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






    THE AMERICAN ENERGY INITIATIVE, PART 18: A FOCUS ON LEGISLATIVE 
                  RESPONSES TO RISING GASOLINE PRICES

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

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 28, 2012

                               __________

                           Serial No. 112-133






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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         TAMMY BALDWIN, Wisconsin
CHARLES F. BASS, New Hampshire       MIKE ROSS, Arkansas
PHIL GINGREY, Georgia                JIM MATHESON, Utah
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington   DORIS O. MATSUI, California
GREGG HARPER, Mississippi            DONNA M. CHRISTENSEN, Virgin 
LEONARD LANCE, New Jersey            Islands
BILL CASSIDY, Louisiana              KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky              JOHN P. SARBANES, Maryland
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                 _____

                    Subcommittee on Energy and Power

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

                                  (ii)













                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...........................................     3
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illiniois, opening statement................................    20
Hon. Cory Gardner, a Representative in Congress from the State of 
  Colorado, opening statement....................................    21
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................    22
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................    23

                               Witnesses

Regina A. McCarthy, Assistant Administrator, Office of Air and 
  Radiation, Environmental Protection Agency.....................    25
    Prepared statement...........................................    27
    Answers to submitted questions...............................   270
Christopher Smith, Deputy Assistant Secretary for Oil and Natural 
  Gas, Office of Fossil Energy, Department of Energy.............    37
    Prepared statement...........................................    39
    Answers to submitted questions...............................   275
Robert V. Abbey, Director, Bureau of Land Management, Department 
  of the Interior................................................    47
    Prepared statement...........................................    49
James Burkhard, Managing Director, Global Oil Group, IHS 
  Cambridge Energy Research Associates...........................   128
    Prepared statement...........................................   131
Joseph Romm, Senior Fellow, Center for American Progress Action 
  Fund...........................................................   136
    Prepared statement...........................................   138
W. Jackson Coleman, Managing Partner and General Counsel, 
  EnergyNorthAmerica, LLC........................................   148
    Prepared statement...........................................   150
Matt Smorch, Vice President, Strategy, CountryMark Cooperative...   168
    Prepared statement...........................................   170
Robert J. Meyers, Senior Counsel, Crowell & Moring, LLC..........   183
    Prepared statement...........................................   186
Niger Innis, Co-Chairman, Affordable Power Alliance, National 
  Spokesman, Congress of Racial Equality.........................   203
    Prepared statement...........................................   205
George R. Schink, Managing Director and Principal, Navigant 
  Economics, on behalf of Emissions Control Technology 
  Association....................................................   209
    Prepared statement...........................................   211
    Answers to submitted questions...............................   277

                           Submitted Material

Discussion Draft, ``Strategic Energy Production Act of 2012,'' 
  submitted by Mr. Whitfield.....................................     7
Discussion Draft, ``Gasoline Regulations Act of 2012,'' submitted 
  by Mr. Whitfield...............................................    11
Letter, dated February 29, 2012, from Mr. Burgess to President 
  Barack Obama, submitted by Mr. Burgess.........................    71
Article, dated November 2, 2008, ``Audio: Obama Tells SF 
  Chronicle He Will Bankrupt Coal Industry,'' posted at 
  newsbusters.org, submitted by Mr. Shimkus......................    74
Report, dated January 30, 2012, ``The Impact of Decreased and 
  Delayed Drilling Permit Approvals on Gulf of Mexico 
  Businesses,'' Greater New Orleans, Inc., submitted by Mr. 
  Scalise........................................................    98
Letter, dated June 25, 2008, from C. Stephen Allred, Assistant 
  Secretary, Land and Minerals Management, Department of the 
  Interior, to Hon. Don Young, Ranking Member, House Committee on 
  Natural Resources, submitted by Mr. Shimkus....................   223
Report, dated March 2012, ``Addendum to Potential Supply and Cost 
  Impacts of Lower Sulfur, Lower RVP Gasoline,'' Baker & O'Brien, 
  Inc., for American Petroleum Institute, submitted by Mr. 
  Shimkus........................................................   234
Letter, dated March 27, 2012, from Charles T. Drevna, President, 
  American Fuel & Petrochemical Manufacturers, to Mr. Whitfield 
  and Mr. Rush, submitted by Mr. Shimkus.........................   252
Letter, dated March 26, 2012, from Anne Steckel, Vice President 
  of Federal Affairs, National Biodiesel Board, to Mr. Whitfield, 
  submitted by Mr. Shimkus.......................................   254
Letter, dated March 28, 2012, from Shannon Baker-Branstetter, 
  Consumers Union, and Sally Greenberg, National Consumers 
  League, to committe and subcommittee leadership, submitted by 
  Mr. Sarbanes...................................................   260
Letter, dated March 28, 2012, from Center for Biological 
  Diversity et al. to Mr. Whitfield, submitted by Mr. Sarbanes...   262

 
    THE AMERICAN ENERGY INITIATIVE, PART 18: A FOCUS ON LEGISLATIVE 
                  RESPONSES TO RISING GASOLINE PRICES

                              ----------                              


                       WEDNESDAY, MARCH 28, 2012

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:54 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Ed 
Whitfield (chairman of the subcommittee) presiding.
    Members present: Representatives Whitfield, Shimkus, Terry, 
Burgess, Bilbray, Scalise, McMorris Rodgers, Olson, McKinley, 
Gardner, Pompeo, Griffith, Barton, Rush, Castor, Sarbanes, 
Markey, Green, Capps, and Waxman (ex officio).
    Staff present: Gary Andres, Staff Director; Maryam Brown, 
Chief Counsel, Energy and Power; Allison Busbee, Legislative 
Clerk; Garret Golding, Professional Staff Member, 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; Andrew Powaleny, 
Deputy Press Secretary; Alison Cassady, Democratic Senior 
Professional Staff Member; Jacqueline Cohen, Democratic 
Counsel; Greg Dotson, Democratic Energy and Environment Staff 
Director; Caitlin Haberman, Democratic Policy Analyst; and 
Alexandra Teitz, Democratic Senior Counsel, Environment and 
Energy.

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

    Mr. Whitfield. I would like to call this hearing to order. 
Today's hearing will be the 18th day of hearings on what we 
refer to as the American Energy Initiative. Today we are going 
to be focusing primarily on the Gasoline Regulations Act of 
2012, which is--simply requires an interagency committee 
chaired by the Secretary of Energy to analyze the cumulative 
impacts of particular regulations on gas and diesel, and the 
impacts that that has on fuel prices and jobs.
    And then the second bill that we are going to be 
considering is the Strategic Energy Production Act of 2012, 
which simply would require the Secretary of Energy in response 
to any ``SPRO'' drawdown to develop a plan with other Federal 
departments to open additional Federal lands for oil and gas 
exploration and production to replace the oil in the drawdown.
    Now, I want to take just a few minutes today--start my time 
there--take a few minutes today to make a few comments about 
the proposed regulation of EPA to regulate greenhouse gases, 
which was announced yesterday. Now, I am genuinely concerned 
about this for a lot of different reasons.
    First of all, it is my genuine belief that EPA has not been 
totally straightforward with the American people on some of its 
regulations recently. Specifically I am talking about the 
Utility MACT, is one I will discuss first. The Utility MACT was 
sold to the American people as necessary to reduce mercury 
emissions, and the impression was that the benefits of the 
Utility MACT would come from reducing mercury emissions.
    And yet the data and the statistics and the analysis of EPA 
show quite clearly that any benefits from reducing mercury were 
negligible. The primary benefits would come only from reduction 
of particulate matter, which is already regulated under the 
Clean Air Act.
    In addition to that, there were no accurate or 
comprehensive analysis of the total cost of the Utility MACT. 
Now, we know that the purpose of it is to reduce production of 
electricity by using coal, but once again, I would say that I 
don't think that EPA was totally straightforward with the 
American people on that issue.
    Now, on the greenhouse gas regulation, proposed regulation, 
Congress on three separation occasions has said no to 
regulating greenhouse gas under the Clean Air Act. Two-hundred 
and twenty-one members of Congress sent a letter to OMB, to 
Jeffrey Zients, asking that they delay any proposed regulation 
on greenhouse gas.
    Not only did they not reply in any way, did not respond by 
letter, by phone call, or anything else, totally disregarded 
any input from 221 members of Congress. Now, I recognize this 
is a proposed regulation. But if this regulation is adopted, 
there will not be another coal power plant built in America 
without carbon capture and sequestration, because there is no 
other way to meet the standard. And we know that there is no 
commercially viable carbon capture and sequestration applicable 
to any coal-powered, that a coal-powered plant could use today 
to meet that requirement.
    And we are also concerned that under new source review, if 
you modify an existing coal-powered plant to meet existing 
environmental regulations, that that might be, claim to be a 
new plant, and therefore, you have got to meet this new 
requirement.
    Now, I know that there is an exception that says that is 
not the case, but we also know that historically lawsuits have 
been filed, and there have been all sorts of unintended 
consequences as a result.
    And so if a lawsuit were filed against some company trying 
to modify an existing plant to meet existing regulations and a 
decision was made that, oh, this is a new plant, then we would 
have a catastrophic result, I believe, in America for meeting 
our electricity needs.
    So I would simply want to express my genuine concern about 
the way we are going on these regulations.
    [The prepared statement of Mr. Whitfield follows:]


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    [The information follows:]


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    Mr. Whitfield. And at this time I would like to recognize 
the gentleman from Illinois, Mr. Rush, for a 5-minute opening 
statement.

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

    Mr. Rush. I want to thank you, Mr. Chairman.
    Mr. Chairman, we are here today, holding yet another 
hearing on high gas prices, much like we have done numerous 
times in the past and will continue to do many more times in 
the future unless we make up our minds to fundamentally change 
our dependence on oil.
    Mr. Chairman, I support President Obama's All of the Above 
energy approach, which encompasses increased oil and gas 
production here in the U.S., additional conservation, and 
energy efficiency measures, as well as a move towards cleaner 
and renewable sources of energy.
    These gas price hearings may play well in the media and may 
make it appear as though Congress is actually busy doing 
something to address rising fuel prices. But the fact of the 
matter is that there is nothing that Congress or the 
administration can do to address the way to reduce gas prices 
in the immediate future.
    We all know, Mr. Chairman, that fuel prices are set by 
global supply and demand, and as long as we continue to rely so 
heavily on oil, especially for powering our vehicles, then we 
will continue to be at the mercy of OPEC and surging fuel 
prices driven by the insatiable demand for oil led by the 
emergence of India and China.
    Mr. Chairman, while attacking EPA regulations and shouting 
bumper sticker slogans such as, ``Drill, baby, drill,'' may be 
enough to fire up a small percentage of the American public. 
Those simplistic solutions do nothing to really address the 
issue before us and the issue before the American people.
    We must strategically wean ourselves away from oil, from 
our oil reliance, especially in the transportation sector. That 
is the only way we can ever steer clear of fluctuating gasoline 
prices that are set on the global market. And neither of the 
bills before us today will do anything to get at the heart of 
the problem. Surprise. Surprise.
    Republicans in Congress are once, again, attacking the EPA 
and blaming the Clean Air Act as the cause for all of the 
problems we face in our Nation today, and now that also 
includes rising gasoline prices. In fact, the draft legislation 
before us seems to directly contradict the Supreme Court's 
unanimous 2001, ruling that cost could not be considered in 
establishing standards, whose primary objective is to protect 
America's children, America's families, and the public health 
of all Americans.
    And despite the howls and despite the protests of the Tea 
Party faithful, most Americans do not blame the EPA for high 
gas prices but rather blame major oil companies who made $137 
billion in profits last year and that they have more to do with 
the recent wild increases in gasoline prices. Don't blame the 
EPA. Blame the oil companies.
    Maybe this stems from the fact that for every additional 
penny that the average American pays at the pump, big oil 
profits go up another $2 million. In light of this fact, Mr. 
Chairman, I would submit along with my March 15 letter 
requesting a hearing on speculation in the oil market, this 
subcommittee should also look into the impact that rising 
gasoline prices have on big oil profits as compared to the 
pocketbooks of ordinary American families.
    At least then, Mr. Chairman, at that hearing we would be 
actually looking into the practices that the American people 
really do believe are behind the rising fuel prices.
    Thank you, Mr. Chairman. I yield back the balance of my 
time.
    Mr. Whitfield. Thank you, Mr. Rush. At this time I 
recognize the gentleman from Colorado, Mr. Gardner, who is the 
author of our Strategic Energy Production Act of 2012, for 5 
minutes.

  OPENING STATEMENT OF HON. CORY GARDNER, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Mr. Gardner. Thank you, Mr. Chairman, and thank you for 
holding this hearing today.
    Our country runs on abundant affordable energy. It is the 
energy that fuels our factories, our farms, and ultimately 
drives our economy forward. Each of us here today understands 
that rising gas prices are impeding the growth of our economy. 
Without lower gas prices, families, businesses will spend more 
and more of their income filling up with a tank of gas instead 
of investing into our economy.
    So I don't think it is an overstatement to say that the 
country's economic recovery is at risk if we continue with the 
status quo, which brings me to the subject at hand: Why we need 
to develop energy on Federal lands and why the Strategic 
Petroleum Reserve, or ``SPRO'', should not be drawn down when 
there are many longer-term, more lasting ways to address the 
problem of higher gas prices.
    Mr. Chairman, many in this administration and beyond have 
suggested that tapping the ``SPRO'' was the way to bring down 
prices. While this may be politically expedient during an 
election year, no one can argue with the fact that it is a one-
time, short-term political fix to an enduring problem. The 
``SPRO'' is intended to be used during times of severe energy 
disruptions like shutdowns or major natural disasters, and I 
think we can all agree that fortunately we don't find ourselves 
having to deal with either of those situations today.
    What we are experiencing, however, is extraordinarily high 
gas prices, and we need real solutions in order to bring them 
down. What baffles me is that the Federal Government has 
resources to alleviate the problem, but it refuses to use them. 
While production on the whole is up, production on Federal 
lands is down. In fact, only 3 percent of all public land is 
now leased for oil and gas production. The vast amounts of oil 
that we are unable to access are lying fallow until we allow 
energy production, energy production companies to develop them.
    The Strategic Energy Production Act in front of us today 
provides that if the President decides to draw down oil from 
the SPR, a plan must be in place to increase leases on Federal 
lands. It is as simple as that. If there is a supply shortage 
severe enough to warrant tapping our reserves, then we should 
do all we can to address it. Why not make more lands available 
for production or streamline procedures by which we can access 
Federal land of production? Why address this problem with a 
short-term fix when we all know it is a long-term problem?
    We should address this problem with a good policy, not 
quick-fix politics. It is time we take some proactive steps in 
promoting domestic energy production and stop playing politics 
with an issue as serious as this.
    Thank you, Mr. Chairman, and I yield the balance of my time 
to Mr. Barton.

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

    Mr. Barton. Thank you, Congressman. I want to associate 
myself with what you just said, and I also want to associate 
myself with what Chairman Whitfield just said about the recent 
issuance of regulations regarding emissions of coal-fired power 
plants. Chairman Whitfield couldn't be more right in his 
concern about that.
    Today is the 18th hearing in a day about America's energy 
policy. I understand that because of jurisdictional issues the 
Energy and Commerce Committee can't be involved in every 
legislative issue regarding energy, but I would like to put 
before the committee for its consideration a plan that I think 
would address the high gasoline prices over time.
    I think the first thing that we would have to do is reform 
Federal land permitting issues. When it takes the Texas 
Railroad Commission days to issue a permit and it takes the 
various Federal agencies years, that is a problem, and it is 
not that Texas is too fast. It is that the Federal Government 
drags its feet. The Obama administration has shown repeatedly 
that they really do not want, in spite of the rhetoric, to 
encourage domestic oil and gas production anywhere in America 
on Federal lands. We need to take a look at those permitting 
practices, and I think legislatively address them.
    As Chairman Whitfield and Mr. Gardner just pointed out, we 
also need to look at the various environmental regulations and 
how they impact the energy production and energy use. Chairman 
Whitfield's draft bill is a step in the right direction. It may 
not be the end all, be all, but at least it is an attempt to 
look at some of those negative regulatory impacts.
    Something that really hasn't been mentioned but needs to be 
is we need to encourage the use of more natural gas for 
transportation uses. There is absolutely no reason when natural 
gas is $2.30 mcf and oil is over $100 a barrel that we can't 
find a way to use more natural gas for transportation issues.
    Finally, we need to encourage the use of new technologies 
for oil and gas production in America. Hydraulic fracturing, 
horizontal drilling, and CO2 injection into depleted fields all 
have potential to increase domestic energy production in the 
mid term. We are currently producing about eight million 
barrels of oil. We could, I think, produce double that amount 
in the next 10 years if we use those technologies in an 
environmentally-safe fashion.
    There is absolutely no reason that America can't be energy 
independent, Mr. Chairman, if we want to and with your 
leadership and Chairman Upton's leadership and the leadership 
of the Republican Majority in the House, I think we can work at 
the rest of this Congress to begin to make that a potential 
reality in the near term.
    With that I yield back.
    Mr. Whitfield. Thank you. At this time I would recognize 
the gentleman from California, Mr. Waxman, for a 5-minute 
opening statement.

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

    Mr. Waxman. Thank you, Mr. Chairman.
    First of all, I want to welcome back to our committee a 
previous member and now again a member, Congressman Sarbanes 
from the State of Maryland. He was a very energetic member 
before, and I am sure he will be a real--make a real 
contribution now that he is back on our committee.
    Now, if I could get the clock, I will start my opening 
statement.
    I want to comment on the Chairman's statement about EPA's 
regulation. I want to congratulate EPA on the carbon power 
plant regulation. It is required by the law, and it is a good 
regulation, and I think it makes a lot of sense to protect our 
environment and for our economy.
    Today we are examining the Republicans' response to 
gasoline prices. It is not an encouraging occasion for 
America's families who are faced with rising costs at the pump. 
The discussion drafts before us are not based in economic 
principle or sound policy. The policies haven't been publicly 
recommended to us by any knowledgeable or authoritative body. 
These bills are a package of half-baked ideas and giveaways to 
the oil industry.
    They are based on false premises. These are not solutions 
to the real problems that Americans are struggling with. The 
Republicans' have two answers to gasoline prices at $4 a 
gallon. First, they propose drilling for more oil, yet every 
economist and oil market expert tells us that this will have no 
meaningful impact on oil prices which are set on a global 
market. Just look north to Canada. Canadians drill plenty of 
oil. They are energy independent, and they export to us, but 
this doesn't bring them lower prices. In fact, their gasoline 
prices are higher than ours due to taxes.
    We will also hear today that Republicans can bring down 
gasoline prices by blocking the environmental regulations that 
protect Americans from dangerous air pollution. No one should 
be fooled by this argument. Under Republican leadership this 
body has become the most anti-environmental Congress in 
history. Since January, 2011, the House Republicans have voted 
more than 200 times to undermine the Clean Air Act, the Clean 
Water Act, and other environmental laws.
    The premise of this legislation is, that we are going to 
have before us today, that high gas prices are caused by EPA 
regulations that haven't even been proposed. That is a complete 
fantasy. High gasoline prices are being caused by rising global 
demand, tensions in the Middle East, and tight supplies.
    Americans want clean air. They don't want this committee to 
use high gasoline prices as an excuse for blocking regulations 
to reduce toxic emissions from oil refineries. Americans want 
cars that can go further on a gallon of gasoline. This is 
especially important when fuel prices are high. They don't want 
us to use high gasoline prices as a pretext for blocking clean 
fuel regulations that the auto companies need to make cleaner, 
more efficient vehicles. But that is exactly what the 
legislation does.
    Even worse, one of the bills before us contains the Latta 
Amendment. That is a proposal that will cut the heart out of 
the Clean Air Act. It would overturn a unanimous 2001, Supreme 
Court case and repel a 40-year-old law that says the goal of 
the Clean Air Act is to achieve air quality that is safe for 
Americans to breathe.
    On our first panel today we will hear from the 
administration on gas prices. There is no silver bullet to 
gasoline prices, but the actions Federal agencies are taking 
show that President Obama is charting the course for an economy 
that is built to last. EPA will tell us how they have adopted 
rules that save consumers money at the pump and decrease the 
Nation's oil demands. The Department of Interior will tell us 
how American oil production has increased to levels we haven't 
seen in recent memory, and the Department of Energy will 
explain how they are researching and developing the clean 
energy options that will lessen our dependence on oil and our 
vulnerability to price spikes going forward.
    Instead of supporting these valuable initiatives, the 
Republican-controlled House has done everything possible to 
frustrate them. The House has passed partisan legislation to 
prevent the administration from cutting tailpipe emissions and 
making vehicles more efficient. The Republican budget could 
decimate the funding for clean energy, and House Republicans 
have even opposed efforts to penalize oil companies that sit on 
oil leases and refuse to produce any oil until prices go 
higher.
    If you really cared about helping the country become more 
resilient to gasoline price volatility, you would be working 
with the administration instead of trying to block President 
Obama's every initiative.
    But this hearing isn't about understanding and addressing 
gasoline prices. It is about using high gasoline prices as yet 
another rationale for advancing a profoundly anti-environmental 
agenda. Oil companies will surely benefit if these bills are 
enacted, and just as surely American families will suffer.
    Mr. Whitfield. Thank you, Mr. Waxman.
    That concludes opening statements, and so I would like to 
welcome the members of the first panel. We appreciate your 
being here very much, and we look forward to your testimony 
about these pieces of legislation as well as other issues.
    We have with us this morning the Honorable Gina McCarthy, 
who is no stranger to the subcommittee. She is the Assistant 
Administrator of Air and Regulation at the United States 
Environmental Protection Agency. We have Mr. Christopher Smith, 
who is the Deputy Assistant Secretary for Oil and Natural Gas, 
Office of Fossil Energy, at the U.S. Department of Energy, and 
then we have Mr. Robert Abbey, who is the Director of Bureau of 
Land Management, U.S. Department of Interior.
    And each one of you will be given 5 minutes to make an 
opening statement, and Ms. McCarthy, I will recognize you for 5 
minutes to begin.

STATEMENTS OF REGINA MCCARTHY, ASSISTANT ADMINISTRATOR, OFFICE 
    OF AIR AND RADIATION, ENVIRONMENTAL PROTECTION AGENCY; 
   CHRISTOPHER SMITH, DEPUTY ASSISTANT SECRETARY FOR OIL AND 
NATURAL GAS, OFFICE OF FOSSIL ENERGY, DEPARTMENT OF ENERGY; AND 
     ROBERT V. ABBEY, DIRECTOR, BUREAU OF LAND MANAGEMENT, 
                     DEPARTMENT OF INTERIOR

                  STATEMENT OF REGINA MCCARTHY

    Ms. McCarthy. Thank you, Chairman Whitfield, Ranking Member 
Rush, members of the committee, I appreciate the opportunity to 
be back before you today.
    Many families are hard hit by today's high gas prices. They 
deserve and they need real solutions. Unfortunately, the 
Gasoline Act of 2012 doesn't offer real solutions. It uses high 
gas prices as a reason to roll back fundamental public health 
protections that have nothing to do with high gas prices.
    This bill would fundamentally change the cornerstone of the 
Clean Air Act, the requirement that EPA set air quality 
standards for smog at the level that the science advises us is 
necessary to protect public health.
    Let me be clear. Programs to protect public health and to 
provide American families with scientifically-credible 
information about the health of the air in their communities 
are not the cause of high gas prices. In contrast, EPA's 
actions ensure that we travel farther on each gallon of 
gasoline than we--that we consume. In partnership with NHTSA, 
we have issued a set of proposed and final greenhouse gas 
pollution and fuel economy standards for model years 2011, to 
2025, vehicles that will save approximately 12 billion barrels 
of oil over the life of those vehicles. That is equivalent to 
the past 6 years of imported oil from OPEC countries.
    Consumers are already saving money at the pump as a result 
of these rules. In model year 2025, vehicles will save their 
owners $3,000 to $4,400 over the life of that vehicle. EPA and 
NHTSA's recent standards for trucks and buses will also save 
money. For example, a long-haul trucker would save a net of 
$73,000 over the life of a model year 2018, truck.
    In addition, EPA's Renewable Fuels Program, when fully 
implemented, will displace about 7 percent of expected annual 
U.S. gasoline and diesel consumption in 2022.
    The Gasoline Regulation Act of 2012 would not reduce gas 
prices, but it would waste government resources and taxpayer 
dollars. It would unnecessarily delay EPA rules that would 
protect public health in cost effective ways in order to allow 
a new interagency committee to conduct cumulative analysis of 
rules, only it is not clear how the committee would analyze 
rules that haven't even been proposed or how the public could 
comment on that analysis in an informed way. And this analysis 
is simply not needed to ensure that EPA analyzes the effects of 
our rules on gas prices. We do that already.
    Most troubling, however, is the provision unrelated to gas 
prices. Section 6 would roll back one of the key public health 
protections in the Clean Air Act. It would fundamentally alter 
the way that EPA would set the National Ambient Air Quality 
Standard for ozone or smog.
    For many people, including one out of every ten school-aged 
children, elevated ozone levels can make it harder to breathe. 
Ozone exacerbates the suffering of asthmatics, causing more 
frequent and severe asthma attacks.
    So people with compromised health conditions like asthma 
have come to rely on EPA's Daily Air Quality Index to help them 
manage their lives. The elderly skip their morning walk on bad 
air days, and mothers keep their kids indoors when the air is 
not sufficiently protected for their children to breath. What 
will happen if this bill should pass, and we have to do what 
Section 6 tells us to do? We would no longer rely on the 
science to identify bad air days, and instead we would have to 
decide what level of smog is protective of public health based 
on what is cost effective and feasible to address.
    Again, let me be clear. I am not saying that we should not 
take cost and feasibility into consideration when we determine 
the most appropriate actions to take to achieve health-based 
standards like smog. We do, but I am saying that we should not 
let our economists weigh in on what is and is not healthy air. 
That is the job of scientists and health experts, and I for one 
would like to keep it that way.
    In conclusion, the draft bill would do nothing to address 
high gas prices, but it would delay significant cost effective 
health protections required under the Clean Air Act and 
undermine EPA's authority to protect public health and the 
environment by rolling back a fundamental Clean Air Act public 
health protections.
    Lastly, Mr. Chairman, I heard your concerns about the 
recent announcement by EPA on carbon pollution standards for 
future power plants. I am more than happy to come and return at 
a time when you might have a hearing on that or to answer any 
questions you may have today.
    [The prepared statement of Ms. McCarthy follows:]


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    Mr. Whitfield. Thank you.
    At this time I recognize Mr. Smith for a 5-minute opening 
statement.

                 STATEMENT OF CHRISTOPHER SMITH

    Mr. Smith. Thank you very much, Mr. Chairman. Chairman 
Whitfield, Ranking Member Rush, and members of the 
subcommittee, thank you for the opportunity to discuss the 
Department of Energy's perspective on these two legislative 
proposals.
    We share the concern of members regarding the burden that 
rising gasoline prices place on U.S. families and businesses. 
For decades, volatile energy prices have threatened the 
economic security for millions of American households, hitting 
consumers hard and straining budgets for millions of American 
families.
    The American people understand that there is no silver 
bullet for meeting our energy needs and bringing down the price 
of gasoline in the short term. In the long term, though, we can 
work to protect America from the ups and downs of the global 
market by pursuing a sustained, all-of-the-above approach to 
American energy that will reduce oil imports, save families and 
businesses money at the pump, and position the United States as 
the leader in clean energy alternatives.
    As part of this comprehensive energy strategy, the United 
States is expanding oil production here at home, increasing the 
efficiency of the vehicles that we drive, and investing in 
advanced technologies that will diversify our transportation 
sector.
    The Obama administration is committed to expanding the safe 
and responsible production of America's energy resources, which 
is one reason why the U.S. production has increased each year 
the President has been in office. Domestic oil production is 
currently at an 8-year high, and there are more oil rigs 
operating now in the United States than in the rest of the 
world combined.
    At the same time, America's dependence on foreign oil has 
been going down over the last several years. In 2010, imported 
oil accounted for less than 50 percent of the oil consumed here 
in the United States for the first time in 13 years.
    But exploration alone will not solve our energy challenges. 
That is why the administration is working to improve vehicle 
efficiency. The administration has announced historic standards 
that will nearly double the fuel economy of the vehicles we 
drive, saving families approximately $1.7 trillion at the pump 
and cutting oil consumption by 12 billion barrels. The 
administration is also investing in advanced vehicles and 
fuels, including targeted investments in electric and natural 
gas vehicles, advanced combustion engines, biofuels and fuel 
blends, and advanced and lighter materials for vehicles that 
will help reduce the amount of gas American families will need 
to buy.
    Domestic natural gas also has the potential as an 
alternative transportation fuel, especially for long-haul 
trucks. At the Department of Energy we are investing in 
research into natural gas-powered vehicles to further reduce 
our dependence on imported oil.
    The Department of Energy has serious concerns about the 
legislation being discussed today. These bills would do little 
or nothing to address the current situation facing American 
families and businesses, and in fact, could potentially make 
the tools that we do have available to protect U.S. energy 
security less effective.
    Drawdown to the Strategic Petroleum Reserve have been used 
in the past to offset the loss of crude oil supplies and 
mitigate the impact to the Nation of oil supply interruptions 
and the resulting price spikes. The Strategic Energy Production 
Act of 2012, if enacted, will make it more difficult for the 
Strategic Petroleum Reserve to achieve its mission to respond 
promptly to supply interruptions with emergency crude oil.
    Draw downs are already a complicated process, involving 
coordination with a variety of local, regional, and 
international entities. Imposing a requirement to coordinate 
future increases in leased Federal lands as a consequence of 
releasing crude oil from the Strategic Petroleum Reserve would 
require a significant expansion of the resources at the 
Department of Energy and other departments and would have a 
negative impact on the decision-making process to employ the 
Strategic Petroleum Reserve, which should be based solely on 
protecting the United States from the consequences of severe 
supply interruptions.
    Similarly, the other piece of legislation being discussed 
today, the discussion draft of the Gas Regulations Act of 2012, 
would require a large investment of resources from the 
Department of Energy and other Federal agencies participating 
on the committee and would be exceedingly difficult, if not 
impossible, to accomplish in the timeframe mandated in the 
legislation.
    The administration shares this committee's concern about 
the burden caused by high gasoline prices. However, we do not 
believe that the bills we are discussing today would help 
achieve the intended purpose. Creating more bureaucratic 
structures and complicating the government's decision-making 
processes are not the means of best responding to spikes in 
gasoline prices and reducing our dependence on imported oil. We 
remain committed to working with Congress on ways to 
constructively address our Nation's energy challenges.
    Thank you, again, for having me here today, and I look 
forward to addressing any questions that the committee might 
have.
    [The prepared statement of Mr. Smith follows:]


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    Mr. Whitfield. Thank you, Mr. Smith, and Mr. Abbey, you are 
recognized for a 5-minute opening statement.

                  STATEMENT OF ROBERT V. ABBEY

    Mr. Abbey. Thank you, Mr. Chairman and members of the 
subcommittee, for the opportunity to appear before you this 
morning to discuss the Department of Interior's role in the 
administration's plan for our domestic energy future.
    We understand that this subcommittee is considering a 
discussion draft of legislation which would link oil and gas 
leasing on Federal lands and waters to the authorization by the 
President of a drawdown of the Strategic Petroleum Reserve. And 
while we defer to the Energy Department, which is the lead 
agency on this issue, for a position on the legislation, the 
planning and leasing processes currently in place at the 
Department of the Interior are already resulting in a broad 
energy strategy that is reducing our dependence on foreign oil.
    We know the prices at the pump are high and that there is 
no simple solution to bring down that price. This is why the 
President and the Department of Interior has continued to 
promote and implement an all-of-the-above approach to American 
energy.
    The BLM is responsible for managing our National System of 
Public Lands, which are located primarily in 12 western States, 
including Alaska. The BLM administers over 245 million surface 
acres, more than any other Federal agency, and approximately 
700 million acres of onshore subsurface mineral estate 
throughout the Nation.
    The Bureau of Land Management plays an important role in 
advancing domestic energy production on these America's public 
lands. Domestic oil and gas production from the public lands 
remain critical to our energy supply.
    We are also expanding development of renewable energy 
sources like wind and solar and geothermal production that will 
help diversify our Nation's energy portfolio. Onshore there are 
now over 38 million acres under lease for oil and gas, but less 
than one-third, about 32 percent of that acreage is currently 
in production.
    Companies also continue to hold thousands of approved but 
unused permits to drill on our public lands. Expanding safe and 
responsible oil and gas production from the Outer Continental 
Shelf is a key component of the President's Blueprint for a 
secure energy future and will help us continue to reduce our 
dependence on foreign oil and create jobs here at home.
    The Bureau of Ocean Energy Management or BOEM manages the 
Nation's offshore energy and mineral resources in a balanced 
way that promotes efficient and environmentally responsible oil 
and gas and renewable energy development and a commitment to 
rigorous, science-based environmental review and study.
    The Bureau of Ocean Energy Management's Five-Year Oil and 
Gas Leasing Program is a key element in managing our offshore 
oil and gas assets. Under these statutory requirements, the 
Department prepares a long-range program that specifies the 
size, timing, and location of areas to be considered for 
Federal offshore oil and gas leasing.
    The proposed Outer Continental Shelf Oil and Gas Leasing 
Program for 2012 through 2017 includes substantial acreage for 
lease in regions with known potential for oil and gas 
development. This plan makes areas containing more than 75 
percent of undiscovered technically-recoverable oil and gas 
resources in the Federal OCS available for exploration and 
development.
    BOEM has also established a regulatory framework for 
renewable energy leasing and development. Recently, BOEM has 
taken a number of important steps towards additional lease 
sales in fiscal year 2013, and beyond, including developing a 
commercial lease form, conducting an analysis to determine 
auction formats, and completing an environmental assessment to 
support leasing in wind energy areas off four Mid-Atlantic 
States.
    Recognizing that America's oil supplies are limited, we 
must develop our domestic resources safely, responsibly, and 
efficiently, while at the same time taking steps that will 
ultimately lessen our reliance on oil. We are also taking steps 
both onshore and offshore to encourage industry to develop the 
thousands of leases and permits that they already have but that 
are currently sitting idle.
    The Obama administration and the Department of the Interior 
are working to secure our energy future by ensuring that our 
domestic oil and gas resources are safely developed and that 
the potential for clean energy development on our public lands 
and water is realized.
    Thank you, Mr. Chairman, for the opportunity to appear 
before this subcommittee.
    [The prepared statement of Mr. Abbey follows:]


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    Mr. Whitfield. Thank you. We appreciate the opening 
statement of all of you, and Ms. McCarthy, I know you all have 
got a lot going on over at EPA, but we have a policy of asking 
that opening statements be given to us 48 hours before the 
hearing, and I know a lot of people are surprised at this, but 
we actually read these opening statements.
    And yesterday we received yours at 6:25 last night, which 
is certainly way beneath the 48 hours, so I would hope that in 
the future if you could get to us 48 hours in advance, we would 
really appreciate that.
    Ms. McCarthy. Mr. Chairman, I will do my best in the 
future. We had some difficulty because we didn't receive the 
draft legislation until last week, so but we will do our best 
in the future.
    Mr. Whitfield. OK, and second of all, recently you gave a 
speech to the Coal Club here in Washington, DC, and in that 
speech you had indicated that there were hundreds of utility 
plants that could meet the--existing utility plants that could 
meet the Utility MACT regulations, and you indicated that you 
would make that list available to anyone that wanted it. And 
our staff has asked your staff to provide that list to us, and 
we have not received it yet, and since the implication was that 
you all certainly had that list, could you provide that to us 
by the end of the day today?
    Ms. McCarthy. Mr. Chairman, I did attend the meeting that 
you identified. I did misspeak. There are dozens of facilities 
that actually achieve the existing standards, and we are more 
than happy to respond to the request.
    Mr. Whitfield. Well, could we have it by the end of the 
day?
    Ms. McCarthy. I don't know if I can accommodate that, but I 
will get back to you by----
    Mr. Whitfield. Well, because your staff had indicated to us 
that we needed to write a letter, so I am just going to ask you 
verbally if you could get it to us by the end of today, if 
possible, the 12, the list of 12 or so plants that meet that 
existing----
    Ms. McCarthy. It is dozens. It is in the sixties, but I 
will do my best----
    Mr. Whitfield. All right.
    Ms. McCarthy [continuing]. To get that to you.
    Mr. Whitfield. Thank you very much. Now, I would like to 
ask all of you yes or no, has the EPA or Department of Energy 
or Department of Interior taken a position on these two pieces 
of legislation? Mr. Smith, have you all taken a position on 
them?
    Mr. Smith. Yes. Thank you for the question, Mr. Chairman.
    So on the first piece of legislation that has to do with 
the petroleum reserve, as I mentioned in my opening statement 
we do have some concerns about the idea of tying the 
operational capability of one of the few quick response tools 
that the Federal Government actually does have to respond to 
emergency supply disruptions that could cause high price spikes 
for American consumers and taking that and tying it to a 
regulatory, legal legislative process by which we are trying to 
estimate new quantities of oil and gas to be produced on public 
lands in cooperation with private oil companies. So we have 
some concerns about that.
    Mr. Whitfield. So you are not opposed to it at this point, 
but you have some concerns that we might be able to address 
with you?
    Mr. Smith. Well, I would say categorically that we think 
that the direction of taking a strategic asset that is 
dedicated by statute to protecting national security by 
protecting against price spikes that might be caused by supply 
interruptions and tying it to a legislative process, that is 
something that we would be categorically against.
    Mr. Whitfield. Now, Mr. Abbey, what about your Department?
    Mr. Abbey. Mr. Chairman, we have deferred to the Department 
of Energy to take a position on that particular legislative 
proposal, but I will say this, that we believe such a proposal 
is unnecessary.
    Mr. Whitfield. And, Ms. McCarthy, has EPA taken a formal 
position?
    Ms. McCarthy. No, sir, we don't.
    Mr. Whitfield. OK. Well, one of the things that you had 
mentioned in your comment was that this legislation appears to 
use high gas prices as the reason to roll back fundamental 
public health protections, and I would just say and clarify 
that this legislation on the gas issue does not roll back 
anything. It simply defers three rules for at least 6 months 
after the issuance of a final report, the Tier 3 Motor Vehicle 
Emission and Fuel Standards, the new Source Performance 
Standards for Petroleum Refineries, which is not out there yet, 
and the new Ozone Standards, which is not out there.
    So it is not the intent of this legislation to roll back 
any existing health protections.
    Ms. McCarthy. I appreciate that, Mr. Chairman. The roll 
back comment was related to the requirement that we change from 
being advised by the science in terms of what is protective as 
a standard for smog as opposed to taking into consideration 
cost and feasibility, which would significantly change the 
fundamental premise of the Clean Air Act.
    Mr. Whitfield. Well, I would just say that the President 
himself wrote a letter to Administrator Jackson in which he 
directed that you minimize regulatory costs and burdens. He 
wrote that letter September 2, 2011.
    My time has expired. At this time I recognize the 
gentlelady from Florida, Ms. Castor, for--Mr. Sarbanes was here 
first I was told. Recognize the gentleman from Maryland, Mr. 
Sarbanes, for 5 minutes.
    Mr. Sarbanes. Thank you, Mr. Chairman. I am glad to be back 
here on the committee. Appreciate the opportunity.
    Mr. Whitfield. Let me just say we welcome you back, and 
thank you.
    Mr. Sarbanes. Thanks very much.
    Ms. McCarthy, I wanted to address most of my questions to 
you. First of all, thanks for being here. Thanks for your 
testimony, and thanks for the work that you do at the EPA. I 
thought since I was returning to the committee that I ought to 
get back to core principles and understanding the mission of 
the EPA, so I looked again this morning at the mission of the 
EPA, which is to protect human health and the environment. And 
the first purpose listed for the EPA is its purpose is that all 
Americans, to ensure that all Americans are protected from 
significant risks to human health and the environment where 
they live, learn, and work.
    And I commend you for bringing out attention to Section 6 
of the act that is under review here today because I agree with 
you that it creates a dangerous, it is a dangerous development 
to start putting aside the concerns about the science in 
developing the standards, and as I understand it from what you 
have said, that is your concern. It is not that we throw 
economics completely out the window, but when it comes to 
developing the standards that you want to put forward that are 
designed to protect human health and the environment, you need 
to rely on the science first and foremost, and your fear based 
on this provision is that that would be trumped by these other 
concerns. So I thank you for bring that up.
    I come from Maryland, and I am concerned about the fact 
that Maryland, I think, is one of the, well, Baltimore has been 
found to have one of the highest levels of smog on the east 
coast. Baltimore and Washington. That is the corridor I travel 
every day, so I am very, very interested in the potential of 
these Tier 3 Tailpipe Pollution Standards, which are coming 
along to address pollution in our area.
    And what I would like you to do, if you could, and I 
understand that standards aren't developed yet, the regulations 
have not been issued, I am concerned about any effort to get in 
the way of the timeline for those because we have great 
expectations of what they can, how they can benefit Maryland 
and frankly the whole Chesapeake Bay watershed.
    But if you could speak to the health benefits behind these 
new Tier 3 Tailpipe Pollution Standards in terms of reducing 
nitrogen, oxides, and what that means in terms of the public 
health, I would appreciate it very much.
    Ms. McCarthy. Mr. Congressman, first let me congratulate 
Maryland for all the work they do. I know that we work with 
them very closely on issues of ozone. There are many rules that 
we have done that are attempting to address the interstate 
transport of ozone into Maryland where they are working very 
hard on Tier 3 in particular. The importance of Tier 3 is very 
large to States like yours and others that deal with smog, and 
it will produce vehicles that will significantly lower both 
VOCs and NOCs which are precursors of ozone. They will also 
provide significant net benefits related to lower sulfur in 
gasoline.
    So while the rules haven't been proposed, our major concern 
here is that we would be having to wait for the completion of a 
report that may never come, and this rule, this new law would 
actually tell us that we had to wait for 6 years for the 
completion of a rule that will provide no further clear 
information to the public on our Tier 3 rule, and our rule 
hasn't even been proposed. It is not clear how it would be 
analyzed, and we want to move on and get it in front of the 
public and provide the benefits that the Clean Air Act 
intended, and it is a significant way for us to reduce ozone 
and to provide those public health protections.
    Mr. Sarbanes. I appreciate that, and I want to anticipate, 
you know, in the context of this hearing the criticism would be 
that those new tailpipe emission standards would significantly 
increase the cost of gasoline. In fact, the studies that I have 
available to me, I am looking at a very good article from the 
``Baltimore Sun,'' last November, suggests based on industry 
forecasts that you might increase fuel costs by a half cent, 
potentially a half cent to a cent, and you are looking at, you 
know, all tolled maybe $143 million increased costs up to 
potentially $400.
    You look at the benefits in terms of reduced healthcare 
costs because of reducing the pollution out there, and you are 
talking about--and this is reducing hospitalizations, sick 
days, and premature deaths, and you are looking at $234 million 
to $1.2 billion saved. So that is really something we should 
take into consideration. Thank you.
    Mr. Whitfield. The gentleman's time has expired.
    At this time I recognize the gentleman from Texas, Mr. 
Barton, for 5 minutes.
    Mr. Barton. Thank you, Mr. Chairman.
    Ms. McCarthy, yesterday the EPA put out the proposed 
regulations on new coal-fired power plants that allows the 
emission of CO2 to be, I think, 1,000 pounds per ton. Most 
coal-fired power plants, the best that--the average, I think, 
is about 1,700 pounds of CO2 per ton.
    Where did 1,000 pounds per ton come from, and what is magic 
about it?
    Ms. McCarthy. The standard is 1,000 pounds per megawatt 
hour.
    Mr. Barton. Per megawatt. I am sorry. You are right. Per 
megawatt hour.
    Ms. McCarthy. And it is based on what we believe to be the 
best system of emission reduction is what is called on in the 
law. It is based on natural gas combined cycle, which is about 
95 percent of the natural gas combined cycle units that have 
been built since 2005, actually achieve this 1,000 pound 
standard.
    Mr. Barton. But that is natural gas.
    Ms. McCarthy. It is, but we also recognize that most new 
units are actually going to be natural gas. That is the trend 
we see because of the availability and cost.
    Mr. Barton. You understand that if you set the standard for 
coal at that range, you are not going to build a new coal-fired 
power plant.
    Ms. McCarthy. We----
    Mr. Barton. You understand that?
    Ms. McCarthy [continuing]. Identified a pathway for coal to 
achieve by providing flexibility to allow coal a 30-year 
averaging to achieve that standard, recognizing that carbon 
capture and storage, while it is available today, they may not 
want to put or design the facility----
    Mr. Barton. Well, it is too expensive.
    Ms. McCarthy [continuing]. To have it today, but they could 
over a 30-year period and achieve----
    Mr. Barton. Carbon capture works in the laboratory, but 
when you scale it up to put it on a real power plant, it raises 
the cost by about 30 percent or at least it did the last time I 
looked at it. So what you have done is effectively say we are 
not going to use coal to generate electricity in the United 
States ever again.
    Is the EPA and President Obama comfortable with that, that 
you are just wiping out half the generation capacity of America 
of electricity currently?
    Ms. McCarthy. We believe that carbon capture and 
sequestration is actually being put on at full scale now. We 
believe that the capture rate, which is very modest for today's 
systems, can be achieved and allow this averaging to be a very 
successful approach to coal continuing to be developed.
    And we recognize that over time the cost and effectiveness 
of that technology will likely improve dramatically. The 30-
year horizon gives units 10 years to actually, before they need 
to install carbon capture and sequestration in order to make 
that standard within that 30-year period.
    Mr. Barton. I don't think it is a surprise to you that many 
of us don't share the optimism that you just expressed about 
the ability for technology to overcome that, and I wouldn't be 
surprised if you don't see some legislative attempts to correct 
the proposed regulation.
    I want to ask Mr. Abbey about permitting reform on Federal 
lands. As I pointed out in my opening statement, in Texas the 
Railroad Commission on occasion will issue a new permit for an 
oil or gas well within a day, but it almost always never takes 
more than a week. I can't find a record of a Federal permit on 
Federal lands or the OCS being issued in--the average is 3 
years. Some take as long as 7 years.
    Do you agree that Federal permitting reform for oil and gas 
leases should be a priority to enact?
    Mr. Abbey. It is a priority for the Department of Interior 
to look at our existing processes and always determine where 
improvement could be achieved and efficiencies achieved so that 
we can move forward as expeditiously as possible to review the 
applications that come before us and make decisions on those 
applications.
    Mr. Barton. Do you have--what would be a good goal to shoot 
for? Do you think 90 days?
    Mr. Abbey. Well, again, it would be difficult to assign a 
goal to each application because they vary from complexity, by 
complexity, but let me just share with you----
    Mr. Barton. How about let us do it in less than a year?
    Mr. Abbey. Well, many of them are approved or decisions 
made within a year. For example, last year we received 
approximately 41 applications for permits to drill within the 
Bureau of Land Management. We made decisions. We issued 
approvals on over 4,200 applications for permits to drill 
because we ended up addressing some of the backlog that we had.
    Mr. Barton. So when industry says it is 3 to 7 years, they 
are just not telling the truth?
    Mr. Abbey. Some applications will require that much time 
because we go back and have to do an environmental impact 
statement, but many of the applications, most of the 
applications that we do receive for permits to drill are 
decided within probably anywhere between 90 days to a year.
    Mr. Barton. OK. My time has expired. I would like to ask 
Ms. McCarthy one final question.
    Could you elaborate on Lisa Jackson, the Administrator, Ms. 
Jackson's announcement yesterday that the EPA had no plans to 
issue regulations for greenhouse gases for existing power 
plants? What is no plans? Is that the next week, the next year, 
the next decade? Would you elaborate a little bit on her 
announcement on that issue?
    Ms. McCarthy. I think her statement, Congressman, was very 
clear. We do not have plans to develop new source performance 
standards for existing----
    Mr. Barton. So I can state that for the rest of the Obama 
administration, Lisa Jackson and the EPA is not going to issue 
a regulation for existing power plants on greenhouse gases.
    Ms. McCarthy. We just indicated that we have no plan.
    Mr. Barton. For the rest of the Obama administration?
    Ms. McCarthy. Right now we have focused solely on what you 
have already proposed, which is getting comment on the new 
source standard, which is the premise for moving forward. We 
are looking forward to those comments, and we want to make sure 
that we get the new source performance standard right, that we 
protect existing facilities at this point, and should we move 
forward with existing in the future, that would be a standard 
that would be established through separate rulemaking.
    Mr. Shimkus [presiding]. The gentleman's time----
    Mr. Barton. No plans is like President Clinton saying 
depends on what the gentleman----
    Mr. Shimkus. The gentleman's time has expired.
    The Chair now recognizes the gentleman from Texas, Mr. 
Green, for 5 minutes.
    Mr. Green. Mr. Chairman, I am glad to follow my colleague 
from Texas, and if I run over, could I get a couple minutes, 
too, although I am not a Chairman Emeritus as he is.
    Mr. Shimkus. No.
    Mr. Green. That was a quick response.
    Ms. McCarthy, following my colleague from Texas, I 
appreciate what you did on the existing facilities because that 
was a big concern. Now, we may still have some discussion on 
how we can do secrets ratio intervenings on existing 
facilities, but my interest is obviously refining capacity, and 
it is my understanding the EPA has publicly stated or proposed 
the Tier 3 Sulfur Standards this March, which would mean they 
would need to be proposed this week.
    When do you plan to propose those Tier 3 Sulfur Standards?
    Ms. McCarthy. We don't have an exact timeline at this 
point, Congressman. We are actively looking at this issue. We 
want to assure that they are as cost effective as they can be. 
Right now we project that cost to be somewhere less than a 
penny. We recognize the challenges associated with the cost of 
gasoline, and we are going to be sensitive to that.
    Mr. Green. OK, and since you don't have a timeline I know 
you agree that in using the same rationale that you have used 
on greenhouse gases for new permitting, the combination of 
these rules could put refiners in quite a predicament, and so I 
would hope that you are working with--I understand you are 
working with litigants and seeing what we can do because 
obviously everybody wants to do what is right, but we need to 
be able to capitalize it, particularly on refineries like I 
have. I have five of them that are very large, and they just 
don't, I mean, at any given time there is a permit for 
something in the works there in East Harris Country. So I 
appreciate that.
    Let me ask Mr. Smith, Mr. Smith, I have some concerns in 
the discussion draft that our colleague, Mr. Gardner, has with 
interfere with the efficient management operation of the 
Strategic Petroleum Preserve, maybe make it unusable, in fact. 
The proposal covers not just draw downs and sales but also 
exchange agreements. The authority entered in an exchange 
agreement with private companies has been used ten times, and 
these exchanges allow refiners to overcome unforeseen emergency 
disruptions in their crude oil supply.
    In June of 2000 this authority was used because of a 
commercial dry dock collapsing in a shipping canal in 
Louisiana, blocking the primary route of the two refineries. If 
not for the exchange, these refineries would have had to halt 
production. In 2006, an accidental release of storm water and 
oil caused another ship canal closure, again, blocking the 
supply to refineries. Again, the exchange for the strategic 
petroleum reserve kept these refineries running.
    In my district I have a number of refineries that depend on 
the Houston Ship Channel. A closure of that channel could be 
devastating to these companies and the workers, not to mention 
the economy that depends on their fuel.
    My question is, Mr. Smith, do the requirements of 
Congressman Gardner's bill apply to exchange from the Strategic 
Petroleum Reserve such as the ones we that are we were done to 
address ship channel closures in 2000, and 2006?
    Mr. Smith. Thank you for the question, Congressman. I can't 
speak to the details of exchanges. It is just something, I am 
not familiar with that clause of the regulation. What I can say 
is that anything in the regulation that is going to restrict 
the ability for us to use the Natural Petroleum--Strategic 
Petroleum Reserve in a way that protects national security and 
in a way that allows us to respond to emergency disruptions in 
supply that might cause price spikes for American consumers 
would be something that is going to be taking away a primary 
tool that the Federal Government does have at its exposure to 
protect the American consumers, and it would be something that 
would not be in the best interest of the American public.
    Mr. Green. So would an exchange from just one refinery to 
address an emergency interruption trigger the rift requirement 
to create a leasing plan?
    Mr. Smith. Well, my understanding is that exchanges are 
covered.
    Mr. Green. OK. In June of 2000 exchange I mentioned early 
on, it was only 500,000 barrels, that is less than one-tenth of 
1 percent of the holdings of the ``SPRO''. Mr. Smith, would 
this bill require you to create a nationwide leasing plan 
because of the exchange of less than one-tenth of 1 percent of 
the ``SPRO,'' and the plan would have to increase leasing of 
Federal land by less than one-tenth of 1 percent?
    Mr. Smith. Well, my understanding of the legislation as it 
is proposed is that the draw down to the ``SPRO'' would be 
tied, the utilization of the ``SPRO,'' would be tied to the 
requirement to create plans to increase production on public 
lands, which would involve working with all of the regulatory 
and legal authorities and estimates of private companies that 
would be producing on the private end.
    Mr. Green. I don't want any confusion. I want us to lease 
on public lands everywhere we can, but I also know that if we 
tie it to the ``SPRO'' there are some emergencies that happen, 
and we know in our district what happened with Hurricane Ike 
came into the Houston Ship Channel, we had to shut down those 
refineries, and literally the price of oil went up, the price 
of gasoline went up until we could get them up, and we had 
airline companies and DOD saying, we need to get those 
refineries back up.
    So I worry that if we have a disruption, that we need to 
have the ``SPRO'' on a short-term basis in some cases to help.
    Mr. Smith. Well, and just to be clear about the response, 
you know, we are certainly in favor of having that flexibility 
to respond should need be, and we are also in favor of 
generally speaking, making sure we have got an efficient 
process to produce oil and gas on public lands. The tying of 
the two together is something that would make us less 
effective.
    Mr. Green. Thank you.
    Mr. Shimkus. I just want for the record my ranking member 
of my subcommittee did get like 38 additional seconds so--thank 
you, and I would like to recognize myself for 5 minutes.
    Ms. McCarthy, I really do personally respect you and have 
great admiration for your work, but you all are just killing us 
in southern Illinois, our coalminers and our electricity 
generation by coal. So I have a couple of questions.
    Under the new standards, if a power producer were to build 
a new coal-fired power plant, what would that cost be?
    Ms. McCarthy. Mr. Chairman, we are talking about the 
greenhouse gas?
    Mr. Shimkus. Right.
    Ms. McCarthy. Well, we took a look, frankly, and there 
are--there is anticipated no proposals for coal fired at this 
point in time, but we did take a look at it. We looked at the 
costs and benefits.
    Mr. Shimkus. Well, we did the calculation based upon your 
own numbers. Your inventory greenhouse gases said this fossil 
fuel electricity generation emitted 2,154 million metric tons 
of CO2 in 2009. Your report, interagency report says that that 
would cost between 60 to 90 per ton in CO2 avoided, and if we 
assume 50 percent carbon capture, it would cost between $64 to 
$102 billion to replace our existing coal-fired generation with 
new plants using CCS.
    We would be happy--we have economists. We will be happy to 
share those numbers with you, but those are the costs incurred.
    Let me go to another question.
    Ms. McCarthy. Just for clarity, this has to do with future 
power plants?
    Mr. Shimkus. That is right. If we are going to replace our 
current ones with future power plants under your standards, it 
will cost $60 to--$64 to $102 billion based upon your numbers.
    Now, let us go to the second question. In the analysis the 
EPA assumes that nobody would want to build a new coal-fired 
power plant. Is that correct?
    Ms. McCarthy. That is the modeling done by----
    Mr. Shimkus. Right. So you are saying no one is going to 
build one anyway. In fact, I have got your all's quote here 
that says we don't think anybody is going to do it with these 
additional costs incurred.
    Ms. McCarthy. Not at this point in time, Congressman----
    Mr. Shimkus. Yes.
    Ms. McCarthy [continuing]. Because of the availability and 
price of natural resources.
    Mr. Shimkus. Isn't it a self-fulfilling prophesy that if 
you issue rules that nobody could meet that we won't have 
electricity generation by coal?
    Ms. McCarthy. One of the reasons why we created a 30-year 
window was to ensure that there was a pathway forward.
    Mr. Shimkus. Well, there--at $64 to $102 billion, there is 
no pathway forward.
    Let me go--coal is our most abundant source of low-cost 
domestic energy. How is taking coal out of our energy mix 
consistent with the All of the Above energy strategy?
    Ms. McCarthy. EPA is not preventing either the continued 
use or the construction of new coal.
    Mr. Shimkus. OK. Mr. Barton sent a letter, the Department 
of Energy responded on May 28, 2009, and I quote. ``Timeframe 
for undertaking a project varied depending upon the scale and 
complexity of the project with smaller-scale projects typically 
lasting 3 to 4 years in duration. Larger scale near-commercial 
scale, this is for carbon capture and sequestration, projects 
taking 10-plus years to complete.''
    Now, I am in one of the largest areas where carbon capture 
and sequestration is thought to be able to do it, and we are 
not there. No one is going to go there. Also, on the DOE letter 
it says, ``A legal framework is needed to provide certainty in 
having to deal with ownership of the geological core space.'' 
That is never going to happen. So to think we are going to move 
to carbon capture and sequestration is just very frustrating.
    This administration promised before the election that they 
were going to bankrupt coal, and if I could run the U-Tube 
clip.[Video shown]
    Mr. Shimkus. OK. This is to the San Francisco Chronicle, 
and the President basically says--so the issue is his goal was 
to bankrupt coal generation, electricity generation by coal, 
and it is not just greenhouse gases. Mr. Barton was correct. 
Greenhouse gases is the challenge next. What is the electricity 
generation by coal challenges now? Boiler MACT, mercury MACT, 
transport rule, coal ash. So, yes, let us put a new burden on 
future generation, but you are not admitting the burden that is 
closing down coal-fire power plants today. So you are already 
taking the ones out today through current regulation. You are 
going to take out the next generation of coal through 
greenhouse gas.
    My time has expired. I yield back.
    Now I would like to recognize Ms. Castor for 5 minutes.
    Ms. Castor. Well, thank you, Mr. Chairman.
    Mr. Shimkus. Now, wait. Mr. Rush is back. So, Mr. Rush, you 
are recognized for 5 minutes.
    Mr. Rush. I want to thank you, Mr. Chairman. I seen that 
very exciting there, but you were excited as much to do about 
nothing. I mean, you--what was the President speaking of? You 
are trying to insinuate--you are taking a brief three or four 
words out of total context what he was saying, and Mr. 
Chairman, that is----
    Mr. Shimkus. Would the gentleman yield?
    Mr. Rush. No, I won't yield.
    Mr. Shimkus. It is 3-1/2 minutes.
    Mr. Rush. That is the way that your side continues to 
operate. Take a few words that the President says, take it out 
of context, and then start attacking it in the context that you 
want to place it in and start attacking him on those few words. 
I am sure that the President wasn't talking about all the coal 
plants. He was talking about the most egregious polluters, and 
that--I am not going--but I just want to make a point that that 
is totally out of line and with fairness, and that is totally 
out of line with the way I would think that the Chair would 
operate.
    And Mr. Chairman, I just think that that is very malicious 
on your part because those comments were taken out of, totally 
out of context. Totally out of context.
    Ms. McCarthy, what would the health implication be of 
compelling the EPA to consider cost when setting health-based 
standards?
    Ms. McCarthy. The implication would be that science and the 
advice of the scientists and health experts would no longer be 
the primary and sole way in which the Clean Air Act defines the 
goals that it is trying to achieve to protect the public and 
deliver clean air.
    Mr. Rush. Would implementing this bill help reduce prices 
at the pump?
    Ms. McCarthy. As far as I can see it will have no impact on 
the price at the pump. For the most part the rules that it is 
delaying have not even been proposed, so they could not 
possible be influencing the price of gasoline today.
    Mr. Rush. So, again, and this is much ado about nothing as 
far as what we are going through here today, and these are my 
comments. I am not asking you a question as it relates to this 
hearing and what we are attempting to do in terms of blaming 
the EPA and the administration for the rising, the prices at 
the pump.
    Also blocks the EPA from setting new Tier 3 Emission 
Standards for motor vehicles and gasoline, some may believe 
that the current standards are sufficient and that air quality 
has improved enough. Why do we need to consider additional Tier 
3 Standards?
    Ms. McCarthy. Tier 3 Standards would deliver needed and 
required public health protections to deliver cleaner fuel that 
is lower in sulfur and also to ensure that vehicles continue to 
ratchet down the amount of NOxs and VOC emissions. It is also 
providing fuels that will allow new technologies to enter into 
the market, technologies that the car companies are looking to 
deliver to the American people so that we have clean and more 
efficient vehicles.
    Mr. Rush. In the absence of Tier 3 Standards, how will 
States and localities achieve the emission reductions needed to 
achieve clean health air?
    Ms. McCarthy. Tier 3 is going to be one of the most cost-
effective methods of delivering public health protections to 
the American public. If they are denied those protections, then 
they will have to look at other potentially much more costly 
ways of achieving those reductions that are necessary to 
protect their health.
    Mr. Rush. And in these present economic environment and the 
plight of States and local governments, do you think that will 
be part of the problem or part of the solution in your opinion?
    Ms. McCarthy. I think it is safe to say our partners at the 
States, local communities, and the tribes are looking to the 
Federal Government to deliver for them just these types of 
rules that deliver significant public health protections at 
very, very, very low costs.
    Mr. Rush. So how would Tier 3 Standards affect the price of 
gasoline?
    Ms. McCarthy. From what we can tell in the policies that we 
are looking at now because the rule hasn't been proposed, we 
are estimating a cost at less than a penny a gallon.
    Mr. Rush. Gasoline regulations will not do nothing to 
guarantee the lower of gasoline prices or reduce our dependency 
on oil. What it does is guarantee as Americans we will continue 
to breath polluted air.
    Mr. Chairman, with that I yield back the balance of my 
time.
    Mr. Whitfield. Thank you.
    At this time I recognize the gentleman from Texas, Mr. 
Burgess, Dr. Burgess, for 5 minutes.
    Mr. Burgess. Thank you, Mr. Chairman, and Mr. Smith, your 
testimony that you provided us this morning reading the start 
of one of the paragraphs it says, ``The Obama administration is 
committed to expanding the safe and responsible production of 
America's energy resources.'' And let me just say I 
wholeheartedly concur, and I congratulate the President for 
being correct on this and congratulate him on espousing this as 
a policy that he wishes to push forward.
    The second part of your statement, though, confuses me. It 
says, ``which is one reason why U.S. oil production has 
increased each year the President has been in office.'' The 
President has been in office a little over 3 years. We sat in 
this committee room for a whole day in 2008, and heard a 
hearing on the speculation effect on oil prices in 2008, if you 
recall prices were very high, similar to what we are seeing 
this year, and we heard testimony that day that it wouldn't do 
any good to drill because if you drill today, you wouldn't see 
anything for 4 to 7 years.
    Now, I will submit that if we drilled 4 years ago, maybe 
then we would be seeing something happen now, but hard to see 
how your two statements are true and related if, indeed, you 
want to take credit for what the President has implemented. 
That credit is actually going to accrue a few years from now, 
not today. Is that not correct?
    Mr. Smith. Thank you for the question, Congressman. A 
couple comments. First of all, I am glad we have some agreement 
on----
    Mr. Burgess. Sure.
    Mr. Smith [continuing]. Some of the aims and----
    Mr. Burgess. Always looking for areas of agreement. That to 
me, I am Mr. Bipartisan, always looking for areas where we can 
get together.
    Mr. Smith. That is encouraging. The second part of your 
question, not only are policies and practices in place that are 
incentivizing production and allowing companies to get to work 
in a way that is expeditious, you know, creating better value 
for American consumers, but as you look at the activity that is 
going on right now, if you look at the rig count that is going 
on right now, not only are we producing more barrels right now, 
but there is actually more activity going on in the United 
States in terms of producing, crudely producing our domestic 
oil and gas resources than any time in the past.
    Mr. Burgess. If I may just reclaiming my time, and I live 
in an area of north Texas, we live on top of the Barnett Shale, 
and we have seen a lot of activity. Now, the activity is 
diminishing, the price has gone down, and dry gas production is 
apparently not as lucrative as gas and liquids in other parts 
of the State, but nevertheless, it has been an economic benefit 
to our part of the State.
    On the other hand, it has not come without a cost, and 
there are municipalities who have had to make some pretty tough 
decisions regarding where they allow the citing of these well, 
where they allow drilling, how they handle the disposal of 
waste water. But, again, it is all on private land. None of 
this is developed on Federal land, so I would just submit to 
you some of the boom we are seeing in energy production, and I 
am grateful that the gas I there, I am grateful that the cost 
has come down from what it was 5 and 6 years ago.
    At the same time it has not been without some significant 
angst at the local level because all of these things have to be 
managed at the local level because, again, these are not on 
Federal land somewhere out in the wilderness. These are on 
private lands very near existing residential neighborhoods and 
very near existing development.
    Now, one of the Presidential candidates is talking about a 
goal for setting a goal for gasoline prices at $2.50 a gallon. 
Is that realistic?
    Mr. Smith. Well, Congressman, you know, first of all, I 
grew up in Fort Worth, Texas, so I saw that boom firsthand and 
as I go back and forth I see the impact that local drilling has 
had both in terms of creating jobs and creating opportunities 
for the people who live there but also concerns about the fact 
that you are undertaking these activities in people's 
backyards.
    So there is going to be some concern about the 
environmental impacts of drilling.
    Mr. Burgess. Which is why I would submit if we would open 
up more Federal lands, we could move away from where the people 
are and still develop the product, but be that as it may, 
$2.50, is that a realistic goal?
    Mr. Smith. I think that----
    Mr. Burgess. Add State and Federal taxes to that it is 
almost $3 a gallon. You know, that is pretty modest in my 
opinion.
    Mr. Smith [continuing]. What American people understand is 
that there is not a one-point plan or a five-point plan or a 
ten-point plan that is going to result in a big precipitous 
drop in gasoline prices.
    Mr. Burgess. I am going to surprise you again. I agree. All 
the above, all hands on deck. I think it is necessary.
    Administrator McCarthy, before my time expires, I have just 
got to ask you in your testimony you talked about the effect of 
ozone on patients who have asthma, and you have talked about 
this before.
    Ms. McCarthy. Yes.
    Mr. Burgess. For heaven sakes, you have got something 
within your grasp to help people with asthma right now today, 
because as you know, January 1 because of the banning of CFCs 
in asthma inhalers, no one can buy these things anymore, and 
asthma patients wake up at two o'clock in the morning without 
any other med, they have got no option now other than going to 
the emergency room and spending 1,500 bucks to get a breathing 
treatment.
    Why cannot we have a waiver to allow existing stocks, I am 
not asking for anybody to make anymore, but allow existing 
stocks of Primatene to be sold in the drug stores until they 
are exhausted just to give a little relief to those asthma 
patients that you profess to be so concerned about?
    Ms. McCarthy. Congressman, we have heard nothing from FDA 
that indicates----
    Mr. Burgess. Wait. No FDA. OK. We have jurisdiction over 
them, too. I got a beef with them as well. This is your 
jurisdiction. Grant a waiver so existing stock, which has 
already been approved by the FDA, can be sold to patients today 
who may need this product tonight. If we cared about 
asthmatics, if we weren't conducting a war on asthmatics, we 
would allow this to happen.
    I have submitted a letter to the President on this. I would 
ask that it be made part of the record. I simply do not 
understand EPA's intransigence on this. It makes no sense, and 
people are suffering as a consequence.
    Mr. Whitfield. Without objection the letter will be 
admitted for the record.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Burgess. And Mr. Shimkus asked me if I would submit it 
on his behalf subject for the record as well dealing with if 
you want to build a coal plant, you can, but it is going to 
bankrupt you. Can I submit that for the record?
    Mr. Whitfield. Without objection, so ordered.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Whitfield. At this time I recognize the gentlelady from 
California, Ms. Capps, for 5 minutes.
    Mrs. Capps. Thank you, Mr. Chairman.
    Director Abbey, we have been told that the proposal 
relating to the Strategic Petroleum Reserve is about linking 
supply from the Strategic Petroleum Reserve, which I will refer 
to as ``SPRO,'' to supply from domestic production. The 
proposal says that--or the bill that is being proposed says 
that we can't release oil from the ``SPRO'' no matter how 
important the reason is unless we also engage in a duplicative 
planning process to lease more Federal land for oil production 
years down the line.
    The bill sponsor has said that this bill is intended to 
increase production, and I quote, ``to match the amounts 
released from the reserve.''
    However, while the proposal would interfere with operation 
of the ``SPRO,'' it may not achieve this goal. The bill ignores 
the fact that the Department of Energy has no expertise in 
lease sales, that lease sales may or may not be bid on by 
industry, and that leased land may or may not produce oil.
    Director Abbey, does this bill specify how much production 
from Federal land should be increased?
    Mr. Abbey. It doesn't the way at least I interpret it. It 
does require us to make available more Federal minerals as a 
result of any release from the reserve.
    But let me point out as I state in my opening remarks, we 
are already leasing land. Last year the Bureau of Land 
Management held 32 oil and gas lease sales offering up 4.4 
million acres on approximately 1,750 parcels. Of those 1,750 
parcels 1,296 were actually leased.
    Mrs. Capps. Right.
    Mr. Abbey. We have 38 million acres already leased on 
onshore, we have another 38 million acres already leased on the 
Outer Continental Shelf. Of the 76 million acres that the 
Department of Interior has already leased, 50 million of those 
76 million acres have not even been explored or developed at 
this point in time.
    Mrs. Capps. Let me ask. I want to get some certain specific 
things on the record, so if I could just ask you a series of 
questions that pretty much could be responded to with a yes or 
a no, and Mr. Abbey, if we look at acreage leased nationwide, 
is there a simple calculation to find the oil and gas holdings 
of that acreage? In other words, are all acres of Federal land 
equal in terms of oil and gas holdings?
    Mr. Abbey. They are not.
    Mrs. Capps. And if acreage is offered for lease, is it 
guaranteed that industry would bid on those leases?
    Mr. Abbey. No.
    Mrs. Capps. In recent lease sales, both onshore and off, a 
significant portion of offered leases have not received bids. 
Is that correct? I believe I just heard you say that.
    Mr. Abbey. Primarily on offshore.
    Mrs. Capps. Primarily on offshore?
    Mr. Abbey. Uh-huh, and in the case of Alaska as well.
    Mrs. Capps. Offshore leases.
    Mr. Abbey. Onshore and Alaska.
    Mrs. Capps. Offshore and on, a significant portion of 
leases have not received bids that have already been offered? 
OK. Moving on. Assuming for the sake of argument that acreage 
was offered for lease and industry did bid on those leases, is 
it guaranteed that those lease holders are going to drill on 
that land or offshore?
    Mr. Abbey. No.
    Mrs. Capps. OK. A 1 percent draw down from the Strategic 
Petroleum Reserve would make about seven million barrels of oil 
available, but it sounds like you were saying, you are saying 
that a 1 percent increase in the amount of Federal land offered 
for lease could run a gamut. It might be ten times that, or it 
might be no oil at all.
    Mr. Abbey. I see no correlation.
    Mrs. Capps. So there is, in your opinion, no correlation 
between--there is not an equal over here and an equal over 
there?
    Mr. Abbey. No.
    Mrs. Capps. So this bill does not match new domestic oil 
and gas reduction to draw down from the Strategic Petroleum 
Reserve?
    Mr. Abbey. I don't see how it is.
    Mrs. Capps. Well, I have one just comment to make, and then 
I will let you--because this is your area of expertise, make 
any further conclusions that you would like to. In my way of 
understanding this legislation it is just not thought out. I 
suggest that we need to go back to the drawing board. I suggest 
this to the Office of the Legislation and perhaps in this 
subcommittee we need to hold a hearing, Mr. Chairman, on the 
Strategic Petroleum Reserve before we pass legislation to 
interfere with its management and operation.
    I will yield the last half minute to the director of BLM to 
respond.
    Mr. Abbey. Well, again, the Department of Interior is quite 
proud of the work that we are doing to support this 
administration, but more importantly to support the citizens 
that we serve in making appropriate lands and waters available 
for leasing. We are making progress. As I mentioned in my 
statistics, you know, there is 76 million acres that we have 
already leased offshore as well as onshore. Fifty million of 
those acres are not even being explored or developed.
    At the same time we have 7,000 permits that we approved 
last year, I mean, that we have already approved that are not 
being developed on by the industry.
    Mrs. Capps. Thank you.
    Mr. Whitfield. The gentlelady's----
    Mrs. Capps. I yield.
    Mr. Whitfield [continuing]. Time has expired.
    I might say that this bill does not preclude the release of 
oil from ``SPRO'' in the event of an emergency. It simply asks 
that a plan for leasing be submitted within 180 days.
    At this time I recognize the gentleman from California, Mr. 
Bilbray, for 5 minutes.
    Mr. Bilbray. Thank you, Mr. Chairman.
    Following up on that just quickly, there is no guarantee 
that if you offer land up that you will get bids. Right?
    Mr. Abbey. That is true.
    Mr. Bilbray. But isn't it true that there is a guarantee 
that if you do not offer the land up, you will get no bids at 
all?
    Mr. Abbey. That is true.
    Mr. Bilbray. OK. So let us talk about the world of the 
possible. Do you have the slide up, please? Slide on the Gas 
Buddy.
    To the EPA, if you look at this slide, those of us in 
California, and let me just say this as--wouldn't you agree 
that, first of all, probably one of the most successful clean 
air strategies that has ever been implemented or agencies have 
been very successful is the Air Resources Board in California. 
Right?
    Ms. McCarthy. Yes.
    Mr. Bilbray. OK, and I think Connecticut, you guys kind of 
kept an eye on us. Can you explain to me then when we are told 
that oil is fungible around the world, that environmental 
regulations aren't affecting price, that supply doesn't affect 
the price, would you take a look at this graphic and explain to 
me so I can explain to my citizens in California why we have 
the highest priced gasoline in America as a State?
    Ms. McCarthy. I am sorry. I don't have the information 
available to me to make an assumption.
    Mr. Bilbray. OK. Well, let me say as somebody who is a 
regulator, for me to deny that our regulations didn't have some 
affect there or the Federal mandate of regulations haven't had 
an affect there or the fact that domestic supply coming from 
Alaska and California has dropped of dramatically and we import 
55 percent of our oil in California now from the States, I just 
think that we ought to, Mr. Chairman, I think we ought to have 
a hearing and try to explain what is that impact, because 
obviously there is some impact there, and we ought to be 
upfront about this. I think that that is one of the things I 
would like to look at.
    You brought up the issue of volatile organic compounds, and 
you used the term tailpipe emissions. Can you explain to me why 
the Federal Government at this time in our history is still 
operating off of tailpipe emissions rather than going to total 
emissions, which at California we did in the early '90s? Why 
are we maintaining that antiquated testing system when those of 
us at ARB found it grossly inadequate at reflecting real world 
emissions?
    Ms. McCarthy. Just a second. I am sorry. I would like to be 
able to answer your question, and maybe we could have an 
exchange after.
    Mr. Bilbray. OK.
    Ms. McCarthy. But I am not following the question.
    Mr. Bilbray. The question is this. The cutting edge agency 
on Clean Air that you as a State agency followed and everybody 
looked to, we had the proof that tailpipe emissions were 
misleading and did not reflect reality, and we abandoned that I 
think in 1990, '92. In fact, I think even before that.
    When California recognized the failure of using tailpipe 
emissions, why in the world has EPA continued to use that 
system, which is faulty science, and you talk about science, 
faulty testing, why haven't you gone to barn testing and total 
emissions so it is a real world issue not just sticking a probe 
in the tailpipe but looking at total emissions?
    Ms. McCarthy. Well, we--let me just make clear. We do 
actually look at tailpipe emissions, and we do have almost 
complete alignment with California who also looks at tailpipe 
emissions. If you are talking about evaporative emissions, we 
also address those in various ways, and we look at the fuel 
that is being used and the vehicle of the engine. So we do look 
at a variety of ways in which we can actually reduce pollution 
using our fuels.
    Mr. Bilbray. The point being is that the Federal Government 
is still not using as their standard for auto emissions total 
emissions. They are using tailpipe. Right?
    Ms. McCarthy. We are using a variety of emissions, 
primarily tailpipe, but we look at evaporative emissions as 
well.
    Mr. Bilbray. OK. Ma'am, I will just tell you the reason why 
we abandoned it because we saw in real-life experience that our 
modeling did not reflect reality, and so we abandoned that a 
long time ago, and I am still--I still think that the Federal 
Government is consciously or unconsciously hiding the fact that 
evaporative emissions are a much bigger issue than what anybody 
wants to admit to, and tailpipe emissions is a faulty science 
that hides true emissions.
    And so I just ask we take a look at that and have a 
dialogue about when we talk about let us go science, let us go 
to real science.
    Ms. McCarthy. But you do agree that we both look at 
tailpipe emissions.
    Mr. Bilbray. But you continue to hide evaporative emissions 
by even using tailpipe emissions in my opinion. We use barn 
testing out there, we use cold start so you reflect the fact 
that the catalytic converters don't operate initially, and hot 
soak, which then reflects the evaporative emission.
    I yield back.
    Mr. Whitfield. The gentleman's time has expired.
    At this time I recognize the gentlelady from Florida, Ms. 
Castor, for 5 minutes.
    Ms. Castor. Thank you very much.
    You know, if you look back at the past 40 years of the 
Clean Air Act, and you combine that with the improved fuel 
economy standards over time for the cars that we drive, this is 
a real success story for our country and a great success story 
for our American families. I mean, I remember being younger in 
the 1970s and going out in the morning and the smog-filled 
mornings. We don't have those as much anymore thanks to the 
Clean Air Act.
    And we have also made fantastic progress on the gas mileage 
for our cars, and we are on track now for cars in America to 
the standard to be 55 miles per gallon by 2025, but a lot of 
those vehicles are already on the road. That American 
technology is out there. Someone in my family bought one of the 
cars recently. It is over 50 miles per gallon, and he loves 
driving by the gas stations these days.
    There are additional policies that the Congress can adopt 
to address high gas prices over the long term, and I am very 
disappointed in my Republican colleagues because they continue 
to turn a blind eye to good public policy. Their prescription, 
according to the two bills here, is, one, roll back fundamental 
health protections. Two, create new bureaucracy on top of 
existing agencies.
    And then they continue to guard the subsidities to the big 
oil companies. These are not the answers.
    There are a few things we should be doing. We could require 
oil companies to use the oil that is produced in the United 
States from public lands and offshore to meet the energy needs 
here at home and stopping oil companies from exporting oil from 
our public lands and waters to overseas markets. I mean, our 
domestic production is at an 8-year high, and now America is an 
exporter. We export more product.
    We could repeal the $4 billion per year in Federal 
subsidies that are currently given to the big oil companies and 
use that money instead to fund investments that will make us 
less dependent on oil. After all, the big five oil companies 
made $137 billion in profit last year, and then you ask the 
American taxpayer not just to pay one time at the pump, you ask 
them to pay again when they fill out their tax return.
    We could have tighter oversight and regulation of Wall 
Street speculators to prevent them from artificially driving up 
the price of gasoline. We could do even more to increase fuel 
efficiency standards for cars and trucks so they get even more 
miles per gallon and consumers will save on their gasoline 
costs.
    Just the standards we have in place now it is predicted 
that will save the average American family at the pump over 
$8,000 over time. So that is meaningful, and that is doable, 
and the two bills that are proposed here are--they are simply 
not the answer.
    First let us start with the Gasoline Regulations Act. It 
studies blocks and delays EPA quality, air quality protections 
that haven't even been proposed, and I have a hard time 
understanding how blocking rules that aren't even on the books 
would do anything to help consumers at the pump.
    Ms. McCarthy, would blocking EPA from taking action on 
rules that haven't even been proposed help lower gasoline 
prices?
    Ms. McCarthy. No.
    Ms. Castor. And this proposal also includes an amendment 
previously offered by Mr. Latta on the House Floor. It is a 
radical proposal to overturn 40 years of Clean Air Policy by 
undermining the goal that air should be clean enough to breathe 
safety.
    Ms. McCarthy, will gutting the Clean Air Act help lower 
gasoline prices?
    Ms. McCarthy. No.
    Ms. Castor. The bills we are discussing today also would 
create a new, would create new government bureaucracies. 
Chairman Whitfield's proposal would create a new interagency 
committee to conduct an impossible study based on data that 
doesn't exist. Mr. Gardner's bill would assign the Department 
of Energy the job of developing a new plan for drilling on 
Federal lands when oil is released from the Strategic Petroleum 
Reserve, but this isn't even the Department of Energy's area of 
expertise.
    Mr. Abbey, do you think that adding another layer of 
bureaucracy to help the Interior Department's oil drilling 
policing process will help lower gasoline prices?
    Mr. Abbey. I do not.
    Ms. Castor. What about you, Mr. Smith? Do you think adding 
another Department of Energy, adding the Department of Energy 
to leasing process for Federal lands will help lower gasoline 
prices?
    Mr. Smith. I agree with Mr. Abbey. I do not.
    Ms. Castor. The bill would also apparently require the 
USDA, the Interior Department, and even the Department of 
Defense to follow DOE's drilling plan, even if the plan is 
inconsistent with those Departments' missions authorizing 
statutes and regulations.
    Mr. Smith, can you explain how forcing the Defense 
Department to follow the Department of Energy's drilling plan, 
even if it compromises military training, is a sound solution 
to rising gasoline prices?
    Mr. Smith. I can't really answer that question.
    Ms. Castor. And Mr. Abbey, can you explain how forcing 
Secretary Salazar to do whatever Secretary Chu says would lower 
gasoline----
    Mr. Whitfield. The gentlelady's time has expired.
    Ms. Castor [continuing]. Prices?
    Mr. Whitfield. The gentlelady's time has expired.
    Mr. Abbey. I don't see where it would add value.
    Ms. Castor. Well, thank you for these, for your testimony. 
These bills are not----
    Mr. Whitfield. At this time I recognize----
    Ms. Castor [continuing]. Real solutions to rising gasoline 
prices.
    Mr. Whitfield [continuing]. Mr. Olson for 5 minutes.
    Mr. Olson. I thank the Chair. I would like to welcome the 
witnesses. Thank you for coming today and giving us your time 
and expertise.
    And Ms. McCarthy, I would like to talk to you about EPA's 
Tier 3 gasoline rulemaking because as you can imagine good 
period----
    Mr. Whitfield. Mr. Olson, excuse me. Excuse me. All right. 
Go ahead. I am sorry.
    Mr. Olson. I am sorry, sir. As you can imagine the good 
people of Texas 22 want me to ask you a lot of questions about 
how this rulemaking is going to impact their jobs. Compliance 
with these new standards will require refineries to make very 
large capital investments, and the cost will be passed down to 
the consumers. America is feeling the pain at the pump as you 
alluded to in your opening statement.
    Our economy can't handle skyrocketing energy prices as the 
President promised in the video my colleague from Illinois 
showed earlier today. Now is not the time for unjustified new 
regulations that will raise the price of fuel even further.
    In a letter to Congress in February you affirmed that your 
agency plans to propose gasoline sulfur changes only, a likely 
reduction of ten parts per million in sulfur. I know that you 
know that the Tier 2 Standards have already reduced sulfur from 
300 parts per million down to the current standard of 30 parts 
per million, a 90 percent reduction.
    Will the EPA propose to reduce the sulfur standard to ten 
parts per million? You said you were considering it.
    Ms. McCarthy. We haven't even yet proposed the rule. It has 
not gone through interagency review. I hesitate to tell you 
what we will actually propose at the time.
    I will tell you that we are very interested in ensuring 
that there is a national standard for the amount of sulfur in 
gasoline and that it be a cost-effective way of achieving 
reductions, and I don't think that there is enough information 
out yet for people to assume that there are going to be 
significant capital expenses associated with complying with a 
rule that we have yet to propose.
    Mr. Olson. And that is what they are most scared about is 
there is no, they have no idea where you are going to go with 
this proposal. We achieved a 90 percent reduction. That is 
something to be very proud of.
    Has your agency studied how the Tier 3 Standards will 
impact gasoline prices?
    Ms. McCarthy. We will be, we will obviously have to do that 
and will have a public debate about that when the rule comes 
out. It will be a accompanied by a complete economic analysis 
that will look at all prices associated with this rule that we 
can identify.
    Mr. Olson. I look forward to you getting us that 
information.
    I would like to add also, do you believe that as my 
colleague from Maryland mentioned earlier today that he thinks 
that your study will result that gasoline prices are somewhere 
in the cost of a gallon of one penny will be what the increase 
to Tier 3 Standards? Do you think one penny is the number on 
the price per gallon of gasoline? Something like that as my 
colleague from Maryland stated?
    Ms. McCarthy. Right now the policies that we are 
considering, and, again, it is yet to be gone through the 
process and out in the public arena, is we estimate that the 
cost associated with this rule will have an impact of less than 
a penny on a gallon of gasoline.
    Mr. Olson. Well, I would love to see that statement when 
you get it out there, because the facts back home, the work in 
the industry, think that it will increase their manufacturing 
costs by about 9 cents a gallon. It is almost, you know, nine 
times what you are proposing, what you think may be the limit 
there. That is significant.
    Do you know of any refineries right now that can comply 
with the ten parts per million standard?
    Ms. McCarthy. I am sorry. Say that again.
    Mr. Olson. Do you know any refineries right now, ma'am, 
that can comply with the proposed ten parts per million 
standard?
    Ms. McCarthy. What I do know is that under our rules and 
under our proposal we will be giving substantial lead time 
associated with any rule change as we always do. In the case of 
fuel standards it is usually 4 years, and I believe that the 
standard that we are considering is certainly achievable with 
current technologies.
    Mr. Olson. We have been told that 17 refineries currently 
can attain, can achieve those standards, but do you have any 
idea how many refineries are going to have to install expensive 
retrofits to comply with the ten parts per million?
    Ms. McCarthy. We will be looking at that and providing that 
information, and we are working with the refinery industry now, 
and I would note that they are already looking at how they can 
comply with these standards, and they always seem to be able to 
use their innovation and knowhow to achieve these standards 
much more efficiently and at lower costs than we anticipate.
    Mr. Olson. And I have been told that 110 or more of the 
refineries are going to have those expensive retrofits, and 
finally just do you have any idea what the cost is going to be 
to the industry to get down to ten parts per million?
    Ms. McCarthy. I cannot--that certainly will come out in the 
regulatory impact analysis that we release with the rule.
    Mr. Olson. And does this problem have a negative impact on 
consumers? What about their health? I mean, obviously, you have 
no power, that is going to impact our jobs, we will have no 
jobs, no people's healthcare, no people--and if people are out 
there are struggling, that is a health impact, and so I submit 
to you EPA needs to include these analyses in the proposal. It 
can't just be done in a box in a vacuum. You have to take into 
account what you are actually doing to our economy because 
there are health impacts of these rules.
    And it looks like I have used my time and yield back. Thank 
you, Mr. Chairman.
    Mr. Whitfield. Thank you. At this time I recognize the 
gentleman from California, Mr. Waxman, for 5 minutes.
    Mr. Waxman. Thank you, Mr. Chairman. Today's bills may win 
the prize for legislative false advertising. These bills will 
not reduce gasoline prices by a single penny. Instead they will 
block pollution controls, increase health costs for Americans, 
diminish our energy security, and create pointless new 
government bureaucracies. There is no silver bullet for gas 
prices.
    But there are some critical steps we can take to reduce our 
vulnerability to swings in world oil markets and gas prices. 
This administration is taking those steps and getting results. 
The most effective thing we can do is use less oil. If your car 
is more efficient, increased gas prices will have less effect 
on you, and if all of our cars and trucks are more efficient, 
increased gas prices will have less effect on our whole 
economy.
    Recent data from the Energy Information Administration 
underscores this point. Cost per mile driven were about 23 
cents in 1980. Last month gas prices were higher than any 
previous February, but thanks to more efficient vehicles, the 
cost per mile driven were lower, only 16 to 17 cents per mile.
    Ms. McCarthy, what has EPA done and what are you working on 
that will protect American consumers from gasoline price 
spikes?
    Ms. McCarthy. We have been working on----
    Mr. Waxman. Is your mike on?
    Ms. McCarthy. Is it? OK. We continue to work on fuel 
economy standards with NHTSA and what we do is ensure that 
there are greenhouse gas reductions that are driving both 
reductions in the amount of oil that is demanded by this 
country, as well as providing significant cost savings in 
cleaner air for the American people.
    Mr. Waxman. Millions of Americans are already enjoying 
savings at the pump with new model year 2012, vehicles. As new 
cars become more efficient, the least efficient oldest cars are 
gradually phased out, improving efficiency, saving money 
throughout the whole fleet. In addition to reducing the demand, 
the Obama administration is also increasing domestic 
production.
    Mr. Abbey, please describe the administration's 
achievements in increasing domestic reduction.
    Mr. Abbey. Well, as Mr. Smith indicated in his opening 
remarks, domestic oil and gas reduction has increased each year 
of the Obama administration and is the highest it has been in 
almost a decade, and I know that there is some criticism that 
most of that increase is on private lands and minerals, but 
that is not necessarily the case. Even though there was a dip 
last year relative to the amount of oil that was produced from 
public lands, in the first 3 years of the Obama administration 
total Federal oil production has increased by 13 percent over 
what was produced in the final 3 years of the Bush 
administration.
    Mr. Waxman. The increase in U.S. production does not lower 
gas prices. Every oil market economist tells us that. Years of 
experience here and in other countries proves it. For example, 
Canada is a net oil exporter but still experiences the same 
gasoline price spikes we do. The real answer to gas prices is 
to reduce our dependence on oil, which means transitioning to 
alternatives. Here, too, the Obama administration is investing 
serious effort and making real progress.
    Mr. Smith, what is the Department of Energy doing to 
develop alternatives to oil?
    Mr. Smith. Thank you for the question, Congressman. One 
observation, we pointed out the fact that as Director Abbey 
just mentioned, that oil production here is at an 8-year high. 
If you----
    Mr. Waxman. What are you doing to develop alternatives? Are 
you doing things in the battery technologies, vehicle 
electrification, renewable electric power in natural gas 
vehicles? Are those things you are working on?
    Mr. Smith. Congressman, we are working on all of those 
things.
    Mr. Waxman. And so that will help us develop alternatives 
so we don't have to use that--as much oil, isn't that right?
    Mr. Smith. Yes, it will.
    Mr. Waxman. Ms. McCarthy, what has the combination of more 
efficient vehicles and more alternatives to oil done to reduce 
U.S. oil dependence?
    Ms. McCarthy. It has significantly reduced oil independence 
by billions of barrels of oil each and every year.
    Mr. Waxman. And Mr. Smith, what has happened with oil 
imports as a result of these achievements?
    Mr. Smith. Oil imports have declined every year of this 
administration.
    Mr. Waxman. Oil imports have fallen from 60 percent to 45 
percent. Last year the U.S. became a net exporter of refined 
products for the first time since 1949, according to EIA. The 
Obama administration is doing exactly what is necessary to 
reduce the dependence on oil, reduce our vulnerability to 
gasoline price spikes for over the long term, but there is no 
quick fix. Anyone who tells us that we can drill or deregulate 
our way to $2.50 gasoline isn't telling us the truth.
    Finally, I would like to note that the Tier 3 Clean Vehicle 
and Fuel Requirements are critically important to reducing 
unhealthy air pollution that is affecting millions of 
Americans.
    Ms. McCarthy, when will the EPA propose these provisions?
    Ms. McCarthy. We are actively working on these rules, and 
we hope to have them ready for interagency review shortly.
    Mr. Waxman. Well, I urge you to do it as soon as possible. 
Cleaning up vehicles and fuels is a highly cost effective way 
to reduce air pollution and keep our children and families 
healthy.
    Thank you, Mr. Chairman.
    Mr. Whitfield. At this time I would recognize the gentleman 
from Nebraska, Mr. Terry, for 5 minutes.
    Mr. Terry. Thank you, Mr. Chairman.
    First of all, I just want to follow up on what I heard is 
that the administration is responsible for the reduction in oil 
imports. That is interesting considering that most economists 
state that the reduction of imports is due to a recession where 
people used less, and so I assume that the President is now 
claiming credit for the recession now.
    Is that an accurate statement, Mr. Smith? Yes or no?
    Mr. Smith. What we will say, that was not a----
    Mr. Terry. That is a yes or no. Is he claiming credit for 
the recession now since that had the largest impact in reducing 
imports?
    Mr. Smith. Congressman, that is not a yes or no question.
    Mr. Terry. Well, then probably you shouldn't have answered 
that that way.
    Now, Ms. McCarthy, are the new Tier 3 Standards to be 
proposed, are those discretionary or mandatory?
    Ms. McCarthy. We have not yet proposed the Tier 3 rules 
but----
    Mr. Terry. That is why I said to be proposed.
    Ms. McCarthy [continuing]. They are----
    Mr. Terry. Are those discretionary or mandatory?
    Ms. McCarthy. They are mandatory.
    Mr. Terry. They are mandatory?
    Ms. McCarthy. Yes. We are required to look periodically at 
fuels and vehicles and to make adjustments to comply with the 
requirements under----
    Mr. Terry. OK. Under what authority then specifically are 
they mandatory?
    Ms. McCarthy. I will get back to you with that, Mr. 
Congressman.
    Mr. Terry. OK. Do you know how much time you would need to 
be able to get back to us on the basis of the authority that 
they would be mandated? All right.
    I just--could you do it in 30 days?
    Ms. McCarthy. I should clarify, and I just received 
clarification. When I said they were mandatory, we are looking 
at requirements to reduce pollution necessary to achieve ozone 
standards. They are not required apparently under Title II of 
the Act. They are a discretionary act on our part, which is 
providing cost effective reductions of ozone precursors.
    Mr. Terry. OK. So they are discretionary.
    Ms. McCarthy. I believe--if you are talking about whether 
or not this specific act is required----
    Mr. Terry. Has----
    Ms. McCarthy. No.
    Mr. Terry [continuing]. EPA performed an analysis of the 
accumulative impacts of regulations on fuel prices?
    Ms. McCarthy. When we look at every fuel rule, we look at 
the rules that have come before. They are built into the 
baseline, and we take those into account relative to our 
economic analysis.
    Mr. Terry. So they have not yet been performed?
    Ms. McCarthy. When we do a fuels analysis, we look--the 
baseline includes all of the regulations that have come before. 
So they take account of all of the regulations----
    Mr. Terry. So you take the studies that have been done 
before on accumulative impacts of the regulations? I think you 
are kind of half answering the question, and so it is confusing 
me.
    Ms. McCarthy. Well, you have defined cumulative impact 
differently in the proposed act that I am testifying on, so I 
am trying to make that distinction. When we do our rules, we 
look in the baseline----
    Mr. Terry. Right.
    Ms. McCarthy [continuing]. When we look at what the costs 
are associated, the rules we consider.
    Mr. Terry. If I ask to be delivered with the next 24 hours 
your analysis of the cumulative impacts to date on fuel prices, 
could you provide me anything?
    Ms. McCarthy. We could provide you with an assessment of 
the individual, the costs associated with each of these rules 
as we propose them.
    Mr. Terry. So you said individual, but I am talking about 
cumulative where you can determine----
    Ms. McCarthy. Well, some of those will be redundant, so 
there will be overlaps in those costs, but we can certainly 
provide you as best we can the information that you looking 
for.
    Mr. Terry. All right, and I asked about the cumulative 
impact on fuel prices. How about the cumulative affect of these 
regulations on businesses?
    Ms. McCarthy. We look at impacts both relative to small 
businesses as well as the economy at large. We look at costs 
associated with refineries, we look at consumer costs. Those 
are all included in our economic analysis.
    Mr. Terry. All right, but that is on an individual rule 
basis, but I am talking about the cumulative nature of those. 
Has there been a study of how together they all affect 
businesses?
    Ms. McCarthy. I don't think we could answer a question as 
broad as that with the analysis that we do.
    Mr. Terry. All right. Well, I think that answers the 
question, and it would be no. Just one last observation in my 
12 seconds, not a question, but we have heard along the rant 
earlier from the gentlelady from Florida that data doesn't 
exist. I think that is probably why we are here, but you have 
also then stated that you have studies that show that the Tier 
3 will only impact gas prices 1 percent. So I am hearing that 
you don't have studies----
    Ms. McCarthy. No. By less than a penny.
    Mr. Terry [continuing]. But that you do have studies.
    Yield back.
    Mr. Gardner [presiding]. The gentleman yields back.
    The gentleman from Massachusetts is recognized for 5 
minutes.
    Mr. Markey. Thank you, Mr. Chairman.
    Today is the 17th time this committee has met to discuss 
some form of repeal of the EPA's Clean Air Act authority during 
this Congress, and the House has acted so far on Republican 
bills to, one, prevent EPA from reducing the amount of oil we 
have to import from hostile nations, two, preventing EPA from 
reducing the toxic mercury, dioxin and other chemicals that 
spew out of power plants and other industrial sources.
    Three, prevent EPA from reducing harmful global warming 
pollution, four, Republicans have even felt compelled to 
prevent EPA from promulgating fictitious regulations to reduce 
levels of farm, fairy, or pixie dust, and why did the 
Republican majority do that? Because when unemployment is 
spiking, Republicans tell us EPA regulations, even the non-
existent ones, are going to kill jobs. But that storyline is 
getting harder and harder to sell as the economy improves and 
improves and improves month after month after month, and we see 
positive job numbers.
    So what are the Republicans doing to try to convince 
Americans anew of the reason why EPA must be stopped now? Well, 
they shake up the Etch a Sketch and tell America that the new 
reason to limit and postpone EPA's authority under the Clean 
Air Act is to stop gas prices from spiking, and just like the 
committee's earlier efforts to repel non-existent regulations 
to reduce levels of farm or fairy dust, this new bill also 
requires a trip to Fantasyland.
    Ms. McCarthy, isn't it true that the EPA has no plans to 
propose an expensive standard to lower the Reid vapor pressure 
in gasoline and that what you will propose is likely to cost 
only one penny per gallon?
    Ms. McCarthy. That is correct.
    Mr. Markey. Isn't it true that there are also no rules 
currently in development to reduce global warming pollution 
from refineries?
    Ms. McCarthy. That is correct.
    Mr. Markey. And just so I am clear, are any of the rules 
that this bill delays or weakens the reason why gas prices are 
so high?
    Ms. McCarthy. No.
    Mr. Markey. So when Americans pull up to the pump these 
days, there is no question that it is stressful. They see their 
paychecks trickling away right in front of them, and they can't 
understand why these prices are spiking, but let me just say 
this to all the members if they want to hear it. This is not 
about Obama. This is about OPEC, oil companies and Wall Street 
speculators.
    Now, what does the majority want to do about those things? 
One, should we deploy the Strategic Petroleum Reserve to send a 
signal to Wall Street speculators? Republican answer: No, 
absolutely not. That would interfere with the free market that 
OPEC totally manipulates in their meetings in Vienna.
    Number two, should we fully fund the Commodities Futures 
Trading Commission, the police on the beat for the Wall Street 
speculation? The Republicans say no, we are going to kneecap 
that agency, keep the cops off the beat, and try to stop the 
rulemakings on manipulation, on position limits, on the kinds 
of power that the agency would need.
    Three, the Democrats say keep the oil and gas that is 
drilled for on public lands in the United States. Don't send it 
overseas. How do the Republicans vote? No. Send that oil 
overseas, send that gas overseas.
    So, ladies and gentlemen, when it comes to lowering gas 
prices, you know, when you say to them, hey, let us make sure 
the Keystone Pipeline oil stays in the United States, the 
Republicans say, oh, no. We are voting no on that, and you did 
all vote no to keep the Keystone oil in the United States. We 
had that vote out on the House Floor 3 weeks ago.
    So this crocodile tear, concern about consumers and trying 
to blame the EPA when you have it within your own power right 
now to do something about gasoline prices is so clear in terms 
of what the goal is. It is not about Obama. It is about OPEC, 
oil companies, Wall Street manipulators and speculators, and we 
see no activity on the side of the Republicans in taking any 
actions in this area.
    Moreover, just for the record, there are one-third more 
rigs, floating rigs that are going to be in the Gulf of Mexico 
this summer than there were before the oil spill. So this is a 
very bad way that Obama has of having a plot to undermine oil 
drilling in our country if one-third more floating rigs are 
going to be in the Gulf of Mexico this summer than there were 
before the actual BP historical worst environmental spill in 
the United States. And by the way, each one of those CEOs 
should be sitting down here. You want to investigate the mess 
we have got in the country, BP should be sitting next to 
Halliburton, and we should have them under oath, and they 
should be explaining why they lied or incompetence saying only 
1,000 barrels per day were going into the Gulf of Mexico.
    I thank the chairman.
    Mr. Gardner. The gentleman yields back.
    The gentleman recognizes--the chairman recognizes himself 
for 5 minutes.
    Thank you to the witnesses for being here today and to Mr. 
Abbey, a question for you. Oil production on Federal lands 
increased in 2009, and 2010, as a result of leasing and 
permitting decisions made before your administration took 
office. However, the fall off in leasing and permitting actions 
under the Obama administration is apparent and even your own 
EIA anticipates continued fall off in production in 2012, and 
beyond.
    Isn't it true that BLM leased fewer onshore acre than any 
administration going all the way back to 1984?
    Mr. Abbey. There is a lot of factors that come into play 
where we lease. I will say this, that we are moving forward 
aggressively in identifying appropriate areas for leasing, and 
we are making progress in offering up more acres each year.
    Mr. Gardner. So let me repeat the question. Is it true that 
BLM leased fewer onshore acres than any administration going 
all the way back to 1984?
    Mr. Abbey. Well, that is based upon the market. For 
example----
    Mr. Gardner. Yes or no? I have the public land statistics 
right here.
    Mr. Abbey. Yes. We will get----
    Mr. Gardner. So it is yes or no? Have you leased----
    Mr. Abbey. We offered 4.4 million acres for lease last 
year.
    Mr. Gardner. Onshore acreage according to this shows the 
past 3 years, 2009, 2010, 2011, the lowest on record going back 
to 1984, and it is public land statistics is what I am citing 
data for fiscal year 1984, through fiscal year 2011, from your 
Web site. So is that true?
    Mr. Abbey. That is true.
    Mr. Gardner. And so, yes, the lowest number since 1984. 
Thank you.
    Oil and gas production on Federal lands and waters declined 
14 percent in 2011. However, oil and gas production experienced 
a massive increase last year on lands controlled by State and 
private entities. The CRS last week, Congressional Research 
Service, reported that 96 percent of the increase in oil and 
gas production between 2007, and 2011, has occurred on non-
Federal lands, the lands you do not have anything to do with.
    Since the Federal Government does not manage private lands, 
do you think it is fair for it to take credit for private 
market decisions?
    Mr. Abbey. Congressman, total natural gas production from 
public lands, and I am talking about onshore, has increased 6 
percent during the first 3 years of the Obama administration 
and during the last 3 years of the Bush administration.
    Mr. Gardner. So are you taking credit for private land 
production as well?
    Mr. Abbey. I am talking about public lands.
    Mr. Gardner. But I am asking----
    Mr. Abbey. Six percent on public lands.
    Mr. Gardner [continuing]. A question about private land. 
You said natural gas, correct, not oil?
    Mr. Abbey. Natural gas. On oil it has increased 13 percent 
over the last 3 years or the first 3 years of the Obama 
administration.
    Mr. Gardner. Yes, but what about last year?
    Mr. Abbey. Last year it took a dip.
    Mr. Gardner. It did take a dip. Thank you, and a further 
question for you, Mr. Abbey. A Citigroup last week predicted 
total liquids production could double for the continent in the 
next decade and that the United States could overtake both 
Russia and Saudi Arabia in oil production by 2020.
    Here is what Citi said about new energy production would 
mean for the U.S. Read GDP would increase by 2 to 3.3 percent, 
that is $370 to $624 billion. Three point six million direct 
and indirect jobs could be created by 2020, as a consequence of 
increased energy production. Our trade deficit could shrink by 
80 to 90 percent. The value of the dollar could jump by 1.6 to 
5.4 percent due to increased energy production, and risks to 
the United States, in particular geopolitical risks, would 
dramatically decrease.
    But the only caveat in this report, here is the Citi report 
right here, is this, and this is a quote from the report. 
``Whether the increase in production results in the U.S. 
reducing its imports or whether net exports grow doesn't matter 
much to world balances. Either way North America is becoming 
the new Middle East. The only thing that can stop this is 
politics, environmentalists getting the upper hand over supply 
in the U.S. for instance.''
    Yet according to CRS as I mentioned 96 percent of the 
increase in production from '07, to 2011, was on non-Federal 
lands. Only about 5.5 percent of government lands onshore are 
leased for energy, and you said the lowest amount in 3 years, 
since 1984, the past 3 years leased. And 93 percent of the 
shale oil and gas wells have occurred on non-Federal lands, and 
there is no commercial leasing system for government lands for 
oil shale production even though Congress ordered one in 2005. 
And people are worried including Indian tribes about new 
regulations regarding drilling and fracking that might affect 
their energy production.
    Assuming you agree that more jobs, more GDP growth, more 
oil production, and more potential to become the largest 
producer of energy in the world are good things, how do you 
square your administration of lands and these sorry statistics 
with those goals? It is clearly not working.
    Mr. Abbey. Well, what I did not see in that report is the 
fact that there is 50 million acres that have already been 
leased by the Department of Interior that are going undeveloped 
at this point in time.
    Mr. Gardner. Does a lease guarantee production?
    Mr. Abbey. It does not.
    Mr. Gardner. Does an oil rig guarantee production?
    Mr. Abbey. It does not.
    Mr. Gardner. Thank you. Further questions to Mr. Smith. Mr. 
Smith, last week Mr. Chu, Secretary Chu testified saying that 
supply mattered when it came to price, and I will quote him. 
``If long-term decreased demand has an affect on price, then 
don't the basic laws of supply and demand dictate that so will 
long-term increased supplies?'' His response, ``I absolutely 
agree.''
    Do you believe increased supply will decrease costs?
    Mr. Smith. What we do believe is that over the long term 
increased supply will have an impact on global oil.
    Mr. Gardner. So a long-term increase in supply will 
decrease costs like the Strategic Energy Production Act calls 
for?
    Mr. Smith. I would disagree with the premise of that 
statement given that this act, what it will do is simply tie 
any activity that is going on anyway, which is trying to make 
sure that we are prudently developing acres on public land with 
an important operational capability that the Federal Government 
has. So I would disagree with your assertion that this act 
would actually have an impact on U.S. production or on global 
oil prices.
    Mr. Gardner. So if you have this under this act, 3 percent 
of the Federal land is leased onshore without this under this 
act?
    Mr. Smith. I am sorry. I didn't hear that.
    Mr. Gardner. Without this act 3 percent of Federal lands is 
leased. Without this act.
    Mr. Smith. Without this act----
    Mr. Gardner. As it stands today, 3 percent of Federal lands 
is leased.
    Mr. Smith. Is--I am sorry. I am not hearing the question. 
Three percent of Federal lands is what?
    Mr. Gardner. Leased.
    Mr. Smith. Is leased.
    Mr. Gardner. Right.
    Mr. Smith. Three percent of--well, I mean, you would have 
to direct that question, I think, to----
    Mr. Gardner. My time has expired. Thank you.
    The Chair now recognizes the gentleman from Virginia, Mr. 
Griffith.
    Mr. Griffith. Thank you, Mr. Chairman. I noted with some 
interest earlier when Mr. Shimkus was talking that he made 
several comments that I happen to agree with, and then Mr. Rush 
said, well, this is much ado about nothing. Much ado about 
nothing? I have to beg to differ.
    Three companies in my region have recently either laid off 
employees or idle production of coal. Much ado about nothing? 
Tell that to those employees.
    When you take utility MACT, boiler MACT, transfer rule, and 
coal ash and now the greenhouse gas regulations on utilities, 
you are affecting jobs. My district has a median household 
income of $36,000. Median household income. The President said 
that they were going to raise electric rates. Now, he was 
talking about his cap and trade scheme at the time.
    Ms. McCarthy, this is going to raise electricity rates 
because as the President said when he was campaigning, the 
utilities, and his quote was, ``They will pass that money onto 
consumers.'' Isn't that true with your utility plan as well?
    Ms. McCarthy. We looked at the impact of the mercury and 
toxics standard on electricity rates, and we did not see a 
significant increase as a result of that rule, and that was 
based on looking at the Cross State Air Pollution Rule as well. 
The Greenhouse Gas Standard that we announced yesterday has 
nothing to do with the electricity rates.
    Mr. Griffith. Has nothing to do with electricity rates 
because it doesn't affect the current facilities. Isn't that 
correct?
    Ms. McCarthy. And it also has very little impact on the 
future facilities that we anticipate to be constructed.
    Mr. Griffith. It would be constructed not using coal, 
however.
    Ms. McCarthy. They have a place should natural gas rise so 
much in price that cost would again be--coal would again become 
competitive. Right now in most places it is not.
    Mr. Griffith. All right. If we could see that clip, please. 
All right. Let me just read it.
    [Video.]
    Mr. Griffith. All right. Let me read you what else is in 
there. ``When I was asked earlier about the issue of coal, you 
know, under my plan of a cap and trade system, electricity 
rates would necessarily skyrocket.'' Those--well, let me finish 
the quote and then I will get onto my hypothesis. ``Even 
regardless of what I say about whether coal is good or bad, 
because I am capping greenhouse gases, coal-power plants, you 
know, natural gas, you name it, whatever the plants were, 
whatever the industry was, they would have to retrofit their 
operations. That will cost money. They will pass that onto the 
consumers.''
    Now, I have to ask you, Ms. McCarthy, when the President 
has a little more flexibility, when he gets past November, do 
you anticipate that that flexibility will incorporate not only 
the existing, not only the future power plants, but existing 
coal-power plants and that new regulations will come forward on 
the existing plants at that time?
    Ms. McCarthy. The regulations we announced are a 
commonsense step forward that look at regulating solely 
greenhouse gases emissions from future power plants. That is 
what is in the works. That is what we are taking comment on. It 
is not a cap, it is an emission rate that we relies on modern 
technology and that can be delivered today.
    Mr. Griffith. But when the President has more flexibility, 
if we believe his words, and we believe his words from his last 
campaign, don't you anticipate that he is going to make the 
costs rise on the use of coal and even natural gas, because 
they are both carbon-based fuels? Wouldn't you anticipate that? 
If you were sitting in my shoes watching your district being 
decimated in jobs across the board because the electricity 
rates don't just affect the coalmines and the coalminers and 
the people relying on coal. They affect every business in my 
district because in our area we are relying on coal at this 
time to produce every good that we produce.
    Ms. McCarthy. Right now the flexibility that the President 
is allowing is allowing EPA to provide the public health 
benefits that the legislature asked us to deliver relative to 
the Clean Air Act. That is the kind of flexibility that I 
expect him to continue to provide.
    Mr. Griffith. And so when it comes to using of the carbon-
based fuels, you expect less flexibility so that he can be more 
flexible in cleaning up the air and taking away the jobs of the 
hardworking American taxpayer. Is that correct?
    Ms. McCarthy. The President was very clear that it is an 
All of the Above Strategy. The rule we propose----
    Mr. Griffith. All of the above but doesn't include coal. 
That is a four-letter word now, isn't it?
    Ms. McCarthy. It allows a pathway forward for coal as well 
as natural gas.
    Mr. Shimkus. The gentleman's time has expired.
    The Chair now recognizes the gentleman with a birthday 
today from West Virginia, Mr. McKinley.
    Mr. McKinley. You would add that. Thank you, Mr. Chairman, 
and welcome back Ms. McCarthy. That last question perhaps 
needed a little bit more, but if we have time, we will get back 
to that, but it is interesting that you just, you said all of 
the above.
    Ms. McCarthy. Yes.
    Mr. McKinley. And you have said I think earlier in your 
testimony about that the--for sequestration with coal, they 
could go ahead with sequestration, but I thought--did I, maybe 
I didn't hear correctly. Did you say there is an existing 
facility now with sequestration? You said there it is going on 
today?
    Ms. McCarthy. There are facilities that are large-scale 
applications----
    Mr. McKinley. Can you share that? We don't have any--I have 
no listing of those commercial--could you send that to our 
office for someone to release that?
    Ms. McCarthy. I most certainly will.
    Mr. McKinley. If you would. Thank you. But let us go back 
to the sequestration again, because in your testimony you are 
saying you believe in we should be pursuing the sequestration 
at a route to continue to use fossil fuels, coal particularly.
    Ms. McCarthy. I think the administration----
    Mr. McKinley. But yet the DOE just cut the NETL's 
laboratory by 41 percent. So, you know, that is where the 
research and development for coal, that is where we have the 
plans for carbon capture and sequestration, which didn't get 
funded at all under this.
    So can you share, do you agree with the DOE's idea to slash 
funding for coal research?
    Ms. McCarthy. I am aware that there has been significant 
funding to----
    Mr. McKinley. No. My question was do you agree with it.
    Ms. McCarthy. I am not aware of DOE's current plan----
    Mr. McKinley. You weren't aware that they cut it 41 
percent.
    Ms. McCarthy [continuing]. At NETL.
    Mr. McKinley. I just, I am astounded with that because I 
think the idea of using it is fine, but then to cut the 
research for it shows it is disingenuous on the part of this 
administration. They have, try to have it both ways.
    Let me go to the economic models, because in your testimony 
on page two of ten you use a lot of statistics. You talk about 
the model year 2016, the cars will cost maybe only $950, but we 
have heard testimony from the EPA time and time again that it 
just--I really have to question your economic model. If you 
look at--if we could have up on the chart, the first one, you 
were predicting or the EPA was predicting that the grid 
reliability was only going to be 4 gigawatts, and everyone else 
was showing that they were in the 50 to 60 to 70 gigawatts of 
potential loss. We already had one company, First Energy, alone 
cut 4 gigawatts out of the system.
    So there is your model. There is what you are saying--and I 
have got to question it.
    Let me go to the second one having to do with heavy-duty 
trucks. In this chart this is from 2004, to 2010, the 
compliance you could see it in different years that it talks 
about in these charts, this one in particular, says in 2004, 
you, the EPA was predicting that the cost of compliance was 
only going to be $900 and some or less than $1,000, but in 
reality it was over $4,000. And in 2007, you were predicting, 
it might be $4,000, but in reality it was closer to $8,000, and 
then just 2 years ago you were, you all were predicting it was 
going to be just over $3,000, but the cost was $9,000.
    Could I see the next chart?
    Here is another one in 2010. This talks about your estimate 
was $3,400, but look down the list of all of these from 
Freightliner, International, Kenworth, Mac, Peterbilt, Volvo, 
Western Star are all in the $9,000 range, three times the 
amount that you all were predicting. I really question your 
ability to estimate and because we rely on those estimates. 
When the people on the other side of the aisle, we are trying 
to work together on this, and if your numbers are good, we want 
to work with them, but I come from the construction industry. 
When we give an estimate, we live with it.
    Are you ready to live with it? If your estimates are wrong, 
are you going to reimburse the consumers for the cost that you 
have incurred because you have convinced Congress to adopt 
these heavy regulations because they are only going to cost 
$3,000, but in the real world it costs $9,000. Are you going to 
reimburse the consumers?
    Ms. McCarthy. I believe that over the course of the last 40 
years that EPA had done some of the best economic modeling 
available to any agency.
    Mr. McKinley. So you are disagreeing with all of your----
    Ms. McCarthy. I do not have any idea what those charts 
were, who they developed them on, what basis. Those were not 
charts developed by the EPA, so if that information is 
available, we are happy to take a look at it and to provide you 
some input as to whether or not we believe it is accurate.
    Mr. McKinley. That is fair. I mean, I have got your number. 
So you just project----
    Ms. McCarthy. We have retroactive----
    Mr. McKinley [continuing]. These numbers at $900, and we 
can see it is--and you are predicting that it is going to be 
$900 4 years from now.
    Ms. McCarthy. And the only other thing I would like to 
clarify is that the retirement slide that you put up is we took 
great pains in the mercury and toxic standard to do that 
understanding the impacts associated with the utility industry. 
We knew that there were more than those retirements strictly as 
a matter of business decisions related to the market. What you 
are seeing closing are inefficient, old coal-fired power plants 
that cannot compete moving forward. I do not believe----
    Mr. McKinley. But everyone else----
    Mr. Shimkus. The gentleman's time has expired.
    Mr. McKinley. I am sorry my time has elapsed, but everyone 
else had the same information, and they used more accurate--
they came to a better conclusion than you did.
    Thank you.
    Mr. Shimkus. The gentleman's time has expired.
    The gentleman from Kansas is recognized for 5 minutes, Mr. 
Pompeo.
    Mr. Pompeo. Thank you, Mr. Chairman. Thank you for being 
here today. I am going to try and--I think these pieces of 
legislation are both good. I think there are a few things that 
could change, but I think they make good sense. I want to make 
sure and get a couple facts straight, Ms. McCarthy, about what 
you said in your testimony today and then I want to talk about 
your theory of regulation.
    So you said nothing in these regulations has any impact on 
high gasoline prices. Is that correct?
    Ms. McCarthy. We were speaking about the current gasoline 
prices. That is absolutely true.
    Mr. Pompeo. Do you believe that both for the short term and 
the long term? That is do these regulations have you so--I have 
heard some trying to say, well, I can't do anything about 
tomorrow's gasoline prices. Do you think this impacts next 
week's or next year's or a decade's from now gasoline prices?
    Ms. McCarthy. All I can tell you is that we have managed a 
number of fuel and vehicle programs over the years, and as far 
as we know the result of the impacts of those relative to 
gasoline prices is dwarfed by crude oil prices, by taxes, by 
other inputs that go into the price of gasoline.
    Mr. Pompeo. I disagree. Do you think the same thing for 
electricity? So we talked about gasoline. Do you think these 
regulations have no impact on electricity prices in America 
because you have been talking about gas, now electricity.
    Ms. McCarthy. Well, the regulations in----
    Mr. Pompeo. I am just asking you about electricity. Do you 
think these regulations----
    Ms. McCarthy. Are we talking about the----
    Mr. Pompeo. I am talking about the cumulative set of 
regulations that EPA has pending and current. Do you think they 
impact--you have testified before. Do you think they impact 
electricity prices?
    Ms. McCarthy. Only--I am trying to see how.
    Mr. Pompeo. OK. So you think they don't, no impact.
    Ms. McCarthy. I don't believe so.
    Mr. Pompeo. The more the merrier.
    I want to talk about your theory of regulation you 
mentioned. You said, hey, we are going to essentially put these 
new rules on new coal-fired power plants, but that is OK 
because no one is building them anyway.
    Ms. McCarthy. That isn't my theory. That is an analysis by 
the Energy Information Office and EIA, and they are the ones 
that have done modeling, that took a look at what power plants 
are being constructed, and it is really on the basis of market 
conditions, what is competitive.
    Mr. Pompeo. Right. So your justification for this set of--
this greenhouse gas rule that you have presented yesterday is 
that it is OK because no one is building----
    Ms. McCarthy. No, no. That was how we analyzed the result 
of the cost and benefits. The reason for regulating greenhouse 
gases from power plants is because greenhouse gases pose a 
danger to public health and welfare, and they are a regulated 
pollutant, and as a regulated pollutant under the Clean Air Act 
we must move forward with new source performance standards. 
That is why we did the rule.
    Mr. Pompeo. So why do you talk about that? Why do you talk 
about what the market might or might do in response? You just 
throw it out there as a justification to explain to the 
American people?
    Ms. McCarthy. No. It is part of the economic analysis that 
you are interested in us pursuing----
    Mr. Pompeo. Right.
    Ms. McCarthy [continuing]. Was to look at what are the 
costs and benefits as a result of the rule.
    Mr. Pompeo. Right.
    Ms. McCarthy. We are required to regulate greenhouse gases, 
we have tried to do that in a reasonable way, we have 
identified costs. What is clear is that because of the 
availability of natural gas in the low cost, that coal is not 
competitive at this moment, so it is not anticipated that these 
rules would have a significant cost impact. That is what we 
have identified.
    Mr. Pompeo. I appreciate that. You say coal is not 
competitive. I will tell you compared to solar, compared to 
wind, compared to all the things that you are taking taxpayer 
money to throw resources at, I will promise you that coal is 
intensely competitive. It is why we are using it in America 
today. It is because consumers care about their rates. You 
haven't talked about ratepayers one moment today. You haven't 
talked to the fact that ratepayers all across America may or 
may not know it but they are thrilled that we are using coal-
fired power plant generation in America today because it allows 
them to continue to take care of their families and heat their 
homes and cool their homes and all the things that consumers 
care about.
    Manufacturers care about it, too. They need to make sure 
they have affordable electricity as well. As you continue to 
foreclose these facts, and I have heard others, depending on 
how you count them, 13 to 15 different sets of rules and 
regulations just in my time in Congress that you all have 
imposed on the fossil fuel industry and to sit here today and 
tell me this isn't going to impact costs for consumers and 
costs for businesses and jobs in America, I just think it is 
Alice in Wonderland, and I will yield back the balance of my 
time.
    Mr. Shimkus. The gentleman yields back.
    The gentleman from Louisiana is recognized for 5 minutes.
    Mr. Scalise. Thank you, Mr. Chairman. I appreciate the 
time, appreciate the panel.
    Coming today I think it is important that we continue to 
talk about energy policy in this country and different 
proposals that we brought forward in the House and passed in 
the House that actually would increase energy production, 
implement a real All of the Above strategy, and lower gas 
prices at the pump. It is unfortunate that the Senate has 
blocked that legislation. It is unfortunate the President 
continues to oppose that, and that gets into my questions.
    Mr. Abbey, in your opening statement you made a number of 
comments I want to go through, but you said, ``This is why the 
President and the Department has continued to promote and 
implement an All of the Above approach to American energy.'' 
And I know the President said that out on the campaign trail a 
lot. He has, you know, taken the language that we have been 
using. We have actually filed an All of the Above Bill, passed 
All of the Above legislation, and now the prices are going 
higher. The President is feeling the heat from his policies, 
and so he is trying to say that he is for All of the Above, and 
unfortunately, if you look at the record, it just doesn't back 
up that the President or your agency supports an All of the 
Above strategy.
    I want to start with the moratorium in the Gulf of Mexico. 
You know, in my area we have seen since the, not only the 
moratorium, but even after the moratorium was lifted, there is 
still what people consider a permatorium in the Gulf of Mexico. 
It is very difficult to have any kind of consistent policy out 
of Department of Interior that allows people to go back to 
work. We have seen about a dozen deep water rigs leave not only 
the Gulf of Mexico but leave the United States, left this 
country, taken about 12,000 jobs with it. That number is now up 
to about 19,000 jobs.
    And I am not sure if you have seen this, I hope you would 
go look if you haven't, a group called Greater New Orleans, 
Inc., which is an alliance of business organizations in the New 
Orleans region, did a study called the ``Impact of Decreased 
and Delayed Drilling Permit Approvals on Gulf of Mexico 
Businesses,'' and I am not sure if you have seen it. I would 
like to submit this for the record if I could ask unanimous 
consent to have this report issued.
    Mr. Shimkus. Without objection.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Scalise. Because they actually surveyed not the big 
five oil companies, small businesses that are American 
businesses that service the oil and gas industry, and what they 
found in their report 41 percent of those businesses are not 
making a profit. In fact, 50 percent of the businesses, and you 
can see this in the report, 50 percent of the businesses in the 
oil and gas industry have laid off workers as a result of your 
policies.
    And so while you are out there touting and saying, hey, 
production is up, everything is great, the companies that 
actually do this with over $100 a barrel oil, with gasoline 
skyrocketing, they are laying people off in the industry 
because they can't go to work. They have sent rigs to places 
like Egypt, and so people have calculated that it is better to 
do business in Egypt than in the United States because of your 
policies.
    And so when you are making those statements, that is not an 
All of the Above policy when companies are losing money or 
laying people off in America because they have got to send jobs 
overseas, and so I would hope you would take a look at that. 
Have you seen that report yet?
    Mr. Abbey. I have not, but what I have seen are statistics 
that would lead me to believe that the pace of permitting is at 
nearly pre-Macondo levels as it stands today.
    Mr. Scalise. OK, and I know you have talked about that, 
too, and I have got some information that unfortunately 
disputes what you just said there and what your testimony said, 
because, again, in your testimony you tout here that you have 
had increased total Federal oil production has increased by 13 
percent during the first 3 years of the Obama administration 
combined, yet your own Department of Energy, your own 
Administration's agency, the U.S. Energy Information 
Administration, confirms that production in the Gulf of Mexico 
was down 22 percent in 2011, projected to be down 30 percent in 
2012. Again, Energy Information Administration said in the 
Rockies leasing is down 68 percent since Federal--President 
Obama took office. This is Federal lands, and all of this is 
down. That is not an All of the Above strategy.
    And, again, you know, I don't know, do you dispute those 
numbers, because they are actually looking at your data. I 
mean, Energy Information Administration is under the Obama 
administration, and they are using real numbers, and they are 
saying that production is actually down 22 percent last year. 
Do you dispute that?
    Mr. Abbey. You know, Congressman----
    Mr. Scalise. I know I am running out time. A yes or no. I 
mean, yes or no. Do you dispute it, or do you know about it?
    Mr. Abbey. I think that the statistics speak for 
themselves, but, you know, the Department----
    Mr. Scalise. Well, they do, and they say that it is down. 
That is not All of the Above. That is not All of the Above when 
you have got production down because of your policies. We are 
losing jobs because of your policies.
    I want to ask Ms. McCarthy, you know, we have seen some 
numbers from a number of different entities. You know, you talk 
about this as well, but, you know, we see on EPA going after 
hydraulic fracturing, and this is something that has been one 
of the areas, one of the few areas that has actually been doing 
well. President Obama, you know, touts the success of hydraulic 
fracturing, and we do, and fortunately, the President hasn't 
been able to shut it down. It is mostly on private lands, but 
now we are seeing that--we understand next week EPA plans to 
issue a new source performance standard on hydraulic fracturing 
which will actually decrease one of the big areas that has 
actually been doing well in this industry, and that is not All 
of the Above.
    Are you all getting ready to release some kind of new 
source performance standards on hydraulic fracturing? Is that 
accurate?
    Ms. McCarthy. We are under a deadline to release that next 
week, yes, but it is not a rule that is specifically focused on 
hydraulic fracking. It is----
    Mr. Scalise. Right. That is one of the few areas that has 
been up.
    Ms. McCarthy [continuing]. A rule that looks at oil and 
gas.
    Mr. Scalise. So now you all are going to go after that, 
too, so that the President has actually shut down----
    Ms. McCarthy. Actually, I think if you wait until next 
week----
    Mr. Scalise [continuing]. Areas in leasing, rejected 
Keystone XL Pipeline.
    Ms. McCarthy [continuing]. To see what the rule is, and we 
will show you that it is not just cost effective, but it will 
be a way to actually enhance development and----
    Mr. Scalise. People have heard that before and then they 
see their prices go up even higher when you all go in and try 
to help enhance production, it usually means people are going 
to pay higher prices for energy, and people are fed up with 
those higher prices.
    Mr. Shimkus. The gentleman's time has expired.
    Mr. Scalise. I hope you all would review those policies 
again.
    Thank you, and I yield back.
    Mr. Shimkus. I thank the witnesses for the first panel, and 
your time is done, so thank you very much for being here today. 
Appreciate your willingness to testify.
    And if the second panel witnesses would please come take 
the table. I want to welcome the panel today for joining us and 
for your testimony and time today. Appreciate your willingness 
to be here and the expertise that you are going to provide.
    We will begin this testimony to my left here, Mr. Burkhard, 
the Managing Director of Global Oil Group, IHS Cambridge Energy 
Research Associates. You will be given 5 minutes to testify, 
and thank you for joining us, and also joined on the panel 
today by Matthew--let us see where is that in order here. By 
Dr. Joseph Romm, Senior Fellow, Center for American Progress, 
Jack Coleman, Mr. Jack Coleman, Managing Partner and General 
Counsel, EnergyNorth America, Mr. Matt Smorch, Vice President 
of Strategic Planning, CountryMark, Mr. Robert Meyers, Senior 
Counsel, Crowell and Moring, and Mr. Niger Innis, Co-Chairman, 
Affordable Power Alliance, and Dr. George Schink, Managing 
Director and Principal Navigant Economics here on behalf of the 
Emissions Control Technology Association.
    Thank you very much for joining us. Each panelist will be 
given 5 minutes.
    Mr. Burkhard, you may begin.

  STATEMENT OF JAMES BURKHARD, MANAGING DIRECTOR, GLOBAL OIL 
 GROUP, IHS CAMBRIDGE ENERGY RESEARCH ASSOCIATES; JOSEPH ROMM, 
  SENIOR FELLOW, CENTER FOR AMERICAN PROGRESS ACTION FUND; W. 
    JACKSON COLEMAN, MANAGING PARTNER AND GENERAL COUNSEL, 
    ENERGYNORTH AMERICA, LLC; MATT SMORCH, VICE PRESIDENT, 
  STRATEGY, COUNTRYMARK COOPERATIVE; ROBERT J. MEYERS, SENIOR 
   COUNSEL, CROWELL & MORING, LLC; NIGER INNIS, CO-CHAIRMAN, 
AFFORDABLE POWER ALLIANCE, AND NATIONAL SPOKESMAN, CONGRESS OF 
 RACIAL EQUALITY; AND GEORGE R. SCHINK, MANAGING DIRECTOR AND 
 PRINCIPAL, NAVIGANT ECONOMICS, ON BEHALF OF EMISSIONS CONTROL 
                     TECHNOLOGY ASSOCIATION

                  STATEMENT OF JAMES BURKHARD

    Mr. Burkhard. Thank you very much for this very timely 
opportunity to discuss oil and gasoline markets and----
    Mr. Shimkus. Press your microphone. Thank you.
    Mr. Burkhard. Is that on? OK. Good. Thank you very much for 
the opportunity, very timely opportunity to discuss oil and 
gasoline markets and the role of the U.S. Strategic Petroleum 
Reserve.
    As we all know, gasoline is nearing $4 per gallon on 
average in the United States, which isn't far from the all-time 
high of $4.17 in 2008, and this is clearly a burden for 
American motorists and businesses.
    Since the beginning of the year gasoline is up nearly 20 
percent, and the reason for that is mainly due to higher crude 
oil prices. So what is driving crude oil prices? The main 
driver is geopolitics, specifically concern over the adequacy 
and reliability of oil supplies due to the uncertainty 
surrounding the--nuclear issues having such an impact is the 
limited amount of oil production capacity of the world. The 
capacity is the oil market's----
    Mr. Shimkus. Mr. Burkhard, I am sorry to interrupt you 
again, but I think your microphone may have been bumped and 
turned off again.
    Mr. Burkhard. It has gone off again? OK.
    Mr. Shimkus. Thank you.
    Mr. Burkhard. There we go.
    Mr. Shimkus. Pull it up a little bit closer to you.
    Mr. Burkhard. Is that better?
    Mr. Shimkus. Is the light on?
    Mr. Burkhard. The light is on.
    Mr. Shimkus. OK. Thank you.
    Mr. Burkhard. OK. So spare capacity is the world oil 
market's shock absorber. When it is high, the oil market can 
better absorb supply disruptions or demand spikes for large 
volumes of oil to be brought into production. And for decades 
Saudi Arabia has been the main holder of spare capacity, and 
that is still the case today.
    As recently as 2010, global spare production capacity stood 
at about 5.5 million barrels per day, and at that time that was 
equivalent to about 6 percent of world oil demand. Today spare 
capacity is much less. It is at most at 2.5 million barrels per 
day, which is equivalent to less than 3 percent of current 
world oil demand. For context, Iran in 2011, exported about 2.4 
million barrels per day. The spare capacity and the amount of 
exports last year are roughly the same.
    Under such conditions limited spare capacity, under such 
conditions of limited spare capacity yields political concerns 
and can impact payoffs--switch mikes there.
    OK. Is that--is this mike working? Well, we will just go 
ahead. OK.
    So November last year the International Energy Atomic 
Agency--if that is not working I will just pretend this one is 
working--stated that Iran had carried out activities relevant 
to the development of a nuclear explosive device. In the time 
since that report was issued, the U.S. and the European Union 
have adopted sanctions aimed at tendering Iran's economy, 
particularly by making it more difficult for Iran to sell its 
oil, and that is in order to pressure the Iranian regime to 
reign in its nuclear program and international monitoring and 
controls.
    Iran has responded with bellicose statements such as 
threatening to close the Strait of Hormuz, through which passes 
about 35 percent of the world's oil exports. The sanctions the 
U.S. and the E.U. sanctioned may well succeed in reducing the 
amount of Iranian oil in the global market, and this would 
likely lead to even lower spare capacity and the possibility of 
higher prices. The oil market is tense.
    It is also an election year in the United States, and this 
has raised question again of the purpose of the U.S. Strategic 
Petroleum Reserve, the ``SPRO,'' which is the world's largest 
emergency oil reserve. The ``SPRO'' was created in the 
aftermath of the 1973, '74, oil crisis when disrupted flows of 
oil from the Middle East exposed vulnerability in the U.S. and 
global economies to such actions.
    The original purpose of the ``SPRO'' was to help the U.S. 
manage a very large oil supply disruption from the Persian 
Gulf. If the ``SPRO'' is used to influence the price of 
gasoline and not in response to a major disturbance in the oil 
market, it is a blunt instrument with limited prospects for a 
lasting impact. The original purpose of the ``SPRO'' was not to 
manage gasoline prices, which is an extremely daunting 
challenge even under benign conditions, but it was said to help 
to address major supply disruptions, particularly from the 
Persian Gulf.
    The first emergency release of oil from the ``SPRO'' was in 
January 1991, at the start of Operation Desert Storm, and it 
was done in coordination with other members of the 
International Energy Agency. The release was conducted out of 
concern for what could happen amid the fog of war in the 
world's most important oil-producing region. When the release 
was announced, war was certain. In fact, the very day that the 
President just announced the commencement of attacks against 
Iraqian forces, and it had a calming impact on the oil market.
    Today, to conclude, there is a risk that ratcheting up 
economic pressure on Iran, combined with Iranian intransigence 
on the nuclear issue could lead to a situation where the 
``SPRO'' needs to be used for its original purpose, as an 
emergency response to a massive supply disruption.
    Thank you.
    [The prepared statement of Mr. Burkhard follows:]


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    Mr. Shimkus. Thank you, Mr. Burkhard.
    Dr. Romm, 5 minutes, please.

                    STATEMENT OF JOSEPH ROMM

    Mr. Romm. Is this working?
    Mr. Shimkus. We just ask that you speak very loudly, 
please.
    Mr. Romm. All right.
    Mr. Shimkus. Thank you. .
    Mr. Romm. Mr. Chairman, members of the committee, thank you 
for inviting me to testify. Actually my first hearing was 16 
years ago this month when I was Principle Deputy Assistant 
Secretary at the Department of Energy, and that hearing was 
also on oil crisis.
    Imagine the world's oil market is the Atlantic Ocean. U.S. 
oil production is the Potomac River. You could release every 
reservoir dam in this country, and it just won't raise sea 
levels noticeably. There is just too much water in the ocean, 
and that is the way it is with oil, the global oil market, and 
oil prices.
    I have six key points to make.
    First, there is broad agreement among energy experts and 
economists that increasing domestic oil production will have no 
noticeable impact on U.S. gasoline prices for the foreseeable 
future. Oil prices are set on a world market.
    Could we have the first chart?
    This is a chart of the U.S. oil price, which is on the 
bottom, plotted against the price of--U.S. gasoline price, I am 
sorry, which is the line on the bottom and the British, German, 
and French price, which is on the top, and as you can see oil 
prices, gasoline prices rise and fall in tandem. Our prices 
rise and fall in tandem with European countries, even though 
they produce very little oil, and we produce a great deal. It 
is, again, gasoline prices are driven by the world price for 
oil.
    Second, my second point, the rising U.S. gasoline prices 
has come at a time of soaring U.S. gasoline production. So 
while President Obama has adopted an aggressive pro-drilling 
strategy, it has, as expected, not worked to lower prices for 
Americans. As the Cato Institute itself explained this month, 
``It is not Obama's fault that crude oil prices have 
increased.'' Indeed, Douglas Holtz-Eakin, former CBO Director 
and Chief Economist for President Bush's Council of Economic 
Advisory, wrote this month, ``Domestic actions to increase 
production will not lower gas prices set on the global 
market.''
    The Energy Information Administration has estimated that 
adding a quarter million barrels of oil a day in 2020, would 
have no impact on gasoline prices whatsoever, and adding half a 
million barrels of oil a day in 2030, would lower gasoline 
prices by just 3 cents.
    Third, U.S. refining costs account for a mere one-eighth of 
the price of gasoline. The cost of reducing pollutants that 
harm public health and our children are a small fraction of 
that small fraction. As the Wall Street Journal has noted, 
``Germans over the past 3 years have paid an average of $2.64 a 
gallon, excluding taxes, while Americans have paid $2.69, even 
though we produce 200 tons as much oil at they do.'' Again, it 
just is not domestic regulations that affect the price of 
gasoline.
    Senator Bingaman has explained, ``We do not face these 
cycles of high gasoline prices because of lack of access to 
Federal resources or because of some environmental regulation 
that is getting in the way of us obtaining cheap gasoline.''
    Fourth, every independent study shows that EPA regulations 
deliver benefits to the economy and public health that vastly 
exceed their short-term costs. The OMB reported to Congress 
that in the past decade EPA regulations had total costs of some 
$28 billion while delivering benefits to the Nation that ranged 
from $80 billion up to an astonishing $500 billion.
    Economic analysis does not support the conclusion that EPA 
regulations have harmed U.S. competitiveness, and indeed, some 
analyses suggest that they have boosted our competitiveness by 
giving us market leadership and cleaner technologies. Given 
that our major industrialized trading competitors pay $2 and $4 
a gallon more for gasoline than we do, it would be essentially 
impossible for the tiny impact EPA regulations might have to 
harm U.S. competitiveness.
    There is only one demonstrated way to reduce gasoline 
prices a little in the short term and that is the release of 
oil from the Strategic Petroleum Reserve, ideally in concert 
with a similar release by our allies. This has on average 
temporarily reduced oil prices by around 10 percent.
    Six, the only thing that can protect Americans from rising 
gasoline prices and global oil shocks is an aggressive strategy 
to reduce the country's oil intensity, oil consumed per dollar 
of GDP, including a steady increase in the fuel efficiency of 
our vehicles and an alternative fuel vehicle policy built 
around electric vehicles. As Michael Levi of the Council on 
Foreign Relations put it, ``The amount of oil you produce at 
home does not affect the price. You can lower your 
vulnerability price by lowering your consumption of oil but not 
by increasing your production.''
    So you are not going to notice a big change with gasoline 
prices through more domestic production or by gutting 
regulations to protect public health.
    Just one final point since the new carbon pollution rules 
have been discussed here, unrestricted emissions of industrial 
carbon pollution are the greatest threat to public health and 
the American way of life that we know of. The EPA's new carbon 
pollution rules are the minimum first step to protecting our 
children and future generations.
    Thank you.
    [The prepared statement of Mr. Romm follows:]


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    Mr. Shimkus. Thank you, Dr. Romm, and Mr. Coleman, for 5 
minutes, please. Thank you.

                STATEMENT OF W. JACKSON COLEMAN

    Mr. Coleman. Thank you. Thank you very much, Mr. Chairman. 
It is a pleasure to be here. I appreciate the opportunity to 
testify on this proposal that you submitted the underlying bill 
for.
    I think it is extremely important, and by the way, my 6 
years of working for the House Resources Committee, I had the 
pleasure of working with this committee many times, and it is 
my pleasure to testify before it.
    I think the Strategic Energy Production Act of 2012, is a 
very important piece of legislation that highlights the fact if 
we have supply situations that we need to draw down Strategic 
Petroleum Reserve for, then we need to be doing more to produce 
from our Federal lands.
    It has been mentioned that, you know, we haven't had a lack 
of resources available from Federal lands. I beg to differ. 
When we look at the Outer Continental Shelf, only 2 percent of 
the Outer Continental Shelf is available, is leased. Five 
percent of the onshore public lands, Federal lands are leased. 
So a total of around 3 percent of all federally-controlled 
lands are leased. You cannot tell me that we don't have a lot 
of resources that are available to the United States and to the 
citizens of this country for not only economic development, 
creating jobs, high-paying jobs in those other resources that 
have not been made available or not leased.
    You know, I think it is a lot of fuzzy thinking, frankly, 
to say that we don't, it doesn't matter about American 
production of oil to the Federal oil price. You know, the AP 
analysis that came out about the price of oil and trying to say 
that, you know, it didn't matter about increases or decreases 
in production in the United States because the world, the oil 
is set on the world market, certainly it is, but we are the 
third largest producer of oil in the world. You cannot tell me 
that if we--if our production was eliminated, that that would 
not have an impact on the price of oil in the world. We already 
have just because of the reduction in production from Iran, 
much smaller amount than what this country is producing, 
already has a significant impact on the world market price of 
oil.
    So what we need to be focused on is what can we do. You 
know, I am pretty amazed with the credit that is being claimed 
for increases in production of oil from private and State 
lands. As we, as I point in my testimony, actual production of 
oil from Federal lands decreased significantly over the last 
year. We all know based on how long it takes to get permits and 
how long it takes to get out there and drill, it takes a long 
time to get that production on board. The increase that we had 
in the previous years came about from significant lease sales 
that were in the past and commitment of capital, what you have 
seen.
    And a little bit of my background, I have spent 14 years as 
Senior Attorney for Offshore Minerals at the Interior 
Department, and you know, I know something about this, and then 
another 6 years here at the committee. What we have seen is 
really a manipulation of statistics, trying to claim credit for 
something which people aren't due credit for, and actually what 
credit there is due is a 15 percent reduction in leasing of 
Federal lands, onshore and offshore, in the last 3 years. The 
actual number--it doesn't matter. The actual number of leased 
acreage, which is an indicator of future production, has 
decreased by 15 percent over the last 3 years. It is one of the 
lowest levels that we have had in almost 20 years.
    This should be a great concern to the American people, that 
you have much less opportunity. We talk about opportunities for 
production in this country. You know, for the longest time we 
were given the mantra, oh, we don't have much resources, 
nothing we can do. Well, we actually have had that corrected by 
the record of Congressional Research Services, I point out in 
my testimony, came out with a report about 2 years ago that 
said the United States has the largest endowment of total 
fossil fuel resources that have not yet been produced in any 
other country in the world, and even in the oil and gas area we 
have significantly more conventionally recoverable resources 
than most nations on the face of the Earth.
    And the Institute for Energy Research came out with a 
report about 3 months ago in North America we have something 
around a 1-1/2 trillion barrels of oil that could be produced. 
The vast majority of that is in the United States, and more 
than half of that is on Federal lands.
    So I appreciate the opportunity to testify, and I look 
forward to any questions.
    [The prepared statement of Mr. Coleman follows:]


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    Mr. Shimkus. Thank you, Mr. Coleman, and Mr. Smorch, you 
are recognized for 5 minutes.

                    STATEMENT OF MATT SMORCH

    Mr. Smorch. Thank you, Mr. Chairman, for allowing me to 
testify and tell you about CountryMark and how the current 
regulatory regime affects our business.
    CountryMark is Indiana's only American-owned oil refining 
and marketing company. We are a cooperative, and we are owned 
and controlled by our members who represent over 100,000 
farmers in our market area. Our purpose is to ensure adequate 
supply of quality fuels to these farmers.
    CountryMark, our refinery, is small. Only one-tenth the 
size of the average refinery in our region. Even though 
CountryMark is small, we have a big impact in our area. We 
purchase 100 percent American crude oil, providing $100 million 
of income per year to 40,000 local royalty owners. We supply 
over 75 percent of the agricultural market and 50 percent of 
the school districts in the State of Indiana. We employ nearly 
450 workers, mostly in rural communities. We purchase nearly 
$200 million in products and services every year.
    With everything combined, CountryMark's total economic 
contribution exceeds $2.5 billion per year. This value stays 
here in the United States and provides much needed jobs in 
mostly rural communities. We are not a fully-integrated oil 
company. We operate between two commodity markets, crude on one 
side, products on the other. CountryMark stays in business 
based on how well we can control our costs compared to other 
fuel suppliers.
    Regulations and mandates increase operating costs, which 
makes our viability uncertain. My job is to analyze market 
trends and develop long-term strategies. Since I work for a 
cooperative, I do not own a piece of the company. I am here 
solely due to the longevity of CountryMark. I am a chemical 
engineer and have spent most of my career in refinery 
operations, so I have real world experience.
    In my current role I have to look at the cumulative affects 
over a 10-year period of all regulations to make sure that 
money and credit is available when it is needed.
    Today I would like to highlight two examples where 
regulations increased our costs.
    First let me talk about sulfur and gasoline. In 2010, 
CountryMark constructed a process unit that reduced gasoline 
sulfur by 90 percent to meet the Tier 2 sulfur limit of 30 
parts per million. We had to do this to be able to sell 
gasoline and stay in business. That unit cost $33 million, and 
its annual operating cost is $1.8 million.
    Tier 3 requires gasoline sulfur reductions to 10 PPM. This 
will take an additional $15 million of modifications and more 
energy, in turn, increasing operating costs again. When 
averaged over a 10-year period, meeting Tier 2 costs $160,000 
per ton of sulfur removed, while meeting Tier 3 will cost 
$200,000 per ton of sulfur removed.
    This comparison demonstrates two things. The cost of 
compliance is high when based on the amount of pollutant that 
is removed, and also at each stage there are diminishing 
returns. By requiring multiple reductions in different years, 
capital costs increase and are less efficient.
    I would also like to talk about renewable fuels mandates. 
CountryMark blended biodiesel since 2005, and ethanol since 
2008, because it made economic sense. The Renewable Fuel 
Standards changed the natural progression of these fuels by 
mandating a market. It is a very complicated rule. We either 
purchase and blend renewable fuels or purchase credits. Even 
though there are four distinct categories of renewable fuels, 
ethanol and biodiesel are the only two fuels that are 
available. Cellulosic biofuels don't exist.
    Under the current rule CountryMark's estimated compliance 
cost for buying credits would be $9 million this year, but that 
increases to $64 million like the year 2021. We continue to 
blend ethanol and biodiesel for compliance but now at a loss. 
For example, to drive the demand for biodiesel we would have to 
sell it at the same price as diesel fuel. We purchase biodiesel 
at $5 a gallon and have to sell it for $3 a gallon at a loss of 
$2 for every gallon of biodiesel that we sell.
    Over the next 10 years these two areas combined to increase 
our average cost to produce gasoline by 19 cents per gallon or 
diesel fuel by 22 cents a gallon. Our costs of operation have 
and will increase due to EPA regulation.
    While fully integrated oil companies or larger refineries 
may be able to absorb these incremental costs, small business 
refineries like CountryMark cannot. If the market does not bear 
the additional cost with higher prices, refineries will go out 
of business. Jobs are lost, and gasoline and diesel prices 
still increase.
    Sixty-six refineries have shut down in my 22-year career, 
and I happened to be at one of those before I came to 
CountryMark. It makes sense to let the experts determine the 
combined effects of all EPA regulation on the industry, the 
consumer, and the American worker.
    CountryMark fully supports this legislation.
    [The prepared statement of Mr. Smorch follows:]


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    Mr. Shimkus. Thank you, Mr. Smorch, for your testimony, and 
I am going to recess the committee for such time as may be 
necessary to put this new microphone up and hopefully we can 
get it addressed quickly.
    [Recess.]
    Mr. Shimkus. Reconvene the committee, and Mr. Meyers, 5 
minutes, please.

                 STATEMENT OF ROBERT J. MEYERS

    Mr. Meyers. Thank you. First I just want to thank the 
chairman and members of the subcommittee for the opportunity to 
be here, and I would ask that the full written statement be 
placed into the record.
    My written testimony addresses the cumulative impact 
analysis required by the discussion draft pending Clean Air Act 
rulemakings affecting refinery sector and the projected timing 
for the new requirements, and I also address the parts of 
legislation that affect the promulgation of ozone standards.
    What my bottom line conclusion is is that it makes sense to 
do a comprehensive analysis, and it also makes sense to do it 
at this time. A fundamental issue in this legislation as my 
experience tells me for a while is that any time you are 
dealing with the Clean Air Act you always have to face the 
challenge of why do we want to change anything.
    And I can completely understand why EPA is taking the 
position that they do. They are charged with implementing the 
act. That is their role, but I wanted to clarify a couple of 
things from the first panel.
    First, from my reading of the discussion draft, there is no 
rollback under the bill to affect current regulations, so my 
definition of rollback would be, you know, if you are affecting 
the current regulations. By definition you are looking at the 
effect of regulations in the future.
    Second, I was also a little bit confused in terms of we are 
to understand that in terms of the Tier 3 rulemaking it has not 
been decided exactly what the regulations are but at the same 
time we know they cost less than a penny. The two don't go 
together because cost analysis is essentially derivative of 
what the regulatory standards are.
    So my questions there go with respect to the current, if 
you look on current OMB iteration of the rulemaking, we are 
also dealing not only with residual authority in the act to set 
standards but 211(v) regarding renewable fuel standards and 
211(h), which deal with volatility.
    Now, they may not do volatility through other authoring 
act, but you also have the issue with the E-15 labor at this 
point in time, whether the current 1-pound waiver exists, and 
that could be another significant cost impact if based on the 
decision to allow E-15, if you don't allow a 1-pound waiver, 
you will have an effect of effectively decreasing the 
volatility of ethanol-blend gasolines by those two actions.
    In any event, in terms of the general nature of the bill 
and in terms of looking at multiple pollutant strategies, this 
is something that the agency itself has talked about and 
advocated. Indeed, just last fall the Clean Air Act Advisory 
Committee concluded that the time was right to take a more 
vigorous look at opportunities to align and optimize Clean Air 
Act regulations affecting individual sectors. That is an 
outside committee that advises EPA.
    My written testimony outlines the nexus between the various 
rulemakings contained in the discussion draft, but I was trying 
to think of a simple analogy, and I think that it is mostly as 
taxes. As an individual we need to pay multiple tax levies, 
sales taxes, school taxes, property taxes, Federal, State, 
sometimes local, and Federal gas and State taxes, and I am 
certain that each of these taxes were initially enacted to 
convey a public benefit.
    But it really their combined effect on individuals in our 
economy that we feel, not the individual levies themselves, 
although sometimes they can be painful.
    So I don't see the intellectual leap it takes to support a 
comprehensive review of the cumulative impact of regulations. 
The bill does not require the government to do the impossible 
but instead allows reliance on available data.
    Despite numerous executive orders, the plain fact of the 
matter is that such reviews aren't done. I will give you a few 
examples. In the latest transport rule EPA did not examine the 
effects of the current program, even though it is being 
implemented in over two dozen States. EPA's climate rules 
didn't examine the impact of the rule on stationary sources, 
even though the net effect of the rules, as was explained in 
the earlier panel, as a result of these determinations, now you 
need to have greenhouse gas permitting for large facilities.
    And EPA doesn't consider NAAQS imposed costs on small 
businesses, State, local, or tribal governments or the private 
sector. Why? Because the prevailing view is that NAAQS did not 
directly impose regulations on sources. This is legally correct 
but analytically it is problematic.
    So the basic question is why does this system of analysis 
make more sense and target the legislation to require 
assessment of the accumulated costs of regulating the petroleum 
sector? What is essentially so sacrosanct about the current way 
we consider costs and benefits?
    My written testimony tries to point this out in detail, but 
basically in terms of the impact going forward I made a couple 
observations.
    One, we got Tier 3. You are talking model 2017, cars and 
vehicles, other light-duty vehicles, so you are talking 
essentially approximately about 5 years from now before the 
effective date of standards.
    In a similar fashion I understand EPA's current ozone 
regulations to require plans for regulations to require rules 
about 28 months from now. Under the reading of the bill you 
have got 13 months for the study, so it would seem to be that 
you do have enough time, well enough time to do a comprehensive 
study before the impact of regulations are going to be felt.
    So I will sum up here by just saying that the last thing I 
think you should look at was March 20 memo from Cass Sunstein, 
head of OIRA, OMB Office, would direct the agencies to, ``take 
active steps to take into account the cumulative effects of new 
and existing rules and to identify opportunities to harmonize 
and streamline multiple rules.''
    The discussion draft in large part implements this 
directive.
    Thank you very much.
    [The prepared statement of Mr. Meyers follows:]


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    Mr. Shimkus. Thank you, Mr. Meyers.
    Mr. Innis, you are recognized for 5 minutes.

                    STATEMENT OF NIGER INNIS

    Mr. Innis. Thank you, Mr. Chairman.
    Mr. Chairman, Ranking Minority Member Rush, members of the 
committee, I want to thank you for the opportunity to address 
the committee today. I also want to thank your crack technical 
team for getting our mikes up and running.
    I am here in my capacity as co-chairman of the Affordable 
Power Alliance and national spokesman for the Congress of 
Racial Equality, one of our Nation's oldest civil rights 
organizations.
    In 2007, CORE's National Chairman, Roy Innis, wrote the 
book, ``Energy Keepers, Energy Killers: The New Civil Rights 
Battle.'' The premise of my chairman's book is that the final 
frontier of the civil rights revolution is the fight for 
economic opportunity and that access to reliable, affordable 
sources of energy is integral to providing that economic 
opportunity. Conversely, when energy prices are raised due to 
the market or unfortunate government policy, that final 
frontier becomes all the more difficult to reach.
    And that makes high energy prices, be it gasoline for our 
cars or electricity for our homes, an assault on the people's 
ability to exercise their fundamental civil rights.
    The book, ``Energy Keepers Energy Killers,'' inspired the 
formation the Affordable Power Alliance. This alliance is led 
by the Congress of Racial Equality and was joined by the High 
Impact Leadership Coalition of Churches, the 60 Plus 
Association, the 2-decade old Senior Citizens Advocacy Group, 
and the National Hispanic Christian Leadership Conference, 
which is the largest Hispanic Christian organization in the 
country with a network of over 30,000 member churches.
    The Affordable Power Alliance campaign has promoted the 
message that affordable energy is a critical element of today's 
civil right struggle because energy is the master resource that 
reaches into every facet of our lives. We cannot tolerate 
bureaucratic bans and regulations that separate people from 
that desperately-needed affordable energy. Affordable energy is 
not only a vital resource, it is a moral imperative.
    Rising energy prices disproportionately discriminate 
against the poorest and most disadvantaged among us. People 
don't want energy welfare. They want affordable energy. They 
want affordable prices based on abundant supply, not government 
subsidies and certainly not artificially-high prices based on 
bureaucratic bans and regulations.
    EPA's current automotive standards enacted in 2000 and 
implemented beginning in 2004 already require vehicles to be 77 
to 95 percent cleaner and reduce the sulfur content of gasoline 
by up to 90 percent. As for fuel efficiency, fuel economy which 
has been discussed a great deal today, these standards, the EPA 
admits already, they will raise automobile sticker prices by 
$1,000 by 2016, and $3,000 by 2025. Industry estimates are 
often higher. These higher sticker prices would disqualify 
nearly 7 million working class Americans and potentially new 
car buyers. You can't get the fuel savings if you can't afford 
the car in the first place.
    The legislation before this subcommittee, I believe, we, 
the Affordable Power Alliance and the Congress of Racial 
Equality believe will help America produce affordable and 
reliable energy for all its citizens.
    Mr. Chairman, the Affordable Power Alliance and CORE are 
not here today with an economic plea. We are here to give our 
support to these measures as a moral imperative to remove the 
bans and regulations that now force energy prices beyond the 
means of millions of decent, worthy Americans.
    I see that I have a little bit more time. Very quickly, we 
have made a tremendous amount of progress in our country. 
Minority Member Rush, Congressman Rush was a part of that great 
civil rights revolution, along with my father and many others, 
that changed this country for the better. It would be tragic if 
the social and the political activity and progress that we have 
made as a country would be balanced off with a stifling of 
economic mobility which has been the hallmark of making this 
country the greatest country on Earth.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Innis follows:]


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    Mr. Shimkus. Thank you, Mr. Innis, and Dr. Schink, you are 
recognized for 5 minutes.

                 STATEMENT OF GEORGE R. SCHINK

    Mr. Schink. Thank you. Good afternoon, Mr. Chairman and 
members of the committee. I want to thank you for allowing me 
to appear before you and testify regarding this very important 
and relevant topic.
    As an economist my work over the past 30 years has been 
focused largely on the energy industry. Today I am here to 
discuss some economic issues related to EPA's Tier 3 Motor 
Vehicle Emission and Fuel Standards.
    There are four major points I will make today regarding 
Tier 3 related to the affects not only on gas prices but also 
on the environment, human health, and the economy. These points 
are addressed in more detail in my written testimony.
    First, it is vital to understand that Tier 3 has absolutely 
nothing to do with the recent increases in gasoline prices. The 
Tier 3 rules have not yet been proposed and will not go into 
effect until 2017.
    The retail price of gasoline depends on numerous demand and 
supply factors with the global price of crude oil being the 
most important. The cents per gallon increases in U.S. retail 
prices and global crude oil prices over the last 3 years are 
virtually identical. That is the entire increase in U.S. retail 
gasoline prices over the last 3 years can be fully explained by 
the increases in global oil prices.
    Second, the estimates of the marginal cost to U.S. refiners 
of meeting of Tier 3 standards prepared on behalf of the oil 
industry by Baker and O'Brien are significantly overstated. 
Initially these estimates costs, marginal cost estimates were 
up to 25 cents per gallon and included the cost to U.S. 
refiners of reducing both the sulfur content and vapor pressure 
of gasoline.
    However, the EPA has stated that the Tier 3 rules only 
involve reducing the sulfur content of gasoline. The oil 
industry's revised marginal cost estimates for U.S. refineries 
are 69 cents per gallon for just the sulfur reduction. The oil 
industry's estimated average increase in U.S. refining costs is 
only 2.1 cents per gallon.
    However, there are two major concerns with the assumptions 
underlying the oil industry's marginal and average cost 
estimates. First, the investment cost and resulting annual 
capital costs are unrealistically high. Second, the cost 
estimates are developed without taking into account the option 
of averaging and trading across refineries. The lateral 
omission biases the marginal cost estimates upward 
dramatically.
    It should be noted that if the latest Baker and O'Brien 
marginal average cost estimates are correct and the refiners 
are able to pass the marginal costs onto consumers in the form 
of higher gasoline prices as implied by their study, the 
refiners can make a profit from Tier 3. They could sell 
gasoline for 69 cents per gallon more while incurring only a 
2.1 cent per gallon average cost increase. If this is the case, 
it seems odd the refiners would oppose Tier 3.
    There is another study cost that has been performed by 
MathPro Incorporated for the International Council on Clean 
Transportation that has more realistic estimates of investment 
costs and annual capital costs. The MathPro study calculates an 
increase in average U.S. refining costs for reducing the sulfur 
content in gasoline of at most 1.4 cents per gallon. This 
result is close to the EPA's estimate of about 1 cent per 
gallon.
    The difference between the oil industry's 2.1 cent per 
gallon estimate and MathPro Inc.'s 1.4 cent per gallon estimate 
can be explained almost entirely based on the difference 
between the annual capital costs estimates in the two studies.
    Third, when Tier 3 goes into effect in 2017, there may be 
no increase in gasoline prices for the American consumer. 
Removing sulfur from diesel fuel will increase the production 
costs of refineries by a small amount, but there is no 
certainty that this incremental cost will result in higher 
retail prices. The retail prices are determined by many factors 
and impossible to tell to what extent these costs will be 
passed through.
    It is also important to note that the likely increase in 
the average cost to refining the low-sulfur gasoline is 
probably in the vicinity of 1 cent per gallon. Even if this 
cost were passed to the consumers, increase in gas prices would 
hardly be felt.
    Fourth and finally, the increased refining costs associated 
with reducing the sulfur content of gasoline are likely to be 
more than offset by environmental and health benefits that will 
be realized from Tier 3. Tier 3 will be pre-submissions of 
nitrogen oxides that are responsible for countless health and 
environmental problems, including asthma, ground level ozone, 
acid rain, and damage to soil, just to name a few.
    For the northeast and Mid-Atlantic regions alone, the 
annual health benefits by 2018 are estimated to be in the area 
of--health benefits are estimated to be in the neighborhood of 
$235 million, which are expected to rise to $1.2 billion over 
time.
    Further, the improvement in health will result in a more 
productive workforce, which will lead to a more productive 
economy. Tier 3 will also generate economic benefits. In the 
auto and emission control industries it will increase jobs and 
value added to the implementation of the technologies.
    I haven't fully evaluated these yet, but my preliminary 
analysis indicates that these benefits will greatly exceed the 
cost.
    Thank you, again, for allowing me to appear here.
    [The prepared statement of Mr. Schink follows:]


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    Mr. Shimkus. Thank you, Dr. Schink, and, again, thank you 
to the witnesses for your testimony today, and I yield myself 5 
minutes for questions.
    We have heard a lot today discussing the issue of demand, a 
lot about supply, and in particular, some of our colleagues on 
the Democratic side of the aisle believe that perhaps demand 
can address the price of gasoline, but supply is no part of 
that equation.
    A couple of weeks ago we had Secretary Chu from the 
Department of Energy here, and I asked a question about whether 
or not the release that President Obama made last year from the 
Strategic Petroleum Reserve impacted price, and Secretary Chu 
said, ``I think the supply did make a difference.'' And we 
talked about the lifting of the moratorium in 2008 by President 
Bush when the price of oil dropped $9, and then the price that 
happened when the ``SPRO'' was released, it was two times more 
than the ``SPRO'' was released, its impact on the price, and he 
said that is true.
    My next question was if long-term decreased demand has an 
affect on price, then don't basic laws of supply and demand 
dictate that so will long-term increased supplies, and he said, 
I absolutely agree. And then the next question, if you increase 
supply, it will decrease costs. That is what you have admitted 
to. That is what the ``SPRO'' did. Is that correct? That was a 
question to the Secretary of Energy, and Secretary Chu said, 
``I agree that both supply and demand matter.''
    Now, we have heard people say that supply doesn't matter. 
We have heard people testify that supply has no impact, and Mr. 
Burkhard, in your testimony I don't know if you were able to 
pick out in Dr. Romm's testimony, he talked about only a--only 
by reducing demand can the U.S. lower prices at the pump, and I 
do have a couple of questions for you on that.
    Do you agree with that assessment?
    Mr. Burkhard. Well, both the demand and supply set the 
price. It is not one or the other, but it is, indeed, both. 
There is a mix of factors that push prices up. There is a mix 
of factors that push prices down, and the net result is what we 
see in the price of oil.
    Mr. Shimkus. Dr. Romm says that U.S. demand has decreased 
while U.S. production has increased over the past few years, 
yet oil and fuel prices have continued on an upward trajectory 
over that same time period.
    Do supply and demand data only from the U.S. explain the 
global price of oil?
    Mr. Burkhard. No, they don't, but because it is a global 
market as has been discussed here, and both the demand trends 
in the U.S. and the supply trends in the U.S. have had a big 
impact. The U.S. is the biggest oil consumer. It is the third 
largest oil producer. If you look at supply, U.S. liquid's 
production has increased 1.3 million barrels per day in the 
last 3 years. That is by far, by far the largest increase of 
any country in the world.
    Mr. Shimkus. Well, then do you agree then that more U.S. 
oil production won't help lower prices?
    Mr. Burkhard. That more production won't----
    Mr. Shimkus. Well, not----
    Mr. Burkhard. It is in more--economic logic would dictate 
that more supply at a given level of demand would tend to--
would be a force to lower prices.
    Mr. Shimkus. And so any clue if the U.S. was not the third 
highest producer in the world what prices would be?
    Mr. Burkhard. If we didn't have that supply growth, this 
great revival in U.S. oil production, I talked about how tight 
the market is right now. If we did not have that supply growth, 
we would probably be faced with an even tighter market today 
and probably higher prices.
    Mr. Shimkus. So if you are releasing oil from the Strategic 
Petroleum Reserve in order to impact price, then it makes sense 
then to have long-term policies in place to increase overall 
U.S. supplies as good solid policy?
    Mr. Burkhard. Yes. Short term or long-term supply does 
matter, just like demand does.
    Mr. Shimkus. Thank you. Mr. Coleman, some have said that 
oil companies are sitting on millions of acres of land but not 
producing any oil from their leases. What are the problems with 
that characterization in your opinion?
    Mr. Coleman. Mr. Chairman, there are many problems with 
that. Number one, it defies economic logic. Companies have to 
pay substantial amounts of money to get these leases. They have 
to pay a lot of money to maintain them every year. They have a 
lot of expenses in studies and surveys to--before they could 
ever go out and try to even apply for a permit to drill.
    Yet the idea that companies just sit on an asset just to 
drain money out of the corporation is ridiculous, and I talked 
about it in my testimony, in my written testimony, how 
difficult it is and what length of period of time it takes to 
get a permit from the Federal Government versus State 
permitting agencies.
    The amount of red tape and the studies and reviews that 
have to be gone through to be able to move forward on Federal 
land are not comparable to States. So I really take offense at 
people who say they are just sitting on this stuff and not 
making use of it. There is always work to be done in the 
continuum.
    Mr. Shimkus. And without objection I would enter into the 
record a letter from Steven Allred at the United States 
Department of Interior discussing the Federal Government's 
policy when it comes to using leases and the difficulty it is, 
that it takes in order to move forward with the leasing and 
achieve a permit.
    [The information follows:]


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    Mr. Shimkus. Thank you, Mr. Coleman.
    Mr. Rush, you are recognized for 5 minutes.
    Mr. Rush. I want to thank you, Mr. Chairman. Most of us 
understand that oil is trading on the global market, and 
therefore, prices are established based on rule of supply and 
demand in addition to other geopolitical factors. I think in 
this panel and the prior panel, I don't think there is any 
disagreements in that.
    A number of prominent oil and energy economists have 
indicated that tensions with Iran increase demand from China 
and India, reduce production in Libya, and worried observations 
about global economic growth are all contributing to rising oil 
prices.
    Mr. Romm, in your testimony you stated that the only thing 
to protect Americans from rising gasoline prices and global oil 
fluctuations is by implementing an aggressive strategy to 
reduce the country's demand for oil. You cite measures such as 
steadily increasing vehicle fuel efficiency and finding 
alternative fuels to power our automobiles.
    Given your conclusions, do you believe that either of the 
two bills under consideration will have any noticeable impact 
on U.S. gasoline prices? And if not, what type of policy and 
programs should Congress be pursuing in order to resolve this 
yearly, almost monotonous debate on how to address these rising 
gasoline prices?
    Mr. Romm. Thanks for that question. No. I don't believe 
either of the bills in question could substantially or 
noticeably affect gasoline prices.
    I want to clear up something about what I was trying to say 
in my testimony. I don't think that an aggressive energy 
efficiency strategy fuel economy standards and alternative 
fuels would substantially lower prices. I don't, again, the 
price of oil is set on the world market, and demand is really 
being driven by countries like India and China.
    What we can do, however, is reduce fuel bills, which is the 
product of the price and the amount that you use personally, 
let us say, through your vehicle or that the economy uses per 
dollar of GDP. So the goal if you are trying to reduce the 
country's vulnerability to an oil shock, price spike that is 
out of our control because of what happens in the Middle East 
or somewhere else, is to reduce the amount of oil that an 
individual uses when they drive their car, and that is what the 
President has done with the aggressive fuel economy standards 
he has put on the table, and I think it was Representative 
Waxman who cited this new EIA analysis which showed that even 
though we have record gasoline prices, consumers are not seeing 
record fuel bills because their vehicles are considerably more 
efficient than they were the last time gasoline prices were 
very high.
    So the goal if you want to make the economy more resilient 
to the inevitable rising prices driven by other countries and 
the inevitable price spikes driven by, you know, disasters or 
conflict in other countries, is to make this country less 
dependent on oil consumption, decrease oil intensity by making 
our cars more efficient and by finding substitutes for oil.
    Mr. Rush. Any independent peer review studies that conclude 
that EPA regulations have harmed U.S. competitiveness, and 
commercially, are you aware of any independent studies that 
suggest that EPA regulations have loosened our competitiveness 
by giving us market leadership and cleaner technology?
    Mr. Romm. Well, it is a good question. I discuss it 
somewhat in my testimony. I think it is quite clear that there 
really are not independent studies that find that EPA 
regulations have hurt U.S. competitiveness. I mean, I think it 
is pretty obvious in the case of gasoline. Most of our trading 
competitors, whether it is Japan or Germany or Great Britain, 
tax gasoline at a very high level. I mean, if you have been to 
Europe, you know they are paying $2, $3, $4 a gallon more for 
gasoline than we are. So some regulation that might affect U.S. 
gasoline prices by a penny or two pennies can't possibly hurt 
U.S. competitiveness when they are paying, you know, $2, $3, $4 
a gallon more than we are.
    What I do think you will find in the literature is that 
U.S. leadership on clean energy standards, particularly the 
automotive industry, created leadership in pollution control 
technology, catalytic converters, and in fact, the low sulfur 
standards ironically have allowed U.S. diesel producers to sell 
diesel into the European market because it now meets their 
standard.
    So I think in general it is always good, the world is 
moving towards cleaner energy and lower emissions. The 
countries that do it first become leaders in the technology, 
and they create jobs exporting that technology.
    Mr. Shimkus. The gentleman's time has expired.
    The gentleman from Virginia is recognized for 5 minutes. 
Mr. Griffith.
    Mr. Griffith. Thank you, Mr. Chairman.
    Mr. Smorch, each of the regulations that would be included 
in this study would require a refiner to spend capital. What is 
it like to face these types of capital improvements? Is it easy 
to arrange for loans, engineering design services, construction 
permitting, and other steps that may be required to comply?
    Mr. Smorch. That is a great question. One of the things 
that we look at, you know, like I said in my testimony is I 
look at where cash and credit is going to be available over a 
10-year period, and these regulations come one after the other 
it seems like. So I am looking at trying to deal with capital 
for multiple regulations at one time.
    OK. For small business refiners in this type of an economy 
there are some out there that would have a hard time being able 
to get the credit and raise--and to be able to go and comply 
with regulation.
    There is an example for renewable fuel standard. Thirteen 
small business refiners got an exemption, an additional 2-year 
exemption because it was a burden for them. So that just shows 
that these are burdensome regulations.
    Mr. Griffith. If a small refiner is forced out of business, 
how does that impact the local economy? I know that when small 
coal operations are forced out, it impacts my district 
tremendously. What happens when a small refiner is forced out 
in a local, in the local economy, particularly a rural economy?
    Mr. Smorch. For small companies like CountryMark we do 
mostly operate in rural communities. In Posey County, Indiana, 
we are the second biggest employer in the county, and as I 
testified, we have about a $2.5 billion per year economic 
impact.
    Other small refiners are similar to that, but they are 
typically located in rural areas that are remote. They tend to 
be the biggest employers and have the most economic impact in 
their areas.
    Mr. Griffith. And so that then affects the car salesman, 
the refrigerator salesman, the Long John Silvers, the 
McDonald's, et cetera.
    Mr. Smorch. Yes. It is going to affect everybody in the 
community. When you lose a big employer in any community, it 
goes away forever.
    Mr. Griffith. Yes.
    Mr. Smorch. And you can never recover. Those communities 
have a hard time recovering in the long term.
    Mr. Griffith. That is why a lot of folks in my district are 
concerned about the whole array of new regulations.
    Do you have any examples where different rules would either 
overlap or contradict each other in regard to your business?
    Mr. Smorch. You know, there was a lot of talk about Tier 3 
rules and all that, and EPA hasn't really proposed them yet, 
but I was able to go and sit on a small business advocacy 
panel, and so I got to see what they were going to propose. The 
sulfur standards for me is at CountryMark we just completed 
construction of our low sulfur gasoline unit to comply with 
Tier 2, just a couple of years ago. Now we are faced with going 
and modifying that same equipment and going and to meet a ten-
part-per-million standard.
    Well, it would have been better for us and more efficient 
if we would have known that ahead of time because now we have 
to go and rearrange the equipment we just bought, and I don't 
even know if we can recoup the cost of that modification or not 
in the marketplace.
    So it does have a vulnerability. So for me that is two 
regulations I kind of stack on top of each other and really 
cause us problems in the long term.
    Mr. Griffith. And for some businesses, maybe not yours, but 
for some businesses you start doing that stacking. You collapse 
the business, and they go out of business.
    Mr. Smorch. That is exactly right.
    Mr. Griffith. Mr. Innis, let me ask you talking about small 
businesses, many small businesses and what I would call micro 
businesses, the ones that have one or two folks, Mom and Pop 
operations, are owned by low-income persons who are struggling 
to work their way to a better life. They are taking a risk, 
they have opened up a business.
    What is the impact of high gasoline prices on small 
businesses such as this?
    Mr. Innis. The impact of high gas prices or high 
electricity prices are traumatic. It stifles economic mobility 
for these entrepreneurs and these small businesses.
    Just one quick statistic. The average family right now 
spends 5 percent of their disposable income on energy costs. 
Lower income, 20 percent. You fall below the poverty level, 50 
percent of your income. That means if you are, if you fall 
below the poverty level, before you wake up in the morning, 
half your income is gone, is soaked by high energy prices. That 
means that is income not available for healthcare, for 
education, for food, for shelter, and forget entrepreneurship, 
forget investing in this great idea that you might have as a 
potential entrepreneur.
    So it stifles economic mobility, and that is why we 
consider this fight for affordable access, access to affordable 
energy as a final frontier for the Civil Rights Revolution.
    Mr. Griffith. Thank you very much. I yield back my time.
    Mr. Shimkus. The gentleman yields back, and I have three 
things for the record. Without objection I would enter into the 
record the analysis of the Tier 3 Sulfur Rule conducted by 
Baker and O'Brien for the American Petroleum Institute, a 
letter of support for the Gasoline Regulations Act from the 
American Fuel & Petrochemicals Manufacturers, and a letter of 
support for the Gasoline Regulations Act from the National 
Biodiesel Board.
    [The information follows:]


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    Mr. Shimkus. I recognize Mr. Sarbanes for 5 minutes.
    Mr. Sarbanes. Thank you, Mr. Chairman. Thank you all for 
your testimony.
    I wanted to start with Mr. Smorch. Just real quick, how is 
your business doing? Is it doing OK?
    Mr. Smorch. Yes. Our business is fine, and one of the 
things that when you work for a cooperative, we share in our 
profits with 100,000 farmers. That basically--our profits end 
up going and are shared out in the rural areas of our marketing 
area.
    So for us we are sharing in profit with 100,000 farmers 
that are going out, using that money to increase their 
business.
    Mr. Sarbanes. Well, I commend you for doing that, and I 
just wanted to make the point that the upgrades that you needed 
to implement in response to Tier 2 haven't prevented the 
business from doing well and still having profits that it can 
distribute, and I would expect you would be able to handle the 
Tier 3 requirements as well.
    I would like to ask Mr. Coleman, you suggested you were 
offended at the notion that the people would have leases issued 
to them, permits, and would not then take advantage of those to 
produce on the land. Are you questioning the fact that there 
are a substantial number of permits and leases that have been 
issued in instances where production has not yet occurred?
    Mr. Coleman. Congressman, I am offended at the 
misrepresentation of the situation. Leases are out there. They 
are working on these leases all the time. It is not possible to 
drill them all at once because the process that you have to go 
through to do the analysis of the lease, you get a lease, you 
may do more analysis, more 3D seismic surveys, and you may--and 
that takes a while to do. It takes money to finance that. It 
takes the availability of seismic crews to be able to shoot 
that seismic. You may have permits, but those may be in 
litigation. There is a lot of different----
    Mr. Sarbanes. Well, I sat through a lot of hearings in the 
Natural Resources Committee. I have heard endless testimony on 
this question, and I have gotten pretty comfortable with the 
idea that there is substantial number of situations in which 
there is nothing preventing the industry from developing, 
producing, and so forth these leases that they have, and yet 
they haven't proceeded forward.
    So I am equally offended by the notion that these resources 
would be available, typically given all the arguments that you 
are making about how we have to increase supply and that the 
industry would not be pursuing them.
    But I am going to run out of time, so I need to turn to Dr. 
Romm, who I want to thank for your testimony. You put together 
a terrific set of bullet points about the six key points that 
you wanted to see, and I wanted to first echo your observation 
about the benefits the EPA regulations offer us in terms of 
public health in particular. There is--I just lost it on my 
iPad, but there is an article that I was referring to earlier 
which showed great expectations in Maryland about the benefits 
that would come from Tier 3 in terms of reducing these nitrogen 
oxides, and the health benefits that would follow reducing smog 
and so forth. And, you know, limiting the amount of sulfur that 
is coming from the gas is one of the most effective ways to 
impact the pollution out there.
    But you also made two points that I thought were intriguing 
given the purpose of the legislation that was put through here 
with respect to the Strategic Petroleum Reserve. You noted 
there is broad agreement among energy experts and economists 
that increasing domestic oil production will have no noticeable 
impact on U.S. gas prices for the foreseeable future. And then 
you also indicated there is only one demonstrated way to reduce 
gasoline prices in the short term, and that is release of oil 
from the Strategic Petroleum Reserve.
    And as I understand the legislation, the second piece that 
we are discussing here today, it says that you can't go take 
action with respect to the Strategic Petroleum Reserve until 
you put more of these lands into production.
    So essentially it is saying you can't go do the one thing 
that will work until you go do the thing that won't work, which 
doesn't make any sense to me, and I think really sort of 
undermines the inherent logic of that particular legislation.
    With that I yield back my time.
    Mr. Shimkus. Thank you. The gentleman yields back, and the 
Chair recognizes himself for 5 minutes, and actually, the 
legislation that is before us, the Strategic Energy Production 
Act, doesn't tie the hands of the President whatsoever in order 
to access or release energy from the Strategic Petroleum 
Reserve. In fact, it is very clear that the President may 
continue to make the decision under any circumstances that 
comply with the law to release energy from the ``SPRO.'' So the 
President can continue just as they always have as long as they 
meet and comply with the conditions of the law that allow for 
the ``SPRO'' release to occur in the first place.
    But if that happens, and I believe what we have heard 
today, what we have heard in other places, is that we have 
heard another witness testify today----
    Mr. Sarbanes. Mr. Chairman, you just recognized yourself 
for an additional 5 minutes.
    Mr. Shimkus. I am sorry. We are doing another round.
    Mr. Sarbanes. Oh. You want to do another round?
    Mr. Shimkus. Yes. I am sorry. Yes.
    Mr. Sarbanes. I didn't understand that. Yes. We can do 
another round.
    Mr. Shimkus. Thank you. Thank you. I had a conversation 
with Mr. Rush, and that is why we switched out. I apologize for 
that.
    But anyway, so the conversations we have had all point to 
the release of the Strategic Petroleum Reserve causing prices 
to go down 4 cents a gallon for, you know, a maximum amount of 
time of a week or so because of the infusion of supply into the 
marketplace, and it makes sense then if you infuse the 
marketplace with supply that supply then matters.
    And so instead of a quick fix to supply by going into the 
Strategic Petroleum Reserve, why don't we have a long-term 
supply policy of increasing domestic production so that we can 
actually reduce the price long term instead of just for a week 
or so.
    So I think the conversation about the Strategic Petroleum 
Reserve, the very point of the conversation is that increasing 
supply decreases price. So if we increase that supply, we will 
decrease price, and that is long term as well as short term.
    And with that being said, I wanted to get back to this 
issue of leases on Federal lands. I know Mr. Abbey in the 
previous panel had talked about the number of acres that are 
under Federal leases that may or may not be under active 
production, and, again, I refer to the letter that I entered 
into the record from Mr. Steven Allred, the Assistant Secretary 
of Lands and Minerals Management. This is a letter to Don 
Young, ranking Republican member then in 2008, on the Committee 
on Natural Resources. And the letter makes reference to the 
fact that you have a lease doesn't mean that you have 
production opportunity. It means that you may not have 
production opportunities to go forward with, and the letter 
specifically says that the existence of a lease does not 
guarantee the discovery of or any particular quantity of oil 
and gas.
    Mr. Coleman, can you expand on that a little bit?
    Mr. Coleman. Yes, Mr. Chairman. Leasing happens based on a 
general analysis of the area. Then once you get a lease, you do 
a more specific analysis of the specific leases that you have. 
That is based on additional seismic surveys rather than 
potentially a 2D seismic survey which would be used for--and 
less expense seismic survey used to get the lease, and you do a 
3D seismic survey to determine whether you, really looks like 
you have something there to go after.
    That takes a while as I explained in my previous statement. 
And there are many other hoops that you have to jump through. 
You have to do surveys with endangered species before you go 
out and apply for permits. So many, many stages to go through.
    This is not a static situation. Just because it is not 
drilling doesn't mean there is not activity. To say as previous 
testimony says, sitting on the leases, they are not active on 
the leases, that is not the case.
    Mr. Shimkus. Thank you, Mr. Coleman, and Mr. Burkhard, in 
your opinion would it be responsible to initiate a ``SPRO'' 
draw down right now in the face of what could be an extreme 
supply emergency caused by Iran?
    Mr. Burkhard. Given the potential for what could happen 
and, again, the oil market is very tense, there is a very 
limited cushion of spare capacity, the situation with Iran, 
there is many scenarios that we could come up with which could 
be startling to the oil market.
    So the ``SPRO'' is intended as a response to a large supply 
disruption, and we haven't had one yet.
    Mr. Shimkus. Thank you, Mr. Burkhard, and to your knowledge 
has the ``SPRO'' been refilled, the amount of oil that was 
taken out last year, has it been replaced?
    Mr. Burkhard. It stands at 696 million barrels, which is 
below what it was last year.
    Mr. Shimkus. And are you aware of any plans to refill that 
if there is access to the ``SPRO'' this summer?
    Mr. Burkhard. I am not aware of any plans.
    Mr. Shimkus. And so if there is an extreme supply emergency 
caused by some kind of international conflict, right now there 
is no plan to actually fill the ``SPRO'' back up to capacity. 
In fact, Congress has approved the ``SPRO'' to go up to a 
billion barrels, but it is almost 300 million below that. Ss it 
currently stands it is even lower than capacity at this point. 
Correct?
    Mr. Burkhard. That is right.
    Mr. Shimkus. OK. Thank you, Mr. Burkhard, and the Chair now 
recognizes Mr. Sarbanes for 5 minutes.
    Mr. Sarbanes. Thank you, Mr. Chair. Before I ask a question 
I ask unanimous consent to, without objection, to submit two 
letters to the record. One is from the Consumers Union, the 
other is from coalition environmental groups, both addressing 
the legislation that we are looking at here.
    Mr. Shimkus. Without objection.
    [The information follows:]


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    Mr. Sarbanes. Thank you. This debate over whether we are 
using the lands that have already been leased we could probably 
go on all night with it, but I just want to point out some 
statistics here, again, reiterate that between fiscal year 2009 
and fiscal year 2011, the Bureau of Land Management approved 
almost 14,000 applications for permit to drill, but as of the 
end of 2011, had yet to begin production on over 7,000 of them, 
more than half that had been approved. They had yet to begin 
production, and overall of the nearly 39 million acres that are 
currently under lease to oil and gas companies, onshore only 
about 13 million or less than one-third are actually in 
production.
    Now, I understand your point that you take a snapshot. It 
may not capture what is going on behind the scenes, that 
industry is making judgments about, you know, which leases are 
the most important to pursue and what is involved in doing it, 
so that, you know, it may be that if only one-third of the 
acreage is in production at a given time that doesn't mean that 
the other two-thirds is being completely ignored.
    But to suggest that we are not making lands, public lands 
available to the industry to pursue in the context of this idea 
that have to increase supply, when two-thirds, you know, at 
least one the surface appear not to be actively in production, 
I think is sort of pushing the question here, and so, again, I 
don't want to debate it because we are not going to solve it 
here today, but I think it is a legitimate point that is being 
made about the number of acres that are actually out there that 
have yet to be put into production.
    Why don't you respond? I don't want you to feel like you 
are not getting a chance to respond to this because----
    Mr. Coleman. Well, Congressman, I appreciate the 
opportunity to----
    Mr. Sarbanes. Yes.
    Mr. Coleman [continuing]. Respond to your comments. This is 
a very complicated question, you know. Just to give you--for 
the BOM to give a statistic, OK, this is how much percentage of 
acreage or how many permits are not being used, I assume they 
didn't tell you how many of those permits are being litigated, 
how--what other kind of problems there might be with some of 
these areas.
    These are not static. Litigation comes. It can come----
    Mr. Sarbanes. I will tell you what because I am going to--I 
will commit to you that I am going to make this a project of 
mine to find out the answers to those questions that you are 
raising.
    Mr. Coleman. And there are other questions, too.
    Mr. Sarbanes. Yes. I am sure there are, and we will make 
sure we get them all, but I am betting that that won't fully 
respond to the observation that these are not being utilized to 
the extent they could at a time when we need to increase 
production, and I am going to have to move on.
    I just wanted to ask Mr. Schink if you could speak, you 
talked about in your testimony but speak to the benefits, well, 
two things. There is this specter raised that if we have the 
Tier 3 regulations as we envision they might be because they 
haven't actually been proposed yet, but if they went into the 
fact that I would have this substantial impact on the price of 
gas and you already spoke to how modest that would be, if at 
all, if it got passed on at all, if you could reiterate that 
and then also allude, again, to the benefits in terms of health 
and protecting the health of the public.
    Mr. Schink. Yes. I think the reliable estimates are that 
the cost increase refiners will face is somewhere in the 
neighborhood of a penny a gallon, and I think there is no 
guarantee that that will necessarily get passed through, 
because the refining industry is highly competitive, and it is, 
you know, whether or not they are able to pass it on is not 
clear, but even if they are, it is only a penny.
    So I think that there has been a lot of skies falling going 
on and based on numbers that are too high and not justified. I 
think it is a small effect, if any.
    But I think, and I am glad I ran out of time at the end, 
but, you know, the benefits that come from this in the 
environmental health area I think are probably some of the most 
important. The purpose of the regulations are to improve health 
and environment, and I think this will go a long way.
    In the Mid-Atlantic area the emissions from motor vehicles 
of nitrogen oxide are a high source of that, and this is a cost 
effective way of trying to reduce it, and the benefits can be 
very large. I think we both cited the same numbers or at least 
one study, and that is one area.
    The amount of emissions that are in the others are two or 
three times that much, so the benefits of these other areas 
could be two or three times the numbers for the Northeast 
Region. So rather than $1.2 billion it could be $3, $4, $5 
billion once we get through it. I haven't done the studies yet. 
I am not saying that is the number, but I think it could be 
very big.
    And one of the benefits of this----
    Mr. Shimkus. The gentleman's time has expired. If you could 
wrap it up, please. Thank you.
    Mr. Schink. OK. There are benefits because the health 
benefits of people would be more productive, and this is also 
very much pro industry. We have a very strong emission control 
industry and auto industry. They have leadership in this, and 
this will be a chance for them to, you know, to show their 
stuff again and generate jobs and investment by moving to meet 
these standards.
    Mr. Shimkus. The gentleman's time has expired. Dr. Schink, 
thank you, and the Chair recognizes the chairman of the 
subcommittee, Mr. Whitfield.
    Mr. Whitfield. Thank you very much, and I would like to 
welcome all the witnesses, and I am sorry that I had to leave 
for a while, but we genuinely appreciate your being here, and 
Mr. Meyers, let me ask you a question or two. I know you have 
spent quite a bit of time over at EPA, and Ms. McCarthy 
indicated that it was very difficult for them to analyze the 
cumulative effect of the rules in our bill, and just from your 
experience at EPA do you think that they have the necessary 
tools to review the cumulative impact of the regulations that 
we set out in our legislation?
    Mr. Meyers. Well, I think in any economic analysis that you 
do you need to make certain assumptions. So you are going to 
have to make some assumptions that would be clear, but in 
different ways that are currently done, you do sensitivity 
analysis, you do different analysis, different proposals. They 
will turn it proposals, so I don't see that as insurmountable.
    You know, you could basically using current data 
effectively do a range of proposals as to what you think they 
might be and do that prospectively. Plus I think I note in the 
discussion draft, there is a limitation saying it is not 
required to go beyond available data.
    So I think it is a doable option. It is just, you know, 
whether they want to do it.
    Mr. Whitfield. Did you hear her testimony today? Did you 
hear the question and answers with Ms. McCarthy?
    Mr. Meyers. I was here during the hearing. Yes.
    Mr. Whitfield. Was there anything else that she may have 
made a comment about that you would like to commend on?
    Mr. Meyers. Well, you know, I think there was basically 
referenced in my oral I was just saying if Tier 3 is limited to 
sulfur, that is one thing. There are other authorities in the 
Clean Air Act regarding fuels that could also be--have an 
effect on the marketplace in the next 5 years.
    Secondly, although when we were talking about the changes 
on the ozone standard and the authority on the ozone standard, 
I make two observations. One, they are not inside the act. They 
don't amend directly the standards saying provision that is 
inside the Clean Air Act. So that still remains.
    That being said, there are still other statutory law 
talking about cost and feasibility. What I think I tried to 
point out in my testimony is that EPA examines those issues now 
in terms of cost of the standards, in terms of postural 
limitations to scenarios, but what we have is a situation where 
you are effectively saying to the Administrator, you know, put 
blinders on. Don't look at the man behind the curtain and try 
to make this decision.
    There are other ways of doing it. The Safe Drinking Water 
Act, for example, has two concepts in it; MCLG, which is a 
goal, and then basically a limitation level. So they decide 
what the goal is.
    And the last thing I thought in the written testimony was 
and that is where we actually referred in the written testimony 
as a goal. They are not a goal. They are a standard, and I 
think any State that puts together any Federal implementation 
plan that is trying to implement a standard knows it is a 
standard. So I think there is a way around it. What I think the 
legislation is looking for is a balancing of factors and 
allowing the Administrator to look at cost and feasibility.
    It is a big change. I don't think there is any way of 
getting around saying it is a big change, but it is something 
that could be supportable by looking at other statutes.
    Mr. Whitfield. We know we are getting ready to have some 
forums on the Clean Air Act simply because it has not been 
really reviewed in quite a while, and there have been some 
unintended consequences with the Clean Air Act, and we are 
looking forward to having these forums to have people come in 
on all sides of the issue to determine is the Clean Air Act 
working the way that it was really intended to work today, and 
we will be getting into that later on.
    Mr. Smorch, let me just ask one question. How many 
refineries do you, are you involved in?
    Mr. Smorch. CountryMark only owns and operates one 
refinery.
    Mr. Whitfield. OK. Now, have you estimated the potential 
impacts of the regulation on gas and diesel prices from EPA's 
pending rules, and if so, what would the range of increases be?
    Mr. Smorch. Earlier, you know, earlier I mentioned that we 
were able to share our profits with our members who represent 
100,000 farmers in our area, and I thought that was the point 
of this regulation or the legislation, the Gasoline Regulations 
Act, to go and look at regulation and how the accumulative 
effect is going to affect our business.
    My job is to try to preserve that that we can go and still 
provide that and return to our member owners. When I look at 
the range, and if you look in my written testimony, there is a 
chart on page 11 that basically, depending on how regulation is 
developed, it can be as low as 8 to 13 cents a gallon and as 
high as 39 to 61 cents a gallon, depending on how all the 
regulations stack on top of each other.
    That is an extreme expense that we either have to absorb or 
is going to have to get transferred to the consumer.
    Mr. Whitfield. Thank you.
    Mr. Shimkus. The gentleman's time has expired.
    The gentleman from Virginia, Mr. Griffith, is recognized 
for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman.
    Mr. Innis, if I might ask you a few questions, one of the 
concerns that I have with so many of the regulations that have 
been proposed by the EPA is that coming from a district that 
does not have great wealth, we have a few places that are 
wealthier than others, but we have some really poor areas in 
particular, I sense that there are actually public health 
concerns with all these regulations, and I am wondering if you 
can comment on that, and do you share that concern?
    Mr. Innis. Well, I think what is very important for this 
committee and others to recognize is that economic 
sustainability for these communities that are affected by these 
regulations should be part of the health consideration as well. 
What high energy costs represent on poor people in particular 
and working class Americans is the most vicious regressive 
attacks. As I said before, when you have got to spend a 
disproportionate amount of your income, be a small family or be 
a small business, on high energy costs, that takes away income 
that could be made available for other things, including 
healthcare.
    So I think what is very important, I think it is what--
there is no question that the regulations that have gone into 
effect over the last several decades have helped the American 
people. It has helped the environment, it has helped the health 
of the American people.
    The question is at what point is there diminishing returns. 
At what point, I mean, do you attempt to achieve some type of 
balance where you realize how much more regulation do you want 
to put on a particular industry and what kind of negative 
impact potentially could it have on the economy.
    Mr. Griffith. And do I hear from your testimony and from 
comments today that you believe we are at that point of 
diminishing returns, at least in the current economic situation 
that we are in?
    Mr. Innis. Well, if you just look at the sulfur rule, and 
forgive me for not knowing the technical designation, but I 
believe that the bill or the regulation that was passed in 
2000, and implemented in 2004, said you have to regulate 
emissions, sulfur emissions up to 95 percent. I mean, how much 
more regulation do you want to implement on top of that? And I 
think that is the question that this committee has to ask. I 
believe I have heard several cases that the EPA is not allowed 
to look at economic impacts on communities, all American 
communities. Forget lower-income communities but all 
communities.
    So I think this committee as a representative of the people 
have the moral responsibility to look at those economic 
impacts.
    Mr. Whitfield. And I would agree with you on that. I worry 
about folks on fixed incomes in my district having to heat to a 
minimal level, one room in their house during the wintertime, 
and when I asked the EPA if they took that into consideration 
as part of their health--Lisa Jackson was here last year, and I 
said, did you take that into consideration when you were 
looking at the health concerns related to greenhouse gases, the 
response was, well, we have programs to help those people. 
Unfortunately, my folks tell me that while it may help the very 
poorest of the poor, they don't have enough money in those 
programs to help the working poor and some of the folks who are 
on fixed income, that it does help the very poorest of the 
poor, but there are a lot of folks who are not caught in that 
safety net who then find themselves having to make sacrifices 
or as you said, do we pay for healthcare or do we pay for heat. 
And fortunately, we have had a very mild winter, but when you 
don't have natural gas into every area of the district, when 
you have a lot of folks using electricity, and those rates have 
gone up substantially, and you have folks who are using oil to 
heat their homes, this becomes a very serious health concern in 
my opinion, and I appreciate that.
    Last but not least and it is somewhat of a rhetorical 
question because I already know the answer, but do you see 
electric cars and other green energy alternatives a viable 
option at least today for low-income households?
    Mr. Innis. No. That dog is just not going to hunt in the 
lower-income communities, but I would argue, though, that the 
reason we really need to examine these regulations and the 
impact that they have on all energies, be they renewable or 
traditional sources of energy, is that even if you can afford 
the Volt, the Volt to recharge the battery has to be plugged in 
and has to use electricity. In today's Washington, I believe it 
was today's Washington Post, it said that some recent EPA 
regulations, I believe that were released yesterday----
    Mr. Whitfield. Yes, sir.
    Mr. Innis [continuing]. Are going to cause coal-powered 
generated power plants, no new ones to be built for the next 10 
years. This is while our largest economic competitor, China, is 
building two per week. What kind of impact is that going to 
have on electricity, which is going to have on the ability of 
someone who can afford that Volt vehicle and needs to plug in 
to recharge it, what kind of impact is that going to have on 
the feasibility of this alternative vehicle?
    Mr. Whitfield. And I think you are submitting that it would 
have a negative impact, and I would completely agree with you. 
Thank you.
    Mr. Innis. I am.
    Mr. Whitfield. I yield back my time.
    Mr. Shimkus. The gentleman yields back.
    Thank you, again, for your time to be here today and 
appreciate your testimony, and that concludes today's 
committee.
    [Whereupon, at 1:50 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]


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    [The report is available at http://www.theicct.org/sites/
default/files/publications/ICCT04--Tier3--Report--Final--v4--
All.pdf.]

                                 
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