   224
    Memorandum, dated March 16, 2011, on Case Study Analyses of
      Potential Local-scale Human Health Risks Associated with
      Mercury Emissions from Electric Utility Steam-generating Units,
      from Dave Guinnup, submitted by Mr. Whitfield..................   238

     THE AMERICAN ENERGY INITIATIVE, PART 15: WHAT EPA'S UTILITY MACT RULE
                            WILL COST U.S. CONSUMERS

                                  ----------

                          WEDNESDAY, FEBRUARY 8, 2012

                      House of Representatives,
                      Subcommittee on Energy and Power,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:06 a.m., in
    room 2123 of the Rayburn House Office Building, Hon. Ed
    Whitfield (chairman of the subcommittee] presiding.
        Members present: Representatives Whitfield, Sullivan,
    Shimkus, Terry, Burgess, Scalise, McMorris Rodgers, Olson,
    McKinley, Gardner, Pompeo, Griffith, Barton, Rush, Castor,
    Dingell, Markey, Green, Capps, Doyle, and Waxman (ex officio).
        Staff present: Maryam Brown, Chief Counsel, Energy and
    Power; Allison Busbee, Legislative Clerk; Patrick Currier,
    Counsel, Energy and Power; Cory Hicks, Policy Coordinator,
    Energy and Power; Heidi King, Chief Economist; Ben Lieberman,
    Counsel, Energy and Power; Mary Neumayr, Senior Energy Counsel;
    Alison Cassady, Democratic Senior Professional Staff Member;
    Greg Dotson, Democratic Energy and Environment Staff Director;
    Caitlin Haberman, Democratic Policy Analyst; Elizabeth Letter,
    Democratic Assistant Press Secretary; and Alexandra Teitz,
    Democratic Senior Counsel, Environment and Energy.
        Mr. Whitfield. Today's hearing will come to order.

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

        Today we are going to focus on the cost and impact of the
    Utility MACT rule, or as EPA prefers to call it, the Mercury
    and Air Toxics Standard. When the President was a candidate for
    the office he now holds, he attended a meeting in San
    Francisco, a fundraiser, and at that fundraiser, he made the
    comment that we will bankrupt the coal industry in America.
    While his administration was unsuccessful in passing the cap
    and trade legislation, the President was quoted after that
    failure as saying that ``there is more than one way to skin a
    cat.'' And he was right, because EPA did become the lead agency
    to significantly damage the coal industry in America, the
    industry that provides the base load for electricity in this
    country. When I talk about the coal industry, I am talking
    about the coal mining industry, yes, I am talking about
    utilities that burn coal as well. And with this new rule, EPA
    has made it very clear that in this area, they are not
    concerned about--they are not setting environmental policy,
    they are setting energy policy for America.
        More than one expert in the field has said that the
    stringency of the new unit--electric generating units that use
    coal standard means that under this rule, not one new coal-
    fired plant can be built and meet these standards, because no
    one can get a warranty which is necessary to get the financing
    to build a unit because of the Frankenplant standard that EPA
    is using.
        Now, the sad thing about it is when we asked about the cost
    of this regulation, EPA gives us no cost. In fact, they made
    the comment that that is not useful. But they did go out to the
    year 2016, they said that in 2016 that this would cost $9.6
    billion that year. And of course, that is calculated by you
    borrow the money to meet these requirements, and the payment on
    that year will be $9.6 billion. We have repeatedly asked, we
    have sent questions, we have sent letters, we have called,
    asking for the total cost, and we still have no total cost. And
    we know that this is the most costly regulation relating to
    utilities that EPA has ever submitted.
        And the sad thing about it is, they do not even look at the
    cost of lost jobs. They said that the total gigawatts lost as a
    result of this regulation would be 4.7 gigawatts, and one
    company, FirstEnergy, has announced in the last few days the
    closure of plants that equals 3.3 gigawatts from one company.
        So I think EPA is misleading the American people and
    deliberately so, because when they talk about this regulation,
    all they talk about is mercury. The importance of reducing
    mercury and acid gases, and non-metallic components, and yet,
    when they did the benefit analysis of this rule, all of the
    benefits, with the exception of a very minute amount, comes
    from particulate matter, which was never even set out as a
    purpose of this regulation, to reduce particulate matter.
    Everyone you will hear today will talk about, oh, the mercury
    and how important it is we reduce that, and the benefits from
    that are minute. And I would just like to put on the slide real
    quick, the total global mercury emissions around the world are
    about 7,300 to 8,300 tons per year. About 70 percent of that is
    natural and U.S. utilities each year, out of that 8,300 tons
    per year worldwide, provides 29 tons of emissions of mercury.
    And the total benefit from this new regulation in reductions of
    mercury emissions in the U.S. will be about 20 tons per year,
    out of 8,300 worldwide.
        So I am quite disappointed in this regulation is going to
    have profound impact in a negative way on the American people
    and their ability to compete in the global marketplace.
        [The prepared statement of Mr. Whitfield follows:]

        [GRAPHIC] [TIFF OMITTED] T6379.001

        [GRAPHIC] [TIFF OMITTED] T6379.002

        Mr. Whitfield. At this time, I would like to recognize for
    an opening statement the ranking member of the full committee,
    Mr. Waxman of California.

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

        Mr. Waxman. Thank you, Mr. Chairman.
        In the first 20 years after the Clean Air Act was enacted
    in 1970, visible air pollution decreased substantially. But we
    made very little progress on reducing toxic air pollution, the
    invisible heavy metals and other chemicals that cause cancer,
    brain damage, birth defects, and other devastating health
    problems.
        In the Clean Air Act amendments of 1990, adopted by an
    overwhelming bipartisan majority on this committee, we
    addressed this issue: The new law directed EPA to set standards
    requiring industrial sources to use available pollution control
    technology to reduce their emissions of mercury, arsenic, and
    other toxic air pollution.
        Since 1990, EPA has adopted standards for almost every
    major industrial source of toxic air pollution. Every source,
    that is, except power plants, which emit more mercury than any
    other source.
        Owners of the dirtiest power plants have used political and
    legal tactics to block standards requiring them to clean up
    their pollution. When forced to act, the Bush administration
    issued weak standards for power plants that were scientifically
    and legally indefensible. The courts ultimately threw them out,
    forcing EPA back to the drawing board.
        Finally in December, after more than 20 years of study,
    litigation, and delay, EPA issued strong but achievable
    standards to cut toxic air pollution from America's dirtiest
    power plants.
        These new standards will cut emissions of toxic mercury by
    90 percent. This is a major step forward. Exposure to mercury
    can damage the nervous system of infants and children, which
    can impair their ability to think and learn.
        We should be cheering this good news. But, instead, we are
    holding this hearing to criticize EPA for protecting the health
    of our children. Last year, the committee and House Republicans
    even voted to block EPA from acting.
        I think this committee has its priorities exactly
    backwards. We should be standing up for the health of infants
    and children, not the powerful coal and utility industries.
        These new standards will have tremendous health benefits.
    By cutting emissions of pollution that triggers asthma attacks
    and damages babies' brains, we could see up to $90 billion in
    health benefits every year. Ninety billion dollars in health
    benefits every year. These benefits far outweigh the costs of
    implementing these long overdue achievable pollution controls.
        We will hear from members today that these health benefits
    aren't real. But as you evaluate these claims, remember that
    some of the members who voted to deny that climate chang is
    real will be making these claims.
        We need to be guided by science. EPA's findings are
    supported by reams of peer-reviewed science on the health
    impacts of mercury and fine particles, including work by the
    independent EPA Science Advisory Board and the National Academy
    of Sciences.
        I am concerned about what is happening in this committee.
    Science denial should have no place in Congress. It is reckless
    and it is dangerous.
        If members have questions about our scientific
    understanding of air pollution and its health effects, bring in
    the researchers, bring in the experts and examine the peer-
    reviewed scientific literature.
        The last 40 years prove we can have both economic growth
    and a cleaner environment. We do not have to choose between
    jobs and toxic mercury pollution that endangers our children's
    brains. In fact, requiring power plants to invest capital and
    install modern pollution controls will create jobs. Fabricators
    and factory workers build the pollution controls, construction
    workers install them on the site, and skilled employees operate
    them. EPA says its rule will create 46,000 short-term
    construction jobs, and 8,000 long-term utility jobs. The EPA--
    that is even more than the XL pipeline will create, in terms of
    jobs.
        The EPA rule will save American lives, protect our children
    from brain damage, clean up all polluting power plants, and
    even create jobs.
        I congratulate President Obama, Administrator Jackson,
    Assistant Administrator McCarthy, and the hardworking staff at
    EPA for finally getting the job done.
        Thank you, Mr. Chairman.
        Mr. Whitfield. Thank you.
        At this time, I recognize the gentleman from Texas, Mr.
    Barton, for 5 minutes for an opening statement.

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

        Mr. Barton. Thank you, Chairman Whitfield. Thank you, Ms.
    McCarthy, for once again coming before us.
        I have a prepared statement, and it is a very good prepared
    statement. I am going to put it in the record, but I am going
    to speak a little bit extemporaneously because I think this is
    a very important hearing.
        This Utility MACT rule is the most expensive regulation
    that has ever been proposed on the American economy, as far as
    I can tell. The annual estimated cost for the first 5 years is
    approximately $10 billion a year. It is estimated that by 2020
    we are going to have a loss of about 1.5 million jobs, and the
    question is, what are the benefits?
        As you know, myself and others have sent a number of
    letters to you and the administrator, Mrs. Jackson, asking to
    try to flesh out these so-called benefits, these avoidable
    deaths and things of that sort. Mr. Waxman alluded to that in
    his opening statement. I have a letter that you signed to me.
    We received it 3 days ago, and it is the most extensive effort
    yet to try to comply with our request, so I am going to give a
    pat on the back for that.
        I have read it twice, and I honestly can tell you that I
    don't think you have told me anything. I think that we keep
    referring to these studies, these models. There is no real
    factual data in this response anywhere where they have gone out
    and done an emergency room study near a power plant and
    compared it to someone who lives in Yosemite National Park or
    something. I mean, you go from wherever you think the dirtiest
    area is to where you think the cleanest area is, compare those
    over time to get a base line for what the ambient environmental
    issues are, and then compare them. These are all models based
    on assumptions, and they are written in a way that the average
    person's eyes just glaze over it. I am going to keep trying. I
    am going to keep trying to understand it, and I am going to ask
    some people that are a lot smarter than me to take a look at
    it.
        But when Mr. Waxman said in his opening statement that
    these regulations could create 46,000 jobs--that is in your
    report that you put out with the rule--and I looked at that
    and, when you delved down into it, it is because of the
    increased jobs created to comply with the rule. Now, the more
    regulation you have, the more compliance cost you are going to
    have, but you are going to have to hire people, but they don't
    produce anything. If I go out and hire a coal miner and he digs
    an additional ton of coal a day, and that coal is burned to
    create electricity, there is something--a product is developed
    that is salable and that somebody uses. If I hire another
    compliance officer, he sits there and shovels paperwork all
    day. Now if the answer to our economic problem is more
    regulation so that we get more people hired for compliance, we
    could go out and start hiring people to go rob banks, so they
    would have to hire more bank guards for--to protect against the
    bank robbers. You would create jobs, but you would shut the
    bank down.
        Madam Administrator, I am afraid that is what we are doing
    right here. So I look forward to an honest debate. You are
    always honest in your answers. I appreciate that, but we have a
    fundamental disagreement about the result, and we hope to
    elaborate on that later.
        [The prepared statement of Mr. Barton follows:]

        [GRAPHIC] [TIFF OMITTED] T6379.003

        [GRAPHIC] [TIFF OMITTED] T6379.004

        [GRAPHIC] [TIFF OMITTED] T6379.005

        Mr. Barton. With that, I want to yield to Mr. Pompeo the
    remainder of my time.

      OPENING STATEMENT OF HON. MIKE POMPEO, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF KANSAS

        Mr. Pompeo. Thank you, Mr. Barton. You know, we will learn
    a lot about studies and reports and data today, but we don't
    have to go very far from where I live to see the real world
    impact of this rule. In Kansas, we have been trying to build a
    coal-fired power plant called Holcomb II for an awfully long
    time. It has been stopped by our former governor, our secretary
    of HHS through litigation, and it is a clean coal-fired power
    plant. This is a power plant that I would think
    environmentalists would advocate. We will retire some older
    coal. This is a good step forward, and yet, under the existing
    Utility MACT, I am anxious to talk to Assistant Administrator
    McCarthy today about how we are going to build that plant. I
    don't think it is possible. The company certainly doesn't. It
    hasn't been able to move forward on this for many, many years
    now so I am anxious to learn how under this new set of rules we
    can begin to continue to build coal-fired power plants in
    America.
        I think the Utility MACT rule is designed to create costs
    which prohibit that, and isn't about a good environmental
    policy but instead is about energy policy, trying to drive coal
    out as an affordable source for manufacturers and consumers all
    across the country.
        Mr. Pompeo. With that, I yield back to Mr. Barton.
        Mr. Whitfield. The gentleman's time is expired.
        At this time, I recognize the gentleman from Illinois, Mr.
    Rush, for 5 minutes for his opening statement.

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

        Mr. Rush. Thank you, Mr. Chairman.
        Mr. Chairman, we are here today to hold yet another debate
    in a long series of subcommittee hearings on the costs
    associated with implementing the EPA's Utility MACT rules. I am
    curious to see, will we hear anything new or different from
    what we have already learned from the numerous hearings on this
    issue in the past?
        Mr. Chairman, I don't know, you know, I feel a sense of
    serious schizophrenia kind of settling in on this committee,
    because we have already passed the Train Act--to delay the
    rules and you know, with the majority's votes. Now we are
    saying well now, now that they are delayed, let us study them
    more. Let us look at the cost.
        Mr. Chairman, in all the hearings that we have had in the
    past, we have heard industry say that implementing these new
    Utility MACT rules will raise prices for everyone involved, and
    they advocate stalling and they are delaying these rules for
    five or ten or twenty more years down the road in order to give
    themselves more time to plan and prepare for the new standards?
        You know, Mr. Chairman, this schizophrenia in this
    committee, you know, yesterday we were saying let us hurry up
    and pass the legislation to force the administration to--within
    30 days to approve the XL Keystone Pipeline. Another day, 24
    hours later, we are saying let us stop, let us wait. Hold up.
    It reminds me of when I was in the service, you know, hurry up
    and wait. We were always running from here to there, running to
    the mess hall, running to this, running, and then you always
    had to wait in line. Hurry up and wait. So what we are doing
    here is yesterday we were hurrying up, and today we are saying
    let us wait. And those who subscribe from this horrific waiting
    and passing say that because many in the industry are not
    prepared for these new rules, they will have to shut down many
    old plants and spend money investing in retrofits and upgrades
    so they will be in compliance with the new MACT rules.
        Mr. Chairman, these folks have had years and years and
    years to prepare for these new rules. I am sensitive to the
    issue hiring as much as anyone on this subcommittee. My
    constituents that I represent want something just as
    important--and energy bills eat up a larger share of their
    hard-earned paycheck.
        But I believe it is a cop-out that we should scrap--to
    delay these new EPA rules, and give those who have been caught
    flat-footed more time to catch up, to get more forward thinking
    industry counterparts.
        Again, Mr. Chairman, my utilities--Edison, Exelon, they
    have already retrofitted their plants. They invested over a
    billion dollars. They were out in front of this. Now you are
    telling them that they didn't have to invest all of that money
    and they didn't have to take a very progressive and forward
    view? You are telling my constituents that what has happened is
    meaningless? Mr. Chairman, I think that these companies who did
    not take--see the writing on the wall, did not take this
    Congress seriously, did not take the work of this committee
    seriously, and decided that at the end of the day, they were
    going to try to manipulate the American people and manipulate
    this committee so that they have even more time, 10, 20 years
    to do something that is common sense and that is in the
    interest of the American people?
        I think, Mr. Chairman, that it is time for us now to try to
    deal--first of all, we have got to admit that we are a
    schizophrenic committee or subcommittee, and once we admit that
    we have got a problem, then we can get some help to try--an
    intervention to try to solve the problem. So let us--Mr.
    Chairman, I think this is a useless subcommittee, and I am glad
    that the administrator is here, but frankly, Ms. McCarthy, I
    think you have much more important work to do than to sit here
    and entertain us with the same old questions, the same old
    rigmarole, the same old game. You have got--the American people
    need you to be over doing your real work and not here
    entertaining us.
        Thank you, and I yield back the balance of my time.
        Mr. Whitfield. Thank you, Mr. Rush. Is there a psychiatrist
    in attendance this morning in the audience somewhere?
        Well, we have one person on the first panel this morning,
    and that is the Honorable Gina McCarthy, who is the Assistant
    Administrator for Air and Radiation, U.S. Environmental
    Protection Agency. Ms. McCarthy, thank you for joining us again
    today. We appreciate your taking time to come and talk about
    Utility MACT, or Mercury--or MATS, as you all call it. You are
    recognized for a period of 5 minutes, and at the end of that
    time, then we will go into a question-and-answer period.
        So you are recognized for 5 minutes.

    STATEMENT OF GINA MCCARTHY, ASSISTANT ADMINISTRATOR FOR AIR AND
               RADIATION, ENVIRONMENTAL PROTECTION AGENCY

        Ms. McCarthy. Thank you, Chairman Whitfield, Ranking Member
    Rush, members of the committee. I really appreciate the
    opportunity to testify before you today.
        Last December, EPA finalized the Mercury and Air Toxic
    Standards, MATS. These standards required by the Clean Air Act
    are the first national standards to protect American families
    from power plant emissions of mercury and other toxic air
    pollutions, like arsenic, acid gases, nickel, selenium, and
    cyanide. These long overdue standards will help make our
    children and our communities healthier. MATS will eliminate 20
    tons of mercury emissions and hundreds of thousands of tons of
    acid gas and toxic pollution each year. The control equipment
    that reduces these toxic emissions also will reduce fine
    particle pollution. As a result, MATS will help protect
    children and adults from the effects of exposure to toxic air
    pollution, saving thousands of lives and preventing more than
    100,000 heart and asthma attacks each year. We project that the
    annual public health benefits from MATS are $37 billion to $90
    billion, far outweighing the annual projected cost of $9.6
    billion.
        Technically, we know how to achieve these reductions. MATS
    relies on widely available, proven pollution controls that are
    already at use in more than half of the Nation's coal-fired
    power plants. These standards are affordable. EPA projects that
    electricity prices on average will rise only 3 percent as a
    result of MATS. With MATS and the cross-State rule combined,
    rates are projected to be well within the range of normal
    historic fluctuations, as this graph that is projected and as
    in my written comment shows.
        In addition, the updated standard will support thousands of
    good jobs for American workers who will be hired to build,
    install, and then operate the pollution control equipment.
    Furthermore, the country can achieve these reductions while
    maintaining a strong and reliable electric grid. Several EPA
    and Department of Energy analyses conclude that MATS will not
    adversely affect capacity reserve margins in any region of the
    country. A January 2012 Congressional Research Service report
    reached similar conclusions.
        The reliability concerns we heard were largely tied to
    concerns that 3 years was not enough time for compliance. We
    addressed those concerns. Sources would generally have over 4
    years until the spring of 2016 to comply with MATS, and
    reliability critical units will have the opportunity for an
    additional year. All power plants will have at least 3 years.
    That is the compliance date that we established in the rules
    under the Clean Air Act. In addition, State or local permitting
    authorities can grant that additional year under certain
    circumstances. EPA recommends in its rule that this fourth year
    be broadly available to sources that require it for a wide
    range of activities, including constructing replacement power,
    upgrading transmission lines, maintaining reliability while
    other sources complete their compliance activities. My staff
    and I have already begun and we will continue to reach out to
    States to help develop clear, State-forward processes for
    requesting and granting these extensions.
        Additionally, EPA is providing a well-defined pathway for
    reliability critical units to get up to an additional year
    beyond the 4 years mentioned above by obtaining a schedule to
    achieve compliance with an additional year. This pathway is set
    forth in a policy memorandum from EPA's Office of Enforcement
    and Compliance Assurance. While we don't foresee problems with
    the country maintaining a reliable electric grid as a result of
    our rules, we do believe that extra vigilance is appropriate to
    identify and address any potential localized reliability
    concerns that might arise. My staff and I have been and will
    continue to work with organizations that have the
    responsibility for maintaining the Nation's electricity
    reliability, including the Department of Energy, the Federal
    Energy Resource Commission, the National Association of
    Regulatory Utility Commissioners, and the Regional Transmission
    Organizations. We are working to help power plant owners
    understand their responsibilities, and remain confident that
    together, we do have the tools to address any challenges that
    may arise in connection with the implementation of the Mercury
    and Air Toxics Standard.
        In summary, EPA's final MATS standard will reduce emissions
    of toxic air pollution from power plants. It will lead to
    healthier communities and a safer environment. For 40 years, we
    have been able to implement the Clean Air Act. We have been
    able to continue to grow the American economy, and we have kept
    the lights on. MATS will not change that.
        Thank you for the opportunity to testify, and I look
    forward to answering your questions.
        [The prepared statement of Ms. McCarthy follows:]

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        Mr. Whitfield. Thank you, Ms. McCarthy. We appreciate your
    testimony very much.
        In the analysis that you provided the committee and that we
    have seen publically, you indicate that the annualized cost of
    this new regulation in the year 2015 will be $9.4 billion, and
    then you said that in 2020, it would be $8.6 billion, and in
    2030 it will be 7.4 billion. How do you develop those
    annualized costs if you don't know what the total cost will be?
        Ms. McCarthy. Well, EPA follows the best practices as well
    as OMB guidance to develop the costs and benefits information.
    We use a standard best management practice for understanding
    what those annualized costs are.
        Mr. Whitfield. And what is the total cost?
        Ms. McCarthy. I do not have--the figures that you are
    asking me for, actually, Congressman Upton asked us for as
    well. Those are costs that we don't establish or----
        Mr. Whitfield. So you don't have a total cost for this
    regulation?
        Ms. McCarthy. We have an annualized cost because the
    purpose of the cost----
        Mr. Whitfield. Well, what is the annualized cost in 2016?
        Ms. McCarthy [continuing]. Compare costs and benefits.
        Mr. Whitfield. What is the annualized cost in 2016?
        Ms. McCarthy. The 9.6 billion is the annualized cost in
    2016. That is compared to----
        Mr. Whitfield. Nine point four billion in 2015?
        Ms. McCarthy. I am sorry?
        Mr. Whitfield. Nine point four billion in 2015. What is
    2016?
        Ms. McCarthy. I believe it is 2016, but we can double-
    check.
        Mr. Whitfield. Well what is 2017?
        Ms. McCarthy. It would be less, but I don't have that exact
    figure.
        Mr. Whitfield. Do you have 2018?
        Ms. McCarthy. No, we used 2016 as the snapshot to compare
    both----
        Mr. Whitfield. And when you look at these costs----
        Ms. McCarthy [continuing]. Because it was the most
    conservative----
        Mr. Whitfield [continuing]. Which you don't know the answer
    to, you don't know the total cost.
        When you look at cost, we have a number of letters from
    companies that have already announced they are closing down
    various coal-fired plants as a result of these regulations. Do
    you look at the cost--do you include the cost of a person who
    loses their job because of this regulation?
        Ms. McCarthy. We--in terms of our cost calculations, we
    look at the costs associated with the control equipment being
    purchased and installed, we look at the price of electricity
    and the changes----
        Mr. Whitfield. But what about lost jobs? Do you look at
    that cost?
        Ms. McCarthy. We actually estimate in our analysis that
    this will actually create both short-term and long-term jobs.
        Mr. Whitfield. Do you look at the lost jobs, the cost of
    that?
        Ms. McCarthy. We look at benefits associated with increased
    job growth.
        Mr. Whitfield. Increased jobs, but do you look at lost
    jobs, the cost of that? Do you look at cost of a person who
    loses their health insurance and their family loses their
    health insurance? Do you consider that as a cost?
        Ms. McCarthy. I understand what you are asking, Mr.
    Chairman, but in this rule, we estimated that it would increase
    jobs, both short-term and long-term.
        Mr. Whitfield. OK. So you say it is going to increase jobs.
    We have plenty of experts who say it is going to lose jobs, but
    I find it rather appalling that this agency would issue a rule
    this widespread, this costly, and not even know what the total
    costs are. I mean, it is almost unbelievable that you would do
    this.
        And then, you know, another thing that is quite disturbing
    is just the name that you give it, Mercury Air Toxic--the MATS,
    and every time we hear people talk about it, we talk about oh,
    we are reducing mercury, we are reducing the acid gas, we are
    reducing the non-metallic components, and yet, all of the
    analyses indicate that the dollar value of the benefits from
    the reductions of those are almost nil. That if you didn't have
    the co-benefit of the reduction of the particulate matter, that
    you wouldn't have any benefit of any size. I mean, it appears
    to me it is misleading the American people. I know we have Mr.
    Hescox from the Evangelical Group here who have been running
    ads in various members' districts about how dangerous it is
    about this mercury reduction, it is important that we reduce
    mercury. And yet, there is no calculated benefit or very
    minute, because this rule does not reduce mercury to any
    calculated benefit. So it is a total misleading of the American
    people. The only benefit is reduction in particulate matter.
        So that is very disappointing to me, and at this time, I
    would like to recognize the gentleman from Massachusetts, Mr.
    Markey, for 5 minutes.
        Mr. Markey. And I thank you, Mr. Chairman, and I thank the
    Ranking Member, Mr. Rush, for allowing me this courtesy.
        In the movie ``Groundhog Day'' a weatherman named Phil
    Connors, played by Bill Murray, finds himself repeating the
    same day over and over and over again. And here we are in the
    same committee room for this committee's tenth hearing relating
    to EPA's regulations to remove toxic chemicals from power
    plants and other industrial sources. For the fifth time, Gina
    McCarthy has come to defend her agency against the specious
    claims that President Obama just doesn't want Americans to have
    jobs, and on the House floor, Republicans have already voted to
    weaken, delay, or repeal these regulations at least 40 times so
    far. It is Groundhog Day here in the House with the same
    hearings, the same bills, the same votes over and over again.
    Punxsutawney Phil saw his shadow, six more weeks of winter. Ms.
    McCarthy, you are just like Punxsutawney Phil, but you have
    eight more months of appearances before this committee to say
    the same thing over and over and over again. That is their
    plan.
        Clearly, this a Republican majority that has run out of new
    bad ideas, so they have just decided to recycle all of their
    old bad ideas. This may be the only type of recycling which the
    Republicans actually support.
        Of course, at each of these hearings, Republicans claim
    over and over again that Americans must choose between air
    conditioning and air quality. They tell us that we have to
    choose between pollution and power plants. What the Republicans
    are giving us are false choice. We may not have to choose
    between manufacturing and mercury. We do not have to choose
    between concrete and cancer. We do not have to choose between
    the next generation and generators.
        Just yesterday in this very committee during the debate on
    the Keystone pipeline, the Republicans said we should just
    ignore the environment, ignore pipeline safety, ignore public
    health, ignore the fact that none of the oil or fuel from this
    pipeline will stay in this country and benefit our citizens.
    And why do none of these things matter? Because of jobs, the
    majority says. Republicans even accused Democrats of not liking
    the blue-collar jobs they say the Keystone pipeline will
    create.
        According to the EPA, the regulations that are subject to
    today's hearings will create 46,000 short-term construction
    jobs. That is nearly eight times the 6,000 temporary jobs that
    the State Department estimated for construction of the Keystone
    XL pipeline. An independent report from the Economic Policy
    Institute estimated that this rule could create between 28,000
    and 158,000 jobs by 2015. That could be as many jobs as 26
    Keystone pipelines would create. The Political Economy Research
    Institute at the University of Massachusetts found that EPA's
    Clean Air Act cross-State air pollution rule and the mercury
    rule would together create nearly 1.5 million jobs over 5
    years. That is 250 Keystone pipelines.
        Ms. McCarthy, the Clean Air Act is one of the reasons for
    tremendous growth in the U.S. environmental technologies
    industry, and has been estimated to support 1.6 million jobs
    over the past 40 years. Is that your understanding?
        Ms. McCarthy. Yes, it is.
        Mr. Markey. So assuming Keystone is able to create the
    6,000 jobs State Department generously estimates it would, we
    would need 267 Keystone pipelines under that math to create the
    equivalent number of jobs as U.S. environmental technologies
    that have been created under the Clean Air Act, is that
    correct?
        Ms. McCarthy. I will have to take your word for the math on
    this one.
        Mr. Markey. But assuming that division is correct?
        Ms. McCarthy. Yes.
        Mr. Markey. Isn't it true that EPA's mercury rule will
    create 8,000 long-term utility jobs?
        Ms. McCarthy. That is what our estimates project, yes.
        Mr. Markey. Well, that again is more permanent jobs than
    the number of temporary construction jobs the State Department
    estimates the Keystone pipeline will create. So while the
    Republicans are crying crocodile tears over the 6,000 temporary
    jobs that the Keystone XL pipeline will create, they make us
    vote over and over and over again to kill tens of thousands of
    jobs that are created simply by ensuring that our air is clean
    to breathe.
        This certainly would seem like a ridiculous comedy if the
    consequences weren't so serious. I can only wish when I rise
    and shine tomorrow morning this whole movie won't be repeated
    yet again here in this committee, because I like Bill Murray's
    version much better, how that movie turned out. I don't see a
    good ending to the way in which the Republicans want to deal
    with the environment and job creation in this country.
        I yield back the balance of my time.
        Mr. Whitfield. Thank you, Mr. Markey
        At this time, I recognize the gentleman from Illinois, Mr.
    Shimkus, for 5 minutes.
        Mr. Shimkus. Thank you, Mr. Chairman. Before Mr. Markey
    leaves, we have been debating pronunciations of bitumen and
    bitumen, so we did additional research, Mr. Markey, and if you
    go on the online Oxford Edition, unfortunately, we are both
    correct, because they will have a pronunciation of the words
    and I take the English version and you take the American. I
    have the old money version, you have the new money version.
        Mr. Markey. You are taking the British version of how to
    speak it. You are so Southern Illinois, and I am taking the
    American version.
        Mr. Shimkus. You know where the Industrial Revolution
    began, right? It was those old dirty coal packs in England that
    helped fuel their power.
        Mr. Markey. And they came to America, they came to Boston.
    Ms. McCarthy and I, we took their language which is Irish, and
    we said no, let us use it correctly here. Let us put the----
        Mr. Shimkus. I just wanted to put that on for record, for
    those who followed Keystone yesterday.
        Mr. Markey. You said unfortunately we are both correct.
    That would be reconciliation, which is good.
        Mr. Shimkus. Hard to believe it would happen here.
        Mr. Markey. We hope that we can do the same thing with the
    EPA and the Clean Air Act, that we both----
        Mr. Shimkus. All right, reclaiming my time.
        Ms. McCarthy, thank you for coming. I do appreciate your
    time, and I do appreciate every time you appear. Even though it
    seems contentious, we have discussed and talked offline.
        So a couple of questions. We do have concerns with this
    annualized impact analysis, 9.4 billion in 2015 and then we
    skipped to 2020 and say well that year, that annualized cost is
    going to be 8.6 billion, and then we skip to 2030 and you say
    then it is going to be 7.4 billion. You are testifying today
    that you cannot provide us with estimates for the intervening
    years, is that correct?
        Ms. McCarthy. Yes, I am indicating that the way in which we
    do this is we compare an annualized cost very conservatively
    with the cost that would be the highest with the annualized
    benefits.
        Mr. Shimkus. So I mean, I think we will have other folks on
    the second panel who say well, we can, and that is the problem.
    We are going to say--you are going to use these annualized
    numbers that industry will say it is just not in the ballpark.
        Let me ask this question, and I will--how long past 2030 do
    you envision these annualized costs occurring?
        Ms. McCarthy. Well we don't know. We can't project right
    now, and I certainly can't tell you how much lower they are
    going to go, nor can I tell you how much more increase in
    benefits will accrue through from this rule.
        Mr. Shimkus. Let me then follow up, because again, with my
    friend Mr. Markey--you know, people from my district want me
    fighting for coal, and as the chairman of the recycling caucus,
    I take offense. We had a great bill moved through this
    committee to make sure we could recycle coal ash, which is an
    additional cost. This is one of the multitude of attacks on
    coal and electricity generation, Boiler MACT, Mercury MACT,
    coal ash, I mean, that is our problem.
        So my folks send me here to fight for coal. My folks send
    me here to fight for low-cost power, because of jobs and
    incomes. There is--Atlantic Cities did an article, ``What
    Happens to Small Town When Its Coal Plant Shuts Down?'' The
    mayor of Eastlake was quoted as saying ``It is a huge hit in
    terms of lost revenue for our town and school district.''
        In doing your analysis, did you consider what happens to
    small town America when they lose their coal-fired power plant?
    And we are losing three, based upon recent rules, in the State
    of Illinois.
        Ms. McCarthy. I will tell you that the rule itself didn't
    project a significant amount of closures that were the result--
    as a result of----
        Mr. Shimkus. But you can understand small town rural
    America, that is their only facility. Best wages, good
    benefits, good health care, what it does to the school system
    when that is no longer on the tax rolls, what it does to the
    local hospital when they no longer have a paying private-
    sector----
        Ms. McCarthy. Yes.
        Mr. Shimkus [continuing]. Industry. It kind of follows up
    to our next panel, we have a representative from the Navajo
    Nation who says this rule will be cataclysmic to the Navajo
    Nation. Do you consider these economic impacts in your
    consideration of the rule?
        Ms. McCarthy. We certainly take a look and we are able to
    take a look nationally and regionally at what the impacts of
    the rule might be in terms of electricity capacity. We are also
    working really closely with local communities, with the Navajo
    in particular. I was there last week at the Navajo generating
    station. We are looking at these rules----
        Mr. Shimkus. And if I can reclaim my time, I have 19
    seconds. Their testimony will say you have not worked with
    them. So I would--we need to get a meeting of the minds.
        And just to finalize, you know, Mr. Markey's tirade on the
    Keystone XL pipeline, remember, it is the plumbers and
    pipefitters who support the Keystone pipeline, Laborers
    International, the AFL-CIO, International Brotherhood of
    Teamsters, International Brotherhood of Electrical Workers,
    operating engineers, many who support me, I am a pro-labor,
    building construction trade guy, so they are barking up the
    wrong tree trying to stop the Keystone pipeline.
        I yield back.
        Mr. Whitfield. At this time, I recognize the gentleman from
    Michigan, Mr. Dingell, for 5 minutes of questions.
        Mr. Dingell. I thank you for your courtesy, and I commend
    you for this hearing.
        Administrator McCarthy, first I would like to welcome you
    back to the subcommittee. I appreciate your willingness and
    patience to answer questions. I would also like to thank you
    for taking time last year to meet with two utilities from my
    home State of Michigan, DTE and CMS, and I am appreciative of
    the fact that you were able to take the time to listen to their
    concerns.
        Administrator McCarthy, you may know I wrote a letter last
    December, along with Senators Levin and Stabenow to
    Administrator Jackson. We expressed our concern for sensible
    measures to reduce emissions of hazardous air pollutants in
    order to protect human health and the environment. However, we
    also pointed out that some utilities may not have enough time
    to comply with emissions standards. Can you inform us what
    steps EPA has taken to address that concern?
        Ms. McCarthy. I can, Mr. Dingell, and thank you for your
    letter. We received a lot of comment concerning that timeline
    and the rule. As I indicated in my opening statement, we not
    only provided the 3 years that we are allowed to provide under
    the MATS rule for compliance, but we also directed States and
    provided guidance to them to be very forward leaning in terms
    of making available a fourth year for units that----
        Mr. Dingell. You actually have potential for 4 and perhaps
    for 5 years?
        Ms. McCarthy. And we also developed an enforcement policy
    to utilize an Administrative Order that could provide a fifth
    year for reliability critical units.
        Mr. Dingell. Thank you, ma'am. Now in order for the
    utilities to request a one-year extension to comply with the
    new rule, what specific requirements or commitments will
    utilities have to meet in order to receive an extension? I
    won't object if you want to submit that to us for the record.
        Ms. McCarthy. I am more than happy to do that.
        Mr. Dingell. Now I know that the final rule has not yet
    been published in the Federal Register, but have any utilities
    contacted you to discuss the process of requesting a one-year
    extension discussed in the final rule? In other words, could
    you submit for the record to us what the utilities will have to
    do to secure that extension?
        Ms. McCarthy. We will.
        Mr. Dingell. Just submit that for the record, please.
        Now, as utilities prepare to upgrade their larger
    facilities and meet the new rule, some of these facilities will
    have to be taken offline in order to install the new
    technologies. While these larger facilities are offline,
    utilities may have to depend on older facilities in order to
    meet the basic peak demand. These older facilities will not
    likely be upgraded to meet the new rules. Now here comes the
    rub. As utilities are going to go through this retrofitting
    process, can they apply for a waiver for the older facilities
    to operate beyond the 3 years to ensure reliability during the
    transitioning? Yes or no.
        Ms. McCarthy. Yes.
        Mr. Dingell. Would you submit for the record how that would
    be done, please?
        Ms. McCarthy. We will.
        Mr. Dingell. Now, Madam Administrator, I understand that
    there have been two instances where the Department of Energy
    required utilities to reactivate generation facilities in order
    to meet reliability requirements. These facilities were not in
    compliance with Clean Air requirements, and it is my
    understanding that they were subsequently fined by EPA. Do you
    believe that the new Mercury and Air Toxics Standards provide
    room and flexibility to ensure that reliability is not
    jeopardized?
        Ms. McCarthy. We will work together, Mr. Dingell, and I
    will provide you information on the case that you referenced. I
    do not believe that EPA fined that facility, but there
    certainly is a concern that those issues raise and we will
    address those to you in written comments.
        Mr. Dingell. I thank you for that. I would also like to see
    sufficient attention given to that, if we could have a good
    answer to those questions in the record, and if you would
    submit that for the record, it would be much appreciated
    because there is a great deal of concern amongst the utilities
    on this particular matter.
        Now, Madam Administrator, should this situation occur
    again, that is, what I have been referring to earlier, will the
    EPA explore ways to work with utilities so that the utilities
    are not fined?
        Ms. McCarthy. We are exploring with them the issues that
    they are facing and how to face those challenges together right
    now. We are raising these issues. We are working with the
    regional transmission organizations, we are working with each
    of the States and with individual utilities right now to ensure
    that there is a pathway forward where we will absolutely be
    able to provide reliable, cost effective electricity and
    achieve compliance with these rules.
        Mr. Dingell. Madam Administrator, I note that you have a
    number of agencies, Federal, State, EPA, and also, you have to
    address the concerns of the Department of Energy, which has its
    reliability responsibilities. You had said--and this is
    comforting to me--that you are working with the utilities, but
    it appears to me to be very necessary that you should also be
    working, for example, with the Department of Energy, with the
    several State agencies, perhaps with the reliability councils,
    and others so that you can achieve the necessary purposes of
    avoiding fining utilities behaving in good faith but trying to
    serve a number of different masters.
        Can EPA give us assurance that you will be working with
    these other agencies as well as the utilities to avoid this
    kind of situation?
        Ms. McCarthy. I can provide that assurance, and the
    President directed the agencies to work together and we are
    doing that.
        Mr. Dingell. Thank you, Madam Administrator.
        Mr. Chairman, you have been most courteous. I am 1 minute
    over time, and I thank you.
        Mr. Whitfield. Thank you.
        At this time, I recognize the gentleman from Texas, Dr.
    Burgess, for 5 minutes.
        Mr. Burgess. Thank you, Mr. Chairman, and thank Ms.
    McCarthy for being here again.
        Could we talk for just a minute about the energy policy
    that is being followed by this administration? Of course, we
    got some clues 4 years ago when President Obama was running for
    president and he said so, if somebody wants to build a coal-
    fired power plant they can, it is just that we will bankrupt
    them. So could a new coal-fired power plant be built today that
    meets the new Utility MACT rule, or has the EPA effectively
    taken coal off the table for our future energy portfolio,
    consistent with what President Obama said when he was running
    for president?
        Ms. McCarthy. Let me just say that we believe that you can
    not only construct a new coal facility that meets the new coal
    standards, but we believe there is an existing facility that
    already does achieve the toxic standards in this rule.
        Mr. Burgess. No surprise that not everyone agrees with
    that. We may hear some testimony in the second panel that
    provides some additional insight into that.
        Let me ask you this. I come from a part of the country that
    does not produce coal. We do produce a fair amount of natural
    gas through a procedure known as hydraulic fracturing. Is the
    EPA planning further restrictions on the production of natural
    gas?
        Ms. McCarthy. Are you asking are we looking at additional
    emissions rules relative to oil and gas? I am just trying to--
    --
        Mr. Burgess. Correct, are there going to be further
    restrictions placed on the production of natural gas through
    hydraulic fracturing that the EPA is now contemplating?
        Ms. McCarthy. Well, we--I can speak for the air program,
    and we are finalizing an oil and gas new source performance
    standard that does relate to oil and gas development that looks
    at emissions associated with that.
        Mr. Burgess. And when will that appear?
        Ms. McCarthy. It is due to be finalized this spring.
        Mr. Burgess. Well is there--you just worry that--you take
    coal out of the equation, a lot of people feel nuclear no
    longer belongs in our portfolio--natural gas is under assault
    as well. Where do we get our energy? We heard testimony in this
    committee last session of Congress when the Waxman-Markey bill
    was being debated that without energy, life is cold, brutal,
    and short. I think that is still true. So where are we going to
    get our energy if we take all of these sources off the table?
        Ms. McCarthy. I believe that the MATS rule that we are
    discussing today allows existing coal to continue to run. I
    believe it allows new coal to be sited and constructed. I
    believe that the rules we are contemplating on the oil and gas
    industry, on natural gas will continue to allow natural gas to
    be utilized. The only thing we are doing in this rule in
    particular is using available cost effective controls to
    minimize harmful emissions of toxic chemicals that are
    impacting American families. That does not mean that we are
    precluding any type of energy from being utilized or
    constructed.
        Mr. Burgess. But on the one hand, it seems like you are
    eliminating other sources of energy, driving electrical
    suppliers to natural gas and on the other hand, there are going
    to be new regulations that make this problematic as well, not
    just in your department, but also on the studies of
    groundwater. We want it to be safe, but at the same time, we
    know we have to have energy available.
        You know, we have talked before and it doesn't take long in
    your testimony where you refer to asthmatics whose lives will
    be improved because of the things that you are doing. You
    didn't disappoint. It was in your third paragraph, prevent
    100,000 heart and asthma attacks each year.
        I just got to tell you, I do not believe that the EPA is
    serious about reducing asthma in this country because as
    someone who suffers from asthma, I can no longer buy an over-
    the-counter asthma inhaler as of January 1 to remove it. You
    said that the CFCs were not permitted because there is going to
    be a hole in the ozone, and as a consequence Primatene Mist,
    which I relied upon for years and years and years, is now gone.
    Many of us are inconsistent asthmatics, that is, we are not
    asthmatic all the time so we may move away from our maintenance
    medications, but then at 2 o'clock in the morning, something
    happens, mountain cedar, someone goes by on a horse and
    carriage, triggers our asthma and we are in trouble. And at 2
    o'clock in the morning, it used to be you could go down to the
    all-night pharmacy and buy a Primatene inhaler. You can't do
    that anymore. The only option you have is to go to the hospital
    emergency room and spend $800 to $1,500 getting a breathing
    treatment. How is that enhancing the life of asthmatics in this
    country?
        Ms. McCarthy. Mr. Burgess, as you know, there has been much
    review of the issue of Primatene Mist, not only at EPA but
    primarily at FDA in concert with many medical associations. The
    decision was made that the Primatene Mist did not--was
    available to be phased out because of concerns with the ozone
    layer without impacting the treatment that is medically
    available and that is useful for individuals----
        Mr. Burgess. It didn't work. It didn't work, and as a
    consequence, we cannot buy the leftover Primatene in the
    pharmacy any longer, and we are left to find much more
    expensive solutions to those problems that occur. This is
    something that could be fixed, and people frankly do not
    understand why it cannot be fixed. We had Margaret Hamburg in
    here from the FDA at the Health subcommittee the other day, and
    she said that it wasn't their problem, it was the EPA's
    problem.
        Mr. Whitfield. The gentleman----
        Mr. Burgess. I am asking you, fix this problem. People want
    it----
        Mr. Whitfield. The gentleman's time is expired.
        Mr. Burgess. Thank you, Mr. Chairman.
        Mr. Whitfield. Recognize the gentleman from Illinois, Mr.
    Rush, for 5 minutes.
        Mr. Rush. Thank you, Mr. Chairman, and I do share in your
    concerns, and I think the problems need to be fixed. Asthma is
    a very, very--high incidents of asthma and asthma-related
    illnesses in my district, and so I want you to know, I
    empathize with and I share your concern.
        But along those lines, Ms. McCarthy, I know that this has
    been kind of a protracting struggle that you have been engaged
    in here with us, and--but we are here today and I welcome you
    again, you know. I feel for you.
        The second panel--there are witnesses on the second panel
    who will allege that the EPA has enslaved the health benefits
    of the air toxics rule. In particular, they argue that EPA has
    over-estimated the value of reducing emissions of deadly fine
    particles which are linked to asthma, stroke, heart attacks,
    and premature deaths.
        Ms. McCarthy, do you have a response to these allegations,
    and could you share your responses?
        Ms. McCarthy. Thank you. I would respond by saying that EPA
    did its best job working with congressional panels who did a
    peer-reviewed study of how we do our cost and benefits
    approach. There are clearly benefits associated with the
    reduction of toxic emissions of mercury, arsenic, cyanide. Many
    of those toxic emissions and those benefits cannot be
    specifically calculated because of data and methodology
    problems. It doesn't mean that mercury doesn't cause
    neurological challenges for our children. We calculate those as
    best we can. But we also identify that the control technologies
    that are going to be put in place as a result of this rule also
    bring benefits associated with reductions in particulate
    matter. We counted those reductions. We used the best available
    science, both the science that is being driven by peer review,
    by our guidance with our Office of Management and Budget. We
    used the exact, most transparent way of calculating those, and
    we included them in benefits.
        There is no reason to deny the public the numbers
    associated with the full suite of public health benefits that
    are accrued as a result of this rule, just because the rule
    itself isn't targeting those reductions. It is coming with the
    rule itself, and that is what is driving significant public
    health benefits, as well as those benefits we just can't
    calculate that stem from reduction of toxic pollution that is
    impacting children and adults in this country.
        Mr. Rush. I think that should put to rest this fallacy that
    is being perpetuated, you know, at each one of these hearings,
    each one of your appearances that----
        Ms. McCarthy. Mr. Chairman, these are all real benefits to
    real people. People should know about them and we are telling
    them about the benefits. Thank you.
        Mr. Rush. Thank you.
        Last year in September, the committee and the full House
    passed the TRAIN Act that nullified the EPA's Mercury Air
    Standards or Air Toxics rules, requiring EPA to start from
    scratch. This prohibits the EPA from issuing a new rule for at
    least 2 years and bars implementation for at least 5 years. I
    can't--it doesn't make sense. I can't see the rhyme or the
    reason that this committee, this subcommittee never, ever had a
    hearing on the public health implications of nullifying these
    rules before passing the bill. So Ms. McCarthy, just for the
    record, how will nullifying the Mercury and Air Toxics rules
    affect public health?
        Ms. McCarthy. The Mercury and Air Toxics rules are now 20
    years overdue. If we are denied the ability to move this rule
    forward and implement it, you are denying significant public
    health improvements that Congress anticipated that EPA would
    produce for the American public. You are denying the ability
    for us to move forward with cost effective rules that will
    actually provide healthier families and healthier communities
    across the entire United States.
        Mr. Rush. Thank you. I yield back.
        Mr. Whitfield. Thank you.
        At this time, I recognize the gentleman from Texas, Mr.
    Barton, for 5 minutes.
        Mr. Barton. Mr. Chairman, could I defer at this point in
    time and let one of the other members who has been here ask
    questions? I do want to ask questions, but I still have some
    studying to do, so if you could go to somebody else who has sat
    here.
        Mr. Whitfield. At this time, I recognize the gentleman from
    Texas, Mr. Olson, for 5 minutes.
        Mr. Olson. I thank the chairman, and good morning, Ms.
    McCarthy.
        Ms. McCarthy. Good morning.
        Mr. Olson. Thanks for coming today, and the people I
    represent back home in Texas 22 have a lot of questions they
    want me to ask you this morning. It is going to center on costs
    for the Utility MACT bill and greater liability.
        And just starting out, everyone in this room is entitled to
    their own opinion, but no one is entitled to their own facts,
    and that is why we are here today, ma'am, is the facts.
        My home State is still experiencing severe drought
    conditions. We just went through the hottest August in record.
    My district, the Houston district, we were over 100 degrees the
    entire month of August. While most people here don't think that
    is unique, that is. We will go over 100 maybe 10 times a year
    normally. We have 100 percent humidity a lot longer than that,
    but experts are going to predict that this pattern is going to
    continue. And so reliability of the grid is particularly
    important. And ERCOT, the entity that regulates our grid in
    Texas, expects capacity shortages. If we are going to have
    rolling blackouts in the soaring heat, young and elderly lives
    are going to be in danger, the very people that this supposed
    rule is going to protect. These aren't projected lives saved,
    but real lives lost.
        And the people in Texas 22, I have got to be honest with
    you, ma'am, are skeptical about the administration's motive.
    They remember then-candidate Obama's statements to a San
    Francisco editorial board that under his policies, energy
    prices will ``necessarily skyrocket'', basically making the
    cost of fossil fuels too expensive and making the other fuels,
    the alternative fuels, economically viable. I share their
    concerns.
        EPA claims that the benefits of this bill are $90 billion,
    but the experts say the benefits to the mercury are much, much
    lower, $500,000 a year. In this chart here, just to focus on
    the mercury issue, as you can see on this chart, blood levels
    are significantly low exposure levels. Look at this. This is
    the World Health Organization up here, and there are 20
    micrograms per liter. The European Food Safety Authority down
    here, U.S. Environmental Protection Agency down here.
    Obviously, we have got the lowest mercury standards in the
    entire world. And we are above the limits in blood mercury
    levels of women ages 16 to 49, 95th percentile from 1999 to
    2000. President Bush takes office, we go below for the first
    time, 4.6 milligrams per liter, 4.4 in 2003-2004, 4.5 2005 to
    2006, 3.8 2007 to 2008. So this chart shows that EPA--we are
    below EPA's own standards right here, and yet you are calling
    this thing the Mercury and Air Toxics Standards rule. It can't
    be mercury, looking at this chart.
        So the question I have for you, and this is what my people
    back home want me to ask, are these numbers being used, the
    mercury being used, to get it to the miniscule mercury exposure
    to actually get reductions in particulate matter? Yes or no.
    Again, are you using mercury to get another target, particulate
    matter?
        Ms. McCarthy. This standard is about reducing toxic
    pollution. It has the co-benefit of reducing particulate
    matter.
        Mr. Olson. Total benefit. Ma'am, you are below the levels
    right now, and again, people are skeptical. We are over 95
    percent. This is from, again--we will get you all the
    information.
        Ms. McCarthy. I am sorry, I don't know what--are those
    numbers reflective of what, the blood level mercury?
        Mr. Olson. Blood level mercury, yes, ma'am, the Y axis
    going up is the blood level mercury, and that is micrograms per
    liter, and then the level, the number here on just the--what
    has decreased, what has happened over a number of years. As you
    can see, this is the World Health Organization, European Food
    Safety Authority, U.S. Environmental Protection Agency, your
    agency. We were above, EPA only, 1999 to 2000, and then since
    that point forward, from 2001 to 2008, we have had significant
    decreases. We have been below EPA's own levels. So I am very
    skeptical about this thing being called some sort of mercury
    bill, and not being used to get into particulate matter. But I
    have got to move on, ma'am, I have got a lot more questions
    from my people.
        The other thing I have got, in questions from our chairman
    here, he talked about jobs gained and jobs lost. You kept just
    talking about the jobs gained, jobs gained, jobs gained. That
    is only half the equation. I mean, we need to know about how
    many jobs are lost as well, because it is the net that is
    important. Not just the jobs gained, but the net of jobs gained
    versus jobs lost. I have got a bill, H.R. 1341, the
    Establishing Public Accountability Act, that is going to
    require EPA to do a study of the job impact overall, jobs they
    have lost, jobs gained, jobs sent overseas, and to do it before
    the public comment period so the public has the ability to
    determine whether or not they will get some of that
    information. Would you support that bill?
        Ms. McCarthy. Our job numbers are net, so I would be happy
    to have any additional information and participate.
        Mr. Olson. OK, thank you, because you just kept talking
    about jobs gained, so thank you very much. I appreciate that.
        Mr. Whitfield. Thank you very much, Mr. Olson.
        At this time, I recognize the gentlelady from Florida, Ms.
    Castor, for 5 minutes.
        Ms. Castor. Thank you, Mr. Chairman, and good morning,
    Administrator McCarthy.
        Ms. McCarthy. Good morning.
        Ms. Castor. And really to everyone that values clean air
    across America, I want to thank you for your perseverance,
    because after all, it has been 20 years--21 years since the
    passage of the Clean Air Act amendments, and we finally have a
    proposed air toxics standard that will regulate mercury and
    other toxic air pollutants that is based on the best science
    and technology.
        These substances are some of the most toxic, carcinogenic,
    and dangerous pollutants. Mercury is known to cause devastating
    damage to the brain. Mercury is of particular concern to women
    of childbearing age, infants, and children, because mercury
    exposure damages the nervous system, which can impair
    children's ability to think and learn.
        So I guess it is no surprise that a lot of public health
    groups see this as a great victory, like the American Lung
    Association, the Academy--American Academy of Pediatrics, but I
    think people across the country would also be interested in
    knowing that religious organizations, sportsman's organizations
    like hunters and anglers, also support the rule, but they may
    be particularly surprised to understand how many utilities
    support this rule. Thirty-six energy businesses and business
    associations, including Calpine, Constellation Energy, Entergy,
    Exelon, NRG Systems, Pacific Gas and Electric, and Public
    Service Enterprise Group have expressed their support. And in
    fact, in my home State of Florida, a number of utilities that
    operate coal-fired power plants have expressed their commitment
    to coming into compliance. I think that is very telling. See,
    many of those utilities over the years have invested in the
    technology. They have continued to make good profits, but part
    of that has been being responsible businesses. They have
    invested in technology to reduce their emissions. The
    technology is in widespread use all across the country, but the
    dirtiest power plants have put off installing pollution
    controls for decades.
        So hopefully this is going to spur everyone to come up to
    the best science, use the best technology. It will create jobs,
    but Madam Administrator, I understand that there will be some
    that are going to be affected. They have kind of stared in the
    face of the evolution of technology and haven't gone down that
    road, and now they are going to have to. But explain that
    compliance period. How long will businesses, utilities, have to
    come into compliance?
        Ms. McCarthy. We are generally talking about the ability
    for companies to have a 3- to 4-year window, which brings us to
    the spring of 2016. Units that are necessary for reliability
    purposes will have a defined pathway that they can come to the
    agency and get a fifth year added on to that, which brings us
    to 2017. We do not even anticipate that most will need a 4-year
    window, never mind a fifth year, but we are fully prepared to
    address those issues to ensure that we meet the President's
    clear directive that we keep the lights on while we address
    issues that are so critical to the health of American families
    related to toxic air pollution.
        Ms. Castor. I mean, 3 to 4 to 5 years? Some, I bet, have
    argued that that is too lenient. What is that compliance
    timeframe of 3 to 4 to 5 years based upon? What study went into
    that time period?
        Ms. McCarthy. Well, it is a statutory requirement that we
    look at what kinds of technologies are in the marketplace that
    are cost effective and available, and then we give sufficient
    time under the statute to be able to allow those to be
    constructed. We have looked at in detail with the Department of
    Energy and others have looked at this as to whether it is
    sufficient time. We know the types of control technologies that
    will be required. We understand the time it takes to construct
    those, to engineer them, to put them in place, and we believe
    that the timeline that is being provided with this rule and
    with the other pathways available to us will be more than
    sufficient to address the challenges associated with compliance
    and keeping the lights on.
        Ms. Castor. Thank you very much. I yield back.
        Mr. Whitfield. Thank you.
        At this time, I recognize the gentleman from West Virginia,
    Mr. McKinley, for 5 minutes.
        Mr. McKinley. Thank you, Mr. Chairman.
        Unfortunately, my colleague from Massachusetts left, and he
    made an interesting analogy about Groundhog Day, but
    unfortunately he missed the point. Groundhog Day, by repeating
    the message, the actor of the story got the message finally and
    he became a better person. That is what we are trying to do
    here. We are going to repeat it and repeat and repeat it until
    America understands that these rules--what effect these rules
    are going to have, because what we have said to you and your
    predecessors and others is that just because you can doesn't
    mean you should. It is a business lesson. And for those of us
    that have come from the business community, we understand just
    because you can doesn't mean you should, because of your
    consequences of what you do.
        So for example, powerhouses all across America are shutting
    down because of the onslaught of EPA rules. If I could just
    show you, here is a visual for people to understand, here are
    the plants that are going to be closing across America, because
    of the short timeframe and the rules are simply too severe to
    comply.
        Just this morning a company announced three more
    powerhouses are going to close, in addition to the six they
    already--hundreds of jobs are going to be lost, health care
    benefits. Nationally, you can see the drama that will play out.
        But curiously, last December in your own testimony and then
    today again, you said that you only think the loss of gigawatts
    will only be in the neighborhood of 4.7 gigawatts. But yet,
    every other group in America that has studied this has said
    that you are grossly misleading the American public and
    concealing information apparently from Congress, because your
    number is down here, while all the others are up in a much
    higher level. I think there is a real question about your
    capability of doing your own mathematics. Some have said it
    could be as high as 75 gigawatts, not 4.7. Just in the last 48
    hours, we have had one power company reduce 3.3 gigawatts.
    Earlier this year, AEP came out and said 6 gigawatts. Between
    the two of them are 10. That is twice the number that you
    suggested. It is so blatantly false what you are representing
    to us in this. What you are doing is this war on coal. It is
    not just a war on coal in the industry, but just a war on the
    miners and the families and the communities. You are
    devastating them with these kinds of threats.
        But more importantly, what you have to understand, and we
    have heard it throughout this whole thing, has been the
    increased cost of electricity. You say 3 percent. Utility
    companies are saying 13 to 15 percent. Again, what are we
    supposed to believe? Your numbers that you keep giving us are
    flawed, and they are proven out time and time again as being
    unreliable. Just in the last 10 years, half of the American
    families have seen their energy costs double, and you are
    saying it is only going to increase 3 percent?
        Now, I wish what you would do is the EPA--all of you, would
    take some of your resources and look at where possibly the real
    culprit is, that cost, and bear that in mind. All the quotes
    that we keep hearing coming from the other side of the aisle
    talk about asthma, heart, but no one differentiates between
    outdoor air and indoor air quality. You look surprised. Have
    you considered indoor air quality? Do you understand that 90
    percent of our hours that we are on this planet, 90 percent of
    our day is spent in a building? Only 10 percent in that outdoor
    air quality, 90 percent--60 percent of it is in our homes. We
    have 56 million children and families that go into a school
    building every day and deal with bad air quality. Indoor air
    quality is one of the biggest issues we should be addressing,
    and when we talk about the asthma conditions that occur, why
    don't we look at the fact that historically, with all the drops
    in all of the contaminants that are occurring across America,
    asthma is increasing. All of this, all this money that is being
    spent by the powerhouses to reduce a particular matter, whether
    it is NOX, SOX, or whatever is going to be in the air to
    contribute to that, has not been offset the fact that asthma
    has actually increased across America. I would like to see you
    spend some time to do the research to find out what that is
    about, instead of spending--we have 700 powerhouses in America
    that need to be upgraded, and for you to say $9.4 billion
    annually is just patently preposterous. Everyone in this room
    that has any sense of engineering and facts knows that you
    can't do it for that amount of time.
        Unfortunately, my time has run out, but--so I didn't get a
    chance, but I hope that--I hope you can respond finally to some
    questions, issues that we have raised, because I have asked you
    for questions in the past--for answers--and you have not gotten
    back to me. Thank you.
        Mr. Whitfield. At this time, I would like to recognize the
    gentleman from California, Mr. Waxman, for 5 minutes.
        Mr. Waxman. Thank you, Mr. Chairman.
        The idea that EPA requirements to clean up air pollution
    will hurt the economy and kill jobs is now Republican economic
    dogma, but these are the same doom and gloom scenarios we have
    heard from industry since the Clean Air Act was first adopted
    in 1970, and none of them have come true. The truth is, it
    takes workers to install new pollution controls and construct
    cleaner power plants. That is why groups representing over
    125,000 U.S. businesses support the air toxics standards.
        Mr. Chairman, I would like to make a unanimous consent
    request to insert this letter of support into the record.
        Mr. Whitfield. Without objection.
        [The information follows:]

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        [GRAPHIC] [TIFF OMITTED] T6379.019

        Mr. Waxman. The--during a recent call with investors and
    discussing the effects of the Mercury and Air Toxics rule,
    American Electric Power CEO Michael Morris even stated ``Once
    you put capital money to work, jobs are created.'' EPA has come
    to the same conclusion. The Agency estimates that compliance
    with the new air toxics standards will be a net job creator,
    not a job killer.
        Ms. McCarthy, how many jobs could be created as power
    companies comply with the new standards?
        Ms. McCarthy. We estimate that as many as 46,000 jobs will
    be created on a temporary basis to assist with the construction
    and installation, and 8,000 permanent jobs will be created.
        Mr. Waxman. Can you explain how complying with these new
    air toxics standards will create jobs?
        Ms. McCarthy. Yes, because the standards will require, in
    particular, some of the small inefficient coal-fired facilities
    to make a choice between continuing to run and investing. There
    are a number of facilities that will need to install control
    equipment. That will mean engineering jobs, that will mean
    construction jobs. We estimate that there will be investments
    made, as we indicated, up to 9.6 million in 2016 alone. That
    means that we will have construction jobs, and in the long-
    term, we will have permanent jobs at those facilities to manage
    that control equipment, and it, of course, will allow us
    significant health improvements that will really be of benefit
    to American families in terms of lower health care costs, and
    improved health of particularly our children.
        Mr. Waxman. Thank you. As economist Josh Bivens will point
    out in the second panel, these regulations are expected to have
    particularly positive effects under current economic
    conditions. American industry isn't short of cash, it is short
    of demand for its products, and spending capital to hire
    workers and buy equipment injects desperately needed cash into
    the economy, stimulating demand. The record bears this out.
    Over the last 40 years, the economy has continued to grow as
    EPA has set new standards to cut air pollution from every
    industrial sector. Can you discuss some other examples of how
    implementing the Clean Air Act has created jobs in engineering,
    manufacturing, construction, and other highly skilled areas?
        Ms. McCarthy. I certainly can, and there have been studies
    done of this which we are happy to provide to the committee.
        But you look at everything from our car rules, including
    the ones that we are contemplating now that are leading to new
    cost effective cars available to people that save them money.
    We are looking at the installation of catalytic converters that
    actually significantly helped to reduce emissions from cars
    that led to the growth of industries in the United States that
    are now exporting to other countries. There is great
    documentation about our rules initiating expertise in
    innovation and technology improvement that is bringing world-
    class industries developing in the United States that then
    export to other countries. Control technologies in the air
    pollution sector are, for the most part, have been designed in
    the United States, manufactured in the United States. A lot of
    that has been driven by the requirements under the Clean Air
    Act.
        Mr. Waxman. In addition to the overblown rhetoric about the
    impact of this rule on jobs, some have warned that this rule
    will cause electricity prices to skyrocket. EPA estimates that
    the rule will cause electricity prices to increase by just 3
    percent on average by 2015, falling to 2 percent by 2020, and
    less than 1 percent by 2030. Can you put this 3 percent
    increase in context for us?
        Ms. McCarthy. I can. It is well within the normal
    fluctuations that we have seen, and it is--the increase that we
    would estimate as a result of this rule is less than what folks
    would have paid in 2009 for electricity. It translates into
    about $3 per household per month.
        Mr. Waxman. Thank you, Mr. Chairman.
        Mr. Whitfield. Thank you.
        At this time, I recognize the gentleman from Kansas, Mr.
    Pompeo, for 5 minutes.
        Mr. Pompeo. Thank you, Mr. Chairman. Thank you, Ms.
    McCarthy, for being here today.
        Do any existing units currently meet the new unit
    standards?
        Ms. McCarthy. One.
        Mr. Pompeo. One? What plant is that?
        Ms. McCarthy. It is a plant in New Jersey. I think it is
    called Logan.
        Mr. Pompeo. Is this Logan 1? So there is a single--of all
    the plants in the United States today, there is a single
    existing plant that meets these new requirements. Did I ask the
    question correctly to get the answer I got, ma'am?
        Ms. McCarthy. Let me just indicate that we don't have all
    the information on all the plants in terms of whether or not
    they would comply. We are aware of one plant that I indicated
    that would meet this new----
        Mr. Pompeo. So to the best of your knowledge with all the
    data that you have there, it is single plant that you are aware
    of that currently would comply with the new rule----
        Ms. McCarthy. That we have data to verify, that is correct.
        Mr. Pompeo. Great, I appreciate that. That is not very
    many. That is a far cry from what you have described as a
    process that can be accomplished in 3 to 5 years.
        Ms. McCarthy. Well, the good news is for the existing
    plants and those standards, there are many dozens and dozens
    actually that will comply out of the gate.
        Mr. Pompeo. Sure, I understand. In Kansas, we have got a
    plant we have been trying to build that has an existing air
    permit, it has been granted the permit, but because it was
    unable to break ground to begin construction, it is now going
    to be trapped under the new regulatory regime. Your rule as
    issued, I understand, made no exception for plants that already
    had existing permits granted, but because the Sierra Club and
    other folks took them to task for years, they were unable to
    proceed. Am I--have I got that correct as well?
        Ms. McCarthy. I would be happy to look into it in detail,
    but generally, if you are constructing a new facility and you
    haven't broken ground, you are obligated to meet new source
    facility standards.
        Mr. Pompeo. Right, that is their understanding as well,
    so--we talked--Mr. Waxman asked you a question about cost.
    Testimony today--and I have heard from folks back in the
    district about increasing costs of a penny a kilowatt hour, 3
    cents a kilowatt hour. You talked about 3 percent as if it was
    nothing. I will tell you that when I was in business, we tried
    to take costs out everywhere. We had to require--when your
    energy costs go up by any amount, it enormously impacts your
    business and causes you to consider seriously about whether to
    continue to manufacture or produce chemicals here in the United
    States.
        Did you consider the economic impacts to all of those
    businesses that will be affected by the cost increase for
    electricity when you promulgated the rules?
        Ms. McCarthy. We did, to the extent that methodology
    allows, look at the cascading impact on other sectors, yes. And
    that impact was negligible.
        Mr. Pompeo. Do you think that there will be new coal-fired
    power plants built in the United States following the
    implementation of this rule?
        Ms. McCarthy. Actually, I don't make those predictions, so
    I would hesitate to do that based on my personal knowledge.
        Mr. Pompeo. If there are no new coal-fired power plants
    built in America following this rule, would you be willing to
    at least consider the possibility that it was a direct result
    of this rule, that no such plants were ever built?
        Ms. McCarthy. Well actually, our analysis did take a look
    at whether or not the MATS rule, in and of itself, would change
    the dynamic in terms of decisions about building new coal, and
    we do not believe that it will.
        Mr. Pompeo. Mr. McKinley showed you some data that refuted
    your assessment that only 4.7 gigawatts of energy will be lost
    as a result of this. Do you think that data is just wrong? We
    have already got FirstEnergy's announcement. What is it about
    the data that Mr. McKinley presented you that you think causes
    that to be at such a wide variance from your very low
    prediction about the impact of the rule on retiring facilities?
        Ms. McCarthy. I think that we have to acknowledge that
    there is a transition in the energy world. We have to
    acknowledge that low natural gas prices is causing a
    transition, and when these issues come up, and I am sure they
    will consistently come up, you have to take a look at it and
    see what is actually happening. Whether it is the MATS rule or
    it is an overall business decision, that is reflective of that
    transition, and we could walk through what happened with
    FirstEnergy, but it appears to us on looking at this that
    FirstEnergy is making a business decision. And what we are
    attempting to do is work with the RTOs, with the energy world,
    to understand these dynamics so that we can be informed by this
    and ensure that the MATS rule can be complied with, but it is
    not changing the direction in which the industry is heading.
        Mr. Pompeo. I will tell you that FirstEnergy disagrees with
    you. I mean, their public statements, the folks who know the
    business best tell us that you are wrong about that, so their
    assessment is very different. So while you said you can't
    predict about what someone will do about a coal plant,
    apparently you can predict inside of a company's own business
    why it is making their own business decision better than the
    leaders of that business.
        Ms. McCarthy. Well, the units that they have announced that
    they are closing, they are closing now, 3 or 4 years in advance
    of being required to do it under the rule, and they are also an
    average of 53 years old.
        Mr. Pompeo. I have got one last question. The new coal-
    fired power plants, have you talked to any of the contractors
    about whether their permit to issue--they are prepared to issue
    certifications saying that they can meet these new rules? That
    is what a new--a company needs. If they are going to build a
    plant, they have got to get financing. They need the
    contractors to confirm that, in fact, when it is built it will
    be in compliance. Have you talked to any of the contractors who
    have assured you that they can provide that guarantee?
        Ms. McCarthy. I have not, but clearly, we expect that there
    will be concerns raised about many aspects of these rules, and
    we will take a look at it if people submit data and have
    concerns.
        Mr. Pompeo. Thank you. Thank you, Mr. Chairman.
        Mr. Whitfield. At this time, I would like to recognize the
    gentleman from Texas, Mr. Green, for 5 minutes.
        Mr. Green. Thank you, Mr. Chairman. Ms. McCarthy, welcome
    back. It is good to see you again.
        Ms. McCarthy. You, too.
        Mr. Green. I want to start like my colleague, Congressman
    Olson, we share East and Southeast Harris County together, and
    we are concerned about the reliability issues.
        Last year, Texas suffered two major reliability problems,
    and we actually experienced rolling blackouts throughout the
    State. Since that time, EPA has issued the Cross State Air
    Pollution rule, which is something that our utilities had not
    anticipated having to comply with, and now the Utility MACT
    rule on top of that. The North American Reliability Corporation
    recently looked at the reserve margins in 18 regions covering
    the 48 mainland U.S. States, and found that two regions, ERCOT
    in Texas, the Texas grid, and New England would experience
    margin--planning margins below the NERC reference level of 15
    percent in 2015. According to the Congressional Research
    Service, the data suggests that ERCOT may experience
    reliability problems, but the Utility MACT would play a minor
    role. Of course, industry has different conclusions.
        Did you or EPA work with our regional grid, ERCOT, during
    the rulemaking process on the reliability issue, and if so,
    what were their concerns and how were they addressed?
        Ms. McCarthy. Actually, we did and we continue to work with
    them. I think I would just point out that I believe the study
    that you identified was on the basis of the proposed rule, and
    because of the comments that we received, we made significant
    adjustments in that rule because of the data we received.
    Recent analysis does indicate, we believe, that the MATS rule
    will not impact resource capacity in any region. So I think the
    issues that were raised for ERCOT and the New England States
    are no longer considered in the same framework, because of the
    changes that we made.
        Mr. Green. Does ERCOT agree with you on that?
        Ms. McCarthy. We actually had them on a phone call last
    week with a number of the RTOs. We are working hand in hand
    with them. I do not know exactly what their comments might be
    on the final rule, but if they have concerns, we are certainly
    open and we will be working with them.
        Mr. Green. OK. One of my concerns is that if we--because of
    the coal plants and in central Texas and in east Texas, if
    those are required to shut down, I know some companies are
    bringing natural gas facilities out of mothballs, but they are
    having--going through the permitting process. Is there any way
    that EPA could look at some of those--some of them are in
    Harris County, in fact, in Congressman Olson and I's district--
    to look at bringing those back on in time? Hopefully we won't
    have 100 degree temperatures for, you know, 200 days or
    whatever it was last year, but is there an effort to make sure,
    whether it be ERCOT or even New England, that there are some
    additional power that will be coming online? And like I said,
    we have no shortage of natural gases, we know, in our country,
    but the permitting process may be longer through EPA to get
    those plants back up, those mothballed----
        Ms. McCarthy. We will be working with those, Congressman.
    One of the things that I indicated is that we have developed an
    enforcement policy that would utilize and Administrative Order
    to allow up to 5 years for those types of issues to be
    addressed. But we will address those issues and we are working
    to identify them now so that there is more than sufficient time
    to look at what other generation will be constructed and how to
    address these issues.
        Mr. Green. I have a number of questions, Mr. Chairman. I
    would like to submit them in writing, but let me get to another
    one.
        In response to the stakeholder comments EPA received and
    operational concerns related to the magnitude in facilities the
    retrofit required by the standard, you are now providing
    sources the option to use more flexible facility-wide averaging
    approach, as long as it provides the equivalent reduction in
    mercury, for example. Can you elaborate on this, and if the
    facility-wide averaging program is something that has been
    pushed in the past, especially during the cap and trade debate,
    but would have often--would we hear often push back from EPA on
    looking at a system instead of per unit?
        Ms. McCarthy. Actually, we proposed an averaging system at
    the facility, not across facilities, that could be utilized
    under the rule. What we did in the final rule is to allow that
    averaging to be a little longer period of time with a little
    tighter standard to provide more flexibility to those
    facilities. We believe it is consistent with the law. It is not
    trading among facilities or within regions that would result in
    different exposure patents for communities. So we believe it is
    consistent and it is good under the law, and that it will
    provide opportunities for very cost effective methods to
    achieve compliance with the rule.
        Mr. Green. Mr. Chairman, I know I am out of time, and I
    just hope we will invite Ms. McCarthy to come enjoy our
    hospitality more often, because obviously we have a lot of
    questions that would, you know, I think it would help with
    Members of Congress on both sides of the aisle. So I thank you
    for you time.
        Mr. Whitfield. And I am sure that she would like to come
    back more often, too.
        At this time, I recognize the gentleman from Texas, Mr.
    Barton, for 5 minutes.
        Mr. Barton. Thank you, and I appreciate the courtesy of
    being allowed to defer initially so that I could become
    somewhat better prepared.
        It is obvious that everybody in this room wants the best
    health environment we possibly can here in the United States.
    It is also, I think, a given that we want the best economic
    opportunity for people here in the United States. You are in an
    unenviable position of having to make decisions that, to some
    extent, trade off between those two noteworthy goals. I have
    really tried to understand this MACT rule, and I have really
    tried to look at the justification for it and tried to be able
    to substantiate that, and I just can't do it. I want to talk
    about health benefits briefly, and then I want to talk about
    costs.
        In your--not your rule, but the EPA rule, this is the
    statistical report that accompanies the rule. It was put out in
    December. It is, gosh, who knows, 500 pages long. On Table E5,
    it talks about the reduction in ES3, estimated reduction of
    incidents of adverse health effects of the Mercury and Air
    Toxics Standard at a 95 percent confidence level. And
    basically, it says that 99.98 percent of the total benefits are
    going to be because of reductions in PM2.5, I think, that only
    .02 percent of the total benefits are with reductions in
    mercury. And yet, all the press is about mercury reduction.
    Isn't it true that you get almost no health benefit from the
    reduction--the new standards for mercury reduction, according
    to your own statistical analysis?
        Ms. McCarthy. I do not believe that that is an accurate
    statement. What I will----
        Mr. Barton. That is what you say.
        Ms. McCarthy. No, we actually identify the benefits that we
    can count. We certainly know the toxic impacts associated with
    mercury. We know that other toxins----
        Mr. Barton. I stipulate that mercury is toxic.
        Ms. McCarthy [continuing]. Cause cancer, we are just not
    able to quantify those sufficiently because of data, resource
    methodology.
        Mr. Barton. When you talk in your--I don't know if you
    talked in your testimony, but you gave us in an answer to a
    question, you just said that--you used the phrase ``real
    people.''
        Ms. McCarthy. Yes.
        Mr. Barton. ``Real people.'' Is there a verified incidence
    of a real person in the United States either dying or being
    hospitalized because of mercury poisoning that results from a
    power plant emission?
        Ms. McCarthy. I don't think I can address that specificity.
        Mr. Barton. You just talked about ``real people,'' OK, I am
    asking you a straight question----
        Ms. McCarthy. When we look at it on----
        Mr. Barton [continuing]. About ``real people.''
        Ms. McCarthy [continuing]. Populations, I can't name an
    individual----
        Mr. Barton. Well, you can't name it because it doesn't
    exist.
        Ms. McCarthy. Well, I can tell you that power plants are
    the single largest source of mercury emissions. I can tell you
    that that mercury enters into the food chain. I can tell you
    that----
        Mr. Barton. If you cannot tell me that somebody has gotten
    sick and died and gone to the hospital in the United States
    because of exposure to mercury from a power plant smokestack.
    You can't do it.
        Now, let me read you something. This is from your report.
    This isn't me making it up. Down in the sub-footnotes of this
    table ES3, and this is your table--not you personally, but the
    EPA's table. ``The negative estimates for certain endpoints are
    the result of the weak statistical power of the study used to
    calculate the health impacts and do not suggest that increases
    in air pollution exposure result in decreased health impacts.''
    The weak statistical power of the study. Now, if you read this,
    these tables, and they have an estimated midpoint and then they
    have--on the downside and on the upside, and it turns out that
    they are all over the map. But the most negative impact, when
    you go through all of these, non-fatal heart attacks, hospital
    admissions, respiratory admissions, cardiovascular, emergency
    room, acute bronchitis, lower respiratory, upper respiratory,
    asthma exacerbation, it turns out that most of the impact is
    minor restricted activity days. Minor restricted activity days.
    From 2.5 million to 3.7 million in the eastern United States
    from 99,000 to 150,000 in the western United States, and from
    2.6 million to 3.8 million nationwide. Minor restricted
    activity days.
        Now, minor restricted activity days is going to cost them
    probably--in your own numbers at least $10 billion a year for
    10 years, but you estimate even in the out years it is about $7
    billion a year. That is going to cost real jobs and real
    negative economic impact, and your own tables don't back it up.
        Mr. Whitfield. Thank you, Mr. Barton.
        At this time, I recognize the gentleman from Pennsylvania,
    Mr. Doyle, for 5 minutes.
        Mr. Doyle. Well, that is quite a hard act to follow.
        Mr. Chairman, thank you for putting the hearing together
    today and Ms. McCarthy, thanks for your testimony.
        Mr. Chairman, we are here today to have another hearing on
    EPA's Utility MACT rule that was finalized in December of last
    year, and it seems to me that one thing that is often missing
    from the conversation is that these rules are finally being
    implemented after years and years of delay, so we shouldn't sit
    here and pretend like this has just sprung up on our utility
    and manufacturing sectors in the last year. In fact, EPA has
    been tasked with regulating mercury since the passage of the
    1990 Clean Air Act, and efforts to issue a mercury rule that
    treated mercury as non-hazardous were thrown out by the courts
    and now after 24 years, we are finally seeing a rule from the
    EPA that will regulate mercury and other toxins. And yet, we
    sit here trying to sort through these claims that, in fact, 24
    years wasn't long enough for the power sector to prepare, and a
    potential 5 additional years of compliance time provided by the
    rule, totaling a full 29 years since the power sector knew
    controlling mercury would be required. We are saying that that
    is simply too onerous.
        The fact is, the time has come and the time is now, so let
    us see what we can do to make sure that the rule has the least
    negative impact possible on those people who matter the most,
    American consumers.
        Administrator McCarthy, in your written testimony, you tell
    us that though the rule will cause the retirement of some older
    coal plants, you don't expect that any of these retirements
    will affect the capacity reserve margins in any region of the
    country. Is that correct?
        Ms. McCarthy. That is correct.
        Mr. Doyle. Can you tell us why that is?
        Ms. McCarthy. Because the estimated retirements are
    basically primarily small coal-fired facilities that are highly
    inefficient and fairly non-competitive. We believe that this
    4.7 percent is less than 1 percent of the capacity of
    generation across the U.S., and we have analyses from a
    resource capacity perspective, and we believe that the
    uneconomic units that will decide not to continue to operate,
    because they don't want to invest in modern pollution control
    equipment will be replaced by new capacity, cleaner capacity,
    and there is sufficient capacity in the system to be able to
    allow this transition to happen over the next 3 to 4 to 5
    years.
        Mr. Doyle. Now, can you tell us, do you expect capacity
    reserve prices to increase in power markets where there will be
    or have been retirements?
        Ms. McCarthy. That could very well be the case. We are
    seeing at least claim of that, but I want to indicate that the
    increase in capacity reserve market prices are only one factor
    that impact the retail cost of electricity. We actually
    calculated where we thought that capacity increase might
    happen. That was factored into our estimate that retail prices
    are only likely to, at its maximum, average to 3 percent across
    the U.S. to increase. And again, that needs to balance against
    the American families being able to accrue the benefits, which
    are 9 to 1, against the costs. The benefits associated with
    lower health costs, being able to make it to work, being able
    to send your kids to school, that result from the health
    benefits associated with this rule.
        Mr. Doyle. So you are saying that those potential increases
    were included in EPA's assessment of regional cost impacts?
        Ms. McCarthy. That is correct.
        Mr. Doyle. That was part of your assessment?
        Ms. McCarthy. Retail cost impacts, that is correct.
        Mr. Doyle. OK. Thank you, Mr. Chairman. That is all I have.
        Mr. Whitfield. At this time, I recognize the gentleman from
    Virginia, Mr. Griffith, for 5 minutes.
        Mr. Griffith. Hi, thanks for being here, and I am going to
    ask you for some yes or no answers. If you can't do that, just
    submit them to me later because I just have a little bit of
    time allotted to me.
        Isn't it correct that the vast majority of mercury
    emissions in our air come from natural sources, such as
    volcanoes and forest fires, or from foreign sources?
        Second, isn't it also correct that the EPA's proposed rule
    cites the estimates of global mercury emissions that range from
    7,300 to 8,300 tons per year and between 50 and 70 percent of
    that is from natural sources, less than 50 percent of which
    would be from manmade sources? Yes or no.
        Ms. McCarthy. I will provide you----
        Mr. Griffith. You will provide me with an answer? I
    appreciate that.
        It is also--seems that the EPA has published that the
    mercury coming from U.S. power plants of about 29 tons per year
    under this proposed rule, and isn't it true that that is about
    1/3 of a percent of the total global mercury air emissions? You
    will give me an answer later?
        Ms. McCarthy. And I will, yes.
        Mr. Griffith. And I appreciate that.
        And I question, as others have, how you can estimate and
    then build from that estimate other projections of what is
    going to happen to the coal-fired power plants when FirstEnergy
    alone has closed or has eliminated 3.3 of your 4.7 gigawatts of
    power alone, that doesn't count the other folks. And here is
    the concern that I have. AEP estimated in a meeting that I was
    in earlier this year that with the new rules, they were going
    to have to expend money that--to clean up another 12 percent of
    the air, and there is no question that that is a good thing to
    clean up, but for the consumers and the AEP footprint in my
    area of Virginia would be--they would pay an additional 10 to
    15 percent.
        I asked Lisa Jackson earlier this year and she didn't have
    an answer for me, and if you have got one, please submit it
    later. What is the impact--when I have got a district where the
    median household income is $36,000 a year, you raise the
    electric costs, what is the health impact on my constituents
    when they can't afford to heat their homes, and doesn't that
    have a negative impact? And I don't believe that was considered
    in your estimates of the health benefits, and so I would ask
    that you submit that to me as well. And I would submit to you
    also that having people out of work also affects their health.
    I think every statistic shows that, and I pick up Mr.
    McKinley's chart and he showed you the coal power plants that
    are closing down, and we have got a dot right here. That is the
    same spot in a small county that Boiler MACT might very well
    put 700 jobs out of business at. So we are double whammying
    with different EPA rules the rural communities of this country.
    And I would have to ask you, do you know if the new Dominion
    plant being built in Virginia City area is going to meet the
    new standards that you all have come out with? Do you know
    that?
        Ms. McCarthy. I do not. I am not familiar.
        Mr. Griffith. If you could find out for me, I appreciate it
    because that is just south of this dot right here, and so what
    we are talking about is from one regulation after another, the
    Ninth District of Virginia and all the parts of the country are
    being hammered on jobs, and I submit to you that the United
    States has got a job problem, if you all haven't figured that
    out by now, and that we shouldn't be piling on regulations that
    are killing jobs. We want to move in the right direction, but
    we can't be killing our economy. And I would have to ask you
    that if we had a regulation that we could eliminate, an
    instrumentality or something, we were going to get rid of power
    and we were going to get rid of those jobs, if we could save
    from 1990 to the present--I am looking at page 9 of your report
    where you said that the current regs have saved 167,000 lives.
    What if in that same time period we could have eliminated
    direct, not indirect, but direct, about 700,000 premature
    deaths? Would that be a good thing, and should we have
    regulations that would prohibit and make it clear that those
    deaths wouldn't occur?
        Ms. McCarthy. I am sorry, I am not sure I followed the
    question.
        Mr. Griffith. The question is if there were a regulation
    that could save directly 700,000--forget the job impact--
    700,000 lives, would you all be recommending that to the
    President?
        Ms. McCarthy. I would have to tell you what--I would have
    to decide whether it was consistent with the law and my
    authority. That is all I am doing here, that is all I would
    speak to.
        Mr. Griffith. OK. So you wouldn't be--notwithstanding the
    fact that we could save all those lives, it wouldn't matter? Is
    that what you are saying?
        Ms. McCarthy. I would be happy to save every life we could
    save, obviously.
        Mr. Griffith. But you understand that there's always a
    trade-off, and that sometimes it is--you know, you can't make
    the world perfect. You understand that? EPA can't make the
    world perfect. You don't control the Chinese, you don't control
    a lot of parts of the world. You can't even make the United
    States perfect, can you?
        Ms. McCarthy. Right. Hopefully that is not the mission of
    the Agency.
        Mr. Griffith. Well, it sure seems like you all want to make
    it perfect, because you want to wipe out everything related to
    coal, as far as those of us in the coal industry and areas are
    concerned, and you are killing jobs left and right with no
    regard to what is going to happen to the people in those areas,
    and when you raise the cost of electricity, it doesn't appear
    to me that you have any regard for the cost to the people who
    have to pay those heat bills and those electric bills who
    cannot afford to do so. I had a manufacturer in my district
    here this morning. I stepped out to talk to him, and I said
    that that is what we were looking at and that is what we were
    talking about today, and they said please don't let that
    happen. We can't afford to be any less competitive than we are
    right now with our foreign competitors, et cetera.
        So this is why you are getting so much concern from this
    committee today, and I appreciate your testimony, and I yield
    back, Mr. Chairman.
        Mr. Whitfield. At this time, I recognize the gentleman from
    Nebraska, Mr. Terry, for 5 minutes.
        Mr. Terry. Thank you, Mr. Chairman. I appreciate you being
    up here. It is always interesting.
        I have a public power in my district, and they have, for
    the metropolitan area, two different coal-fired plants, both of
    which will have to be upgraded for the MACT rule, and then of
    course later on, the inclusion in CASPER, but I just want to
    talk about the MACT rule right now.
        They estimate--again, they are just guessing a range of
    $450 to $500 million per unit, two units, so we are talking
    about $1 billion. They estimate in their published documents
    that they have given both the press and me, that would relate
    to about a 12 percent or little over 12 percent rate increase.
    So I just lay that out because it is completely--I mean, from 3
    percent to 12 percent rate increase is a huge difference in
    swing between the EPA's estimates.
        The other issue that seems--from them and other utility
    companies that they have expressed to me is the 3 years. Not
    only in the fact that there is a limited number of companies
    that have the expertise and the trades people necessary to do
    that, but now they have to compete against each other and that
    drives up the cost of the bids. Have you taken that into
    account at all, that by trying to compact all of the
    construction into a 3-year period that you are actually driving
    up the costs, and if we extended it out maybe 3 or 4 years or 4
    or 5 years that we could eliminate some of the angst and
    anxiety?
        Ms. McCarthy. We looked at--actually at both issues. We
    looked at costs associated with the rule, and what impact that
    might have on retail electricity prices. We are more than happy
    to work with--through the APPA, which we have met with and with
    those companies in that region. We provided a lot more
    flexibility in the final rule because of comments that we
    received in the proposal. We think there is a lot more
    flexibility in terms of controls and compliance strategies that
    should significantly lower the costs associated with
    compliance.
        We also looked at the timing. We are forward-leaning in the
    fourth year for States. We have also provided an additional
    fifth year opportunity for reliability critical units. We know
    that this is a challenge, and we will work with the regions as
    well as the local communities to make sure that we can get this
    done well.
        Mr. Terry. Yes, and on the reliability critical units,
    which are the only ones that are eligible for the fifth year,
    as I understand, is that right?
        Ms. McCarthy. Yes.
        Mr. Terry. OK, and the EPA issues an Administrative Order
    that the plant can operate for a fifth year. Can EPA guarantee
    that the plant will not be subject to citizen suits?
        Ms. McCarthy. No, you are asking a very complicated
    question. We cannot guarantee that; however, this is an
    administrative vehicle that we have used many thousands of
    times, and we believe that because it is a year that--the
    process that we are going through for the Administrative Order
    will be transparent and will be rigorous, that we believe that
    there would be limited opportunity or likelihood of civil suits
    that would follow.
        Mr. Terry. When could these companies that are requesting a
    fourth year or a fifth year if it is a reliability critical
    unit, when will they know that they have got that extra time?
        Ms. McCarthy. That is a very good question as well, and
    what we tried to signal in the enforcement policy was that the
    sooner we have these discussions, the better. We are working
    with the RTOs and the planning agencies to gather the
    compliance plans and to assess what will be necessary for
    reliability. The agency has indicated that we will provide a
    signal to that company about the eligibility of that
    Administrative Order so that they would be able to rely on it
    with certainty to make their investments as soon as possible,
    while in advance----
        Mr. Terry. Would that be this year?
        Ms. McCarthy. Well, it will take a while for the compliance
    plans to be done and for the reliability assessments, but as
    soon as they are ready, we are ready and working with DoE and
    FERC to assess those applications and make those decisions
    quickly.
        Mr. Terry. All right. Again, on getting some extra time,
    there is also a phrase in the rule or the order that said
    that--disclaims that anything can change at any time. And so if
    somebody is even granted an extra year or a fifth year if it is
    a reliability critical unit, they already know that anything
    can change without even public notice. I don't think that
    provides a level of certainty, and I would like the EPA to go
    back and look at that disclaimer.
        Ms. McCarthy. Let me look at that qualification. I think we
    are trying to make sure that we communicate effectively and we
    work with folks to provide a certain investment path forward.
    We will do everything we can to be able to do that.
        Mr. Whitfield. Thank you, Mr. Terry, and I think we have
    concluded with questions. Ms. McCarthy, thank you very much for
    taking time to join us, and we look forward to seeing you again
    real soon.
        Ms. McCarthy. Thank you, Mr. Chairman.
        Mr. Whitfield. As soon as possible.
        Ms. McCarthy. Thank you, members.
        Mr. Whitfield. And now I would like to call up the second
    panel. We have seven witnesses on the second panel. First,
    Dr.--Mr. Darren MacDonald, Director of Energy, Gerdau Long
    Steel North America; Mr. Harrison Tsosie, Attorney General,
    Navajo Nation; Dr. Julie Goodman from Harvard School of Public
    Health; Dr. Anne Smith, Ph.D., Economist with NERA Economic
    Consulting; Mr. Ralph Roberson, President of RMB Consulting and
    Research; Reverend Michael Hescox, President and CEO,
    Evangelical Environmental Network; and Dr. Josh Bivens, Acting
    Research and Policy Director of the Economic Policy Institute.
        So we appreciate all of you being with us this afternoon,
    and I will recognize--I am going to recognize each one of you
    for the period of 5 minutes for you to give your opening
    statements, and then at the end of that time we will have
    questions for you or some of you.
        So once again, thanks for being with us, and Mr. MacDonald,
    we will begin with you, so I will recognize you for a period of
    5 minutes for an opening statement, and I would just remind all
    of you to be sure and pull the microphone close and push the
    button to make sure that it is on, because the transcriber has
    difficulty hearing if it is not on.
        So Mr. MacDonald, you are recognized for 5 minutes.

    STATEMENTS OF DARREN MACDONALD, DIRECTOR OF ENERGY, GERDAU LONG
        STEEL NORTH AMERICA; RALPH E. ROBERSON, PRESIDENT, RMB
       CONSULTING AND RESEARCH, INC.; HARRISON TSOSIE, ATTORNEY
       GENERAL, NAVAJO NATION; THE REVEREND MITCHELL C. HESCOX,
    PRESIDENT AND CEO, EVANGELICAL ENVIRONMENTAL NETWORK; JULIE E.
      GOODMAN, PRINCIPAL, GRADIENT, AND ADJUNCT LECTURER, HARVARD
       SCHOOL OF PUBLIC HEALTH; JOSH BIVENS, ACTING RESEARCH AND
    POLICY DIRECTOR, ECONOMIC POLICY INSTITUTE; AND ANNE E. SMITH,
            SENIOR VICE PRESIDENT, NERA ECONOMIC CONSULTING

                     STATEMENT OF DARREN MACDONALD

        Mr. MacDonald. Thank you. I would like to thank the
    chairman of the subcommittee, Mr. Whitfield, for the
    opportunity to testify here regarding EPA's Utility MACT rule
    and its impact on our company, the steel sector, and the
    manufacturing sector in general as we all attempt to recover
    from the great recession.
        I ask that my full written statement be placed in the
    record.
        My name is Darren MacDonald. I am the Director of Energy
    for Gerdau's 17 steelmaking facilities in the U.S. Gerdau
    employs 10,000 people in the U.S. and is the second-largest
    steel recycler in North America. My responsibility at Gerdau is
    to secure a reliable, cost effective energy supply, and manage
    the company's energy efficiency strategy. Like all energy
    intensive manufacturers, energy is a significant input cost for
    Gerdau, and a key consideration when making investment
    decisions.
        The steel sector is concerned about the tremendous
    disagreement regarding the increased costs and reliability
    impacts that may result from the Utility MACT. The simple fact
    is that all of the reliability risks and all of the compliance
    costs will be ultimately passed on to us, the consumers.
        Let me be clear. The U.S. manufacturing sector is doing
    everything that we can to be energy efficient and reduce our
    costs. In fact, in a recent DoE study, they concluded the U.S.
    steel industry was the most energy efficient in the world, and
    only a new breakthrough technology could make a significant
    improvement in energy intensity. So there is no silver bullet
    for us to address increased energy costs or reliability impacts
    associated with the rule.
        Although the EPA has projected the Utility MACT will not
    have a significant impact on reliability and only have a modest
    impact on the price of electricity, other reputable
    organizations disagree with these estimates. NERA has looked at
    the full suite of EPA's proposed regs on the utility sector,
    and have estimated that electricity prices in some regions will
    increase by double digits. Others, such as Credit Swiss and
    NERC, have found that there will be significant costs and
    reliability issues.
        To give you some idea of the sensitivity of the
    manufacturing sector to an increase in electricity costs, a 1
    cent per kilowatt hour increase in the cost of electricity
    imposes an additional cost of approximately $9 billion per year
    on the manufacturing sector.
        Reliability is also a significant concern. Please recognize
    that large manufacturers with interruptible contracts are the
    first to be called upon if there is a reduction in reliability.
    There was a case in February of 2012--2011 when Texas had an
    ice storm and our operations in Texas were curtailed far beyond
    our contracted limits to provide reliability so hospitals and
    residential consumers could maintain reliability. So if
    reliability is impacted, there will be direct costs on--and
    those will have an impact on our bottom line, our ability to
    meet our customer orders, but also our ability to operate
    safely.
        From the private sector perspective, we wonder if the pace
    of change makes sense. The timeline required by the Utility
    MACT rule will put a significant demand on suppliers and
    installers of pollution control equipment, and utilities will
    have no choice but to pay these heightened market rates, and
    these extraordinary costs will simply be passed through to rate
    payers.
        We believe that it is in the best interest of the
    manufacturing sector for the EPA to phase in the Utility MACT
    rule over a longer period of time to alleviate the combined
    impact that regulations will have on electricity costs, and on
    reliability. A delay will also give time for utilities to avoid
    what appears to be an over-reliance on natural gas. Natural gas
    has had a history of volatility, but itself is the subject of
    potential new regulation that could drive up those costs.
        So let me be clear. I am not here today to say that the EPA
    should do nothing with respect to improving environmental
    regulations. We share the environmental goals involved in many
    of the regulatory efforts, but the timeline is too tight and
    the potential extensions for utility compliance are too
    uncertain. If the regulation is implemented in a thoughtful and
    systematic way with sufficient time, then compliance and
    environmental gains will impose less of a concentrated impact
    on reliability and on the economy.
        Policymakers must understand that we are exposed to global
    competition. Risks of higher prices and reliability impacts
    will inevitably affect the economy, investment decisions, and
    the levels of employment that are sustainable in the U.S. If
    our customers can't afford the products made here in the U.S.,
    the replacement products will come from somewhere else with a
    larger emissions footprint.
        Thank you for the opportunity to testify.
        [The prepared statement of Mr. MacDonald follows:]

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        Mr. Whitfield. Thank you, Mr. MacDonald.
        At this time, I recognize Mr. Ralph Roberson, President of
    RMB Consulting, for 5 minutes.

                     STATEMENT OF RALPH E. ROBERSON

        Mr. Roberson. Thank you. Chairman Whitfield, Ranking Member
    Rush, and members of the committee, thank you for the
    opportunity to appear before you and speak to you about the
    American Energy Initiative. My name is Ralph Roberson and I am
    President of RMB Consulting and Research. I personally have
    over 40 years of experience in measuring air pollution and
    evaluating the ability of pollution control technologies to
    meet emission limits.
        Let me begin by saying that I am not representing any of
    RMB's clients today, and the views that I express are mine and
    not necessarily indicative of any of my clients, and I am not
    receiving any compensation for this testimony.
        My testimony addresses EPA's recently promulgated by now we
    know MATS rule. That rule addresses emissions of hazardous air
    pollutants from electric generating units. My testimony is that
    the emissions limits in the MATS rule, which EPA developed
    under the Maximum Achievable Control Technology provisions, or
    MACT provisions of the Clean Air Act, are so stringent that no
    new coal-fired generating unit can be built. The stringency of
    these new unit standards means that no generating unit can
    built in this country. In effect, EPA has adopted standards
    that prevent our country from building any new coal units;
    thus, coal-fired units will no longer be an option for the
    utility industry's generation portfolio.
        Note that my comments and testimony do not include the
    category of facilities called integrated gasification combined
    cycle, as they are regulated under a different rule. I am
    addressing conventional coal-fired units.
        Power companies have always relied on a diverse set of
    resources in order to ensure that the industry can provide
    electricity to their customers at stable prices. Coal has
    always played a role in that because it is a domestic fuel, and
    over the long-term, it has always been available at predictable
    cost. Banning new coal generating units would represent a
    significant shift in U.S. energy policy and the way that
    utilities have planned their portfolios, with potential
    significant consequences for us, the electric consumers.
        As I explained in my comments on the proposed rule, there
    are several reasons why I believe what I am telling you. First,
    no unit actually achieves all of the emission--all of the new
    unit emission limits. Second, EPA based its new unit limits on
    selected short-term stacked tests that are not representative
    of long-term performance, and are inconsistent with the 30-day
    rolling average provisions that the rule requires. Third, some
    of the emission limits in the final rules are so low that they
    are below our ability to measure them accurately. In the final
    rule and in response to comments on the proposed rule that no
    existing unit met all of the new unit limits, EPA said it has
    identified a source that did meet all the limits, even though
    that source was not identified in the preamble of the final
    rule. We have heard Ms. McCarthy say it today, and my testimony
    is that that unit is Logan Generating Unit 1. EPA used Logan 1
    to set the new unit limits for HCl and mercury, and EPA now
    says that Logan can, in fact, meet all the new unit limits.
        But please consider the following facts. Publicly available
    data show the results of six separate HCL tests for Logan. In
    only one of those tests did Logan meet the limits that EPA has
    set for HCl. It failed the other five times. In other words,
    EPA is requiring all new units to meet an HCL standard based
    solely on the performance of Unit 1, when that unit itself
    failed to meet the standard in five out of six tests.
        An identical situation exists for the Chambers Cogeneration
    Unit 2. Unit 2 was selected by EPA to support the final
    filterable PM limit, or particulate matter. However, six
    publicly available stacked test results for Chambers exist, and
    only one out of those six meet the limits. EPA's selective use
    of these test results undermines EPA's conclusion that new
    units can meet the new unit limits.
        If the best performing unit for HCl fails the test five out
    of six times and the best performing filterable limit--unit
    fails the filterable limit five out of six times, how can it be
    concluded that these standards are achievable?
        Taking all of these problems together, I am convinced that
    no air pollution control vendor will provide guarantees that
    its equipment can meet these stringent limits. Absent those
    guarantees, developers will not be able to obtain the huge
    amount of financing that it takes to build one of these
    projects, and absent such financing, no units will go forward.
        In sum, the standard set forth for new coal units in the
    MATS rule are so stringent that new units, even using the best
    technology available on the market, cannot comply. These
    standards therefore prevent new coal-fired units from coming
    into existence.
        Thank you.
        [The prepared statement of Mr. Roberson follows:]

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        Mr. Whitfield. Thank you.
        At this time, Mr. Tsosie, Attorney General for the Navajo
    Nation, you are recognized for 5 minutes.

                      STATEMENT OF HARRISON TSOSIE

        Mr. Tsosie. Ya'at'eeh, Chairman Whitfield, Ranking Member
    Rush, and distinguished members of the committee. Thank you for
    allowing the Navajo Nation an opportunity to present its views
    concerning the recent EPA Utility MACT rule pertaining to
    mercury emissions from electric generating facilities.
        My name is Harrison Tsosie, and I am the Attorney General
    for the Navajo Nation. As the Chief Legal Officer for the
    Navajo Nation, I have an extensive background in matters
    pertaining to the implementation of various Federal laws and
    regulations on the Navajo Nation.
        In order to fully understand the effects of the MACT rule
    on the economy and its impact on consumers, I will provide a
    brief history of the Navajo Generating Station to illustrate
    how complex these issues can be.
        NGS was authorized by Congress to provide power for the
    pumps of the Central Arizona Project. Congress authorized the
    Central Arizona Project in 1968 through the Colorado River
    Basin Project Act. The purpose of the CAP is to provide the
    State of Arizona with access to the annual 2.8 million acre
    feed of entitlement to the Colorado River. Simultaneously, the
    Act authorized the Department of Interior to enter into
    cooperative agreements with non-Federal entities to build a
    power plant to provide power to the Central Arizona Project and
    to augment the lower Colorado River Basin Development Fund,
    which is used to fund Indian Water rights settlement claims.
    The result is a 24.3 percent ownership in the Navajo Generating
    Station by the U.S. Government.
        NGS is unique because of its Federal ownership stake and
    the plant being sited on Indian lands and uses Indian resource
    as a fuel source. Therefore, the Federal Government has certain
    trust responsibilities to safeguard the economy of the Navajo
    Nation. The U.S. EPA held no tribal consultation prior to
    ruling on the MACT as required by the administration's
    Executive Order on tribal consultations. Further, there are no
    health studies on the Navajo Nation regarding mercury. There
    are no mercury-based land studies to determine if there will be
    health improvements by the rule.
        The cost of compliance with the regulations has a
    cumulative impact. While the U.S. EPA says the MACT rule will
    not force closure of power plants, it is the sum of all its
    regulations that could do just that. The Navajo Nation has
    already experienced impact of the Mojave Generating Station
    closure, resulting in job and revenue loss to the Navajo
    Nation. Roughshod regulatory policies and implementation
    without full analysis and tribal consultation will result in
    the possible closure of other facilities. Closures mean massive
    job losses on the Navajo Nation, which is already faced with an
    unemployment rate of 50 percent. A closure of NGS would also
    mean the forfeiture of $20.5 billion in gross State products to
    the Arizona economy, and just under $680 million in adjusted
    State tax revenues during the years 2011 to 2044, according to
    recent studies.
        The U.S. Federal Government set up the Navajo Nation
    economy as a natural resource economy. The Federal Government
    holds title to Indian lands, therefore, they control the
    economy of the Navajo Nation. As a result of the Federal over-
    regulation and control of Indian lands, there is no economy
    existing on hardly any Indian lands. Indian nations are often
    cited as being pockets of poverty throughout this great Nation,
    and the one common denominator is the pervasive Federal
    control. The United States EPA MACT ruling is no exception, and
    adds yet another regulatory burden tribes are left to contend
    with.
        While some testifying today might espouse the affordability
    of the MACT rule implementation and the net job creation
    following EPA's regulatory action, the facts on the ground do
    not support these assertions and provide little comfort for the
    1,000 plus workers employed by the various plants and the
    mines, in addition to the over 7,000 Navajo Nation employees
    that are funded in part by the revenues created by these
    operations. When the barrage of regulatory burdens hits home,
    the Navajo Nation is left with little recourse but to
    investigate the exportation of our abundant coal reserves to
    outside interests like China and India. This will only be--be
    the only method by which the Navajo Nation in the short-term
    can maintain its economy.
        The Navajo Nation supports the goal of reducing hazardous
    emissions. We recommend a tailored implementation of any
    environmental rule. In the case of the MACT ruling, appropriate
    analysis and consideration of the economic impacts to the
    Navajo Nation did not occur. The MACT implementation should be
    fair and reasonable, taking into account compliance timelines,
    and must consider impacts on the Navajo economy, Indian water
    rights settlements, and the overall price tag that will be
    passed on to the electric utility consumers in the Southwest
    and the CAP water users throughout the State of Arizona.
        [The prepared statement of Mr. Tsosie follows:]

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        Mr. Whitfield. Thank you.
        At this time, Reverend Hescox, who is President of the
    Evangelical Environmental Network, you are recognized for 5
    minutes.

                    STATEMENT OF MITCHELL C. HESCOX

        Mr. Hescox. Thank you, Chairman Whitfield and Ranking
    Member Rush, and all the members of the committee. I must say,
    my biggest challenge here this morning, being an old preacher,
    is to keep this to 5 minutes.
        ``Life, especially protecting our unborn children and
    infants, should not be a matter of party or economic
    commodity.'' Speaker Boehner spoke those words just a couple of
    weeks ago in my hearing at the March for Life rally. He
    suggested protecting life and providing the opportunity for
    abundant life must be a matter of principle and morality.
    Children are a precious gift from God. They are among the most
    vulnerable members of our society, and our scripture demands
    that we protect the vulnerable. And yet, we gather here today
    to choose if protecting our unborn children and newborns from
    mercury emitted from coal-burning power plants is in our
    national interest in keeping with our national character.
        Are we, as a Nation, willing to protect our children or
    hinder them? Mercury is an neurotoxin whose impacts on the
    unborn and newborn children pose significant costs to both them
    and society. A recent medical paper states that mercury is a
    highly toxic element, and there is no known safe level of
    exposure.
        In the past year, the National Association of Evangelicals,
    the United Conference of--United States Conference of Catholic
    Bishops, and us, the EEN, Evangelical Environmental Network,
    have joined together to support a Federal mercury standard that
    would protect our unborn children and infants across the
    country. Two different Christian traditions united to protect a
    sacred gift from God, a gift before and after birth, and
    anything that threatens or impedes life or unborn infants is
    contrary to our common belief an exacts a moral cost on the
    Nation's character.
        Approximately one in six children in the United States are
    born with threatening levels of mercury. Mercury impairs
    neurological development, lowers IQ, and has a potential list
    of other health impacts. There are over 1,000 documented
    published medical journals that support these conclusions.
    These conditions result from eating food containing methyl
    mercury, primarily contaminated fish, and the source of 50
    percent of our domestic mercury emissions remain coal-fired
    utilities.
        Unborn children and infants are at risk. Pregnant women who
    consume fish contaminated with mercury transmit such mercury to
    their unborn children. They also give it to them in their
    breast milk. Unlike adults, unborn children have no way to
    excrete mercury. The toxin keeps circulating inside their
    mother's womb, increasing their exposure. Medical research
    indicates that mercury cord blood is twice that of the mother's
    blood. Therefore, even if a mother's blood remains below toxic
    levels, risk levels, the unborn child may not.
        Right now, according to the latest survey, over 50 percent
    of our fresh waters in the United States have mercury fish
    eating advisories. It is simply not safe to eat freshwater
    codfish in most of the United States. An example of that is one
    of my employees, one of my staff, Ben Lowe who lives in
    Illinois, many of his neighbors fish regularly to provide
    protein for their families. Ben tells a story of one day he was
    fishing in the Chicago River. He knew it was polluted, knew it
    was filled with mercury, and he was about ready to throw his
    catch back in when a man came up to him and asked him if he
    could have it. Ben tried to explain to him that it was full of
    mercury and other toxins, but the man said I need to feed my
    family. They are hungry. Ben gave him the fish, but it is not
    right. Nowhere in America should a man have to choose to feed
    his family or to feed them poison.
        Our children pay the greatest cost to mercury pollution,
    but such costs also accrue to society. One study estimate that
    the cost of methyl mercury alone was $5.1 billion in 2008. The
    authors of that study compare the economic benefits of
    eliminating mercury pollution to the benefits gained from past
    lead regulation.
        We have heard today over and over again that MATS will cost
    $9.6 billion a year, but I believe with these kinds of benefits
    that aren't even included in the EPA studies that for every $1
    spent, we will see 5 to $10 in return. It is going to be
    expensive. We estimate in an internal EEN Study that it could
    cost in the high area $7 a month to electricity bills. You have
    heard the averages here before. But I think that $84 a year is
    worth protecting our families.
        I know I am probably running out of time, so I would just
    like to say and conclude by as this stance bill was released
    earlier this year. We stood together with the U.S. Catholic
    Conference. Bishop Blair stated upon the MATS release that the
    U.S. Catholic bishops welcome this important move by the
    administration to adopt long-awaited standards to reduce
    mercury and air toxic pollution from power plants and to
    protect our children's health. We believe together that this is
    a fair and uniform standard to address a powerful threat. We
    can take 90 percent of the mercury out away from coal-burning
    power plants without the fear of diminished electricity
    reliability or job loss, and with great economic ability.
        It is well past time to act. No more delays, no more
    special treatment of one industry over another. Not caring for
    our children simply diminishes our Nation. And as the Psalmist
    says, give justice to the weak, and maintain the rights of the
    afflicted.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Hescox follows:]

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        Mr. Whitfield. At this time, we recognize Dr. Julie Goodman
    from the Harvard School of Public Health, and you are
    recognized for 5 minutes for your opening statement.

                     STATEMENT OF JULIE E. GOODMAN

        Ms. Goodman. Good afternoon, Mr. Chairman and members of
    the subcommittee, and thank you for the opportunity to testify.
    I am Dr. Julie Goodman, a board-certified toxicologist and
    Principal at Gradient, which is----
        Mr. Whitfield. Is your microphone on?
        Ms. Goodman. Is it--can you--should I start again?
        Mr. Whitfield. Yes.
        Ms. Goodman. Thanks. All right. Good afternoon, Mr.
    Chairman and members of the subcommittee, and thank you for the
    opportunity to testify. I am Dr. Julie Goodman, a board-
    certified toxicologist and Principal at Gradient, which is an
    environmental consulting firm in Cambridge, Massachusetts. I
    also teach a graduate level epidemiology class at the Harvard
    School of Public Health. I am presenting testimony this morning
    on my own behalf, and as an independent scientist.
        I want to start by stressing how important clean air is.
    there is no doubt that high levels of pollution can be
    detrimental to human health and the environment. But
    considering everything from infant mortality to life
    expectancy, negative impacts from air pollution are at their
    lowest levels in recent history in the United States.
        EPA has estimated that the Mercury and Air Toxics
    Standards, also known as the Utility MACT, will lead to
    benefits from reductions in health effects ranging from
    bronchitis to mortality, and that these benefits translate to
    tens of billions of American dollars saved. But the methods use
    to derive these benefits are fraught with large uncertainties,
    which will likely result in a large overestimation of benefits.
        Despite its name, the vast majority of the benefits from
    the Mercury and Air Toxics Standards reported by EPA are not
    from mercury reductions, but rather, from highly imprecise
    estimates of mortality reductions from decreasing emissions of
    fine particulate matter, or PM2.5. Importantly, these estimates
    are not based on an evaluation of all available relevant
    science. Rather, EPA relied on two observational epidemiology
    studies conducted when air pollution levels were generally
    above current standards.
        Epidemiology studies investigate statistical associations
    or correlations between estimated levels of air pollutants and
    health outcomes in human populations. The two studies on which
    EPA relied report statistical associations between PM2.5
    reductions and health benefits and assumed a causal
    relationship, but dozens of other epidemiology studies are
    available, and many report no such correlations.
        The fact that EPA only considered studies that suggested an
    association means that it conducted a biased assessment of the
    available data. And even if it were appropriate to rely only on
    these two studies, just because two factors are correlated does
    not mean that one caused the other. Study outcomes can depend
    on many factors. For example, health risk factors such as
    smoking, exercise, and diet may have contributed to the
    increased mortality some studies attributed to PM2.5. In
    addition, most epidemiology studies, including the two on which
    EPA relied, estimated personal exposure for monitors at central
    sites, even though most people spend the majority of their time
    indoors. These monitors do not accurately capture daily
    variations in PM2.5 concentrations or composition that are
    experienced by individuals, particularly indoors. This also
    leads to inaccurate results in epidemiology analyses.
        Finally, in addition to ignoring much of the epidemiology
    evidence, EPA did not consider other lines of evidence in its
    benefits estimations. Experimental studies have demonstrated
    that the physiological impacts of inhaling PM2.5 are only
    observed when very high doses overwhelm the lungs natural
    defense mechanisms. In other words, the body's natural defenses
    can effectively deal with a certain level of PM2.5. Above that
    level, called the threshold, additional PM2.5 can perturb
    normal function. Indeed, some level of PM2.5 in ambient air is
    unavoidable and has been present on Earth for eons, but humans
    have evolved the means to cope with these exposures without
    major health consequences.
        Despite this, EPA assumed that there is no level of PM2.5
    below which health effects, including mortality, would not be
    observed. Although EPA acknowledged that the benefits estimate
    would be significantly overestimated if a threshold was
    incorporated in its analysis, it nonetheless calculated
    benefits without one. If a threshold were accounted for,
    mortality estimates would be much less and could be zero.
        In conclusion, the largest benefits from the Mercury and
    Air Toxics Standards are derived not from reducing mercury, but
    from reducing PM2.5. Despite the vast array of peer reviewed
    scientific literature on the topic, EPA based its calculations
    on only two epidemiology studies. These two studies had several
    methodological limitations, including the inability to assess
    alternative causes of the observed health effects and the
    reliance on central monitors to estimate personal exposures.
    These studies were not consistent with many epidemiology
    studies, indicating no correlation between reducing PM2.5 in
    health benefits, nor experimental studies indicating an
    exposure threshold below which PM2.5 is not likely to overwhelm
    the body's natural defenses.
        All of these factors indicate that the benefits estimates
    from the Mercury and Air Toxics Standards are grossly inflated
    and not realistic. Because there is arguably very limited
    evidence that these standards would reduce the disease burden
    more than pollution standards already in place, resources
    should be used towards other measures that would more clearly
    benefit society..
        Thank you again for the opportunity to testify, and I look
    forward to answering your questions.
        [The prepared statement of Ms. Goodman follows:]

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        Mr. Whitfield. Thank you, Dr. Goodman.
        At this time, I recognize Dr. Josh Bivens, who is Acting
    Director at the Economic Policy Institute, for 5 minutes.

                        STATEMENT OF JOSH BIVENS

        Mr. Bivens. I thank the House subcommittee, and especially
    the chairman and ranking member for the invitation to testify
    today. I am Josh Bivens, an economist at the Economic Policies
    Institute in Washington, D.C. I am going to focus on a
    relatively narrow slice of the issue, which is the short run
    job impacts of the toxics rule.
        This is the narrowest part of the issue, but it has started
    to become a major part of the debate. And this is
    understandable. Far too many Americans remain jobless nearly 4
    years after the bursting housing bubble led to what is now
    known as the Great Recession. Further, I think it is--the
    entangling of this debate of the toxics rule with this current
    crisis of joblessness is why I actually began writing about
    this rule. On the topic of job creation and economic
    performance, especially in the short run, this is my area of
    expertise.
        Further, I think it is safe to say that no other research
    institute in Washington, D.C. has worried more loudly and
    publicly about the current crisis of joblessness than the
    Economic Policy Institute. Nobody has stronger bonafides in
    demanding the policymakers address the unacceptably high
    unemployment rates in the past couple years. So in short, I
    take very seriously any claim that economic policy could
    actually inflict some harm in the labor market.
        But looking at the toxics rule with an eye towards making
    sure that the current crisis of joblessness is not exacerbated,
    I found nothing to concern me on the jobs front. In fact, I
    found that the jobs impact of the toxics rule in the next
    couple of years is going to be modest positive. It is not a
    jobs bill, it is a bill to improve health and quality of life.
    It also happens to have modest positive job impacts.
        In my testimony, my written testimony which I request be
    submitted into the record, draws heavily on research I authored
    for EPI. I sketch out how regulatory changes in general and the
    toxics rule specifically can impact unemployment.
        I concluded a couple of things. One, the air toxics rule,
    like almost all regulated regulatory changes, will have only
    negligible impacts on job growth over the longer run, and that
    in the shorter run, especially in an economy plagued by too
    high rates of unemployment like the American economy today, its
    impact is very likely to be positive. The major findings in my
    research is I do a couple different methodologies. My best
    estimate is that the impact of the rule will be to create about
    100,000 jobs between now and 2015. And so for the rest of my
    testimony, I am just going to briefly describe some of the
    economic mechanisms that I take into account in making this,
    and then, of course, I am happy to take questions.
        So basically, if you want to think about the effect of
    regulatory changes on job creation, you really want to separate
    two things, you know, the long run when the economy is
    functioning pretty well, versus the short run, when the economy
    is not functioning well. Employment over the long run and in a
    well-functioning economy, basically regulatory changes are
    going to have no impact on unemployment in that case. The
    reason is pretty simple. When the economy is functioning well,
    the Federal Reserve has a great ability to neutralize any boost
    or reduction in job growth through its conventional monetary
    policy. We may criticize the Fed for their specific
    unemployment or inflation targets, but when the economy is
    functioning well, they hit them. So whatever the effective
    regulation does to the unemployment rate when the economy is
    functioning well, the Fed can just push back on it, either way.
        Further, the impact of the regulatory changes on the first
    round impacts even before the Fed gets involved, they are going
    to be pretty modest because they are cross-cutting. Basically
    you are going to see some job growth because of the
    investments, the need to be undertaken to install the pollution
    abatement and control equipment that is going to clean the air,
    and then on the other side, you are going to see a slight rise
    in the overall price level as energy costs are then perhaps
    passed on in the form of higher prices to consumers. But they
    are cross-cutting effects, they are going to be modest. It
    isn't even going to be that hard for the Fed to push back
    against them. In a well-functioning economy, the Fed will be
    able to do so.
        We know that is not the case of the economy today. The Fed
    is unable to push the unemployment rate lower. It has been
    trying for a long time and it can't. And so that means, you
    know, in the jargon we call it the economy is stuck in a
    liquidity trap. We have very high rates of unemployment, even
    with short-term interest rates absolutely stuck at zero. The
    Federal Reserve has essentially disarmed its conventional
    policy and that changes the analysis of regulatory changes.
        So basically you have got, I would say, a positive, a
    negative, and a neutral effect of this rule on unemployment.
    The positive is jobs gained through investments and pollution
    abatement and control equipment. The roughly neutral is jobs in
    the utility sector themselves, and then the negative is the job
    impacts of higher energy costs being passed on to higher
    prices, and that is reducing consumer demand.
        I am just going to tell you a couple reasons why in an
    economy with a very large unemployment rate and large output
    gaps, that that last negative factor is not going to be as
    strong. I mean, first the bulk of cost impacts of the toxics
    rule and electricity prices are temporary, reflecting the need
    for utilities to make up for investments and cleaner
    generation. The vast body of economic research says households
    don't respond very much to temporary price increases. Second,
    it is likely that any upward price pressure stemming from
    regulatory changes in the current environment are going to be
    very blunted because of the very large output gap in the
    economy. Basically, firms don't have pricing power. When they
    are not running factories full bore, when they are not selling
    enough stuff, they just don't have much pricing power to pass
    on the higher cost to consumers. We know that they have very
    large profit margins today, pre- and post-tax profit margins
    are at their highest rates in over 40 years. They have a very
    large buffer with which they can absorb any cost increase,
    especially when it is modest as that stemming from the toxics
    rule.
        And lastly, even if prices do rise slightly in response to
    the toxics rule, this could actually be of benefit in the
    current economy. What we have right now is nominal interest
    rates that the Fed controls, they are stuck at zero, and so as
    prices fall, that actually makes real interest rates rise. That
    is the last thing we want in the economy right now. We don't
    want to increase borrowing costs for firms, and so anything
    that pushes back against disinflationary pressures could
    actually be good for the economy.
        I would just conclude by saying the claim that regulatory
    changes in general are responsible for today's continued
    economic weakness don't have an empirical foundation. The claim
    that regulatory changes should be expected to slow economic and
    employment growth in the future lacks any basis in economic
    theory or evidence, and normally, regulatory changes are pretty
    neutral in their impacts on employment. Actually, the poor
    performance of the economy today is a reason to make sure that
    the toxics rule is actually implemented as planned.
        [The prepared statement of Mr. Bivens follows:]

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        Mr. Whitfield. I let you go over a minute, so next our
    witness is Dr. Julie--Dr. Anne Smith, I am sorry, Anne Smith,
    from the NERA Consulting Group, economic consulting, and you
    are recognized for 5 minutes.

                       STATEMENT OF ANNE E. SMITH

        Ms. Smith. Mr. Chairman, members of the committee, thank
    you for inviting me. I am Anne Smith. My statements today are
    my own opinions and do not reflect the views of my company,
    NERA Economic Consulting.
        The MATS rule is costly and will create net harm to the
    economy without providing any meaningful reduction of risk from
    the hazardous air pollutants, or HAPs, that are its sole
    purpose. No matter how costly, EPA must set MACT rules based on
    the assessed risks from the HAPs. However, EPA lacks evidence
    that the utility HAPs pose meaningful risks. EPA is masking
    that fact in its regulatory impact analysis, or RIA, with
    estimates of so-called co-benefits from coincidental reductions
    of PM2.5, which is not a HAP, and which EPA is already required
    to regulate to safe levels.
        EPA estimates the MATS rule will void up to 11,000
    premature deaths and many other respiratory and heart ailments,
    creating benefits of 33 billion to 90 billion per year, which
    compared to EPA's cost estimate of about 10 billion per year.
        First, those benefits have nothing to do with the HAPs at
    all. All of the lives saved and virtually all of the dollar
    benefits are from coincidental reductions of already save
    levels of PM2.5. The estimated benefits from HAP reductions are
    10,000 times smaller than the PM2.5 co-benefits, lost to
    rounding error. It is solely due to the mercury reductions
    under this complex rule as well. The mercury related benefit is
    so low because EPA estimates the rule will improve IQ of
    exposed children by an average of only 0.002 IQ points. That
    change is not even measurable in actual IQ testing. EPA
    nevertheless assumes it reduces their lifetime earnings to
    generate those tiny mercury benefits.
        The story is even worse for requiring MACT on acid gases
    from utilities. This rule--this part of the rule accounts for
    about half of the $10 billion price tag, and EPA has not
    identified any actual health risk associated with current
    emissions of acid gases from power stations.
        That leaves only co-benefits. In a report I completed last
    December, I explained why EPA's practice of justifying new
    rules using co-benefits is wrong, and showed how the PM2.5 co-
    benefits are overstated to the point of implausibility. For
    example, EPA's estimates of 11,000 lives saved under the MATS
    rule from coincidental PM2.5 reductions is based on assumptions
    that also imply that about 25 percent of all deaths nationwide
    were due to PM2.5 back in 1980. Those assumptions stretch the
    bounds of credibility.
        Further, as I said, EPA must identify the safe level of
    PM2.5 when setting the PM2.5 national ambient air quality
    standard. EPA's MATS RIA shows that all of its estimated lives
    saved are in areas where PM2.5 is already below that safe
    level.
        Even if EPA tightened its PM2.5 standard to a lower level,
    given the range it is willing to consider for that new standard
    right now, 94 percent to nearly 100 percent of those 11,000
    lives will still be from areas where EPA deems the PM2.5 levels
    to be safe. If EPA considers those PM levels unsafe, it would
    have to set an even lower standard for PM2.5. It is thus not
    valid to use those risk estimates to instead justify non-PM
    regulations, such as the MATS rule.
        Without any meaningful risks from the HAPs themselves and
    with the co-benefits both non-credible and inappropriate to
    consider, the economic impact of the MATS rule becomes
    relevant. EPA does not fully analyze the implications of
    spending $10 billion per year for MATS compliance. I have.
    Using NERA's new era model, I project that EPA's $10 billion
    costs per year implies a net loss in worker income, GDP, and
    consumption. Even accounting for spending on workers who will
    install the controls, the NERA analysis projects a reduction in
    worker income that is equivalent to about 200,000 full-time
    jobs in 2015.
        RIAs are intended to provide transparency about the impacts
    and merits of regulations. Even when a benefit cost
    justification is not the legal basis for setting the standard,
    the MATS RIA fails to serve that purpose. EPA's use of highly
    dubious co-benefits in its RIA for the MATS give it a shield to
    justify a costly rule that it cannot justify on its own risk
    merits.
        [The prepared statement of Ms. Smith follows:]

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        Mr. Whitfield. Thank you, Dr. Smith, and I thank all of
    your for your testimony.
        Mr. Tsosie, Dr. Bivens in his testimony indicated that he
    would anticipate maybe 100,000 jobs gained in the U.S. as a
    result of this regulation, maybe more, maybe a little less.
    What did you tell me the unemployment rate was in the Navajo
    Nation right now?
        Mr. Tsosie. Based on our studies----
        Mr. Whitfield. Turn your microphone on, please.
        Mr. Tsosie. Based on our studies in 2009, the unemployment
    rate on the Navajo Nation hovers about 50 percent unemployment.
        Mr. Whitfield. And do you anticipate from the analysis that
    you all conducted and from your own personal knowledge working
    with others, that your unemployment rate is going to go down as
    a result of this regulation?
        Mr. Tsosie. No, we anticipate there may be some preliminary
    jobs during the installation of the technology; however, there
    may be, at the most, eight jobs that are created as far as
    operating the technology. But the offset is not only with the
    MACT but with the BART, there will be substantial costs on the
    generating facility, which in my mind, will force the owners to
    shut down the plant.
        Mr. Whitfield. And if that happens, how many jobs do you
    lose?
        Mr. Tsosie. If that happens at the Navajo Generating
    Station, I believe we estimated 438 jobs at the plant. There is
    also an associated mine that employs close to 400 people also,
    and that also will have a devastating effect. So we are talking
    approximately 1,000 jobs, in addition to the additional jobs
    that it creates by----
        Mr. Whitfield. So you are potentially really going to be
    hurt economically?
        Mr. Tsosie. That is correct. We also have two facilities.
    The Navajo Generating Station is one example that I used. We
    have the Four Corners Power Plant located near Farmington and
    the San Juan Generating Station also right across the river
    from that that are going to be impacted by these regulations.
        Mr. Whitfield. Now Ms. McCarthy testified that EPA has been
    working very closely with the Navajo Nation to try to address
    your concerns. Are you all satisfied with the assistance you
    are getting from EPA?
        Mr. Tsosie. Not on this particular rule.
        Mr. Whitfield. OK. Now Dr. Goodman in her testimony and Dr.
    Smith in her testimony and others had indicated that in all the
    analyses, even the EPA's analysis, shows that the benefit from
    mercury reduction is almost nil, and yet, the advocates of this
    regulation, that is all they talk about is the benefits of
    mercury reductions. From your perspective as the Attorney
    General of the Navajo Nation, are you--do you feel like the
    benefit of the mercury reduction from this bill will outweigh
    the negative impacts of losing jobs, or are you more concerned
    about mercury reduction or the jobs in the Navajo Nation?
        Mr. Tsosie. We are concerned about both, and the difficulty
    in the MACT rule is there is no data available that we can
    analyze to make an assessment. That is the ongoing difficulty.
    We have studied the impacts of the BART, the Best Available
    Retrofit Technology, on the power plants that exist, but as far
    as the MACT implications, we haven't generated any data, so we
    can't make a determination as to whether or not it is going to
    be good or bad.
        Mr. Whitfield. Well Dr. Goodman, in your analysis, did
    you--you did a pretty thorough analysis on this. Did you find
    any dollar value in the reduction of the mercury emissions as a
    result of this rule?
        Ms. Goodman. I am not an economist--but I can tell you
    that--sorry about that. I am not an economist, so I can't speak
    too much to the dollar value, but what I can say is that the
    science used to evaluate the mercury benefits, the evaluation
    had similar issues as the PM analysis in that there were many
    steps getting from the beginning to the ultimate calculation of
    risks and each step had uncertainties and these uncertainties
    were compounded, so by the very end, this ended up being a
    large overestimate, even though it is still on the accounts for
    whatever it is, .01 percent of the benefits.
        Mr. Whitfield. Well my understanding, Dr. Smith, and you
    can tell me if you disagree, and Dr. Goodman, that the benefits
    certainly did not come from mercury reduction, the primary
    benefits were coming from reduction of PM2.5. Is that correct?
        Ms. Goodman. Oh, absolutely.
        Mr. Whitfield. OK. So I think they are very misleading
    about focusing on the mercury, because there is no benefit in
    the mercury reduction.
        Mr. Roberson, you made some quite startling comments, and I
    know that you have worked with electric generating utilities
    for a long time. Are you saying that conventional coal plants
    cannot really be built in this country as a result of this rule
    because of guarantees and financing issues? Did I understand
    you correctly?
        Mr. Roberson. Yes, that is my testimony. The emission
    limits, the numerical emission limits in the final rule for new
    coal-fired units are so low that an equipment vendor could not
    possibly guarantee that they could meet those numbers on a
    consistent basis.
        Mr. Whitfield. Yes. Well, that is really a concern because
    we expect electricity demand to go up by 2035 by maybe 50
    percent, and we are reducing our base load, and I am concerned
    about our ability to compete in the global marketplace.
        My time is expired, and at this time I recognize the
    gentleman from Illinois, Mr. Rush, for 5 minutes.
        Mr. Rush. I want to thank you, Mr. Chairman.
        Reverend Hescox, I am glad that you are here. It is really
    refreshing for me. I am a pastor of a church on the south side
    of Chicago, so it is so refreshing to me to hear the voice of
    the priests on this particular issue. I want to thank you for
    being here.
        Why did you decide to get involved on this particular
    issue?
        Mr. Hescox. I am an Evangelical, and I am concerned about
    life. To me, the threat of 600,000, 15 percent of our unborn
    children, suffering IQ brain damage from the result of mercury
    is a significant problem to me. I mean, I believe that we
    should stand up and protect our unborn, the least of these, and
    we know that mercury is a problem. You know, it has been going
    on for a long time, this amount of IQ damage and other things.
    Our waters are filled with it. I have pastors in Pennsylvania
    where I live. I live in the State that produces the third
    amount most of mercury who used to fish for their children who
    won't even take their children fishing anymore because they are
    scared of the mercury poisoning.
        So I am here because it is a life issue. For us, creation,
    care--I mean, I am not an environmentalist. I am a Christian
    who believes that God gave us a planet, the Creation, for
    sustainable life, and things like mercury pollution are making
    the planet not sustainable. It especially impacts those we
    can't protect at all.
        Mr. Rush. Well, your organization is not the only religious
    organization that is involved on this issue. Can you talk about
    the other organizations?
        Mr. Hescox. Sure, and with us together, I have a
    representative from the U.S. Catholic Conference of Bishops is
    right behind me, at least I hope she is still here. Also the
    National Association of Evangelicals have joined us, and there
    are probably other Christian groups involved. We happen to be
    two groups that are pro-life groups, and so it is very easy for
    the NAE and the Catholic Bishops to join together with us to
    stand up for the rights of the unborn.
        Mr. Rush. Now, you have been very patient with us, and you
    have been here from the beginning and I am sure you probably
    pay attention to the discourse, the debate on both sides over a
    number of months, if not years. We seem to be going back and
    forth, never moving forward, just going back and forth in what
    I may call a firing squad. We just look forward and--what do
    you think we are missing here in terms of the point? Why can't
    we move forward? What is the element that we are missing here,
    in your opinion, that we are failing to appreciate that we have
    lives that don't see and ears that don't hear? What are we
    missing here?
        Mr. Hescox. I mean, the flippant answer would be a miracle,
    but I think the reality is that we--I know--I live in southern
    York County, Pennsylvania. I am a Republican. I have been a
    Republican since I was born. York County is a Republican place.
    But we talk about what we need to come together as a people to
    solve these problems. I think that is what I would urge us all
    to do. It is why the Catholics--Catholics and Evangelicals
    don't agree on everything, but we have this common issue of
    protecting unborn that is very important to us. And so I guess
    how do we solve it? I would like to get you and Mr. Whitfield
    in a room together and say let us work it out and not go
    forward until we agree. There has to be a way to find a common
    interest to go forward on all these issues, and quite honestly,
    our country needs it. Our country needs the men and women of
    this Congress to really--to find a way to work together. I
    mean, that is my prayer every day that we could--I mean,
    Speaker Boehner put it right. I was at the March for Life rally
    and walked up the Hill. When he said those words that, you
    know, life should not be a party or an economic issue, I stood
    up and cheered. Somehow we found that in 1990 when the Clean
    Air Act was first put into place, and I am just asking let us
    find a way to come back together again to find that. Let us
    find a way to work together to solve these problems.
        Mr. Rush. I just want to, you know, as a pastor and a
    believer--7:14, would that have meaning for us here?
        Mr. Hescox. I think that we just need to come together to
    be people to recognize that there are problems. We need to
    solve the problems, we need to get on with it, and really
    establish America as a great place again. I think we can do
    that by working together.
        Mr. Whitfield. Thank you, Mr. Rush.
        At this time, I recognize the gentleman from Texas, Mr.
    Barton, for 5 minutes.
        Mr. Barton. Thank you. Amen. We all want to work together.
    Brother Rush and myself want to work together. We just have
    differences of opinion on what the problem is, but we
    definitely want to work together. I hope someday that I come to
    your church and get to sit out in the congregation, if I am
    allowed in the door.
        Mr. Rush. No, you are allowed in the door.
        Mr. Barton. I hope so.
        Mr. Rush. Not only allowed, but you will be welcome.
        Mr. Barton. I will help the collection plate a little bit.
        Mr. Rush. No, you will be welcome.
        Mr. Barton. I want to ask Dr. Goodman some questions. I
    think you were in the audience when I questioned the Deputy
    Administrator. I am going to read you the sentence that I read
    her that is in the footnotes of their ruling that says ``The
    negative estimates for certain endpoints are the result of the
    weak statistical power of the study used to calculate the
    health impacts, and do not suggest that increases in air
    pollution exposure result in decreased health impacts.'' Is
    that sentence basically stating in one sentence what your
    testimony stated, that these--that their conclusions really
    can't be confirmed by the true facts of the case?
        Ms. Goodman. Yes, I think if you look at the science as a
    whole, so it is epidemiology, toxicology, mechanistic studies,
    they don't support that reducing PM2.5 levels, when you are
    already starting with low levels, reducing them even more is
    going to necessarily have any health benefits.
        Mr. Barton. And I know that--I mean, you are the only
    toxicologist on the panel here. The gentleman next to you on
    your right, who I have great respect for because of his right
    to life beliefs, which I am about a 96 percent right to life
    lifetime voting record Congressman, he is concerned about
    mercury poisoning in the unborn. Is it your belief as a
    toxicologist that the exposure levels resulting from smokestack
    emissions of power plants in terms of mercury does impact the
    unborn?
        Ms. Goodman. I would say that the--in terms of this rule,
    the impact on mercury emissions is going to be so negligible
    that it will not have a measurable impact.
        Mr. Barton. A measurable impact, OK.
        I am going to ask the Attorney General for the Navajo
    Nation, you seem to be a pretty level-headed guy and you seem
    to understand the real world and the impacts on your tribe. Dr.
    Bivens, if I understood him correctly, I was listening in my
    office, says that higher electricity prices are good for the
    economy because it has a deflationary impact and since
    factories aren't working anyway, they can't raise prices so we
    ought to just go with it. I am paraphrasing, but I think that
    is a pretty close paraphrase. What is your reaction to that?
        Mr. Tsosie. For us, for the Navajo Nation, the reaction is
    that it is a little different than what he is stating. The
    Navajo Nation is generally not the end customer for electric
    utility facilities.
        First of all, most of our people lived without electricity
    for a long time, and we just recently made an effort to get
    electricity into our households, so that is not a luxury that
    we have enjoyed for a long time. In addition to that, we site
    the facilities on Navajo lands. Our coal is used to fuel the
    power plants, and historically, the Federal Government has
    taken the initiative to negotiate deals on behalf of the Navajo
    Nation. So in essence, we have always subsidized the Southwest
    with the low rate prices for our resources, our water, our air
    shed, and exemptions from our taxes.
        Now it has come to a point where the leases are expiring
    and we are renegotiating our leases. So we have come to a
    timeframe where we will enjoy greater benefits than we have in
    the past. And the very economy that was established for us by
    the Federal Government is now under threat by the Federal
    Government.
        Mr. Barton. My time is expiring and I want to go back to
    Dr. Goodman.
        Can I paraphrase your testimony to say that you don't think
    these new rules when implemented will have a measurable
    positive impact on public health?
        Ms. Goodman. I think that is a definite possibility.
        Mr. Barton. Thank you, Mr. Chairman.
        Mr. Whitfield. At this time, I recognize the gentleman from
    Michigan, Mr. Dingell, for a period of 5 minutes.
        Mr. Dingell. Mr. Chairman, I thank you for your courtesy.
    My questions are to Darren MacDonald, Director of Energy at
    Gerdau Long Steel in North America.
        Mr. MacDonald, you have a fine manufacturing facility in
    Monroe, Michigan, which is in my district. I have been there
    and seen it. Now, what have the Michigan utilities told you
    about the potential effects of the new rules on the rates that
    they will charge your company in Monroe for electricity?
        Mr. MacDonald. I don't have an exact impact on the cost
    for--from Detroit Edison or from consumers. One of the
    challenges is to understand what the cost will be and what
    technical solution they are going to be able to implement to
    meet the compliance deadlines, so----
        Mr. Dingell. Let us take a quick look at this, though.
    Electricity costs go up and they are going to have significant
    problems, are you not?
        Mr. MacDonald. Well yes. Yes, we will.
        Mr. Dingell. That is very clear. And if these matters are
    handled improperly by the regulatory agencies, the practical
    result will be that the rates for electricity sold to your
    company will go up, is that not so?
        Mr. MacDonald. That is correct.
        Mr. Dingell. Would you have your rate people take a look at
    these matters and give us an answer as to how these things are
    going to affect you under the different possible scenarios? If
    the EPA hurries matters unduly, or if it treats the utilities
    in a proper fashion, we would like to see how you are
    projecting your electrical utility costs.
        Now, next question. What steps will you take if rates for
    your Monroe facility rise excessively?
        Mr. MacDonald. What we do on a regular basis, routine
    monthly basis is look at the costs----
        Mr. Dingell. You buy your electricity in bulk, is that
    right?
        Mr. MacDonald. Well, we are a regulated utility in the
    State of Michigan, both locations, so we buy it from the
    utility under a contracted rate. However, if the rates go up,
    what we do is look at the cost--our cost structure at each of
    those mills, 20 in North America, and we decide where it is
    least cost----
        Mr. Dingell. So you are going to go build somewhere else
    where the rates are cheaper?
        Mr. MacDonald. Lowest cost, yes, sir.
        Mr. Dingell. Is that a danger to us in Monroe?
        Mr. MacDonald. Oh, it is a decision that is made for every
    State that we operate in.
        Mr. Dingell. OK. Now in your testimony, you recommend that
    legislative action be taken to phase in the requirements of the
    new rule over a period of time, is that correct?
        Mr. MacDonald. That is correct.
        Mr. Dingell. Do you--what do you think an appropriate
    period of time would be for phasing in these regs?
        Mr. MacDonald. Well, we have been told that 3 years is too
    quick and that the fourth and fifth year are subject to some
    application process at that time, so you get to the fourth
    year, you need to apply, you get to the fifth year, you need to
    apply. So we are looking for--utilities have told us that they
    were looking for a much longer window in order to properly plan
    and avoid the----
        Mr. Dingell. You are looking for them to phase it in over 4
    or 5 years and hoping that that would be so, is that right?
        Mr. MacDonald. Could you repeat the question?
        Mr. Dingell. I am sorry?
        Mr. MacDonald. Could you repeat your question? I didn't
    hear it.
        Mr. Dingell. I said you are looking for them to phase in
    the new rules over 4 or 5 years as opposed to doing it in 3, is
    that right?
        Mr. MacDonald. At least 5 years.
        Mr. Dingell. All right, and the consequences of phasing in
    over 3 years would be a rapid and difficult rate increase for
    you, is that right?
        Mr. MacDonald. That is right, plus unnecessary costs
    because of the rush for the same resources and the same
    suppliers.
        Mr. Dingell. Now, how many people do you have at your
    Monroe plant?
        Mr. MacDonald. Roughly in the 300 range.
        Mr. Dingell. OK. Do you have any plans for expansion?
        Mr. MacDonald. Yes, we are currently planning an expansion
    at Monroe.
        Mr. Dingell. Now what would that order of magnitude be?
        Mr. MacDonald. From a capacity perspective? We are looking
    to nearly double it.
        Mr. Dingell. OK. And if the rate increases go up too fast,
    you might find that you are going to have to rethink those
    plans, is that right?
        Mr. MacDonald. We always consider the price of electricity.
    Is it one of the key investment decisions.
        Mr. Dingell. All right. Now, are there other
    recommendations you would make besides a longer period of time
    for the utilities to be able to comply with the changes that
    EPA is suggesting?
        Mr. MacDonald. Yes, we would like to see more consideration
    given to alternatives for fuel diversity. We are concerned
    about all the eggs in a single natural gas basket.
        Mr. Dingell. Thank you. Mr. Chairman, you have been very
    gracious. Thank you.
        Mr. Whitfield. Thank you, sir. At this time, I recognize
    the gentleman from Illinois, Mr. Shimkus, for 5 minutes.
        Mr. Shimkus. Thank you, Mr. Chairman. I want to direct most
    of my questions and comments to Reverend Hescox. It is
    interesting how in this profession and in this committee that I
    am always drawn to theological debates and discourse, which I
    think my friends on the other side like to draw me into. But I
    am not afraid, and so with that, let us--Dr. Hescox, the phrase
    ``conceived and bore'' is used repeatedly in Genesis 4:1 and
    Genesis 4:17, and the individual has the same identity before
    and as after birth, ``in sin my mother conceived me,'' the
    repentant Psalmist says in Psalm 51:7. The same word is used
    for the child before and after birth, that word is ``brethos,''
    that is infant. It is used in Luke 1:41 and Luke 18:15. The--do
    you agree with that?
        Mr. Hescox. Yes.
        Mr. Shimkus. Thank you. God knows the preborn child--I also
    quote--``You knit me in my mother's womb ... nor was my frame
    unknown to you when I was made in secret,'' Psalm 139:13-15.
    God also helps and calls the preborn child, and I quote, ``You
    have been my guide since I was first formed from my mother's
    womb. You are my God.'' Psalm 22:10-11. And I also quote,
    ``God, from my mother's womb, had set me apart and called me
    through His grace.'' And that is from Saint Paul to the Church
    Ecclesia 1:15.
        Now, the term--``the pro-life community''--well, first of
    all, there is one, two, three, four, five, six, seven, eight,
    nine, ten, eleven, twelve, thirteen pieces of legislation
    promoted by the pro-life community in this Congress. Has your
    organization endorsed any of them?
        Mr. Hescox. We endorse the whole effort and do that as part
    of the right to life----
        Mr. Shimkus. So you have officially endorsed H.R. 3?
        Mr. Hescox. Not officially.
        Mr. Shimkus. H.R. 374? Have you officially endorsed any
    defined pro-life legislation in this Congress? I mean, it is a
    simple yes or no. Have you or have you not?
        Mr. Hescox. No.
        Mr. Shimkus. OK, that is not unexpected. Why do I ask that
    question?
        Mr. Hescox. Yes, why do you?
        Mr. Shimkus. The ``life'' in ``pro-life'' denotes not the
    quality of life, but life itself. The term denotes opposition
    to a procedure that intentionally results in dead babies. So
    that is why we in the pro-life community take great offense
    when an Evangelical movement tries to usurp the meaning of
    ``pro-life'' when it is defined. Those in the pro-life
    community believe life is distinct, unique, at conception to
    natural death. That is what the pro-life community stands for,
    and in--and I would like to submit for the record testimony of
    Dr. Timothy D. Terrell, Associate Professor of Economics,
    Wofford College, and Senior Fellow at Cornwall, and I would
    also like to submit a statement--I have quoted some of it--
    ``Protecting the Unborn and the Pro-Life Movement from
    Misleading Environmentalist Tactic,'' a joint statement by pro-
    life leaders. I would like to submit that into the record.
        Mr. Whitfield. Without objection.
        [The information follows:]

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        Mr. Shimkus. Because as has been testified here by the
    toxicologist, you are basing your religious movement and
    assuming the pro-life mantle when even a toxicologist testifies
    that there is little to no harm. Little to no harm. Now the
    pro-life community is about life. It is not about levels of
    harm or no harm. We are there to protect the life of the unborn
    child.
        Mr. Hescox. Mr. Shimkus, are you going to allow me to
    respond?
        Mr. Shimkus. I think I am doing pretty good right now,
    thank you.
        Mr. Hescox. I figured as much.
        Mr. Shimkus. First and foremost, truly pro-life issues are
    issues of actual life and death. That is the pro-life
    community, which you are masquerading for an environmental
    cause which I reject and which many in the pro-life community--
    and I am sorry that I have had to take this time to set the
    record straight.
        And with that, I yield back my time.
        Mr. Hescox. I feel that you have just attacked my--and I
    really----
        Mr. Shimkus. Mr. Chairman? Mr. Chairman? Regular order.
        Mr. Whitfield. Just a minute. What did the gentleman say?
        Mr. Shimkus. I just called for regular order.
        Mr. Whitfield. OK.
        Mr. Rush. Mr. Chairman?
        Mr. Whitfield. Yes.
        Mr. Rush. These are some very heated words here and some
    accusations that I think that this witness has come from far
    and he is sitting there very patient. Unfortunately, my friend
    from Illinois threw some real harsh charges at him that goes to
    the core of what he believes in and what he works for. So I
    think this heated--the committee should, out of common
    courtesy, allow him to respond.
        Mr. Whitfield. Well, I am not going to allow him to respond
    because we ask questions all the time. Sometimes we give people
    an opportunity to respond, sometimes we don't.
        Mr. Rush. Mr. Chairman----
        Mr. Whitfield. We have five or six members that are here. I
    recognize Mr. Waxman----
        Mr. Rush. Mr. Chairman, a point of order. I would like to
    then officially request that we have a second round of
    questioning.
        Mr. Whitfield. I don't--no, OK. I don't have any objection
    to that. That is fine.
        Mr. Waxman, you are recognized for 5 minutes.
        Mr. Waxman. Thank you, Mr. Chairman.
        According to EPA, the Mercury Air Toxics Standards will
    generate up to $90 billion in health benefits each year, far
    outweighing the costs of compliance. EPA estimates that this
    rule will create jobs as well.
        Dr. Bivens, in your testimony, you state that ``There is no
    better time than now from a job creating perspective to move
    forward with these rules.'' Can you explain to us in layman's
    terms what you mean by this?
        Mr. Bivens. Yes. I think in the longer run, in economies
    that are working well, regulatory changes are going to have
    essentially no impact on employment, because basically the
    Federal Reserve has unemployment targets that in normal, well-
    functioning times they can hit so they can neutralize any
    change to employment coming from regulatory changes. That is
    not true right now. We have got the Federal Reserve--its
    conventional monetary policy is maxed out, and yet we still
    have very high rates of unemployment. What that means is the
    economy needs more spending, more investment, more consumer
    spending, more government spending, anything to increase
    spending will increase jobs. These regulatory changes will
    actually kick out some corporate investment. It will make them
    undertake some pollution abatement and control investments they
    wouldn't have otherwise.
        Mr. Waxman. Well, many of my Republican colleagues talk
    about the cost of complying with EPA's rules as if the money
    spent on pollution controls and upgrades goes into a black
    hole. That is simply not the case, is it?
        Mr. Bivens. That is right. I mean, one person's cost is
    another person's income, and so what is compliance costs from
    the perspective of the industry is incomes and jobs from the
    perspective of people installing the pollution abatement and
    control equipment.
        Mr. Waxman. How does spending on pollution control
    activities create jobs, both at a power plant and up the supply
    chain?
        Mr. Bivens. Basically, it is investments that firms would
    not have undertaken, absent the mandates to the regulatory
    change, and so in order to make sure that they are emitting
    less of the hazardous air pollutions, they install things like
    filters and scrubbers and bag houses. These are additions to
    the capacity they have. They have to hire construction workers
    and skilled workers to install them onsite. That creates jobs
    down in supplier industries and steel in order to make the bag
    houses and the scrubbers, and so it creates jobs that way. It
    just basically makes a lot of economic activity that wouldn't
    have happened because now it is mandated.
        Mr. Waxman. EPA estimated that the Mercury and Air Toxics
    Standards will create 46,000 short-term construction jobs and
    8,000 long-term utility jobs. You argue that this a
    conservative estimate and likely undercounts the job creation
    benefits of the new rule. How does EPA underestimate the
    employment benefits of the air toxics rule?
        Mr. Bivens. I think the biggest underestimate is that when
    they looked at jobs created through the pollution abatement and
    control investments, they didn't capture anywhere near all of
    the supplier jobs. So basically, you have the equipment that
    needs to be installed, they capture the jobs that install the
    equipment, but the supplier jobs, the steel that goes into the
    equipment, the drivers that are needed to bring it to site, the
    accountants that work for the firms that supply the equipment,
    they missed a lot of those supplier jobs and I think that is
    the biggest source of understatement.
        Mr. Waxman. This committee has had numerous hearings to
    examine the question--the big picture question of whether new
    regulations harm economic growth, and what we have heard from
    the Republicans is that regulations are slowing down the
    economic recovery. You conclude that this argument has not
    merit. Can you briefly describe why regulations are not a drag
    on the economy?
        Mr. Bivens. Sure. I would first urge people--the president
    of my institute had a very good paper on this about regulatory
    change not being the source of slow job growth. People should
    look for that on our Web site.
        The biggest evidence are if you look at profit margins for
    firms today, they are highest in 45 years, and so it is really
    hard to make the case that anything, regulatory change or
    anything else, is sort of destroying the cost structure of
    firms and making them unprofitable. Yet with very high profit
    margins, you don't see them producing a lot. Why don't they
    produce a lot? Because there is just not that many customers
    coming in the door. And so to me, that says when you have got
    very high profit margins and let some out, you cannot exploit
    those and sell more stuff. That is not the sign that something
    has ruined your cost structure, the way the argument the
    regulatory change would be, it is a sign that the economy lacks
    demand.
        Mr. Waxman. Reverend Hescox, I just came in in the middle
    of your questioning by my colleague. How do you--and I don't
    know how much we can get into this, but--or whether we want to
    or whether I want to--but how do the real people you talkS to
    feel about exposing children or unborn children to mercury and
    other toxic air pollution?
        Mr. Hescox. They are scared. They want to protect their
    children. How many people in this room want to have their
    children or grandchildren have two or three points lower on
    their IQ? I don't. I have a 9-year-old--9-month-old grandson
    who was born in Pennsylvania. We won't know for 48 months
    whether his IQ will be normal or not. We stand a good chance
    because of my work in mercury and--I mean, who hasn't gone to
    their physician when pregnant and told what fish not to eat and
    to watch your fish consumption.
        So I think he stands a pretty good chance, but there are a
    lot of people that don't stand that chance in protecting their
    kids. And for me, it is a pro-life issue, along with many
    Evangelicals, that we are totally pro-life. Pro-life against
    poverty, pro-life against air pollution. Certainly first pro-
    life against abortion. Number one, won't deny that in a bit,
    but we are totally whole life, and there is a growing, growing
    number of Evangelicals and Roman Catholics, and that is why we
    are sitting here together.
        Mr. Waxman. I think the Catholic Bishops--Catholic Council
    of Bishops has endorsed the EPA rule. That is my understanding,
    Mr. Chairman. I just wanted to put that on the record. I yield
    back my time.
        Mr. Whitfield. Gentleman's time is expired. At this time, I
    recognize the gentleman from Texas, Dr. Burgess, for 5 minutes.
        Mr. Burgess. Thank you, Mr. Chairman.
        Mr. Roberson, you were in the audience when I was
    questioning Administrator McCarthy and brought up to her that
    under the new rule, that the EPA was effectively taking coal of
    the table for our future energy portfolio. She was very
    dismissive of me in her answer. It seems like you offered
    additional information that perhaps that question was not one
    that should be so easily dismissed.
        Mr. Roberson. Well, it is certainly my opinion that it is
    not easy to dismiss. I think EPA was looking----
        Mr. Whitfield. Is your microphone on?
        Mr. Roberson. Is that better?
        Mr. Burgess. Much better.
        Mr. Roberson. I don't think that is a very easy issue to
    dismiss at all. I think EPA was looking for a simple answer
    that they had found a unit that meets the new unit limits and
    therefore everything is fine. I think they failed to look
    much--as far as they should have, because it is their own data
    of the tests that I am talking about. It is not five or six
    tests that I have in my attic, it is in the EPA's own
    spreadsheets that shows that the Logan unit fails the HCl limit
    five out of six tests. The Chambers Co-Gen unit fails the
    particulate test five out of six times.
        Mr. Burgess. And these were the units that she was
    referencing in her answer to me, that we already have new
    plants that meet the standard?
        Mr. Roberson. The Logan unit is the one she claims meets
    all of the new unit limits, and I am saying the Logan unit is
    the basis for the HCl limit, but it itself doesn't even meet
    that limit when you look at multiple tests.
        Mr. Burgess. Very well. Thank you. Thank you for that
    answer.
        Reverend Hescox, let me ask you a question. It says on my
    information sheet about the witnesses that your group is called
    the Evangelical Environmental Network, is that correct?
        Mr. Hescox. That is correct.
        Mr. Burgess. And currently, are you all involved in any
    sort of media campaign or advertising campaign?
        Mr. Hescox. We have done some important--not currently, we
    did last year.
        Mr. Burgess. And what was your budget for that advertising?
        Mr. Hescox. We had a total of around $250,000.
        Mr. Burgess. Do you have--is it--would it be available to
    the committee who has provided you the funding for that
    advertising?
        Mr. Hescox. Sure, the money came from--I mean, it will be
    filed on whatever the right form is this year.
        Mr. Burgess. Maybe you could provide that to the committee?
        Mr. Hescox. I would be happy to provide that.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T6379.286

        Mr. Burgess. All right, I have got up on the screen a
    slide, because Mr. Barton asked a question of Administrator
    McCarthy about the contribution of the United States to the
    global mercury emissions, and this slide is from the EPA from
    their reference on the Federal Register, and they referenced
    this source from this paper from the atmospheric--the Journal
    of Atmospheric Chemistry and Physics, which is the global
    mercury emissions to the atmosphere from anthropogenic and
    natural sources, manmade and natural sources.
        [Slide]
        Mr. Burgess. If you look at that slide, it looks like we
    could cut out of all mercury production in the United States,
    and we have made a miniscule effect upon global mercury
    production. So I would also suggest from hearing from the other
    witnesses that knocking out the entire United States
    contribution of mercury, which means shuttering all coal-fired
    power plants, could have a devastating effect upon certainly
    Mr. Tsosie's constituents. Mr. Roberson has implied that it
    would be hard on people in his area, certainly the people in
    Texas last winter who had the gas-fired plant shut down for a
    brief period of time during an ice storm would argue that there
    were some health effects of that.
        But you keep referencing the effects of mercury. I have a
    brief film clip that I would like to play. It is not from a
    right-wing group, it is from NOAA, the National Oceanic and
    Atmospheric Association. Perhaps we could key that up and play
    that. Let us just take a listen here. This is from NOAA.
        [Video]
        Mr. Burgess. Go ahead and stop that. Mr. Chairman, this is
    an excepted portion from the NOAA film, and if it is OK with
    the committee, I would like to put a link to the entire 25-
    minute segment on the committee's Web site so people can view
    that for themselves.
        Mr. Whitfield. Absolutely.
        Mr. Burgess. And I yield back the balance of my time.
        Mr. Whitfield. At this time, the Chair recognizes the
    gentleman from Texas, Mr. Olson, for 5 minutes.
        Mr. Olson. I thank the chairman, and welcome to all the
    witnesses. Thank you all for testifying today. Unfortunately
    with such a large panel, I will have to ask my questions in a
    form that requires a yes or no answer. I ask you as a former
    Naval aviator, so please cover your buddy. If they are not
    hitting the microphone button, just reach over there and tap it
    for them.
        And as I mentioned the first panel, my home State of Texas
    is still suffering a significant drought. The district I
    represent, Texas 22, went through the hottest August in
    history, over 100 degrees every single day in August, and still
    we had 100 percent humidity that makes people love Houston
    weather in the summer. Experts predict that we are going to
    have the same conditions recurring this summer. ERCOT, which is
    the company, the organization that controls our grid for most
    of the State, is worried about capacity shortages if the
    weather reoccurs as expected. If it does happen, real lives
    will be lost if we have blackouts. Not projected lives saved
    that EPA uses. Real lives, real people, disproportionally
    impacting the young and elderly if they lose power in this
    excessive heat.
        EPA calls the proposed rule we are talking about today the
    ``Mercury and Air Toxics Standard,'' and I want to make clear
    that I realize that mercury is a dangerous toxin. As a 6-year-
    old, I broke a thermometer with mercury in it in the bathroom.
    We almost moved out of the house because of my carelessness.
    EPA claims that there is going to be $90 billion per year in
    health benefits, and yet the benefits from decreased mercury
    standards is going to be $500,000. One half of 1 percent of the
    total health benefits come from the reduction of mercury.
        Here is the question the people in Texas 22 want me to ask
    you all. If the EPA is using miniscule benefits--mercury
    benefits from--I apologize. If the EPA is using miniscule
    benefits from reduction of mercury to increase reductions in
    particulate matter, PM2.5, is that what they are doing? I will
    start at the right there. Mr. MacDonald. Yes or no?
        Mr. MacDonald. Was the question----
        Mr. Olson. The question basically is EPA--as I said, EPA
    says it is going to be $90 billion in health benefits, but the
    benefits from mercury reduction--I have got a chart here I can
    go into, but the benefits of mercury production are going to be
    $500,000. So one-half of 1 percent of all EPA benefits are
    going to come from mercury reduction, so the other benefits
    have to be coming from, in my opinion, particulate matter
    reductions. That is what the people at home want me to ask you.
    Do you think this is coming--these mercury reductions seem as a
    guise to get to particulate matter reduction, yes or no.
        Mr. MacDonald. Yes.
        Mr. Olson. And Mr. Roberson, yes or no?
        Mr. Roberson. Yes, I do.
        Mr. Olson. OK, Mr. Tsosie?
        Mr. Tsosie. Yes, it appears that way.
        Mr. Olson. Reverend Hescox?
        Mr. Hescox. No.
        Mr. Olson. And Dr. Goodman?
        Ms. Goodman. Yes.
        Mr. Olson. Mr. Bivens?
        Mr. Bivens. No.
        Mr. Olson. And finally, Dr. Smith?
        Ms. Smith. Yes.
        Mr. Olson. OK, five yeses and two nos.
        Another question. This chart, just so you understand this,
    have you seen--and another yes or no, real quickly, did you see
    this chart or have this information before you came here today?
    First Mr. MacDonald, have you seen this before, these numbers?
        Mr. MacDonald. I haven't seen it.
        Mr. Olson. Haven't seen it before. How about you, Mr.
    Roberson?
        Mr. Roberson. I have not seen the chart, but I am very
    familiar with the numbers.
        Mr. Olson. There we go. Mr. Tsosie?
        Mr. Tsosie. No, I haven't.
        Mr. Olson. Reverend Hescox?
        Mr. Hescox. Not seen your particular chart, but seen many
    numbers.
        Mr. Olson. OK, Dr. Goodman?
        Ms. Goodman. The same.
        Mr. Olson. The same numbers, OK, you guys got the
    information. Mr. Bivens--Dr. Bivens?
        Mr. Bivens. No.
        Mr. Olson. And Dr. Smith?
        Ms. Smith. I have not seen the chart, but I have seen the
    data.
        Mr. Olson. And just--OK. Basically just to show you, these
    are three organizations and this is their level of mercury
    exposure, and I apologize to my colleague from Washington for
    trashing APEC, but the bottom line is here. Here is the World
    Health Organization and the vertical axis there, the Y axis, is
    the blood mercury levels at micrograms per liter. European Food
    Safety Authority and Environmental Protection Agency, you can
    see that over a 10-year period, we have been under the EPA's
    limit set the standards here, 3.8 milliliters in blood level
    mercury.
        One final question. I want to talk to the one
    representative here who actually works in the manufacturing
    industry. This is for you, Mr. Gerdau. Has the affordability of
    energy in the United States been a factor in attracting
    manufacturing in the United States, and will increases in
    electricity costs due to EPA regulation potentially deter new
    investment in U.S. manufacturing? Yes or no.
        Mr. MacDonald. Yes, it will.
        Mr. Olson. Yes, OK. One more. Are higher energy costs for
    manufacturers passed on to consumers in the form of higher
    costs for goods and services?
        Mr. MacDonald. Absolutely.
        Mr. Olson. Absolutely. And one final question. You said,
    and this is a quote, ``With a 1 cent kilowatt increase in the
    cost of electricity imposes additional costs of approximately
    $9 billion per year on factories and manufacturing plants.''
    Will those costs--will you swallow those costs, or will you
    pass them on to families and individuals?
        Mr. MacDonald. Oh, those will be passed on.
        Mr. Olson. Pass them on, OK. I am out of time. Thank you
    all. Yield back.
        Mr. Whitfield. Thank you, Mr. Olson.
        At this time, I recognize the gentleman from West Virginia,
    Mr. McKinley, for 5 minutes.
        Mr. McKinley. Thank you, Mr. Chairman.
        I would like to begin by--there has been some testimony
    throughout the day and from--comments from the other side that
    the companies shutting down these plants are doing so to
    enhance their bottom line, rather than facing up to the
    reality, so I would like to introduce into the record some
    reports that have come from the Brattle Group and others about
    the costs, the actual costs of energy.
        Mr. Whitfield. Without objection.
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        Mr. McKinley. Thank you, Mr. Chairman.
        Please understand, where I am coming from is a coal-fired
    State. We create coal, we mine coal in West Virginia. Ninety-
    nine or 98 percent of the power generated in West Virginia is
    produced by coal, so when the EPA goes after the coal industry,
    you are attacking the very fabric--much like your Navajo
    Nation, you are coming at the very fabric of our community. So
    I am very sensitive to it. I take it very personally. But I
    think because the EPA is truly a group that we have to rely on,
    how sensible are they going to approach things? I have learned
    here in my first year that there is a real credibility gap, and
    I heard that in the overall discussion here. The numbers that
    they have been presenting are really subject to question pretty
    seriously, and if we are making decisions based on false
    information, it is only going to hurt a State like West
    Virginia and this Nation that is relying on coal fired
    gemeratopm.
        So I--do any of you agree, given the fact that FirstEnergy
    just spent $1.8 billion on a facility to bring it into
    compliance? For one facility, is it reasonable to suggest that
    with the 700 we have across the country that we are going to be
    able to do this for 9.4 billion annually? I mean, if any of you
    think that we can do it for 9.4, let me know. Do any of you
    agree? I am not--do you think they can do it for 9.4?
        Ms. Smith. If I can explain, that 9.4 billion is
    annualized. It is incurred over many, many, many years, and so,
    in fact, the cost that needs to be spent prior to 2015 to come
    into compliance is more like $100 billion.
        Mr. McKinley. That is going to put a real strain, I think,
    if we are going to be spending that on all 700, or whatever
    number that they are going to have with it.
        And another question, do you agree with the idea that the
    only reductions--although I showed you that chart, we are only
    going to reduce less than half of 1 percent of our energy
    capacity? Is that reasonable to suggest? That is what they are
    representing to us and that is what we are making decisions,
    based on that information. Do any of you agree that it is not
    going to have an impact on our energy production? And last, Dr.
    Goodman, let me go to you on a very direct question, because I
    raised it during the earlier testimony against--with Ms.
    McCarthy. What about indoor air quality, because what the
    Reverend is talking about is providing help for the unborn.
    What about the indoor air quality? Is that--do you agree that
    the indoor air quality, being our homes and our offices, is
    worse than in our playgrounds and parks? Our workplace
    environment, is that--testimony seems to show that, but I would
    like to hear it from you, from a toxicologist.
        Ms. Goodman. Well really, my point was more that----
        Mr. McKinley. Can you speak closer?
        Ms. Goodman. Sorry. My point was really that in estimating
    health benefits, the estimates were only based on outdoor
    concentrations at a fixed point, whereas people don't stand at
    a fixed point and they spend most of their time indoors. So
    this--these calculations don't take into account indoor
    exposures at all, so we have no----
        Mr. McKinley. But that is what they keep testifying to.
    What are we missing? How can we get them to separate the two so
    that we can deal with the real problem, where we are spending
    90 percent of our life is indoors? How do we deal with that?
        Ms. Goodman. Well, we need to put the money into conducting
    studies where we actually measure the indoor exposures, and
    then look at health effects based on people's actual exposures,
    rather than these surrogates for exposure that aren't very
    precise.
        Mr. McKinley. Thank you. I yield back my time.
        Mr. Whitfield. Thank you. At this time, Mr. Pompeo of
    Kansas is recognized for 5 minutes.
        Mr. Pompeo. Thank you, Mr. Chairman.
        Mr. Roberson, I heard your testimony. Isn't it fair to say
    that this new rule is a ban on new coal-fired power plants, in
    effect?
        Mr. Roberson. In my view it is a ban because I don't see
    how anyone can go forward with a new coal-fired project.
        Mr. Pompeo. And we talked to--I think you were here when I
    spoke to Ms. McCarthy about the existing plants. We talked
    about Logan 1. In fact, there is really no power plant in
    existence today that can consistently meet the requirements
    that the new rule would require.
        Mr. Roberson. I believe that is correct.
        Mr. Pompeo. Thank you.
        Mr. MacDonald, when you talk about your electricity rates
    going up, where--if rates go up to the level that you have
    hypothesized, that your data suggests, and that folks have told
    you, what does that mean on a relative basis to other
    countries?
        Mr. MacDonald. Well, we are already seeing imports of steel
    into the U.S. economy, so what it means is that we will
    undoubtedly have a competitive pressure against our own
    domestic production. We will lose production, which is going to
    be a loss of jobs. It is a direct interaction.
        Mr. Pompeo. And electricity costs are a very relevant, very
    significant portion of the cost of goods sold for those
    businesses?
        Mr. MacDonald. That is correct.
        Mr. Pompeo. Thank you.
        Mr. Bivens, I am fascinated by your testimony. I want to
    make sure I have got it right before I ask you questions. You
    said that regulatory policy in the long run has no net impact
    on jobs.
        Mr. Bivens. Yes.
        Mr. Pompeo. And then you also said that one person's costs
    are someone else's income.
        Mr. Bivens. Yes.
        Mr. Pompeo. So if we had a regulation that costs someone to
    take a stack of dollar bills, a million bucks, and burn them,
    that would be a cost to that business, correct?
        Mr. Bivens. Sure.
        Mr. Pompeo. And would that--whose income would that be?
        Mr. Bivens. Whoever set them on fire, if they got paid for
    it. It is a weird----
        Mr. Pompeo. OK, they got paid a dollar, so there would be a
    net loss to the--if they got paid a dollar to burn them. But
    the million dollars that was burned, that regulation, it is not
    true that regulations have a one-to-one correlation between
    costs and income. That regulation would----
        Mr. Bivens. That is right.
        Mr. Pompeo [continuing]. Generate a million dollars of
    cost, and if we paid them $3 an hour and it took them hour to
    do it, it would generate $3 of income, so there would be a net
    loss associated with that regulation. Is that not right?
        Mr. Bivens. That is right, but----
        Mr. Pompeo. So it is--so that is right, so----
        Mr. Bivens. But every bit of compliance costs are somebody
    else's income.
        Mr. Pompeo. Excuse me?
        Mr. Bivens. Every bit of compliance costs is somebody
    else's income.
        Mr. Pompeo. That was a compliance----
        Mr. Bivens. The EPA separates them out, compliance costs
    versus social costs, and the difference between the two is
    economic activity foregone, that is what you are talking about,
    and the vast majority of the total social class is in
    compliance----
        Mr. Pompeo. So where did this money go? This regulation
    required them to--that was a compliance cost. They were forced
    to burn the million dollars.
        Mr. Bivens. That hypothetical on the ratio would be
    different.
        Mr. Pompeo. OK, so if we made somebody build a building and
    we said no power tools could be used, your answer is no impact
    on jobs whatsoever?
        Mr. Bivens. Actually that would create jobs, because that
    would be a very inefficient way to do it and it would take a
    lot more manpower.
        Mr. Pompeo. So the costs would far exceed the benefits
    associated with that.
        It is fascinating. Your experience set in running a
    manufacturing business that has profit and loss responsibility
    is exactly what?
        Mr. Bivens. None.
        Mr. Pompeo. So your views of this are--come from books?
        Mr. Bivens. Looking at actual economic data.
        Mr. Pompeo. And data, but you, unlike some of the other
    folks who are testifying today, haven't actually had
    responsibility for hiring people and making sure at the end of
    the day that those checks cleared the bank and you could grow
    your business and keep all your stakeholders, your
    shareholders, your employees, your community--keeping all of
    them happy. Your sum total experience there is precisely zero.
        Mr. Bivens. Manufacturing, that is correct.
        Mr. Pompeo. Ms. Smith, I want to ask you your views of this
    notion that regulatory policy has no impact on jobs.
        Ms. Smith. It is simply not possible to spend money on
    investments that don't increase the productivity of the economy
    and expect to get a net increase in the economy, or even a net
    zero. It will always have a net drag on the economy if the
    investment that is somebody's income and somebody's spending
    also doesn't increase the productivity, and that is really what
    is happening with investments in retrofit controls, or more
    expensive energy.
        Mr. Pompeo. Indeed, another way to look at Mr. Bivens's
    economic error is if I sell something for $5, it is not a zero
    sum gained, right?
        Ms. Smith. Yes.
        Mr. Pompeo. You are happier with the $5 and I am happier
    with the product. We both gained from that. It is not the case
    that there was just an exchange, we created value through trade
    in that process. Mr. Bivens suggests it is a zero sum deal and
    we are stuck in the new school of research beliefs about
    economic processes.
        Ms. Smith. Correct.
        Mr. Pompeo. Thank you. I yield back the balance of my time.
        Mr. Whitfield. Thank you, Mr. Pompeo.
        Mr. Griffith of Virginia is recognized for 5 minutes.
        Mr. Griffith. I guess my thoughts on the comments of Mr.
    Pompeo are that, you know, one of the problems that we have in
    my area where we have lost a lot of jobs is that even if we
    accept some of the policies of Dr. Bivens, the people who are
    gaining are not Americans. They are foreign countries that are
    gaining at our expense because we can no longer make the goods
    here. We are shipping coal to China and other places so they
    can make the products that we used to make. So even if I accept
    some of your principles, it seems to me that what is happening
    is the gainers are not people who are producing jobs in the
    United States, they are people in other countries. And one of
    the concerns I have, and when we look at this chart and you
    have got, you know, 3 percent--it looks like .3 percent of
    global mercury air emissions--and we had this chart up
    earlier--come from U.S. power plants, according to the EPA. One
    of the concerns I have is that the facilities that use a lot of
    electricity to provide jobs in my district and in other
    districts, Mr. McKinley's district, lots of places, where we
    are heavily dependent on coal, you raise that price and the
    estimate from AEP itself, which is a major supplier, although
    there are others in my district, is 10 to 15 percent for the
    consumers. When those jobs go away, there are health impacts on
    people in my district who no longer have jobs. When that
    increase in the electricity rate goes up 10 to 15 percent,
    there are health impacts on the folks who can't afford to heat
    their home at the level they want to, who isolate themselves
    during the wintertime because unlike--and I am going to
    mispronounce the name--Tsosie--Mr. Tsosie, a lot of my folks
    have been on electricity for quite a while, but they can't
    afford to pay the bill. They isolate themselves in one room and
    try to keep the heat to a minimum. Not to a healthy level, but
    to keep the pipes from freezing and to keep themselves from
    freezing at night. That has a negative impact on health.
        And when we look at this mercury, I would submit when we
    ship jobs because we have made electricity so expensive in this
    country, we ship jobs to other countries where they will make
    the goods with the products that we are not--with the coal that
    we are not willing to use any longer, we actually increase, in
    my opinion, and I don't have a study to back it up but it is--
    common sense tells me if we are shipping that coal to be burned
    in places where they don't even have the reasonable regulations
    that we currently have where they don't have anything to clean
    up the mercury and it is in the Northern Hemisphere, that air
    is coming back to us, and a NASA study has actually shown us
    that it takes 10 days for the air from the central part of the
    Gobi Desert to reach the eastern shore of Virginia. That means
    that it is a significant part and part of the reason you look
    at this, and you are saying wait a minute, what are we doing?
    It looks like to me that while we may be trying to positively
    affect health, we are making some decisions that don't look at
    the world as a whole, that only look at what is happening in a
    particular neighborhood.
        I guess I would ask, would you agree that we need to look
    at the whole world situation and make sure that we are not
    destroying American jobs, which also, by killing those jobs,
    has a negative health impact? Would you agree with that, Mr.
    MacDonald, that if we are going to make these decisions, we
    have to do them in a global sense and not just look at the
    United States?
        Mr. MacDonald. Absolutely. The term leakage, which was
    abundantly used during the cap and trade discussions, isn't
    brought up now but it is just as important.
        Mr. Griffith. And would you explain that to me? I wasn't
    here for the cap and trade discussion, but I clearly talk about
    cap and trade all the time.
        Mr. MacDonald. Leakage is exactly what you are suggesting
    if our costs go up here and force the product to be made in a
    less regulated jurisdiction. The emissions will be higher net
    globally, and the product production won't happen here, it will
    happen somewhere else.
        Mr. Griffith. All right. Regrettably, I would probably
    prefer and I would probably have time to get each one of you to
    answer that, but I am going to decline because I also don't
    like to miss votes on the floor. If you heard those bells going
    off about--I don't know how much time we have left, but about 5
    minutes ago they called for votes on the floor, so I am going
    to yield back my time, Mr. Chairman.
        Mr. Whitfield. Thank you very much, Mr. Griffith.
        Mr. Rush, you wanted to ask a second round, so as you----
        Mr. Rush. Yes, I am going to be quite brief, Mr. Chairman.
    I know we have got to go for a vote.
        But I want to--Reverend Hescox, there is a pretty popular
    spiritual song around that says in effect, ``Please be patient
    with me. He is not finished with me yet.'' And I just--I am
    sorry that my friend from Illinois is not here, but I kind of
    have to apologize. You are our invited witness, and so
    therefore I feel some responsibility for the fact that he threw
    out some charges and you didn't have a chance to refute the
    charges or to address the charges. And there is a record, so my
    only--I am going to offer you an opportunity, either verbally
    on the record now, to address the charges or you--in writing in
    the future. You can do--you can choose your option, how you
    want to deal with that. But I just think that you should have
    an opportunity to respond to those, I think, pretty unfair
    characterizations of you and your motivations and your
    understanding of this issue.
        Mr. Hescox. Well, I can share it in about 1 minute or less.
        First up, the reason we don't take formal actions on pro-
    life bills is we are members of the National Association of
    Evangelicals. We don't take up policy issues on everything
    because they are not our expertise, so we leave that with our
    partner, the larger agency, the National Association of
    Evangelicals, number one.
        Number two, you know, for me, and I wish I would have
    brought my sign from this year's pro-life walk, it just says,
    you know, pro-life is anti-abortion and a whole lot more about
    environmental things. So we have a consistent stream of being
    life. I think what I mentioned to Congressman Waxman was true.
    There is a tremendous growing movement of Evangelicals and
    Roman Catholics across this country who support us, that
    understand that being pro-life is totally pro-life,
    environmental health, anti-poverty, and all those issues.
        So I thank you, Mr. Rush, for your comments, but I also
    know that I have been a man of God and have had lots of parking
    lot conversations as a pastor for 20 years, so I know how it
    goes. Thank you.
        Mr. Rush. I yield back.
        Mr. Whitfield. That concludes today's hearing. The record
    will be kept open for 10 days, and I am also going to ask that
    we submit into the record an analysis by David Guinnup, who is
    with the Air Toxics Assessment Group at EPA, in which they
    looked at specifically two electric utility steam-generating
    units and the impact that those units had on mercury emissions
    into a nearby lake, and its impact on fish. They concluded that
    based on their analysis, that the risks associated with those
    mercury exposures were insignificant. So I will put that in the
    record.
        [The information follows:]

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        Mr. Whitfield. Thank all of you very much for joining us
    this afternoon, and we look forward to working with you as we
    continue to move forward on these issues.
        With that, the hearing is adjourned.
        [Whereupon, at 1:47 p.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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