[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
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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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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.
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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.
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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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