[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
THE AMERICAN ENERGY INITIATIVE, PART 19: FOCUS ON H.R. 4273, THE
RESOLVING ENVIRONMENTAL AND GRID RELIABILITY CONFLICTS ACT OF 2012, AND
H.R. --------, THE HYDROPOWER REGULATORY EFFICIENCY ACT OF 2012
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND POWER
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
MAY 9, 2012
__________
Serial No. 112-141
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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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. Cathy McMorris Rodgers, a Representative in Congress from
the State of Washington, opening statement..................... 20
Hon. Lois Capps, a Representative in Congress from the State of
California, opening statement.................................. 21
Hon. Michael F. Doyle, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 22
Hon. Gene Green, a Representative in Congress from the State of
Texas, prepared statement...................................... 23
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 25
Prepared statement........................................... 26
Hon. Pete Olson, a Representative in Congress from the State of
Texas, opening statement....................................... 28
Prepared statement........................................... 37
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, prepared statement.............................. 94
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, prepared statement................................ 189
Witnesses
Patricia Hoffman, Assistant Secretary, Office of Electricity
Delivery and Energy Reliability, Department of Energy.......... 38
Prepared statement........................................... 41
Answers to submitted questions............................... 191
Regina A. McCarthy, Assistant Administrator of Air and Radiation,
Environmental Protection Agency................................ 46
Prepared statement........................................... 48
Answers to submitted questions............................... 195
Philip D. Moeller, Commissioner, Federal Energy Regulatory
Commission..................................................... 56
Prepared statement........................................... 58
Answers to submitted questions............................... 201
Jeff C. Wright, Director, Office of Energy Projects, Federal
Energy Regulatory Commission................................... 62
Prepared statement........................................... 64
Answers to submitted questions............................... 203
Betty Ann Kane, Chairman, Public Service Commission, District of
Columbia....................................................... 107
Prepared statement........................................... 110
Debra L. Raggio, Vice President for Government and Regulatory
Affairs and Assistant General Counsel, GenOn Energy, Inc....... 119
Prepared statement........................................... 121
Stephen Brick, Consultant, on behalf of the Environmental
Integrity Project.............................................. 132
Prepared statement........................................... 134
Andrew Munro, Director, Customer Service Division, Grant County
(Washington) Public Utility District, on behalf of the National
Hydropower Association......................................... 137
Prepared statement........................................... 139
Kurt Johnson, Principal, Telluride Energy, on behalf of the
Colorado Small Hydro Association............................... 154
Prepared statement........................................... 156
Matthew Rice, Director, Colorado Conservation, American Rivers... 166
Prepared statement........................................... 168
Submitted Material
H.R. 4273, A Bill to clarify that compliance with an emergency
order under section 202(c) of the Federal Power Act may not be
considered a violation of any Federal, State, or local
environmental law or regulation, and for other purposes,
submitted by Mr. Whitfield..................................... 6
Discussion Draft of H.R. --------, to improve hydropower, and for
other purposes, submitted by Mr. Whitfield..................... 9
Statement, dated April 13, 2012, of Mark Crisson, President and
Chief Executive Officer, American Public Power Association,
submitted by Mr. Olson......................................... 30
Statement, dated May 8, 2012, of Glenn English, Chief Executive
Officer, Natural Rural Electric Cooperative Association,
submitted by Mr. Olson......................................... 31
Statement, dated April 25, 2012, of John E. Shelk, President and
Chief Executive Officer, Electric Power Supply Association,
submitted by Mr. Olson......................................... 32
Statement, dated April 26, 2012, of Thomas R. Kuhn, President,
Edison Electric Institute, submitted by Mr. Olson.............. 33
Statement, dated May 8, 2012, of Paul N. Cicio, President,
Industrial Energy Consumers of America, submitted by Mr. Olson. 34
Statement, dated May 7, 2012, of the Midwest Power Coalition,
submitted by Mr. Olson......................................... 35
THE AMERICAN ENERGY INITIATIVE, PART 19: FOCUS ON H.R. 4273, THE
RESOLVING ENVIRONMENTAL AND GRID RELIABILITY CONFLICTS ACT OF 2012, AND
H.R. --------, THE HYDROPOWER REGULATORY EFFICIENCY ACT OF 2012
----------
WEDNESDAY, MAY 9, 2012
House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 9:03 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Ed
Whitfield (chairman of the subcommittee) presiding.
Members present: Representatives Whitfield, Shimkus,
Walden, Terry, Bilbray, Scalise, McMorris Rodgers, Olson,
McKinley, Gardner, Pompeo, Griffith, Barton, Upton (ex
officio), Sarbanes, Dingell, Capps, Doyle, and Waxman (ex
officio).
Staff present: Charlotte Baker, Press Secretary; Ray Baum,
Senior Policy Advisor/Director of Coalitions; Michael
Beckerman, Deputy Staff Director; Anita Bradley, Senior Policy
Advisor to Chairman Emeritus; Maryam Brown, Chief Counsel,
Energy and Power; Allison Busbee, Legislative Clerk; Patrick
Currier, Counsel, Energy and Power; Andy Duberstein, Deputy
Press Secretary; Cory Hicks, Policy Coordinator, Energy and
Power; Heidi King, Chief Economist; Ben Lieberman, Counsel,
Energy and Power; Mary Neumayr, Senior Energy Counsel; Michael
Aylward, Democratic Professional Staff Member; Jeff Baran,
Democratic Senior 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
this morning. This is the 19th day of our American Energy
Initiative hearing, and today we are going to focus on two
particular pieces of bipartisan energy legislation. The first
one is the Resolving Environment and Grid Reliability Conflicts
Act of 2012, and the second is the Hydropower Regulatory
Efficiency Act of 2012.
Now, the Resolving Environmental and Grid Reliability
Conflicts Act is a bipartisan bill brought forward by our
colleagues Mr. Olson, Mr. Doyle, and Mr. Green. I understand
that Mr. Green may not be here today because he was called out
to do something else, but you are here, Mr. Doyle, so that is
great. But this legislation amends the Federal Power Act to
clarify that when an electric utility complies with a DOE order
to generate electricity in order to prevent a reliability
emergency, the generator will not be considered in violation of
conflicting environmental laws, which has been a problem in
many situations.
The other bill under consideration today is hydropower
legislation developed by Representatives Cathy McMorris Rodgers
and Diana DeGette. This legislation is another example of a
bipartisan effort by Ms. McMorris Rodgers and Diana DeGette. Of
course, one of the primary impediments to greater utilization
of hydropower resources is the regulatory red tape, which has
proven costly, time consuming, and burdensome, even for small--
very small hydropower plants.
[The prepared statement of Mr. Whitfield follows:]
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Mr. Whitfield. At this time, I would like to recognize Mrs.
Rodgers to make any additional comments she may want to make
about this legislation.
OPENING STATEMENT OF HON. CATHY MCMORRIS RODGERS, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON
Mrs. McMorris Rodgers. Thank you, Mr. Chairman, and thank
you very much for holding the hearing on this legislation. I
also want to thank our witnesses who are going to be testifying
before the subcommittee today.
In eastern Washington, hydro plays a foundational role,
whether it is conventional, small, conduit, hydro. In fact,
hydropower provides two-thirds of the electricity in eastern
Washington and into the Pacific Northwest. I recognize there is
a vast array of clean green energies, including solar, wind,
nuclear, but in my opinion, hydro potential should not be
overlooked in the important role that it can play in helping
make America energy independent. In fact, we could double
hydropower electricity in this country without building a new
dam, simply by investing in new technologies and upgrades. Only
3 percent of the current dams produce electricity.
That is part of the reason that Congresswoman Diana DeGette
and I have been working to expand hydropower production. Today,
this committee will examine our bill, the Hydropower Regulatory
Efficiency Act. This legislation would facilitate the
development of hydropower and conduit projects through several
commonsense reforms, such as updating the FERC license
exemption standard to streamline the development of more small
hydro projects, giving FERC the option to exempt hydro projects
generating under 10 megawatts, and conduit projects generating
between 5 and 40 megawatts from the permitting process. Also
allowing FERC to extend the term of a preliminary permit for up
to 2 years, for a total of 5 years, in order to allow a
permittee sufficient time to develop and file a license
application.
Our bill is timely and targeted, and it will help create
jobs and encourage America's competitiveness in the energy
sector.
I would also like to take this opportunity to introduce one
of our witnesses on today's second panel. I have had the
privilege of knowing Andrew Munro for the past few years.
Andrew serves on the Grant County Public Utility District in
Washington State. He formerly served as the president, CEO, and
chairman of the board of the National Hydropower Association.
Andrew understands the importance of this legislation, and sees
it as a stepping stone for future hydropower legislation.
Again, I thank all the witnesses for participating, and for
the chairman for taking the time to hold this hearing today.
Thank you.
Mr. Whitfield. Thank you. At this time, I would like to
recognize Ms. Capps of California. Mr. Rush is not with us this
morning, but you are recognized for 5 minutes.
OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mrs. Capps. Thank you very much, Mr. Chairman, and I want
to welcome our witnesses who are being--who are here today to
testify.
At today's hearing, as the chairman has said, the
subcommittee will examine two pieces of legislation. The first
measure is a noncontroversial hydropower bill which we heard
Ms. McMorris Rodgers explain, also co-sponsored by Ms. DeGette.
It is encouraging to see bipartisan cooperation to promote the
types of hydropower that are environmentally responsible. We
have significant hydropower potential in California, including
in my district on the central coast. When developers and
environmentalists can agree on a common framework to utilize
some of these resources in ways that are broadly supported, I
think it is a good step in the right direction.
On the other hand, I have serious concerns about the Olson
bill. Under the Federal Power Act, the Department of Energy has
the authority to issue emergency orders to require the
generation or transmission of electricity when grid reliability
is threatened. Historically, this authority has been used
sparingly. In fact, it has only been used on six occasions
since 1978. These emergency orders are a measure of last
resort. The Olson bill would provide any entity operating under
a DOE emergency order with a blanket waiver of all
environmental liability that could result from actions
necessary to carry out the order. We certainly don't want to
force a company to choose between complying with the DOE order
and complying with environmental laws, but that kind of
conflict has proven to be exceedingly rare. There is only one
case from 6 years ago that arguably even falls into that
category.
In trying to address those rare conflicts, we need to make
sure we don't create bigger problems. As currently drafted, the
Olson bill has the potential to become a major loophole that
could allow utilities to dodge compliance with environmental
requirements. We need to avoid that outcome. The language of
the Federal Power Act provision is quite broad. If we add a
sweeping liability shield to that broad authority, we may have
utilities lining up around the block to get a DOE order so they
can avoid meeting environmental standards and installing modern
pollution controls.
Under current law, operators have strong incentives to act
responsibly and to comply with environmental requirements. With
no risk of liability for violations of environmental law, the
entities would be very different. We want to make sure the
lights stay on, and we all want to treat companies fairly, but
let us not throw caution to the wind as we try to address an
issue that has affected just one company in the last 35 years.
DOE and EPA are raising serious concerns about the Olson
bill. We should take those concerns seriously and approach this
issue in a thoughtful and balanced way. I thank all of today's
witnesses for being here again, and I look forward to your
testimony.
Mrs. Capps. At this point, the remainder of my time I would
be happy to yield to the gentleman from Pennsylvania, my
colleague, Mr. Doyle.
OPENING STATEMENT OF HON. MICHAEL F. DOYLE, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Doyle. I thank my colleague. Mr. Chairman, as you now I
am cosponsor of the bill that Ms. Capps just talked about. This
bill was the product of many months of work, including
consultation with Chairman Upton's staff, Ranking Member
Waxman's staff, the Department of Energy, various electricity
providers, and many others. Admittedly, it has been a difficult
needle to thread.
But I want to remind everybody on this committee, as we
have debated numerous EPA regulations that will affect power
providers, I have supported greenhouse gas regulations, Federal
regulation of coal ash, regulations for industrial boilers, and
most recent, the Mercury and Air Toxics Standards. In fact, at
this committee's hearing on the MATS rule in February, I said,
and I quote, ``Here we are trying to sort through claims that
24 years was not long enough for the power sector to prepare
and a potential 5 additional years of compliance time provided
by the rule, totaling to a full 29 years since the power sector
knew controlling mercury would be required is simply too
onerous. The time has come, and the time is now, so let us see
what we can do about ensuring the rule that has the least
negative impact possible on those who matter most, the American
consumer.''
What I simply want to make clear is that this bill before
us today is not intended as a way out of compliance with any
EPA regulations. But the fact remains, coal-fired power plant
retirements are being announced nearly every month. Since last
year, over 106 coal-fired power plants have announced their
intention to shut down. It is my hope that these retirements
will be managed safely by regional transmission authorities.
However, should something go wrong, like an unexpected severe
weather event, we have one tool of last resort, emergency
orders issued under Section 202(c) of the Federal Power Act.
Whether these issues--orders are issued once, twice, or 100
times, it is never acceptable for the Federal Government to
require actions from a company that necessitates a choice of
which law to violate. This bill attempts to resolve this
conflict in a very narrow and responsible way.
I look forward to working with my colleagues as the bill
moves through the committee, and Mr. Chairman, I do have a
statement for the record from Mr. Green who was unable to be at
the hearing today, and I ask unanimous consent that it be
inserted into the record.
Thank you.
[The prepared statement of Mr. Green follows:]
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Mr. Whitfield. At this time, I would like to recognize the
chairman of the full committee, Mr. Upton of Michigan, for 5
minutes.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Well thank you, Mr. Chairman. Today we have two
very important pieces of bipartisan legislation before us. I
want to commend my colleagues for their hard work and for
reaching across the aisle to find common ground in developing
both of these bills. Ms. McMorris Rodgers and Ms. DeGette
worked together to develop a critical piece of hydropower
legislation, the Hydropower Regulatory Efficiency Act of 2012.
We know that hydropower is the Nation's largest renewable
energy resource, and the bill before us today will help to aid
the development of a new hydropower resource. It accomplishes
that goal without new subsidies or deficit spending. Instead,
it cuts through the red tape to make it easier for this
renewable resource to come online to power our communities.
This is what ``all of the above'' is all about. It in turn will
stimulate job growth as new hydropower resources are
constructed and operated, while the electricity provided by
these new projects will provide low cost power to American
homes and businesses.
This legislation has great promise for increased hydropower
development, including my State of Michigan, which has
significant potential for small hydro projects. In addition,
Michigan manufacturers produce many of the components vital to
the hydropower industry, enhancing the positive economic
benefits.
The other bill under consideration today is the Resolving
Environmental and Grid Reliability Conflicts Act of 2012,
authored by Mr. Olson, Mr. Doyle, and Mr. Green. It is clear
that the Nation's generation fleet will be undergoing a
significant shift over the next several years and beyond, and
although we may disagree on why it is occurring or what the
impacts will be, we should be able to agree that ensuring the
reliable supply of electricity is paramount. That is why H.R.
4273 is such a critical piece of legislation. The bill protects
our Nation's electricity producers from being penalized or sued
for violating a conflicting environmental law when they have
been directed by the Federal Government to operate during an
emergency. Government can't have it both ways. It can't direct
the generator to operate for emergency purposes and then turn
around and fine them for doing so. It is like having one police
officer telling you to speed up while another sits at the end
of the street to give you a ticket. It is not fair, which is
why I am pleased that our colleagues have developed this
bipartisan legislation.
So with that, I will yield to any of my colleagues who wish
time. Seeing none, I yield back the balance of my time.
Mr. Olson, do you want my time?
[The prepared statement of Mr. Upton follows:]
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Mr. Whitfield. Mr. Olson is correct. Mr. Barton, it is my
understanding, is not going to give a statement, and so Mr.
Olson, I recognize you for 5 minutes for your opening
statement.
OPENING STATEMENT OF HON. PETE OLSON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Olson. Well thank you, Mr. Chairman. I thank the
chairman of the full committee for his hospitality, and thank
you, Chairman, for bringing H.R. 4273, the Resolving
Environmental and Grid Reliability Conflicts Act of 2012,
before this subcommittee. I also want to thank the witnesses
for appearing here today to provide their input on this
important piece of legislation which removes electricity
generators from the Catch 22 of conflicting legal mandates that
complicate electricity emergencies and threaten grid
reliability.
I introduced H.R. 4273 with bipartisan support. I would
like to thank my colleagues, Mr. Green and Mr. Doyle, for being
the original cosponsors to clarify Congress's intent that
compliance in an emergency order issued by the Department of
Energy should not be considered a violation of any Federal,
State, or local environmental laws or regulations.
This common sense legislation is extremely relevant today,
as the Environmental Protection Agency, the Federal Energy
Regulatory Commission, and the Department of Energy and others
have acknowledged that grid reliability could be threatened due
to power plant closures. Secretary Chu, in this hearing room
last month, expressed support for the concept of holding power
generators harmless when they exceed emission limits when
ordered to do so by the grid regulator. One of the safety
valves in the toolbox is dealing authority to mandate power
generation and transmission under Section 202(c) of the Federal
Power Act. It is no silver bullet, but it is a fallback in
times of true emergency.
However, as we hear from our witnesses today, 202(c) cannot
work effectively unless Congress passes legislation like H.R.
4273 to resolve the potential conflict between the DOE mandate
and environmental regulations. Absent legislative action, the
risks and costs associated with temporary noncompliance with
environmental requirements could prohibit a company from
complying with the energy order, placing reliability in
jeopardy.
If my home State of Texas has another exceptionally hot
summer like they did last summer and the power is shut off, air
conditioning goes off, lives will be at risk, particularly
elderly and young ones. In fact, last week in my home city of
Sugarland, Texas, a young infant died in an automobile when the
heat rose to 90 degrees. We had 100 degree heat last summer. If
that happens again and the grid goes down, people's lives will
be at risk.
This legislation is bipartisan support because it simply
ensures a common sense solution to protect grid reliability
when it is most needed. I urge my colleagues to support H.R.
4273 to protect grid reliability and to provide certainty to
electric providers.
Mr. Chairman, I ask unanimous consent to include records of
support for my legislation from the American Public Power
Association, the National Rural Electric Cooperative
Association, the Electric Power Supply Association, the Edison
Electric Institute, the Industrial Energy Consumers of America,
and the Midwest Power Coalition. I ask unanimous consent for
these letters of support to be inserted into the record.
Mr. Whitfield. Without objection.
[The information follows:]
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Mr. Olson. I yield back the balance of my time. Thank you.
[The prepared statement of Mr. Olson follows:]
[GRAPHIC] [TIFF OMITTED] 78921.027
Mr. Whitfield. Thank you, Mr. Olson. Mr. Waxman was delayed
a little bit this morning, so we are going to proceed with the
hearing, but when he comes in, I am just going to interrupt to
give him an opportunity to make his opening statement at that
time.
I also want to welcome our witnesses today. We have two
panels, and we genuinely appreciate all of you taking time to
come up and give us your views and expertise on these two
pieces of legislation.
I might also say that we do these hearings, and it really
does take a major effort by everyone, by the witnesses, by the
staff, and a lot goes into every hearing that we have. And we
have had a lot of hearings, and we have repeatedly requested
that testimony from witnesses, that we receive it 2 days in
advance of the hearing, simply because it gives us an
opportunity to more thoroughly review and assess and look at
the views of those witnesses. And unfortunately, once again,
Ms. McCarthy, we didn't get your testimony until yesterday
around 5:00--after 5:00 yesterday, and Ms. Hoffman, we didn't
get yours until after 5:00 yesterday, which was considerably
later than what we really asked for. Now I know everyone has a
lot of demands on their time, and we have talked about this
before, but I would really appreciate if in the future you all
would make a real effort to get that testimony here at least 2
days before so that we can more thoroughly do our job as well.
So thank you for being here, and at this time, Ms. Hoffman,
I will recognize you for 5 minutes for your opening statement.
STATEMENTS OF PATRICIA HOFFMAN, ASSISTANT SECRETARY, OFFICE OF
ELECTRICITY DELIVERY AND ENERGY RELIABILITY, DEPARTMENT OF
ENERGY; REGINA A. MCCARTHY, ASSISTANT ADMINISTRATOR OF AIR AND
RADIATION, ENVIRONMENTAL PROTECTION AGENCY; PHILIP D. MOELLER,
COMMISSIONER, FEDERAL ENERGY REGULATORY COMMISSION; AND JEFF C.
WRIGHT, DIRECTOR, OFFICE OF ENERGY PROJECTS, FEDERAL ENERGY
REGULATORY COMMISSION
STATEMENT OF PATRICIA HOFFMAN
Ms. Hoffman. Good morning, Mr. Chairman and members of the
committee. Thank you for the opportunity to appear before you
today to discuss the Department of Energy's emergency authority
under Section 202(c) of the Federal Power Act, and the proposed
legislation intended to address the use of this authority and
potential conflicts with other Federal, State, and local laws
and regulations.
Currently under 202(c) of the Federal Power Act, the
Secretary can order a generator to operate, or a grid
connection to be made, when, for example, outages occur due to
weather events or equipment failures, or when there is or may
be insufficient electricity supply available that has a
potential to cause a blackout.
Section 202(c) orders are issued only if a determination is
made that an emergency exists due to a sudden increase in the
demand for electric energy, or a shortage of electrical energy,
or a shortage of facilities for the generation or transmission
of electrical energy. The Secretary's 202(c) order can direct
the temporary connection or operation of facilities for
generation delivery, interchange, or transmission of
electricity in order to best meet the emergency, and serve the
public interest.
The Department views the issuance of 202(c) orders as a
measure of last resort to be used only during and in the face
of imminent emergencies. Since the Department was formed in
1978, the Secretary has exercised this emergency authority for
only six events. Past 202(c) orders were issued to address
circumstances such as inadequate supply of electricity during
the 1999-2001 California electricity crisis, in response to the
2003 blackout, to address reliability issues resulting from the
devastation caused by hurricanes, and to ensure compliance with
reliability standards to prevent potential blackouts. Section
202(c) orders are not intended to provide a long-term
alternative to environmental compliance. They are available
only under limited emergency situations, and are temporary
solutions to imminent reliability threats.
If a 202(c) emergency results from inadequate planning, DOE
expects the affected entities to take the necessary steps to
resolve the problem in order to avoid the need for a continuing
emergency order. Generators subject to a 202(c) order are
required to operate in compliance with all other applicable
laws to the extent possible and, after the reliability threat
has been eliminated, the affected generator is still expected
to comply with all relevant environmental statutes.
The Department is aware of only one incident of a potential
conflict between the emergency order issued under Section
202(c) and an environmental statute. It was the 2005 Potomac
River Generation Station order. In this case, Mirant, now GenOn
Energy, Inc., ceased operation of the Potomac River Generation
Station in response to a letter from the Virginia Department of
Environmental Quality requesting that Mirant undertakes actions
as necessary to the protection of human health and environment
in the area surrounding the plant. In response to requests from
the D.C. Public Service Commission, the Secretary issued a
202(c) order requiring the plant to run to ensure compliance
with reliability standards for the central D.C. area. Over the
next several months, the Department worked closely with EPA and
the Virginia DEQ to minimize environmental impacts.
The administration works to ensure the current statutory
authorities work together, especially in the context of 202(c)
authority. DOE recognizes the importance of working closely
with the environmental authorities to achieve the necessary
balance between ensuring reliability and addressing
emergencies, and achieving environmental protection.
Regarding the proposed changes to Section 202(c) of the
Federal act, at this time, the administration has not taken a
position on H.R. 4273. Any time generators anticipate
reliability issues, they should immediately start planning and
working with their grid operators and EPA. As proposed, the
amendment to 202(c) could potentially create a disincentive for
some generators to use the compliance options EPA provided.
Again, DOE's 202(c) authority is one of last resort, and
should not be viewed as an alternative to working with EPA on
environmental compliance and with grid operators on any
potential reliability issues. The administration works to
ensure statutory authorities work together to enable both the
reliable operation of the electric system and environmental
protection. At the same time, Section 202(c) emergency
authority will be considered only when necessary and is not an
alternative to environmental compliance, even on a temporary
basis. DOE will continue to work through potential conflicts to
ensure reliability is met and public interest is served when
exercising its 202(c) authority.
This concludes my statement, Mr. Chairman, and I look
forward to answering any questions you may have.
[The prepared statement of Ms. Hoffman follows:]
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Mr. Whitfield. Thank you very much.
Ms. McCarthy, you are recognized for 5 minutes.
STATEMENT OF REGINA A. MCCARTHY
Ms. McCarthy. Thank you, Chairman Whitfield, Ranking Member
Rush, members of the subcommittee. Thank you for the
opportunity to testify.
Initially, let me emphasize that EPA completely agrees with
the goal of maintaining the reliability of the electricity
grid. The lights have not gone out in the past, due to Clean
Air Act regulations, and our rules won't cause them to go out
in the future. However, it is not clear to me what real world
problem this legislation is attempting to solve. To the extent
that others see potential problems, it is important to resolve
any reliability issues that do arise in more, rather than less,
environmentally protective ways. This bill decreases the
incentives to do so, and could have unintended consequences,
creating problems that would not otherwise exist.
Section 202(c) history does not demonstrate the need for
legislation to override environmental requirements. The
Department of Energy has invoked Section 202 sparingly, and
only the 2005 order concerning the Mirant Potomac River
Generating Station appears to have had claims that compliance
resulted in a conflict with environmental requirements.
But two points are important to understand first. DOE, EPA,
and the Virginia Department of Environmental Quality worked
cooperatively with one another and with Mirant. DOE's 202(c)
order minimized the likelihood of violations of environmental
requirements, and EPA's administrative order allowed continued
operation of the plant, but it minimized adverse environmental
consequences.
Secondly, DOE's order apparently did not require that
Mirant violate any environmental law, although Virginia later
fined Mirant $30,000 for environmental violations while
operating pursuant to the DOE order. Our understanding is that
this fine was not a violation compelled by the order; rather,
Virginia found that Mirant could have operated the plant in
compliance with the DOE and EPA orders, but they simply failed
to do so.
A Section 202(c) order is a tool of last resort. It has
really been invoked and virtually never implicated any conflict
with environmental compliance because affected parties and
regulators have a very strong record of addressing potential
reliability issues before conflicts arise. EPA has recently
promulgated power sector regulations, including the Mercury Air
Toxic Standards, or MATS rule, did not create a rationale for
amending 202(c). The EPA and DOE's analysis projected that the
vast majority, if not all of the sources, will be able to
comply with MATS within the Clean Air Act timeframes. In
addition to the MATS 3-year compliance date, EPA is encouraging
permitting authorities to make a fourth year broadly available,
and EPA is providing a clear pathway for units that have shown
to be critical for electric reliability to obtain a schedule to
achieve compliance within up to an additional year beyond the
four. A 202(c) order is not required to get that fifth year.
When faced with the need to resolve reliability issues,
current law provides important incentives to select more rather
than less environmentally sound solutions. This legislation
could change those incentives. In fact, the legislation could
have the unintended consequence of creating problems that
wouldn't otherwise arise, increasing the likelihood of
conflicts between reliability and compliance with environmental
laws. The bill shields power plants from reliability for
violations of environmental laws without regard to whether the
owner of that facility took responsible actions to comply with
environmental requirements, or to mitigate reliability
concerns. This would eliminate important incentives for owners
to take expeditious actions to comply with environmental
requirements and avoid conflicts of this nature.
By decreasing incentives for environmental protective ways
of addressing any reliability issues that might emerge, this
bill could unnecessarily delay needed public health
protections. If the bill results in 202(c) orders that would
not exist under current law, it increases the likelihood that
facilities will operate in violation of environmental
regulations. Additionally, the hortatory statement that DOE
should minimize conflicts with environmental laws is not
adequate. The bill as currently drafted significantly decreases
current incentives for input from EPA and the State and local
environmental officials on how best to craft orders that are
more, rather than less, environmentally sensitive.
Over the 40-year history of the Clean Air Act, stakeholders
working together with State and Federal regulators have had an
outstanding track record of substantially reducing pollution
while maintaining reliability. In light of this situation, we
encourage the committee to very carefully consider the
potential unintended consequences of this bill.
Thank you, Mr. Chairman.
[The prepared statement of Ms. McCarthy follows:]
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Mr. Whitfield. Ms. McCarthy, thank you. I neglected to say
this, but Ms. Hoffman is the Assistant Secretary for the Office
of Electricity Delivery and Energy Reliability at the
Department of Energy, and of course, Gina McCarthy is the
Assistant Administrator for Air and Radiation from the EPA. Mr.
Moeller is a Commissioner over at the Federal Energy Regulatory
Commission, and I would recognize him for 5 minutes at this
time.
STATEMENT OF PHILIP D. MOELLER
Mr. Moeller. Chairman Whitfield and members of the
subcommittee, thank you for the invitation to testify on H.R.
4273, the Resolving Environmental and Grid Reliability
Conflicts Act of 2012. My name is Phil Moeller, and I serve as
one of four sitting Commissioners at the Federal Energy
Regulatory Commission, FERC. I appreciate your interest in
addressing the important issues facing the Nation's reliable
supply and delivery of electricity.
Along with myself, my three colleagues Chairman John
Wellinghoff, Commissioner John Norris, and Commissioner Cheryl
LaFleur all support the concept behind H.R. 4273. That is, we
all agree that generators of electricity should not be put in a
position of having to choose whether to violate Section 202(c)
of the Federal Power Act or whether to violate the Clean Air
Act when certain generating facilities are needed for crucial
electric reliability needs. The testimony of the next panel
will describe occasions when generators were forced to make
this difficult choice.
The electric power grid can roughly be divided into two
categories: the bulk power system, which carries electricity at
generally high voltage over great distances, and the
distribution system, which takes electricity from the bulk
system to serve local needs, such as the needs of a town or
city. While short disruptions of local service are common for
many people during thunderstorms and other weather-related
events, the high reliability of the bulk power grid ensures
that wide-scale blackouts are extremely unusual.
But to ensure that the bulk power grid continues to be
reliable, Section 202(c) of the Federal Power Act permits the
Federal Government to require a power plant to run in certain
circumstances, even if the owner of that power plant would
rather not run the power plant. In short, the security of this
Nation depends on a reliable power grid, and Section 202(c)
addresses the need of this Nation to have a reliable system.
Ideally, we hope that Section 202(c) will never need to be
invoked, but experience indicates that orders under 202(c) are
sometimes necessary.
Yet the very operation of a power plant in compliance with
a Section 202(c) order can result in a violation of the Clean
Air Act. In this sense, Federal law can sometimes require the
owners and operators of a power plant to violate either the
Clean Air Act or the Federal Power Act. The law should not
require citizens to choose which law to violate.
Our Nation has always faced unique challenges to electric
reliability, and these challenges could accelerate as older
power plants gradually retire or run less frequently, as new
technologies allow new power sources to compete with
traditional power plants, and as environmental mandates change.
While the Commissioners at FERC sometimes disagree on the
extent to which electric reliability can be threatened by the
mandates of the Environmental Protection Agency, EPA, all of
the FERC Commissioners support the concept that the law should
not require a generator to decide whether to violate the Clean
Air Act or the Federal Power Act.
At this time, the Commission is working to formulate a role
in advising the EPA on the reliability impacts of retiring or
retrofitting various power plants in compliance with EPA
regulations. Regardless of how well FERC and EPA can coordinate
their reliability efforts, a bill like H.R. 4273 is essential
to address potential reliability challenges. Like 202(c) more
broadly, we hope that the provisions in a bill like H.R. 4273
would never need to be invoked, but erring on the side of
reliability is the responsible approach.
Thank you again for the opportunity to testify, and I look
forward to working with you in the future and answering any
questions today.
[The prepared statement of Mr. Moeller follows:]
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Mr. Whitfield. Thank you very much, Mr. Moeller.
Our last witness on the first panel is Mr. Jeffery Wright,
who is the Director of the Office of Energy Projects at FERC,
so Mr. Wright, thank you for being here and we recognize you
for 5 minutes.
STATEMENT OF JEFF C. WRIGHT
Mr. Wright. Thank you, Chairman Whitfield and members of
the subcommittee. Again, my name is Jeff Wright, and I am the
Director of the Office of Energy Projects at the Federal Energy
Regulatory Commission. I appreciate the opportunity to appear
before you to discuss the draft legislation entitled ``The
Hydropower Regulatory Efficiency Act of 2012.'' The views I
express in my testimony are my own.
The Commission regulates over 1,600 non-Federal hydropower
projects at over 2,500 dams, pursuant to Part I of the Federal
Power Act, or FPA. Together these projects represent 54
gigawatts of hydropower capacity, more than half of all the
hydropower in the U.S.
The FPA authorizes the Commission to issue licenses and
exemptions for projects within its jurisdiction. About 71
percent of the hydropower projects regulated by the Commission
have an installed capacity of 5 megawatts or less.
The Commission has seen an increased interest in small
hydropower projects, and has responded by implementing measures
to facilitate efficient review of project proposals, including
the following: adding new web-based resources to the
Commission's Web site to make it easier for applicants to
understand and complete the licensing process, updating or
creating MOUs with other agencies to improve coordination,
continuing our small hydropower hotline and e-mail address to
answer applicant questions, and educating potential small
hydropower developers through an education and outreach
program. With this background, I will turn to the draft
legislation.
Section 3 would increase the limit for small hydropower
exemptions from 5 megawatts to 10 megawatts. Section 4 would
establish various measures to remote conduit hydropower
projects. These proposals are consistent with the Commission's
policy to promote small hydro generation.
Specifically, Section 4(a) would amend Section 30 of the
FPA to establish a procedure whereby conduit projects with an
installed capacity of 5 megawatts or less would not be required
to be licensed, provided the applicant makes a showing that the
project qualifies as a conduit project. I support this
provision which would serve to increase the amount of electric
generation derived from conduits. This section would also allow
the Commission to grant conduit exemptions for all projects
with an installed capacity of over 5 megawatts and up to 40
megawatts.
Section 5 of the draft legislation would amend the FPA to
authorize the Commission to extend the term of a preliminary
permit issued under FPA's Section 5 for up to 2 years.
Preliminary permits grant the holder a ``first to file''
preference with respect to license applications for projects
being studied under a permit. Commission staff has heard that
the need for environmental studies in some instances make it
difficult to complete a license application within the current
3-year term of the permit, with the result that a developer
that has invested substantial time and money studying a project
may face the possibility of losing its project based on
competition from other entities if it needs to seek a
subsequent permit. I therefore support the proposed FPA
amendment which could eliminate this problem, and it might be
worth considering as an alternative, authorizing the Commission
to issue permits for terms up to 5 years, which could avoid the
need for developers to go through the process of seeking an
extension.
Section 6 would require the Commission to investigate the
feasibility of implementing a 2-year licensing process for
hydropower developing at existing non-power dams, and for
closed loop pump storage projects. I support the goal of an
expedited licensing process. It is Commission staff's goal to
act on all license applications as quickly as possible, and we
have established procedures that allow for great flexibility
and efficiency. I am thus though not certain whether an
additional licensing process is necessary. We have been able to
issue licenses in a matter of a few months where the project
proponent has selected a site wisely, stakeholders had agreed
on information needs, and State and Federal agencies performed
their responsibilities quickly. Moreover, the Commission
operates under significant constraints imposed by the FPA and
by other legislation affecting the licensing process, including
the Clean Water Act, the Coastal Zone Management Act, the
Endangered Species Act, and the National Historic Preservation
Act, among them.
In the absence of the ability to waive sections of the FPA
and other acts, or to set enforceable schedules in licensing
proceedings, it is not clear that the Commission, under its
existing authorities, can mandate a shortened process.
Section 7 would require the Department of Energy to study
the flexibility and reliability that pump storage facilities
can provide, and the opportunities and potential generation
from conduits. While I cannot speak for the Department of
Energy, I do support such research.
In conclusion, there is a great deal of potential for the
development of additional hydropower projects throughout the
country, including small projects. Working within the authority
given it by Congress, the Commission continues to adapt its
existing flexible procedures to facilitate the review, and
where appropriate, the approval of such projects. Commission
staff remains committed to exploring with all stakeholders
every avenue for the responsible development of our Nation's
hydropower potential. The legislation under consideration will
assist in realizing that potential.
This concludes my remarks. I will be pleased to answer any
questions you may have.
[The prepared statement of Mr. Wright follows:]
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Mr. Whitfield. Thank you very much, Mr. Wright, and thank
all of you for your testimony.
At this time I recognize myself for 5 minutes of questions.
You know, we find ourselves today in a situation where we have
a plethora of regulations that are coming out of EPA that are
having significant impact on the energy sector production of
electricity, as well as on the transportation side. In addition
to that, we have been struggling with our economy and demand
has been lower for electricity and other energy needs than some
times in the past, and we are making an effort to stimulate the
economy, keep growing again. And with all of this change taking
place, and you see a lot of coal plants closing down today
because of regulation and also because of low natural gas
prices. And so there is a significant change going on in our
country in the electric energy sector.
And everyone talks about that we need an ``all of the
above'' energy program. And I was looking at President Obama's
Web site the other day on his campaign, and I really was
actually disturbed by it. I would just like to ask the clerk if
she would put up this campaign Web site of President Obama.
Now, you may not be able to read that, but the thing that
bothers me about it is that President Obama has gone around the
country, like many of us, and he has talked about we want an
``all of the above'' energy policy. In that circle on his
campaign site, he talks about the energy sectors. He talks
about oil, natural gas, fuel efficiency, biofuels, wind, solar,
and nuclear. Now, there is one glaring absence, and that
happens to be coal, which still provides almost 50 percent of
the electricity in America. Many of us get upset about that,
because it has a tremendous economic impact on our country. It
provides a lot of jobs and it makes us competitive in the
global marketplace because coal is still a valuable resource.
We have a 250-year reserve of coal, and yet, this
administration has been openly in the business of putting coal
out of business. For the President to go run around talking
about ``all of the above'' energy policy and even on his
campaign Web site to not even mention coal as an important
energy sector is unbelievable to me.
Now, we are talking about reliability today on one of these
bills and the ensuring reliability and the conflict between
environmental laws and reliability and I don't see how anybody
could have a problem with this legislation, because we are
talking about emergency orders that puts companies in conflict
between an environmental law and an emergency order from the
Department of Energy. With these reliability issues becoming
more and more prevalent, I think we are going to see more and
more of this conflict. I am delighted, Mr. Moeller, that FERC--
they feel like this is something that we should certainly
explore, and I am disappointed that Ms. Hoffman, you and Ms.
McCarthy are not willing to support this kind of legislation.
I said I was going to ask a question. I guess I haven't
asked a question yet. This is my second opening statement. But
we talk about this Utility MACT. I really get upset about it
because that Utility MACT was sold to the American people that
we were going to reduce mercury emissions, and that is all that
anyone ever talked about. We are going to reduce mercury
emissions, maybe by .001 percent or whatever, and we have had
testimony from all sorts of groups saying that the technology
is not there to meet the requirement, but more important than
that, when the analysis was done of EPA's own figures, the
experts said there is no benefit significantly from reducing
mercury emissions. All of the benefits of the Utility MACT,
which is the most costly regulation ever issued, all of the
benefits comes from reduction of particulate matter, which is
already regulated under another aspect of the Clean Air Act.
So my time is already expired, but I wanted to get that off
my chest because I feel like EPA misled the American people on
Utility MACT, and deliberately so, and Ms. Capps, forgive me
for going 20 seconds over, but I recognize you for 5 minutes of
questioning.
Mrs. Capps. Thank you, Mr. Chairman, for recognizing me. I
am sure I don't need to restate my concerns about the Olson
bill which I referred to in my opening remarks. I got that off
my chest in the beginning, Mr. Chairman, so now I think I am
ready to ask a couple of questions.
You know, this bill before us ``waives the ability''--and
this is a quote--``under any Federal, State, or local
environmental law or regulation''--that is the end of the
quote--for an entity complying with the DOE reliability order.
That strikes me as very broad language, and Ms. Hoffman, I will
start with you. Do you have any idea of what specific laws and
regulations are waived by this kind of language?
Ms. Hoffman. My apologies. It is a very good question, and
I think it is the heart of some of the discussions that have
been occurring, and such that it waives, from my understanding,
penalties from statutes that are in the Clean Air Act, but it
doesn't appear--at least the question that we are trying to
struggle with, with respect to administrative compliance
orders, does it waive any of those penalties involved in that?
And I think that is a part of the discussion that the intent is
unsure.
Mrs. Capps. I see. It seems to me that because of its
broadness that it is very hard to get to the kind of nitty
gritty places where you really do have discussions between a
variety of agencies. It seems to me this would include Federal,
State, and local requirements. It could be as broad as
controlling air pollution, controlling water pollution,
protecting drinking water for safe disposal of waste, or to
protect endangered species. I don't even think that would
necessarily be the end of the list.
Maybe I will try this another way. Are you aware of any
example of a conflict between compliance with a 202(c) order
and a compliance with an environmental requirement, other than
an air pollution control requirement?
Ms. Hoffman. I am not aware of any.
Mrs. Capps. How about you, Ms. McCarthy? Are you aware of
some examples of any conflicts under any of these laws?
Ms. McCarthy. I do not believe that there is an inherent
conflict between 202(c) and EPA moving forward with
environmental regulations and compliance with those. No, I am
not aware of any that have happened, and I am not aware that
there is any need for that conflict to happen.
Mrs. Capps. So we have as an example, a single conflict
which involved an air pollution limit and the response of this
bill as a result or I guess of that one incident is to waive
every requirement that could be considered ``environmental''
without even knowing what we are waiving necessarily in
advance. That is not, in my opinion, a narrowly tailored
approach.
Again, Ms. McCarthy, does this make sense to you? From your
experience, can you explain anything having to do with this?
Ms. McCarthy. I would just explain--the only thing I can
tell you is I believe this bill was well-intended to address
reliability concerns. We share those concerns and we have made
that very clear. But I do not believe that the Mirant case that
is being cited actually was the result of any inherent conflict
in the use of 202(c). I believe that that--it is actually a
good example of how the agencies worked together and with the
State agency to address the reliability concern and to ensure
that that facility operated to the extent that we could in
compliance with environmental regulations. And in fact, the
company could have, and for the most part did. It had one
problem because it did not, according to the Virginia DEQ,
follow the operating and maintenance procedures outlined in
those administrative orders. So it was a very successful
application of these laws. It had no inherent conflict. It
didn't ask the generator to make decisions between maintaining
their responsibilities under 202(c) and 113(a), our
administrative order in compliance with environmental
regulations.
Mrs. Capps. So what we do have is a history of
negotiations, when potential conflicts are anticipated, that
there is a history within the regulators and EPA to come
together and to work--to iron things out, to go back and forth
and to have a discussion, and that is what is not reflected in
this language. In my opinion, I think we can do better than
this legislation. I hope the chairman will decide to work to
address some of the serious concerns that we have about this
legislation before scheduling a markup.
I would yield back my time.
Mr. Whitfield. Thank you, Ms. Capps. At this time I
recognize the gentleman from Nebraska--Mr. Terry is not here.
So Ms. McMorris Rodgers is recognized for 5 minutes for
questions.
Mrs. McMorris Rodgers. Thank you. Thank you, Mr. Chairman.
Well, I wanted to start by just having the committee put up
that slide again, because I noticed something else was missing.
The slide from the--President Obama's approach to energy
independence. I didn't see hydropower listed. We have already
heard it is the largest source of renewable energy, 8 percent--
7 to 8 percent right now. I am even under the impression that
Department of Energy has included it as--that they have a goal
of doubling hydropower. So I guess I just want to ask the
question, what is the role between the Department of Energy and
the White House as far as our energy goals moving forward, and
where is hydropower?
Ms. Hoffman. The Department of Energy closely coordinates
with the White House. We have a very strong program, and
looking at R&D in the hydropower area, we have had a lot of
activities looking at the technical potential of hydropower and
consider it a strong part of our portfolio. The research is
conducted under the Office of Energy Efficiency and Renewable
Energy.
Mrs. McMorris Rodgers. So am I to conclude that President
doesn't see a future role for hydropower and that he is
actually picking wind and solar over hydropower as a renewable
source of energy?
Ms. Hoffman. I am sorry, say that again?
Mrs. McMorris Rodgers. Well, am I to conclude that
President Obama doesn't see a role for hydropower moving
forward, and that he is picking wind and solar as the renewable
sources moving forward?
Ms. Hoffman. Hydropower is an important part of the
administration. I guess I have to look at--that is a campaign
Web site and it is part of our portfolio at the Department of
Energy and the research and development that we are working on.
Mrs. McMorris Rodgers. OK, so we will keep working to get
hydropower listed. OK. We will keep working on that.
I wanted to move over to Commissioner Moeller, because on
the previous topic we are hearing--on Olson's bill, the
testimony from EPA and DOE today is saying that they don't
believe the legislation is necessary to address the potential
conflict between Section 202(c) of the Federal Power Act and
the environmental laws and regulations. So I would like to ask,
Do you agree with EPA and DOE that the legislation isn't
necessary to address the conflict?
Mr. Moeller. Thank you, Congresswoman. I am speaking today
in terms of myself and my fellow Commissioners, that everyone
supports the concept behind this bill. Personally, I support
the bill. I think it has been used--this authority, very
rarely. But the fundamental conflict is there. If someone is
being asked to run, they are being asked to choose between
violating one law or the other, and I just don't think that is
fair to put a generator in that position.
Again, I think it has been and hopefully may never be used
again, but having it as one of our tools in the toolbox for
reliability I think is important. We are entering an
unprecedented nature of transitioning our fuel supply in this
country on the electricity side away from coal, and as that
happens, there will be a variety of local impacts that will be
profound, and hopefully we will be working very hard over the
next few years to minimize any impacts or disruptions from
that. But just in case, when it is peak load, when it is
usually very hot and there is an air inversion zone and health
and safety is tied to the ability of people to have their air
conditioning running, it might just mean that there are
occasions where ordering a generator to run to keep people
alive is worth the tradeoff temporarily of the provisions of
the Clean Air Act.
Mrs. McMorris Rodgers. So I understand FERC held a
technical conference last November to consider the potential
reliability implications of EPA's power sector regulations, so
I would like to ask, do you believe EPA's new and forthcoming
power sector regulations pose a threat to reliability due to
the expected retirement and retrofitting of a significant
portion of the Nation's coal-fired generation fleet?
Mr. Moeller. Well it has to do with timing and very
localized impacts. You heard Administrator McCarthy talk about
the fourth year and the fifth year, and that is a pretty
complicated topic because there are different conditions on the
fifth year. But we have to do a lot within the next 5 years to
make sure that this transition is workable. We are trying to
work on it with--at FERC to try and develop a relationship with
the EPA so we can advise them more formally on reliability
impacts and the regulations.
I am concerned. I think you can look to what is going to
happen in northern Ohio, in the new future as to where this new
set of issues comes together in a very challenging way over the
next 3 years, and I think we will be talking a lot about that
over the summer.
Mrs. McMorris Rodgers. Thank you. I yield back.
Mr. Whitfield. Thank you. At this time, I recognize the
gentleman from Michigan, Mr. Dingell, for 5 minutes.
Mr. Dingell. Mr. Chairman, thank you. I commend you for
this hearing, and I congratulate my colleagues on the committee
for bringing this matter to the committee's attention.
These questions are for Patricia Hoffman, but before I do
so, I would like to quote from Oliver Twist and Charles
Dickens. We have here a situation before us where it appears--
and I quote now--``The law is an ass.''
Having said these things, is--these questions are to
Patricia Hoffman. Yes or no, is the Department of Energy
currently required to consult with an environmental entity such
as EPA when issuing an emergency order under Section 202(c)?
Yes or no?
Ms. Hoffman. We are not required. We do consult with EPA as
our past exchanges----
Mr. Dingell. Just yes or no, please. Yes or no.
Ms. Hoffman. No, we are not required.
Mr. Dingell. OK. An emergency order may be declared for
other causes. Other causes is a broad term that could include
any number of scenarios. Could an emergency order under H.R.
4273 effectively waive a utility for any reason from liability
of ever complying with an environmental regulation such as the
Mercury or Air Toxics Standards? Yes or no?
Ms. Hoffman. No, our order cannot waive----
Mr. Dingell. Do you believe that there will be enough
electricity generation for utilities to maintain their services
to rate payers while working to comply with EPA regulations?
Yes or no?
Ms. Hoffman. I can't answer yes or no to that. That will be
dependent on local----
Mr. Dingell. Then can you tell us what your thinking is on
that?
Ms. Hoffman. That will be a very site-regional-specific
question.
Mr. Dingell. OK. Would the Department of Energy want to
make a comment on that? OK, would EPA want to make a comment on
that?
Ms. McCarthy. Not at this time, no. Thank you.
Mr. Dingell. OK. So you haven't got an answer to the
question.
Now, within the ISO region there are nearly 10,000
megawatts from coal units that are already complying with the
Mercury and Air Toxics Standards, and the Cross Air State
Pollution Rule. Some utilities have said that stricter EPA
regulations would create a reliability problem in the future,
due to the amount of time it takes to install technology to
comply with these rules. Do you believe that utilities with
coal units can comply with a new mercury rule within the 3
years stipulated by EPA or within 4 years if they receive an
extra year from the local permitting authority? Please answer
yes or no. This is to Gina McCarthy.
Ms. McCarthy. Yes.
Mr. Dingell. All right. Now can you assure us that
reliability will not be in jeopardy during this time period?
Yes or no? I will take it from both EPA and Department of
Energy.
Ms. Hoffman. No, we cannot assure that reliability----
Mr. Dingell. Thank you. The other agency, please?
Ms. McCarthy. I can assure you that there are systems in
place that will make that happen, yes.
Mr. Dingell. Now, what outreach has EPA done to public
utility commissions or public service commissions to talk about
new pending rules and regulations? Would you submit that for
the record, please?
Now, when working on a disaster-type scenario such as a
hurricane, how quickly can EPA issue an administrative consent
order relating to any EPA-related issues?
Ms. McCarthy. It is case specific. We can issue them very
quickly or we can have a more deliberate process.
Mr. Dingell. I would like a written answer. Would you be
more specific on that----
Ms. McCarthy. Yes.
Mr. Dingell [continuing]. If you please? Now, these
questions are for Philip Moeller, Commissioner, FERC. Mr.
Moeller, to what extent can utilities plan for reliability-
related emergencies that might fall under Section 202(c)?
Mr. Moeller. I believe as part of general reliability
concerns they spend an enormous amount of time. Planning for
reliability contingencies specific to 202(c)----
Mr. Dingell. Would you submit that?
Mr. Moeller [continuing]. I think it would be very plant
specific, based on how they will have to comply with the EPA
regulations over the next 3 to 4 to 5 years.
Mr. Dingell. Thank you. Would you please submit that for
the record?
Mr. Moeller. Certainly.
Mr. Dingell. I want to get an understanding here what
happened, and help me, please. This is to all three agencies.
Is this statement factual? You have a situation here of where
you are functioning under the law. EPA issues one order. The
Department of Energy issues a different order, and we find, lo
and behold, that the utility is caught in between. Is there
any--first of all, is there any relief to be given to the
utility under existing law? Yes or no?
Ms. Hoffman. I assume you are referring from fines and----
Mr. Dingell. We talk about this awful situation we have
before us. Go ahead if you--please, Ms. McCarthy?
Ms. McCarthy. Just a matter of correction, the instance
that we are talking about on Mirant wasn't conflicting orders.
The issue was that the company decided not to continue to run.
EPA issued a 202(c), then we worked with the company, DOE, and
the State to issue an administrative order that allowed----
Mr. Dingell. Now the two agencies--and I apologize to you,
Mr. Chairman. The two agencies behaved very well, but the State
of Virginia finally ultimately fined them under its delegated
responsibilities under the Clean Air Act. Is that right?
Ms. McCarthy. They didn't fine them for complying with
those orders, they fined them because they did not comply with
the operation and maintenance requirements of those orders.
Mr. Dingell. OK. Is there any relief that can be given to a
utility under these circumstances? Do you have any agreements
between the different agencies on giving relief, or on
coordinating your decisions? And can you tell me you don't need
statutory authority on this? Please respond in writing.
Mr. Chairman, thank you.
Mr. Whitfield. Thank you. The gentleman's time is expired.
At this time, I recognize the gentleman from Texas, Mr. Olson,
for 5 minutes.
Mr. Olson. I thank the chairman, and my first question is
for Ms. McCarthy. Nice to see you again, ma'am. Thanks for
coming today.
Ms. McCarthy. You too, Mr. Olson.
Mr. Olson. I am sure you agree on this, but in the event of
a true emergency, DOE has the authority to compel power plants
to operate to avoid a blackout under Section 202(c), even if
that means violating an environmental permit issued by EPA. You
mentioned Mirant's situation that happened in 2005, right
across the river from here, about 2 miles from here. But you
made no mention of another case that happened in 2005 with
Mirant in San Francisco, California. In that case--I mean, I
will get into some details with the next panel about what
happened out there, but the bottom line was Mirant was fined
over seven figures, not some 30,000, seven figures, millions of
dollars, because they were ordered by the regulator to keep the
grid up and running, and because of that they see their permits
under EPA, and the City of San Francisco sued them. I mean, do
you agree that blackouts could potentially create the greatest
environmental threat and public safety hazard, like
uncontrolled sewage, heat stroke, and controlled industrial--
uncontrolled industrial processes?
As I mentioned in my opening statement, a 7-month-old
infant died this past week in Sugarland, Texas. He was in a
car, 90 degree heat for a couple of hours. That was--the
parents made a terrible mistake, but if our State has another
drought heat wave like they did this past summer, 100 degrees
every day in Houston, Texas, unprecedented. The hottest August
on record. If that happens again and the power goes out,
infants all across southeast Texas and elderly people all
across southeast Texas, their lives will be at risk.
Would you agree that--I mean, again, blackouts could
potentially create the greatest environmental threat and public
safety hazards? Yes or no? Losing power in my State, the
biggest threat, as opposed to something rolling on behind and
fining Mirant for the things they did to keep the power up?
Ms. McCarthy. I would agree that reliability has prime
concern here, yes.
Mr. Olson. OK, thank you for that.
And another question for Mr. Moeller. Thank you for coming
today, sir, as well. You have been critical of EPA's power
sector rulemaking and its effect on grid reliability. Has the
EPA adequately addressed your concerns that you raised in your
testimony here before this subcommittee last September with
regard to the implementation timeline?
Mr. Moeller. Well, Congressman, my main concern has been
about the timing of the regulations. I am not an epidemiologist
so I haven't gotten into the actual regulations themselves, but
the concern is over the fourth year and the fifth year of
compliance, and whether that is enough. And the fifth year is
particularly challenging because it requires a generator to
agree to certain things that can make it quite vulnerable
again, perhaps, to citizen or other lawsuits.
So it is really about the timing and the focus on local
reliability needs that are very load pocket specific in this
country, and I can give you examples of those. We are working
with the EPA to try and come up with a more formal arrangement
so that we can advise them. We have not come to resolution yet,
but that is because it is still sitting within the Commission.
But to me, it is about timing, and the concern about the fourth
and the fifth year and very local reliability impacts.
Mr. Olson. Well, it sounds like you believe that there will
be reliability emergencies in localized areas if EPA's rules
are implemented as planned without flexibility.
Mr. Moeller. I am not sure about emergencies, but I think
we can anticipate severe challenges to change out fuel supply,
add transmission, build new power plants in a very short amount
of time.
Mr. Olson. Yes or no answer, and my legislation will fix
this problem? Yes or no?
Mr. Moeller. I support your legislation.
Mr. Olson. Thank you.
Mrs. Hoffman, my last round of questions is for you. I
asked you about Secretary Chu, whether he was supportive of
efforts to revenue any potential conflict between Federal laws,
and this is what he said in a hearing last month. ``I am very
supportive. We don't want to order a generator to continue to
be online to supply emergency backup power and face Federal--
from another branch. We are very eager to work through those
issues.'' Were you aware of that statement by Secretary Chu?
Ms. Hoffman. Yes, sir, I am.
Mr. Olson. And you probably have expressed your concerns
that there is no neutral body conducting a very specific plant
reliability analysis. I believe there is overwhelming
acknowledgement from your department, from FERC, from EPA, and
from others that without some flexibility, there will be
reliability issues.
If I can talk a little bit about in the time I have got
here about private generators--not about private generators but
about the public municipality generators. Does DOE's
jurisdiction extent to public municipality-owned power?
Ms. Hoffman. I will check that for the record, but I do not
believe the jurisdiction is over municipalities.
Mr. Olson. And I have got a conflict here. My staff has
told me that DOE's regs say yes, they are. You do have
jurisdiction over them----
Ms. Hoffman. I am sorry.
Mr. Olson [continuing]. But the DOE staff says no.
Ms. Hoffman. Yes, it is. I am sorry.
Mr. Olson. There you go. My staff said the difference
between DOE's regs and DOE's staff. But the Courts haven't
ruled on this. The amendments to the Energy Policy Act of 2005
exempt rule electric co-ops and municipality-owned power for
Part II of the Federal Power Act, which includes Section
202(c). So would they have to voluntary--they would have to
voluntarily comply, correct, right now?
Ms. Hoffman. It is my understanding, yes, they would.
Mr. Olson. OK. I guess I am out of time. I yield back the
balance of my time.
Mr. Whitfield. Thank you. At this time, I recognize the
gentleman from Pennsylvania, Mr. Doyle, for 5 minutes.
Mr. Doyle. Thank you, Mr. Chairman.
So let us see here. Since 1978, there has been six times
that DOE has issued a 202 order, and four of those times
involved transmission lines. Only twice generators, right? So
only two times since 1978 has this been ordered to a generator
to provide power to the grid. In both those instances, in the
2001 case in California, the company Mirant was subject to a
citizen lawsuit by the City of San Francisco, and environmental
groups for exceedance of the 877-hour operating limit, and was
forced to settle the lawsuit at significant expense, and in
2005 during its operation as directed by DOE, the Potomac River
plant was forced to exceed its 3-hour max limit on February 23
of 2007, and the Virginia DEQ issued a notice of violation and
subsequently fined Mirant for NAAQS exceedances that were a
result of Mirant's compliance with the DOE order to run for
reliability.
I want to ask a couple questions to Ms. Hoffman. Ms.
Hoffman, do you believe if this bill becomes law that the DOE
will be inclined to offer more 202 orders? Will there be some
incentive here for you to use this 202 section more often than
you currently use it?
Ms. Hoffman. We do have a concern that there may be an
incentive, but from experience that has been demonstrated from
the Mirant power plant example, the process that has been in
place is that the order has to take in consideration
environmental considerations, and we have been working very
closely with EPA----
Mr. Doyle. But I am asking you, is DOE--you issue the
order, right?
Ms. Hoffman. Yes.
Mr. Doyle. Are you somehow incentivized--do you think the
DOE----
Ms. Hoffman. Oh, DOE? No.
Mr. Doyle. Yes. No, I am asking, are you going to be----
Ms. Hoffman. Oh, I am sorry, I thought you were----
Mr. Doyle. [continuing]. Incentivized to issue more 202
orders as a result of this bill?
Ms. Hoffman. No, sir.
Mr. Doyle. OK, that is the point I want to make. So twice
in 30-some years, you have asked a generator to come online,
and there is nothing in this bill that is going to incentivize
the DOE to use this section more often than you currently use
it.
Ms. Hoffman. No, sir.
Mr. Doyle. OK, thank you.
Also, I want to talk about the 2005 order. Now, we know EPA
has no authority in 202, but you routinely work, in the two
instances that this has ever happened, with the EPA to minimize
environmental risk. In 2005, Section 202 was used by Secretary
Bodman in the Bush administration, and did this order include
any environmental requirements?
Ms. Hoffman. Yes, it did.
Mr. Doyle. So there is a history in the rare instances that
this is used, that even though you are not required to by
statute, you do work with EPA cooperatively to minimize
environmental risk?
Ms. Hoffman. Yes, sir.
Mr. Doyle. Thank you. Let me ask you another thing. I want
to get to this thing about how this somehow incentivizes power
companies to not comply with the 5-year rule. I mean, there
seems to be the implication here that certain power companies
will be incentivized not to comply with the MATS rule and make
their necessary upgrades over this 5-year period what, in the
hopes that they get a 202 order? I mean, think about how far-
fetched that is, that you know, as someone who supports the
MATS rule, and a lot of what EPA is doing, what is trying to be
suggested here is that these power companies will say well gee,
we don't have to comply with this, you know, this 5-year period
to upgrade our facilities. We will just hang out here and hope
DOE gives us a 202 order. I mean, come on. Let us not make
statements or implications that just defy all logic. As a
member who sits up on this committee and defends the EPA and
what you are trying to do with these standards, to say to this
committee that somehow power companies are going to use this as
some sort of incentive to not make these upgrades--look. They
have to make the upgrades even if there is a 202 rule, is that
correct? They still got to make the upgrades, right?
Ms. Hoffman. Yes, sir.
Mr. Doyle. So if power plants want to operate under the
laws we are passing right now, they are going to have to comply
with this 5-year period to make these upgrades. How are they
skirting this? I mean, what are the chances of a company that
says we are not going to make these upgrades because we might
get a 202 order, what are the chances they are going to get a
202 order? Twice in 38 years?
I understand the concerns that you have, and I share those
concerns, but it seems to me that there has got to be a
practical way to say to generators in these ultra-rare
instances that this occurs, twice in 30-some years, that they
are not put in a situation where they have to pick which law to
violate. That is all we are trying to do very narrowly with
this bill. If the EPA or the DOE has some constructive language
that they want to talk to us about before markup, I am
receptive to hearing about it, but the implication that somehow
power companies are going to use this to start the law I think
is far-fetched and a stretch, and the idea that somehow the
public health is being endangered because twice in 38 years
this order was given--I yield back.
Mr. Whitfield. Thank you, Mr. Doyle. At this time I
recognize the gentleman from Virginia, Mr. Griffith, for 5
minutes.
Mr. Griffith. First let me ask, do you believe--thank you,
Mr. Chairman. Do you believe that we are going to have more
problems and more 202 orders issued as opposed to twice in 30
years because of the policies of the EPA, Ms. Hoffman?
Ms. Hoffman. I believe there is a potential for some
emergency conditions to exist, but there are--if the plant
operators truly are transparent and follow the procedures, then
I think we can minimize any of those cases.
Mr. Griffith. But because of the power plants that are run
by coal that we have already seen that are shutting down, et
cetera, is the reason that you made those statements and that
you think there are going to be more 202 orders is because of
some of the policies that are being brought about by the EPA
under this administration?
Ms. Hoffman. I think there are a lot of things occurring in
the United States right now. We are trying to build
transmission, we have increased production on natural gas, the
building of natural gas----
Mr. Griffith. All right. And I wish I had----
Ms. Hoffman. All of those have to be taken into
consideration.
Mr. Griffith. And I wish I had more time, and of course, we
don't have the natural gas lines going to all the power plants
that may close down, and so a lot of these power plants cannot
retrofit. That is also correct, is it not? Yes or no?
Ms. Hoffman. Yes.
Mr. Griffith. And so part of your concern is the same
concern that we heard from Mr. Moeller earlier, is that, you
know, we are just not sure it is all going to get done, even in
the best case scenario, it is all going to get done in time,
but we are not going to have some situations where we have
energy emergencies like Mr. Olson was talking about because of
the policies and the timelines put together by the
administration's EPA. Isn't that your--in the end, isn't that
what you are saying? Yes or no? If there is going to be some
slippage because of some of these policies?
Ms. Hoffman. There are concerns of potential impact----
Mr. Griffith. OK, I am going to take that as yes and I have
got to move on.
Let me switch gears. Mr. Moeller, if I might, and you may
have to give me answers later because I am asking you about a
bill that is not technically before us, but it does deal with
hydropower, and I will address it generally to both you and Mr.
Wright. Does FERC currently require private property rights to
be considered when issuing a license under the Federal Power
Act, and what about when the Commission is reviewing shoreline
management plan--the shoreline management plans? Now let me
give you some background so you understand. I represent the 9th
District. My colleague, Robert Hurt, represents the 5th
District of Virginia. He has Smith Mountain Lake, I have
Claytor Lake. We have huge shoreline management issue
situations, and there is a feeling by the folks there that the
private property owners along the shores and in the case of at
least Smith Mountain Lake, because I used to do title work in
that area, some of the owners actually own the underlying land
and AEP has the right to flood, and there are concerns about
that.
So the question is--because Mr. Hurt has a bill in to make
it clear--but does FERC currently require private property
rights to be considered when issuing a license?
Mr. Moeller. We have spent a lot of time on Smith Mountain
Lake, but Jeff--Mr. Wright is much closer to it than I am on a
daily basis. I think we will probably want to get back to you
in writing, but I will----
Mr. Griffith. And that is fine, because you should not have
expected these questions today and I appreciate that. But if
you could get back to me, because my big concern is that if we
don't take these things into consideration, some of the folks
there are worried that their docks and maybe even boathouses
may be impacted, and even though there may be the authority
there, do we not have then a taking--if the shoreline
management plan does not take into consideration a taking for
which either the government or--I guess it would be the
government would be responsible for then reimbursing these
folks for the damage to their property, not only the damage of
the taking of that particular dock or boathouse, but also the
obvious diminution in value of their property rights. So if you
all could think about that and get some answers back to me, I
would greatly appreciate it. And I would ask also if you all
believe that private property is, in fact, a local economic
interest, which would be covered, I think, under some of the
current language.
Mr. Moeller. Private property rights are a very significant
part of whenever we do a relicensing on shoreline management
plans, and related to titles they get very complicated, but I
think we try to do our best to manage the various uses of a
project that of course respects private property rights.
Mr. Griffith. And I appreciate that. Last but not least, I
think the bill we have before us is a good step on small
hydropower generation, which is interesting it is not in the
plan along with coal. You know, it is kind of interesting, I
have got coal and I have got hydro, and both of them are not
considered ``all of the above'' by the administration. What--
can you tell me, what are the biggest barriers to greater
hydropower development in the United States? Either one of you
can take it.
Mr. Wright. Right now, I think one of the biggest barriers
to licensing are problems with mandatory conditions we have
from other State, Federal, tribal. We are compelled under the
Federal Power Act to include mandatory conditions from the land
management agencies, Fish and Wildlife Service, National Marine
Fishery Service. We have to wait on the Clean Water Act permits
that are delegated to State governments. Even exemptions, the
conduit exemptions, the 5 megawatt exemptions, are subject to
mandatory conditions from State and Federal fish and wildlife
agencies.
Mr. Griffith. Thank you very much, and regrettably my time
is up. Mr. Chairman, if you want to give Mr. Moeller time to
respond I am happy with that, but my time is up.
Mr. Shimkus [presiding]. Your time is up.
Mr. Griffith. I yield back. Thank you.
Mr. Shimkus. The--Mr. Moeller with have other opportunities
with other questions. Mr. McKinley--Mr. ``Coal Ash'' is
recognized for 5 minutes.
Mr. McKinley. I am curious. Back when former Chairman
Dingell raised a question back to both of you, I want to make
sure I heard it right because of my hearing impairment. Did he
say to you, Ms. Hoffman, can you assure us of reliability or
that there would not be a blackout or brownout? How was that
worded again? Can you share with me how that question came? And
you said no, you could not assure, but Gina--Ms. McCarthy,
she--you said yes, you could. So what was the question?
Ms. Hoffman. We could not absolutely assure that we cannot
prevent----
Mr. Dingell. Will the gentleman yield?
Mr. McKinley. Yes, sir, I yield to you.
Mr. Dingell. And I thank the gentleman for his courtesy.
Can you assure us that reliability will not be in jeopardy
during this time period? Please answer yes or no.
Mr. McKinley. OK, thank you.
Mr. Dingell. And I thank the gentleman.
Mr. McKinley. So having--there was a yes--there was a no
and a yes. So Mr. Moeller, do you agree with the EPA that they
can give us that assurance?
Mr. Moeller. Well I never make any assurances on
reliability, so no.
Mr. McKinley. So between the two of you, you heard her just
testify that she could, and my question to you, from your
position you are not--Ms. McCarthy, I will get back to you.
Ms. McCarthy. OK.
Mr. McKinley. So Mr. Moeller?
Mr. Moeller. We are working hard to make sure that we have
a process with the EPA that deals with the timing issues. We
haven't resolved that yet. It is of great concern to me that we
have the proper process that allows our reliability experts to
weigh in on the individual load pocket situations where a major
plant, or maybe even a minor plant, is shut down but because of
where it is in the grid, it is necessary perhaps to maintain
voltage support for that part of the grid.
Mr. McKinley. So if I could take from the former chairman,
the answer is yes or no, do you agree that she could make that
statement that she can assure us?
Ms. McCarthy. Mr. McKinley, I did not make that statement.
Mr. McKinley. You did not?
Ms. McCarthy. I did not.
Mr. McKinley. I misunderstood. I thought you said yes.
Ms. McCarthy. I said there were processes in place to
address those issues.
Mr. McKinley. I am sorry?
Ms. McCarthy. I assured the gentleman----
Mr. McKinley. Could you speak a little closer to your mic?
Ms. McCarthy. I am sorry. I am sorry to interrupt, but I
did not make assurances and EPA is not in the reliability
business, and I understand that.
Mr. McKinley. Well that is for sure you are not.
Ms. McCarthy. What I said was that there are processes in
place to address reliability concerns as they arise.
Mr. McKinley. OK. I just thought your answer back to
Chairman Dingell was yes.
Ms. McCarthy. I think I made it very clear that I assured
him that there were processes in place to address issues
relating to reliability.
Mr. McKinley. OK. Now the last time, Ms. McCarthy, you were
here, there was a discussion between you and the DOE and it was
about some of the new regs that were out, especially with the
discharge, and you seem taken back by the fact that DOE had
just reduced spending. You were saying how carbon capture and
the like--but DOE had just cut the funding for research on
that. Have you found out--have you done--have you raised the
question about why did they cut back on carbon capture?
Ms. McCarthy. I am sorry, I don't--I do recollect that
issue coming up and I know it was related to the Greenhouse Gas
New Source Performance Standard, but I do not have any further
information at this point to share with you.
Mr. McKinley. I hesitate--with all due respect, I hesitate
to ask you to eventually get back to us, because I am still
waiting since last January for information from your office.
But if you could, please, I would like to understand your
position. If you are pushing for carbon capture but yet DOE is
cutting funding and research, I think it is a contradiction
here. The left hand doesn't know what the right hand is doing,
and it is something that affects us on energy policy.
Ms. McCarthy. Congressman, if there is something that we
owe you at any length in time in terms of response, I will take
care of that immediately, but I will say that the rule that you
are referencing is based on technologies that we believe is
available today.
Mr. McKinley. And that was one of the questions we asked.
Ms. McCarthy. Yes.
Mr. McKinley. Show me where one plant that has that
commercially available, when MIT is doing it--MIT's carbon
capture initiative right now is underway to try to get to a
point, but you are representing that it is a commercially--you
said that it was commercially available when we asked. Name one
plant in America that has a facility like this. You said you
will get back to us.
Ms. McCarthy. I apologize.
Mr. McKinley. I am still waiting.
Ms. McCarthy. We will get back to you right away.
Mr. McKinley. Can you name one now?
Ms. McCarthy. I am terrible with names. They all sound so
nice when you name utilities. No.
Mr. McKinley. You beat the bell.
Mr. Shimkus. The gentleman's time is expired----
Mr. McKinley. We will talk again.
Mr. Shimkus. And there are none.
Ms. McCarthy. OK.
Mr. McKinley. Thank you very much.
Mr. Shimkus. The Chair recognizes the gentleman from
Oregon, Mr. Walden, for 5 minutes.
Mr. Walden. I thank the gentleman.
I know when the President was running for office, President
Obama said that, you know, his idea on coal was to end up
with----
Mr. Shimkus. Would the gentleman yield?
Mr. Walden. Yes.
Mr. Shimkus. I didn't see my colleague from the neighboring
State here, so you are recognized, Mr. Sarbanes, for 5 minutes.
Mr. Walden. I will yield back and start over at a later
date.
Mr. Shimkus. You need to rework your statement anyway. You
were humming around, so----
Mr. Sarbanes. Thank you, Mr. Chairman. I appreciate it.
I am still getting my head around the issues here, but I
certainly understand why a power plant or a company that is
exercising its best efforts to try to make transitions and take
steps to meet environmental standards, if something occurs that
forces them to exceed to reliability requirement and therefore,
they are put into conflict with some of these standards that
they would, under those circumstances, expect to get some
protection from liability and other exposure, because they are
exercising all the best efforts and doing the things that we
want them to do. But I can also see situations where there be
an incentive to drag one's feet potentially--and this could be
done consciously or unconsciously perhaps--thereby creating a
situation where a crisis would occur in terms of reliability if
you were unable to continue on. And that is the dynamic, the
tension here that we are looking at, because we want to offer
some protection where you genuinely put in this position of
having to continue on and maybe violate some standards. At the
same time, we don't want people to be able to gain the system
in some ways. And I would appreciate it, Ms. McCarthy, if you
could maybe speak a little bit more to any concerns you might
have about that, or examples we have seen where that kind of
thing has occurred and could occur in the future if there was a
real broad blanket exemption or reliability protection put in
place.
Ms. McCarthy. Thank you, Congressman. I would say that I
don't disagree with the stated goals as you articulated them.
All I will say is I don't believe that there any inherent
conflict that warrants Congress to be concerned at this point,
and there is no conflict in the application of the laws and the
regulations as we have managed them under these laws. And I
would say that in one instance you had a company that was
provided a 202(c) order, as well as a 113(a) order. The
combination of those was to provide a sure pathway to address
reliability and a clear pathway to stay in compliance with
environmental regulations. It was very successfully done. The
company failed, according to the Virginia DEQ, to actually
comply with those effectively and they were fined a minimal
amount. We are dealing with a company that had compliance
problems before, a company that continues to have compliance
problems. I am sorry, not a company, a facility. The current
owner was just fined in February almost $300,000 for six
violations of pollution standards. So it was not unusual. It is
unfortunate that they did not fully comply, but I don't think
we would be sitting here now had they, and I don't think that
warrants congressional action.
Now in terms of the problem with what might this signal be,
we all agree that the DOE 202(c) order is a last resort. Our
only concern is that that last resort be not turned into a path
of least resistance, because right now we have great activity
in energy among our energy colleagues in terms of planning for
compliance under MATS, making sure that they address any
reliability issues, working with the three agencies that you
see represented here. I just don't want this to change that
dynamic and to make them understand that a 202(c) order could
be available to them with no planning, with no advanced action,
with no working with their environmental regulators or energy
regulators, and provide them an opportunity to do nothing in
the interim, and then to cause a reliability problem as a
result.
Mr. Sarbanes. Well, I think it is a fair concern, and we
just need to be careful that the fix that we are attempting to
design here is not overbroad with respect to the original
problem that has been raised.
Ms. McCarthy. Congressman, can I make one correction? Just
for Mr. Olson, the Potrero Utility incident was not related to
202(c). It was not a 202(c) issue, which is why we believe that
the Mirant issue is the only one that is relevant in here, and
in fact that isn't a problem in and of itself.
Mr. Sarbanes. Thank you. I yield back.
Mr. Shimkus. Gentleman's time is expired. Chair recognizes
the gentleman from Oregon now.
Mr. Walden. Are you sure about that?
Mr. Shimkus. Mr. Walden. I am not sure, but we are going to
try.
Mr. Walden. All right. I thank the gentleman--chairman.
Families in America are really struggling with the cost of
energy, whether it is trying to fuel up their vehicle so they
can go to the grocery store or take their kids to school or
after school activities. This is--the Obama administration is
one that I think has a horribly misguided energy policy. It is
not ``all of the above.'' That was actually something
Republicans talked about for a long time. Our only failure was
that we didn't trademark that saying in time. But the President
is on his Web site--and I assume he doesn't disown his own Web
site, since it is his Web site. And it talks about all our
energy resources and then leaves out 57 percent of the energy
side of energy. No coal and no hydro is listed here. That is
about 57 percent or more of America's energy. He seems to think
the future of energy is Solyndra. To quote, ``The true engine
of economic growth for our country will always be companies
like Solyndra. The future is here at Solyndra. We are poised to
transform the way we use power, the way we power our homes, our
cars, and our businesses.'' This is part of why a lot of
Americans who are actually paying the bills and living in the
real world in the middle class are concerned about the
direction of this President and this administration and his
failed economic policies that have left us in a horrible
situation with the smallest workforce since 1981. Those of us
with kids who are about to graduate from college are figuring
where they are going to live on the hide-a-bed in the basement
because they are moving back home. It is a real problem.
And then you go back to his comments in, I believe, San
Francisco when he was running for office when he said, ``Let me
sort of describe my overall policy. What I have said is that we
will put a cap and trade system in place that is as aggressive,
if not more aggressive, than anybody else's out there.'' This
is President Obama running. ``I was the first to call for 100
percent auction of the cap and trade system, which means that
every unit of carbon gas emitted will be charged to the
polluter. That will create a market in which whatever
technologies that are out there that are being presented,
whatever power plants that are being built, that they would
have to meet the rigors of that market and the ratcheted down
caps that are being placed imposed every year.'' So if somebody
wants to build a coal powered plant, they can, it is just that
it will bankrupt them because they are going to be charged a
huge sum for all that greenhouse gas that is being emitted.
This is President Obama again. ``This will also generate
billions of dollars we can invest in solar wind, biodiesel, and
other alternative energy approaches. The only thing I said with
respect to coal, I haven't been some coal booster. What I have
said is that for us to take coal off the table,'' and this is
as he said it, ``ideological matter as opposed to saying if
technology allows us to use coal in a clean way, we should
pursue it. So if somebody wants to build a coal power plant
they can, it is just that it will bankrupt them.'' Barack
Obama, running for office.
Now, we know by his own Web site he doesn't think coal or
hydro are part of an ``all of the above'' energy strategy.
Coming from the Pacific Northwest, we actually think hydro is
pretty important. And actually, a lot of our electricity comes
from coal. We also have wind. We are now trying to figure out
how to integrate wind into the grid and into a hydro grid. It
is a very difficult process. In some parts of the country we
now have negative energy pricing, where we are paying energy
providers not to produce energy at certain times because we
have a surplus. Taxpayers and ratepayers begin to wonder about
that policy.
We have a great record in the Northwest on saving energy
through conservation. We are very proud of that. I drive a
hybrid on both coasts. I try and do my part. I can and I do.
But this administration's policies are taking this country off
the edge and driving up energy prices.
The Keystone Pipeline, another example where we could be
working with our partners across the border in Canada, not only
to create American jobs but to use North American energy and
bring it here and refine it here and create jobs, and the
President stands in the way of that, President Obama.
And so it is--I am just going to tell those of you and the
agencies--Ms. Hoffman, you said earlier that you coordinate--
the Department of Energy coordinates closely with the White
House on Energy issues. I assume that means you also coordinate
closely with the White House on energy issues like Solyndra.
You must have. We have other committees looking into that and
trying to figure out just how closely all that got coordinated.
But at the end of the day, some of us actually believe in an
``all of the above'' energy policy. We are deeply concerned
that EPA has the lowest number predicting in terms of gigawatts
that are going to come off the grid as a result of the Obama
administration's policies. I think my colleague here is going
to talk about that a little bit.
We got to have a different direction. Part of us are
concerned about the grid and its reliability because of the
policies coming from this administration. My time is expired.
Mr. Shimkus. I thank the gentleman for his questions. Chair
now yields to Mr. Waxman for----
Mr. Waxman. Thank you.
Mr. Shimkus. Would the ranking member--Chairman Upton,
before I got here, said that he would give you 5 minutes for an
opening statement and then a round of questions.
Mr. Waxman. That was very gracious of him, Mr. Chairman,
and what I would prefer to do is to have my opening statement
made part of the record and proceed now for 5 minutes.
Mr. Shimkus. That--we would greatly appreciate that.
Without objection, so ordered.
Mr. Waxman. Thank you.
[The prepared statement of Mr. Waxman follows:]
[GRAPHIC] [TIFF OMITTED] 78921.057
[GRAPHIC] [TIFF OMITTED] 78921.058
Mr. Shimkus. And the ranking member is recognized for 5
minutes.
Mr. Waxman. Thank you very much. Section 202(c) of the
Federal Power Act gives the Secretary of Energy the authority
to order a utility to generate or transmit electricity in an
emergency situation. This authority is really a last resort.
Only a handful of orders have been issued over the years. There
has only been, at most, one case where DOE ordered required
actions that led to noncompliance with environmental
requirements, and even in that case it is not clear that
noncompliance was necessary. One reason we rarely face this
conflict is that potential issues are worked out with the
regional grid operators and the environmental regulators. If
that is insufficient, both DOE and EPA are involved in
addressing potential conflicts. With enforceable environmental
requirements in place, operators have a strong incentive to
minimize the extent of any noncompliance with such
requirements.
But this bill would change all that. It would allow DOE to
waive liability for all environmental violations, eliminating
the current incentives for operators to minimize noncompliance.
The bill also removes EPA's important role in the process.
Ms. Hoffman, does DOE have the expertise to determine the
appropriate environmental safeguards that should apply to a
generation plant ordered to run under a 202(c) order?
Ms. Hoffman. DOE has the capability to do NEPA assessments
and NEPA follow the requirements under the National
Environmental Policy Act. What would--DOE relies on EPA and the
environmental organizations is to look at is their need to
develop an administrative compliance order.
Mr. Waxman. So you would--you could consult with EPA?
Ms. Hoffman. Yes, sir. We do and we have.
Mr. Waxman. If you choose--even if you do choose to consult
with EPA, nothing in this bill requires that, nor does this
bill require you to incorporate any of their suggestions. Right
now, if a utility wants protection from liability for
noncompliance with an environmental requirement, it must go to
EPA and obtain an administrative order or enter into a consent
decree. Ms. McCarthy, how would EPA handle a request from a
company concerned that compliance with a 202(c) order would
violate a Clean Air requirement?
Ms. McCarthy. We actually enter into a discussion with that
company. We enter into a discussion with the State and the
local community, and we make sure that we design any relief in
a way that mitigates any environmental concerns and to the
extent possible complies with environmental laws and
regulations.
Mr. Waxman. Is this a process that can be completed
quickly, if necessary?
Ms. McCarthy. It is.
Mr. Waxman. That process gives everyone the assurance that
the company is doing its best to minimize the extent of
environmental harm, but this bill would simply waive all
environmental requirements for companies operating under a
202(c) order. Ms. McCarthy, with a free pass from all
environmental requirements, would a company have any incentive
to talk to EPA?
Ms. McCarthy. Not that I am aware of.
Mr. Waxman. In the example cited by GenOn, the company was
operating under an administrative order. It was not at risk of
EPA enforcement. Ms. McCarthy, if this bill were limited to
situations where an EPA administrative order or consent decree
were in place, would that ameliorate some of your concerns
about the effects of this bill?
Ms. McCarthy. Some of the concerns would indeed be
ameliorated by such a change.
Mr. Waxman. If we were trying to balance reliability needs
and environmental protections, I just think it doesn't make
sense to cut environmental regulators out of the process. I
think what we have here are legitimate concerns. We ought to
look at them carefully, balance them, so that we don't go too
far.
And with that, I want to work with my colleagues on this
subcommittee to see if we can achieve those goals. I yield back
my time.
Mr. Shimkus. Chairman--Ranking Member yields back his time.
Chair now recognizes Chairman Emeritus, Mr. Barton, for 5
minutes.
Mr. Barton. Thank you, Mr. Chairman, for holding this
hearing in the series of continuing hearings on our Nation's
energy policy.
My first question is just to ask each of the senior
officials whether their agency supports or opposes these two
bills. Ms. Hoffman, does the Department of Energy support both
bills, oppose both bills, undecided?
Ms. Hoffman. We don't have a position at this time on both
bills.
Mr. Barton. On either?
Ms. Hoffman. On either bill.
Mr. Barton. What about you, Ms. McCarthy, what is EPA's
position?
Ms. McCarthy. The administration doesn't have an official
position, nor does EPA.
Mr. Barton. So you all are neutral also?
Ms. McCarthy. We have raised concerns with the bill, but
we----
Mr. Barton. But officially you are----
Ms. McCarthy. We have no official position at this time.
Mr. Barton. Neutral. What about the FERC, Mr. Commissioner?
Mr. Moeller. I was allowed to speak for my colleagues to
say that the four of us support the concept behind 4273, and I
will let Mr. Wright address the----
Mr. Barton. Well, I just want to kind of get a baseline on
where the administration is, and apparently the administration
is neutral, according to the Department of Energy rep, the
Department of EPA--the agency of EPA, and the Commission.
I think it is a true statement what Ms. McCarthy said in
her written testimony and what Mr. Waxman just alluded to, that
there haven't been many cases in the past where we had to
invoke this Section 202(c), and I think that is primarily for
two reasons. Number one, we tended to have fairly substantial
reserve margins so there has never really been an operating
emergency, or not very frequently, and number two, until very
recently most of the electricity generated in the United States
was generated under State regulatory--under State issues where
they have a regulated power market. They don't have an open
market like we have now in Texas where it is basically a
merchant power market. But as the EPA continues to issue more
and more stringent environmental regulations, those reserve
margins are going down. And as more and more States open up
their markets to competition, the economic consequence of that
is always that you take the older, less efficient plants out of
operation so you don't--and you are not able to keep a reserve
margin in what used to be called the rate base.
So I think it is timely that these two bills, especially
the first bill, H.R. 4273, have been put into play because in
the future, I think you are going to see situations where
reserve margins are not adequate and where you are going to
have potential for blackouts. I have been told by several
authorities, both in the private sector and the public sector
in Texas, that we are going to have rolling blackouts this
summer if we have heat like we did last summer. And last
summer, there were deaths in Dallas, Texas, from the heat when
some of our less robust populations air conditioners were
stolen and the people couldn't--didn't the mobility nor the
ability to call for help and they suffered the fatal
consequences.
So Ms. McCarthy, in your written testimony you speak that--
about a concern, to use your term, that if H.R. 4273 were to
become law, that it could have a possible negative health
consequence. Do you not agree that if you have a blackout for
any extended period of time in an area that is having a high
heat situation, that that is a higher potential for health than
giving some sort of emergency operation to an older power plant
that might violate for a small amount of time some very
stringent environmental law?
Ms. McCarthy. I would absolutely agree that maintaining
electricity reliability, it is critical. But that is why we
have been working so closely with the regional transmission
organizations, planning entities, including ERCOT, to try to
understand the concerns and to address them in a way that
maintains flexibility, that maintains reliability, and that is
cost effective. And we believe we are working on those issues,
and very effectively.
Mr. Barton. Well I appreciate that, and my time is about to
expire. I do want to say, Mr. Chairman, I strongly support both
of these bills. You know, obviously they are subject to
tweaking and being improved, but I think the concept in both
bills is noble and I hope that the subcommittee moves them, the
full committee moves them, and that we can work with our
friends in the Senate and on the House floor to get these to
the President's desk. I see no downside to either of these
bills and I see a huge positive upside.
Mr. Shimkus. The ranking member--chairman emeritus yields
back his time. Chair now recognizes himself for 5 minutes.
Thank you all for being here. You know, there was a
Christian book published years ago called ``Evidence that
Demands a Verdict.'' It was laying out the facts, historical
accuracies, and just makes a claim that people need to make a
decision. The evidence of this administration's attack on coal
is clear. I mean, we talked about it the last time you were
here, Ms. McCarthy, about all the five rules and regs, MERC,
Boiler MACT, cooling towers, shutting down plants now.
Greenhouse gas had just come out a day or two before, no new
coal-fired power plants. We have the President's statement that
I played last hearing about his--what he--what his desire was
to do as President of the United States for coal. Now we have
Obama II, the second term, no coal in his ``all of the above''
energy. It is clear--the evidence is clear that this
administration has a deep-seated hatred for coal and
electricity generated by that coal. And of course, we don't
even talk about the Region 5 administrator and his crucifixion
statement.
So we just can't go that way. I mean, you just can't keep
coming here and saying yes, we really do like coal. Everything
is going to be OK, because the evidence outweighs any public
statements of no, we really do like it. Everything will be OK.
We had a great hearing last year on reliability, and I want to
put the bar chart up. Mr. Walden sort of mentioned it. The bar
chart is an analysis of EPA rules and regs, and what the effect
is going--on electricity generation around this country. The
smallest little bitty bar, the 10 gigawatt, that is the EPA's
analysis. Everything else is--the closest one--well, there is
one close to that, the--Citibank is 15, but everything else is
25. EEI is 75.
So this isn't a debate really--Chairman Emeritus Barton was
right. When you have an oversupply of electricity, one, you
have low prices, but it mitigates this problem. When supply is
going to be constrained based upon these rules, we are going to
see this happening a lot. So this is one of the few times we
are trying to get ahead of the curve, not talk about problems
of the past. Even if EPA is right and it is only 10 gigawatts,
that is a lot of base load offline because of regulations.
Now in that hearing, as I recall, DOE agreed with EPA, and
my question to you, Ms. Hoffman, was who did that analysis
under the DOE?
Ms. Hoffman. The DOE's study that was done was by Policy
International, and the Department of Energy.
Mr. Shimkus. Policy, the policy sector. Don't you have an
electricity sector group?
Ms. Hoffman. Yes.
Mr. Shimkus. Why would you have the policy folks do the
analysis, and not the experts in DOE on electricity?
Ms. Hoffman. The study was done because it was a
coordination across multiple agencies and the policy sector
took the lead on that study. Our office----
Mr. Shimkus. Because it is a policy position, not one based
upon science?
Ms. Hoffman. It was done based on modeling and analysis of
information and data that was available.
Mr. Shimkus. I think we are awaiting a response in writing
on this question. I think it was asked to be responded by mid-
April, and we have yet to see it. Can you ensure that that gets
to us to address this issue?
Ms. Hoffman. I will, sir.
Mr. Shimkus. Because the problem is this. I believe at
least--I believe 40, which is probably the medium of this,
which is four times more the EPA, which gives us four times
more, so maybe we only had two. Now we may have eight. And then
what happens?
Let me go to--my time is rapidly moving by. Let me just ask
Ms. McCarthy, what are some of the tools you have? Let me go
quicker than this. Is one tool the consent order?
Ms. McCarthy. Yes.
Mr. Shimkus. How quickly can it--can a consent order be
activated?
Ms. McCarthy. A consent order is not just action by EPA,
but it also needs to go to the courts as well. So it is a more
lengthy process than an administrative order.
Mr. Shimkus. And how--the 2005 case that we are--how long
did that take?
Ms. McCarthy. The 2005 case I believe took 6 months for the
agency to do an administrative order----
Mr. Shimkus. So that is not really a timely response to fix
a problem.
Ms. McCarthy. It--that was a situation that had no advanced
warning. I don't want the committee to believe that that is----
Mr. Shimkus. Like an emergency.
Ms. McCarthy [continuing]. In place under the----
Mr. Shimkus. Like an emergency.
Ms. McCarthy. Say that again?
Mr. Shimkus. Like an emergency. That is when no advance----
Ms. McCarthy. Well it happened----
Mr. Shimkus. No advanced notice, that is why it is an
emergency situation.
Ms. McCarthy. That is exactly why under the----
Mr. Shimkus. That is why we can't wait 6 months.
Ms. McCarthy. We established----
Mr. Shimkus. Let me ask another question. An administrative
consent order, does it protect the company from citizen lawsuit
liability in all cases?
Ms. McCarthy. It does not.
Mr. Shimkus. Thank you. My time is expired. I will now like
to recognize my colleague, Mr. Scalise, for 5 minutes.
Mr. Scalise. Thank the gentleman from Illinois, the
chairman for yielding, and for raising these questions. I think
it is important as we look at the legislation at hand, and I am
strong supporter of both pieces of legislation. I think Mr.
Olson and Doyle and others brought a strong bipartisan bill to
address a serious problem that we have seen out there,
especially as it relates to emergencies. I think from testimony
today it shows that while these are isolated, that people that
produce power for our country are unfortunately posed with a
dilemma in the event of an emergency. And we are here for that
reason, and again, with a very strong bipartisan group of
cosponsors on the legislation, because I think there is the
recognition that if a company is placed in this decision, you
want them to be able to act based on what is best for
consumers, while not being concerned that if they follow the
order that they are given, they are going to be sued on the
other side just for complying with the order.
And so Ms. McCarthy, in your testimony--and this is
following up on Mr. Shimkus's comments--you say the EPA
believes that the Executive Branch already has sufficient tools
to address issues that may arise, and that was the reason you
gave for--one of the reasons you gave for the lack of need for
this legislation, but yet, you just admitted in your testimony
and your answer to Mr. Shimkus that the tools that you have,
even including a consent order, do not prevent some outside
lawsuit being brought forward. And so how can you say that the
legislation is not necessary and you have the tools when, in
fact, you don't maintain those tools to prevent outside
lawsuits that we are trying to prevent just because somebody
complied with an order?
Ms. McCarthy. We have issued administrative orders, last
year alone, 1,300. We are dealing with an instance here in
which we have a tool that is very reliable, a tool that is well
thought out----
Mr. Scalise. What tool are you talking about, consent
orders?
Ms. McCarthy. The administrative order. A consent order is
used very effectively as well, but the administrative order,
which is what is in question here, is for all practical
purposes a significant protection for both the generator
involved and a significant source of protection for the
community in terms of reducing pollution as the result of the
need to comply with reliability and address reliability
concerns.
Mr. Scalise. So the consent order, the ability for you to
issue those orders--and I will ask the question again. Does
that ability that you have, the tool that you have, prevent a
third party lawsuit from coming forward on the same issue?
Ms. McCarthy. I am sorry. You are using different terms. I
just want to make sure I am answering your question correctly.
A consent order does go to the court and does offer that
protection.
Mr. Scalise. How long does that take?
Ms. McCarthy. And administrative order does not directly,
but----
Mr. Scalise. A consent order--when you say consent order
provides that protection, does the consent order prevent a
third party lawsuit?
Ms. McCarthy. No.
Mr. Scalise. That is the question.
Ms. McCarthy. A consent decree does. An administrative
order, for practical purpose, does but it legally--there is a
risk of civil action. It has almost never happened and in
times----
Mr. Scalise. Well, we are talking about almost never, but
we are only talking about select emergencies, which is what
this bill is specifically dealing with. And so when you say
there is still that risk there, you know, on one hand you are
saying you have got the tools in your tool chest, but then
you----
Ms. McCarthy. It is impractical----
Mr. Scalise. But you just acknowledged that there still is
a risk. What we are trying to do is remove that risk. That is
what the bill is being brought forward to address, is to
address the risk that you are acknowledging exists.
Ms. McCarthy. I understand that. The only thing I think
that we are disagreeing with is whether or not this tool is--
the law is crafted effectively to address that issue while
still minimizing the extent that pollution will be emitted and
significantly protecting public health, which we believe the
current system actually does.
Mr. Shimkus. Well let me ask you this question, because
Commissioner Moeller earlier in his testimony said that all
four current FERC Commissioners support the concept behind this
legislation that we are discussing so that generators are not
in the position of having to choose whether to violate Section
202(c) of the Federal Power Act, or whether to violate
environmental regulations. So I guess how would you respond to
his testimony that all four Commissioners, including the
chairman, support this?
Ms. McCarthy. I would join----
Mr. Scalise. I think that this is actually solving a
problem.
Ms. McCarthy. I would join in the chorus that reliability
is essential to maintain, and that generators shouldn't be put
in a position of having to choose with compliance between two
orders. What I would suggest, however, is that they are not put
in that position now. They never have been, and I don't
anticipate that they will be as a result of any actions that--
--
Mr. Scalise. But you did acknowledge that there is that
risk that we are addressing--and I think it is the question, on
one had you are saying you support the concept behind it, maybe
you have some differences in how it is drafted, but then in
your testimony ``EPA believes that the Executive Branch already
has sufficient tools to address issues that may arise, yet
later as we were talking, you acknowledged that there are risks
still even with your tools. There are still risks.
Ms. McCarthy. If there is a legal risk in practical terms,
it has not happened.
Mr. Scalise. And we are just making sure that not only in
practical terms but in legal terms it doesn't happen by
removing the risk. By removing risk----
Ms. McCarthy. I understand.
Mr. Scalise [continuing]. You actually give everybody the
comfort that they can go and do what they need to provide power
without that risk.
Ms. McCarthy. I understand that. We just want to make sure
that the cure is commensurate with what you find----
Mr. Scalise. And that is why I think you have got a broad
bipartisan group of members that came together to make sure
that cures right.
One final question I want to ask you before my time
expires. Earlier in the year, Mr. Terry, I believe it was, on
our committee had asked Administrator Jackson who was before
our committee if EPA would start posting petitions on your Web
site so that we could see the petitions that are being brought
forward, and Administrator Jackson acknowledged that yes, she
would start posting and said it was easy to do, and yet still
to this day there are no postings. Can you tell us why, months
later, that still hasn't happened and do you have any kind of
timeframe of when we will start being able to get that public
information out in a transparent manner so that people can see
this on the Web site?
Ms. McCarthy. I will make sure that I take your concern
back, and we will respond to that right away.
Mr. Scalise. I appreciate that and I yield back the balance
of my time.
Mr. Shimkus. Gentleman yields back his time.
Mr. Walden. Mr. Chairman, just to follow up on.
Mr. Shimkus. Is there objection for 1 minute for Mr.
Walden? Without objection, so ordered. You are recognized for 1
minute.
Mr. Walden. Because I asked the same question of
Administrator Jackson, and she committed that she would do that
and make that change, and I have been busy on other matters,
and so I would share in what Mr. Scalise raised regarding Mr.
Terry, and would appreciate a response.
Ms. McCarthy. I will make sure I----
Mr. Walden. Because she indicated it wouldn't be a problem
and you would get right on it, so----
Ms. McCarthy. I will bring that back. Thank you.
Mr. Walden. Thank you.
Mr. Shimkus. I thank my colleague, and Chair now recognizes
my colleague from Kansas, Mr. Pompeo, for 5 minutes.
Mr. Pompeo. Thank you, Mr. Chairman. I have been waiting 16
months to say this.
I agree with Mr. Doyle. I read the objections Ms. Hoffman
and Ms. McCarthy have, and you are concerned that you will
create an incentive for power plants to sort of do nothing and
hope they will get an order. It doesn't hold much weight for
me, much concern, and I think the likelihood of that happening
is pretty low.
Are there any other concerns that you all have besides that
one that--I didn't read them, but are there concerns besides
that concern of a generator sort of gaining the systems and
hoping on hope that they get one of these orders to keep them
in the clear?
Ms. Hoffman. I don't have any other concerns. I think part
of the process is making sure that we work diligently through
the process in such that the Executive Order, the 202(c) order
is clear under the terms of reliability event is happening, and
how long and the duration of that event, as well as any
administrative order is clear on the terms and conditions under
which a power plant would operate.
Mr. Pompeo. I appreciate that. Thank you.
Ms. McCarthy, are there concerns other than that, that
risk?
Ms. McCarthy. The only other concern is that I believe it
is extremely important for EPA and the States to be engaged in
this decision and have a clear role to minimize pollution when
you are addressing a reliability problem.
Mr. Pompeo. All right, thank you. I appreciate that.
Let me try and get--I listened to the colloquy between, Ms.
McCarthy, you and Mr. Scalise. There have only been two, and we
are concerned that this might happen, this disconnect. I will
describe to you why I think folks are concerned about it, and
it has to do, I think, with the increased likelihood as these
regulations come into place that we see this issue arise more
and more. You and I back in February talked about Utility MACT
and whether suppliers had said yes, we can actually build this
darn thing that is compliant. I asked you if you had a
certification from suppliers that they could. I was hearing
they couldn't get these plants financed because no supplier
would come in and say we can actually do that in the real
world. At that point, you said you had no written guarantees
from suppliers. Have you received any since then, since the
time we spoke back in February, that they can build MATS and
Utility MACT compliant facilities?
Ms. McCarthy. We are actually looking at that issue, and as
you might guess, we have received petitions to look at that
issue, so we will be addressing it.
Mr. Pompeo. I appreciate that. I just want to talk about
one of the petitions that came from Institute of Clean Air
Companies, representing a lot of the folks who are going to be
tasked with actually doing this work. They are very, very
concerned that they can't build these plants, and this starts
to get to this reliability risk that I think now exists more
than it may have in the years that we talk about there being
very few of these 202(c) orders required.
Ms. McCarthy. I really appreciate the fact that this
concern has been raised about new facilities. I just want to
clarify that it is not a concern about the existing facilities
continuing to operate.
Mr. Pompeo. That is correct. Their petition relates to
particularly mercury measurement, the capacity to measure
mercury in an accurate and timely way.
Ms. McCarthy. We will definitely be taking a look at that.
Thank you.
Mr. Pompeo. Great, thank you.
With that, I yield back the balance of my time, Mr.
Chairman.
Mr. Shimkus. The gentleman yields back his time. The Chair
now recognizes the late-coming Mr. Gardner, who is trying to
get to his seat, for 5 minutes for questions.
Mr. Gardner. Thank you, Mr. Chairman. Thank you for
recognizing me, and thank you to the witnesses. I won't take
long with my questions this morning.
To Ms. McCarthy, thank you very much for being here.
Tristate is a wholesale electric power supplier in Colorado
that is owned by the 44 cooperatives generating, transmitting
electricity, and has come to my office many--multiple times
trying to talk about their compliance with EPA's Utility MACT
standards, and whether it would likely cost Tristate about $1
million. That is their estimate, that it would likely cost them
$1 billion. This is partly due to the fact that they will have
to install three FCRs which remove nitrogen oxide at the
Tristate Craig facility in Craig, Colorado, and so I would like
to ask you to confirm this because I know you don't have the
numbers in front of you, but I am asking you to comment on the
rural co-ops which are nonprofits and member-owned. And so the
first question is do you agree that some customers will see
increases in their rates due to some of the rules EPA is trying
to implement?
Ms. McCarthy. We actually have modeled some slight
increases in energy and they differ region to region.
Mr. Gardner. And so those rates would increase. How do you
propose the nonprofits comply with these rate increases, apart
from passing on these costs to the rate payers?
Ms. McCarthy. Mr. Gardner, I would indicate that our
analysis that we did with the Mercury and Air Toxics Standard
indicated that the energy prices would likely fall within the
range of what we have seen in 1990 and historic fluctuations.
We saw between 1 and 3 percent increases, which means about--
for an American family about $3 a month increase on their
electricity bill.
Mr. Gardner. And so that is just the only way they can do
that is to pass those increased costs onto their rate payers?
Ms. McCarthy. I have trouble answering that question
because I don't live in the energy world, but my understanding
is that compliance can be achieved by lower demand as well as
increased generation, fuel switching, and the number of
techniques.
Mr. Gardner. Thank you. Yield back my time.
Mr. Shimkus. Would the gentleman yield to me for just one
moment?
Mr. Gardner. Yes, I yield.
Mr. Shimkus. I think that is the point that we are trying
to drive home. You are right, Ms. McCarthy, you do not live in
the energy world, but then you make extrapolations on gigawatt
issues that are reliability concerns based upon a chart I saw.
DOE rolls over in acceptance of your electricity generation or
lack thereof analysis, and when you have the people in the
field who are disputing that analysis on the gigawatt issue, we
are debating with an environmental agency, not our Department
of Energy. And if the analysis was close to what industry,
financial people, FERC, EEI say, then we would cut some leeway,
but the administration's proposal--actually the environmental
rules and the effect on the electric grid of 10 gigawatts is
laughable. And so we--you can do all the analysis on emittance
you want, but we reject the premise that you all are experts in
electricity generation, cost of building plants, and developing
those.
You still have a couple minutes. This allows me to ask Mr.
Moeller--make a point. Congressman Griffith mentioned a lake
facility and property, of course, Vicky Hartzler would be happy
if I would mention Lake of the Ozarks and those issues of
those, which is commutable distance in my district, but you all
have been somewhat helpful in easing some of the concerns. I
think there are still some issues out there, and we would hope
that you would----
Mr. Dingell. Mr. Chairman.
Mr. Shimkus. Yes, sir.
Mr. Dingell. We have not addressed the question of whether
or not there are rights to judicial review of these different
questions, and if so, how they are applied. Could I ask just a
couple yes or no questions on this?
Mr. Shimkus. The time is my colleague from Colorado.
Mr. Dingell. Well, I don't want to intrude on his time.
Mr. Gardner. I would be happy to yield to the gentleman
from Michigan if the gentleman----
Mr. Shimkus. I am done.
Mr. Dingell. Well, you are all very kind and I thank you.
These are for Ms. Hoffman and DOE. Is an order under
Section 202(c) currently subject to judicial review, yes or no?
Ms. Hoffman. Yes.
Mr. Dingell. Yes. Can somebody file suit now to stop an
emergency order as being antithetical to the public interest
either for health safety or other reasons, yes or no?
Ms. Hoffman. They have to seek a rehearing.
Mr. Dingell. Now, would it still be subject to review if
the Olson bill were to be adopted?
Ms. Hoffman. Yes.
Mr. Dingell. Today there is a question whether DOE can
actually order a generator to violate a law administered by EPA
or another agency. If this bill were to be signed into law,
would this action put a thumb on the scale in the eyes of the
court that Congress intends Section 202(c) to trumpet
environmental laws? This goes to Ms. McCarthy.
Ms. McCarthy. My understanding is that it would give
essentially a pass on environmental laws with the exception of
OSHA.
Mr. Dingell. Is there in any statute or any regulation or
in any cooperative management between the sundry departments
down there a provision which requires consultation, or which
permits consultation between DOE, EPA, and/or the State
agencies which were participants in these matters as we went
through the case that we are discussing today?
Ms. McCarthy. I am sorry. I don't believe there is any
written requirement for that----
Mr. Dingell. OK.
Ms. McCarthy [continuing]. But because environmental laws
have not been preempted for compliance purposes, that DOE
consultation always includes EPA to ensure that we are not
conflicting the generators who have to comply with 202(c).
Mr. Dingell. Now does EPA--do both of the agencies, EPA and
DOE have to consult, or may they consult, or may they not
consult? What is the law on that?
Ms. McCarthy. We have to consult to the benefit of the
generator to ensure that we are providing them a clear
pathway----
Mr. Dingell. Is that required by both agencies or not?
Ms. Hoffman. It is not required. The law does not have any
statement, the existing law or----
Mr. Dingell. Now if they do not consult or if they do
consult, is that appealable by any party or other person not a
party.
Ms. Hoffman. No.
Mr. Dingell. No. Mr. Chairman, I thank you for your
courtesy and I thank my colleague. Thank you very much.
Mr. Shimkus. We thank the chairman emeritus. I think your
questions are very helpful. We would like to now again thank
the first panel for your time and your due diligence in
answering our questions.
We would like now to ask the second panel to join us. OK,
we are almost getting there. If we could ask folks to take
their seats and get the door in the rear closed. We want to
thank the second panel. Obviously we have two groups, the first
three on reliability, the second from the hydro issue. Many of
you are well-experienced at congressional hearings and
testimony. Your full statement will be submitted for the
record. You will have 5 minutes and I will recognize you left
to right, and then--recognize you left to right, and we can
begin.
First I would like to recognize the Honorable Betty Ann
Kane, chairman of the D.C. Public Service Commission. Again,
your full statement is in the record. You have 5 minutes.
Welcome.
STATEMENTS OF BETTY ANN KANE, CHAIRMAN, PUBLIC SERVICE
COMMISSION, DISTRICT OF COLUMBIA; DEBRA L. RAGGIO, VICE
PRESIDENT FOR GOVERNMENT AND REGULATORY AFFAIRS AND ASSISTANT
GENERAL COUNSEL, GENON ENERGY, INC.; STEPHEN BRICK, CONSULTANT,
ON BEHALF OF THE ENVIRONMENTAL INTEGRITY PROJECT; ANDREW MUNRO,
DIRECTOR, CUSTOMER SERVICE DIVISION, GRANT COUNTY (WASHINGTON)
PUBLIC UTILITY DISTRICT, ON BEHALF OF THE NATIONAL HYDROPOWER
ASSOCIATION; KURT JOHNSON, PRINCIPAL, TELLURIDE ENERGY, ON
BEHALF OF THE COLORADO SMALL HYDRO ASSOCIATION; AND MATTHEW
RICE, DIRECTOR, COLORADO CONSERVATION, AMERICAN RIVERS
STATEMENT OF BETTY ANN KANE
Ms. Kane. Thank you very much, Mr. Chairman, and members of
the committee. I am very pleased to have the opportunity to be
here this morning to discuss our comments on the Resolving
Environmental and Grid Reliability Conflicts Act of 2012.
As we understand it, the intention of the bill is to more
clearly define the situations in which emergency orders may be
issued under the Federal Power Act, and to limit the liability
of electric generators when obeying such an order. This bill
speaks directly to a very difficult and challenging experience
of the D.C. Public Service Commission in its efforts to ensure
electric reliability service in the Nation's capital. We
believe that--I will speak of the experience and describe how
enactment of the bill could prevent such situations in the
future, and hopefully could lead to a more timely resolution of
these kinds of conflicts.
My attorney is always happy to say that nothing that I say
in my testimony or in answering questions has any relationship
to any open case currently before the D.C. Commission.
The D.C. Commission is an independent agency of the
government of the District of Columbia. It was actually first
established by Congress in 1913. We are coming up on
celebrating our centennial next year, and reaffirms the Home
Rule Charter Agency under the District's Self-Government Act.
It is a quasi-judicial regulatory agency, and like our fellow
Public Utility Commissions in the other 50 States, our
statutory responsibility is to ensure the provision of safe,
affordable, and adequate natural gas, electricity and
telecommunications services. Specifically in relation to this
legislation, we have a responsibility under district law and
through our oversight of the Potomac Electric Power Company to
ensure that the Nation's capital has an adequate supply of
electricity at all times.
In the summer of 2005, a situation arose, which has been
alluded to. At that time, we were served--the city was served
by three must-run power plants, none of which were actually
owned by Pepco. We are a restructured state. One of these--all
three of them are must-run units. One of these plants, which at
the time was owned by the Mirant Company, an independent power
provider, the Potomac River Generating Station, on August 22,
2005, issued a press release, suddenly announcing it was going
to shut down the plant in just 2 days. This plant is located in
the City of Alexandria, just across the river from the
District. It doesn't supply electricity to anyone in Virginia.
It is connected to the District's power grid through several
transmission lines that run under the river. We understand that
Mirant announced its shutdown of the plant in response to
emissions abatement concerns which had been raised by the
Virginia Department of Environmental Quality, acting under the
Federal Clean Air Act, and Mirant said that it could not
satisfy the Department's concerns at any level of output.
Apparently it had tried some reductions previously.
The D.C. Commission immediately responded to this announced
shutdown by filing an emergency petition on August 24, asking
the Federal Energy Regulatory Commission and the Department of
Energy to order the plant to continue to operate. The continued
operation was critical to ensuring that the downtown sectors of
the District, including the White House, the Capitol, and other
important Federal as well as District government agencies had
adequate access to electric supplies. This was in the summer.
The plant was shut down for 28 days. Finally, on September
21, 2005, the company voluntarily resumed operations at a
reduced level. I was not on the Commission at the time, but my
staff tells me that every day during the hot summer period at
the end of the summer that the plant was not operating, they
prayed for mild weather. The Federal agencies did not respond
for several more months. The Secretary of Energy issued an
order in December of 2005, which directed the continued
operation of the plant to ensure reasonable electricity
reliability, but also said that the company shall utilize
pollution control equipment and measures that maximize--to the
maximum extent possible reduce the magnitude and duration of
any exceedance of the air quality standards. The Federal Energy
Regulatory Commission issued its order in January, 2006, and
that directed Pepco and RTO PJM to come up with an immediate
plan, as well as a long-term plan for transmission to ensure
electric reliability in the District. And finally, EPA issued
its administrative compliance order on June 1, 2006, about 10
months after the initial shutdown.
There were some extensions of the DOE order so that
transmission could be--capacity could be installed. The
Commission itself issued an order ordering building of new
transmission lines. But during the time that the lines were
being built and the DOE order was still in effect, the plant
was operating in order to supply electricity when needed, and
during that time the plant was fined $52,000 while it was--by
EPA while it was--excuse me, by Virginia while it was operating
under the DOE order.
We believe that the resolving legislation would relieve
must-run generators from having to pay such fines while they
are operating under an emergency order from another agency
under Section 202(c) of the Power Act, and we--therefore, we
support the legislation. We also hope that the bill could be
useful in assuring that emergency orders could be obtained in
sufficient time to compel a generating plant to continue
operating. As I said, for the 28 days that we were without the
plant operating, electricity reliability was in peril, and it
was another 118 days from the first shutdown until we got the
DOE order, making them--ordering them to resume operation. Only
the voluntary decision of the plant's owner shortened the
period of heightened risk.
This was not a comfortable experience for the Commission,
and it should not be a comfortable experience for the
Commission. No State agency wants to be in a position to have
to go to a Federal agency and ask them to do something that is
going to cause a company to violate what another Federal agency
ordered them to do, or what another State has ordered them to
do. And we believe that the legislation can help resolve that
conflict while supporting the obligation of State utility
commissions to carry out their responsibility for the
reliability and safety of electric transmission, distribution,
and supply systems under their jurisdiction.
Thank you, and I would be happy to answer any questions.
[The prepared statement of Ms. Kane follows:]
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Mr. Shimkus. Thank you. I would now like to recognize Ms.
Debra Raggio, Vice President, Government and Regulatory
Affairs, and Assistant General Counsel for GenOn Energy,
Incorporated. Welcome. You are recognized for 5 minutes.
STATEMENT OF DEBRA L. RAGGIO
Ms. Raggio. Good morning, Chairman and members of the
subcommittee. I appreciate the opportunity to testify in
support of H.R. 4273, the Resolving Environmental and Grid
Reliability Conflicts Act of 2012, which I would call a good
government and truly bipartisan piece of legislation. I thank
Congressmen Olson and Doyle for working together in such a
bipartisan fashion, along with Congressmen Green, Gonzalez,
Sullivan, Terry, and Barton, who are also cosponsors on this
subcommittee.
To begin with, I would like to share four observations on
the legislation.
First, there currently is a conflict of law, and
notwithstanding Ms. McCarthy's statement, a generator can be
ordered to run by the Department of Energy, and if the
generator has no choice but to violate an environmental limit
in following the order, the company can be subject to fines, as
well as lawsuit liability. The situation is fundamentally
unfair, and it also creates potential reliability issues during
an emergency.
Second, this is not a one company issue. I am testifying
for GenOn because we have experienced this conflict firsthand,
but it could happen to any generator. Accordingly, the
legislation is widely supported by various participants in the
industry. These groups and companies don't always agree on all
issues. It includes APPA, NRECA, EPSA, EEI, and companies like
Exelon, NRG, Alliant Energy, Ameren, We Energies, as well as
GenOn. This is quite a diverse group of companies. In addition,
as you heard, all four FERC Commissions and Secretary of Energy
Chu have recognized the need to remedy the conflict.
Third, the legislation is not anti-environmental or anti-
EPA. I believe it does not impact compliance with any recent
EPA regulations, or provide an avenue for a generator to shirk
its responsibilities. Environmental compliance is paramount,
but reliability during an emergency is paramount as well, and
that reliability could be threatened by a company questioning
whether to follow the DOE order and run during an emergency, or
not run and comply with its environmental limits. Under this
legislation, a company is only protected if it has no choice
but to violate an environmental limit when it runs as directed
by the Department of Energy for an emergency. There is no
environmental hall pass here. Rather, if a company runs as
ordered by DOE during an emergency, it will just not be sued or
fined for an unavoidable environmental violation.
Fourth, the legislation is not intended as a criticism of
EPA or DOE. Both agencies have to manage their own statutory
mandates. It is simply a fact that those mandates may conflict
during a reliability emergency. This wasn't an intent that they
conflict, but they do. Therefore, a statutory fix is needed,
otherwise a company is stuck in the middle of the two
conflicting mandates.
Today, Section 202(c) of the Federal Power Act gives DOE
the authority to require a generator to operate only in the
event of a true emergency as needed to meet and serve the
public interest. Twice, Mirant Corporation, a predecessor
company to GenOn, was required to run for reliability, and both
times we had no choice but to violate the environmental limit
to keep the lights on. In both situations, we were subject to
fines or citizen lawsuit liability. Any generator, coal, gas,
or otherwise, could face this situation. For example, a company
could be ordered by DOE to run for cyber security reasons, or a
dual fuel gas plant could be ordered to run on oil because gas
is unavailable. The company may have no choice but to exceed an
environmental limit in order to comply with the order. There
needs to be clear government directive to run in the event of a
true emergency. In such event, the government should want a
company to salute and operate as directed by DOE to keep the
lights on. A company should not be running to court for an
answer during an emergency. The emergency could require a very
quick response, and a court may not be able to act in time.
This conflict needs to be decided by the legislature, not by a
court, especially during an emergency.
The legislation gives no additional authority to DOE. They
have the authority currently. Nor does it take authority away
from EPA, which does not have jurisdiction under the Federal
Power Act. It merely prevents a company from being fined or
sued for complying with a Federal order.
Thank you very much for the opportunity to speak with you
about this issue, and I am very pleased to answer any questions
you might have.
[The prepared statement of Ms. Raggio follows:]
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Mr. Shimkus. Thank you for saving us some time and yielding
back.
The Chair now recognizes Mr. Stephen Brick. He is a
consultant on behalf of the Environmental Integrity Project.
Sir, you are welcome. Your written statement is in the record,
and you are recognized for 5 minutes.
STATEMENT OF STEPHEN BRICK
Mr. Brick. Thank you, Mr. Chairman, and good morning. My
name is Steve Brick, and I appear today on behalf of the
Washington-based Environmental Integrity Project, a nonprofit--
I am sorry--a nonprofit organization advocating for more
effective enforcement of environmental law. I am an independent
consultant, having worked for more than 30 years on various
energy and environmental policies. During that time, I have
represented public utility commissions, State and Federal
environmental agencies, a wide range of nonprofit groups, and
various private industries. I appreciate the opportunity to
address the subcommittee.
I have two concerns with the proposed legislation. First, I
think it is unnecessary. U.S. DOE emergency orders have been
issued only rarely, and we expect this to continue in the
future. Existing systems and regulations can and are being
adapted to address grid reliability environment conflicts.
Second, the legislation grants an environmental hall pass
anytime DOE issues an emergency order. Environmental
regulators, either U.S. EPA or its designee, would be cut out
of the process. Environmental controls of all sorts could be
turned off during emergency situations with impunity. In
addition, the emergency order could become an avenue for
exempting older fossil plants from making required upgrades.
This would result in unacceptable environmental degradation,
and would potentially distort power markets.
The problem that the legislation purports to fix is not
unfolding in an emergency fashion. Power sector and its
regulators are dealing with the intersection of three factors.
First, significant levels of pending fossil plant retirements;
second, new Federal air regulations affecting the electric
power sector; and third, a need to maintain the reliability of
the Nation's electric transmission system. None of these
factors is a surprise.
The Nation's power plant fleet is aging, and as new, more
efficient capacity has been built, it has become widely
understood that some older plants would retire. The Utility
Mercury and Air Toxics Standards finalized in December, 2011,
have been under consideration for over 2 decades, so the
electric power sector has had more than adequate time to
prepare. Transmission system reliability has been a utility
concern for many decades. Plant retirements and new
environmental regulations are already being considered within
established transmission planning processes.
The changes to the emergency provisions of the Federal
Power Act proposed in the bill are the wrong response to our
actual situation. We are not faced with an emergency, nor is it
in the public interest to resolve all potential conflicts in
emergency mode. Such a practice would unnecessarily tip the
balance away from environmental protection.
I firmly believe that there are legitimate concerns about
the reliability impacts of projected power plant retirements,
but these are already being addressed by regional transmission
organizations, power plant owners, economic and environmental
regulators, and the public. Environmental factors can be
incorporated into existing planning and regulatory processes in
an orderly fashion, ensuring that the health and resource
benefits of all environmental regulations are achieved while
maintaining grid reliability.
In the very rare instance of a DOE emergency order, two
things can be done to mitigate the environmental impact. First,
require that all existing environmental controls continue to
operate. This is needed to prevent environmental backsliding.
Second, condition emergency orders arising from retirement
deferrals using the following procedure. First, specify the
transmission situations under which the power plant will be
needed to protect reliability; second, determine the
environmental consequences of the projected operation; third,
assess options for completing transmission upgrades needed to
permit retirement; and fourth, limit waivers from environmental
regulations to those few hours of operation needed to address
reliability shortfalls identified in the analysis. Under this
approach, plant operation would be strictly limited to the
specific reliability conditions. Deferred retirements should be
limited to one 2-year period, giving time for transmission
owners to complete necessary upgrades or otherwise resolve the
emergency.
The operation of plants operating under a deferred
retirement scenario should be very low, generally less than 200
hours per year. This procedure allows continued operation of
power plants for a limited time under strict reliability
conditions to address genuine emergencies. It would not force
owners to invest in new pollution control equipment on old
plants that they intend to retire. The approach harmonizes
reliability and environmental concerns, and it does not require
new legislation to be put into effect.
Thank you very much for your time, and I am happy to answer
any questions you have.
[The prepared statement of Mr. Brick follows:]
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Mr. Shimkus. Thank you, Mr. Brick. Now I would like to
recognize Mr. Andrew Munro, Director, Consumer Service
Division, Grant County Public Utility District, on behalf of
the National Hydropower Association. Sir, you are welcome and
you are recognized for 5 minutes.
STATEMENT OF ANDREW MUNRO
Mr. Munro. Good morning, Chairman Whitfield and members of
the subcommittee. I am Andrew Munro, immediate past President
of the National Hydropower Association, NHA. Thank you for this
opportunity to share NHA's perspective on the Hydropower
Regulatory Efficiency Act of 2012.
We urge swift markup of the bill and support House passage
as soon as possible. We commend the bipartisan leadership shown
by the bill's cosponsors. In particular, I wish to thank
Congresswoman Cathy McMorris Rodgers, who is from my home
State, the other Washington.
My message today is simple. Hydropower is also part of the
solution. This message is for President Obama, for Congress,
and the American people. This bill supports sustainable
hydropower generation that will strengthen our economy,
environment, and also our renewable energy supplies. Think
about this one statistic. Of the 80,000 dams that currently
exist in the United States, just 3 percent are utilized to
generate renewable energy. Just 3 percent. The Hydropower
Regulatory Efficiency Act puts America on a path to tap this
available existing infrastructure and employ hundreds of
thousands of American workers.
With a current generation capacity of 100,000 megawatts,
hydropower, as you know, is America's largest renewable and
represents 7 to 8 percent of all U.S. generation. It also
supports a strong economy, employing 300,000 American workers.
NHA recently completed a supply chain snapshot that illustrates
2,000 U.S. companies working hydro across the United States.
One of the myths about U.S. hydropower is that there are no
new opportunities. In fact, the opposite is true. Hydro has a
lot more to offer. According to a Navigant study, 60,000
megawatts of new hydro capacity and 1.4 million cumulative jobs
could be created in the next 15 years. Now, these are domestic,
good-paying jobs in manufacturing, construction, engineering,
and operations. In fact, 75,000 megawatts of hydropower is
currently in the FERC queue.
Now, the U.S. hydropower industry is absolutely committed
to sustainable growth that is sustainable in every way. We
commend the Hydropower Regulatory Efficiency Act because it
employs common sense, balanced terms to support growth with our
existing infrastructure. According to the Department of Energy,
there is 12,000 megawatts of new hydro that could be developed
at existing non-powered dams. This would increase U.S. hydro
capacity by 15 percent. Let me repeat. Twelve thousand
megawatts without building another new dam. That is enough
energy to serve 4.5 million residential customers.
One more data point. Hydropower's attributes, being
renewable, reliable, and affordable, was the primary factor for
BMW SGL to build a new automotive carbon fibers plant in my
utility service territory in Grant County, Washington, with
initial investment of $100 million and 80 new local jobs. It
was reliable hydropower that was the primary reason for this
new manufacturing plant to be built in the United States, and
specifically in Grant County, Washington.
Now, NHA's ambitious goal to double sustainable hydropower
jobs is achievable, and it is necessary. Further, it aligns
with the Department of Energy's Wind and Water Program goal to
achieve 15 percent of the Nation's electricity using hydropower
by the year 2030.
This bill contains balanced and common sense provisions,
and supports a dynamic agenda that is supportive in a
bipartisan fashion. Now, I am just going to mention two
provisions here quickly. Section 6 requires FERC to investigate
a 2-year pilot licensing process for hydro at non-powered dams
and pumped storage--closed loop pumped storage projects. NHA
appreciates past efforts to improve the licensing process,
however, the timelines for this type of sustainable hydro is
not on par with, for instance, a gas plant, which is about a 2-
year process. We think this makes a great positive step forward
without--while still maintaining environmental standards and
performance.
We also see significant potential in the low impact small
hydro and conduit projects. Due to the lack of economies of
scale for these small projects, the licensing costs serve as a
financial disincentive. This bill makes another positive step
forward for these small low impact projects.
In closing, I wish to highlight the collaboration
demonstrated by two organizations appearing before you today,
American Rivers and the National Hydropower Association. For
the past several years, we have mutually and purposely called
upon our organizations to lead together in how we can help
support a sustainable energy future. We hope that this is just
the beginning of more collaborations to come, and we invite
Congress to join us in supporting this bill for swift passage.
Thank you.
[The prepared statement of Mr. Munro follows:]
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Mr. Olson [presiding]. Thank you, Mr. Munro. Our next guest
is Mr. Kurt Johnson. Kurt is the President of the Colorado
Small Hydro Association. Mr. Johnson, you have 5 minutes for an
opening statement, and please hit the little button there in
front of you, sir.
STATEMENT OF KURT JOHNSON
Mr. Johnson. Thank you, and I am a PowerPoint guy, so if
you could bear with me and look up at the screen. Thank you. I
would like to commend the leadership of Congresswomen McMorris
Rodgers and DeGette on this bipartisan common sense
legislation. It is a long overdue, cost effective, common sense
measure, and I am pleased that we are finally making it happen,
thanks to the leadership of these members of Congress and this
committee.
Hydropower is not a new idea. Pictured here, this is the
Ames Power Station. This is actually about 3 miles from my
house. It went online in 1891. Small hydro, typically it is
local, it is reliable, it is clean. It was a good idea 120
years ago. It is still a good idea. We can have a lot more of
it if we can get the regulatory reform that is being discussed
here today.
Small hydro is a job growth opportunity. In Colorado, we
have got hundreds of folks currently employed in the industry,
and we can get a lot more jobs in Colorado in small hydro if we
can get the right policies in place.
Small hydro is an economic development opportunity for
rural areas, probably for obvious reasons. Many hydro projects
are located in rural areas. You have a number of job creation
benefits initially when you build a project. I might work with
carpenters, plumbers, electricians, concrete pourers on project
construction. There is also ongoing financial benefit
associated, once a given project is in place. A rancher like
this might have an electricity bill that he has to pay to spin
a center pivot irrigation system. With a small hydro system,
that can cover that bill. For larger systems, once you have a
hydro plant in place, say at an existing dam, you will have an
ongoing revenue source that will lower costs to the water users
and create benefits in perpetuity.
Andrew talked about the 80,000 dams nationwide that
currently don't have hydro. In Colorado, various Federal and
State assessments have estimated that we got a couple thousand.
Pictured here are some examples of local projects that I happen
to be familiar with and have worked on, existing dams and
existing conduits that do not have hydro that are potential
economic opportunities to build hydro.
Towns have opportunities for generating hydro power. In the
mountains where I live, a typical municipality will have--next
slide, please. A typical municipality will have, you know, a
water line running a thousand feet up a hill, put various
pressure reduction valves to supply the municipal treatment
plant. In most cases--many cases, those can be retrofitted cost
effectively with small hydro if you didn't have burdensome
regulations impeding the development of these types of small
projects.
The current FERC process is basically broken for small
hydro permitting. I think the FERC staff has made a valiant
effort in recent years within the existing statutory and
regulatory framework; however, for particularly small projects
the system just plain does not make sense. You can have
situations where the cost of complying with FERC regulations
exceeds the cost of the hydro equipment itself. It just does
not make sense. We in Colorado in the past couple years had a
pilot program to seek to streamline FERC licensing or
permitting program. To date, we have got two projects that have
completed the system, another four that are currently before
FERC. We shouldn't have two, we should have 200 a year that are
being proved and built in Colorado. I think that experiment has
demonstrated that the system is still time consuming and
costly.
Basically the system is broken. This next slide shows a
picture of the table of contents for what you might expect for
typical conduit exemption application. You know, requiring this
level of detailed regulations for non-controversial small
projects on existing conduits does not make any sense. It is
stifling development. It has stifled development for decades in
the past, and it is continuing to do so today. There is
enormous costs there. You have projects not built, jobs not
created, rural incomes not increased, and harmful emissions not
avoided simply because of these burdensome regulations for,
again, non-controversial small projects. Building a project,
you have to run around and get lots of letters from various
agencies, which takes a lot of time. Well-intentioned, folks,
but nothing necessarily moves fast in government. Small hydro
is already pretty complicated for some of the reasons noted
here. It is unnecessary to have the kind of permitting
requirements added on top of what can already be a complex
project development.
The bill being talked about here today created what I
describe as Hydro 1040-EZ, which is a brilliant, brilliant,
brilliant idea. Again, this is long overdue. This enables
small, non-controversial projects to get out of the system
quickly and leave FERC's staff to focus on more important and
more controversial projects.
As discussed, the bill will expedite hydro development at
existing non-power dams nationwide. The bill also calls for
some new resources estimates completed by the Federal
Government. They are pictured here. I actually have a copy of a
report completed by--last year. These types of resource
assessment reports have led directly to new development and new
business for developers like myself. It is sort of the kernel
that starts the whole process. It is a really brilliant idea
that is included in this bill.
So in summary, I think again, long overdue, common sense,
bipartisan reform legislation. I thank the committee for their
work on this issue and would be happy to answer any questions.
[The prepared statement of Mr. Johnson follows:]
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Mr. Olson. Thank you, Mr. Johnson. Our last opening
statement is to be given by Mr. Matthew Rice. Mr. Rice is the
Colorado Director of American Rivers. You have got 5 minutes
for your opening statement, and hit the microphone. Thank you.
STATEMENT OF MATTHEW RICE
Mr. Rice. Thank you, Mr. Chairman, members of the
committee. Good morning, and thank you for inviting me to
testify. My name is Matt Rice, and I am the Colorado Director
for American Rivers. I am also a lifelong fly angler, kayaker,
and former fly fishing guide. I love rivers and consider myself
extremely lucky that my job is to protect them.
American Rivers is the Nation's leading voice for healthy
rivers and the communities that depend on them. We believe
rivers are vital to our health, safety, quality of life, and to
the economies that depend on them. American Rivers supports the
Hydropower Regulatory Efficiency Act. We have worked for years
trying to improve hydropower's environmental performance, and
we recognize that hydropower will be an important part of our
Nation's future energy mix, especially given the urgent need to
reduce the use of fossil fuels.
The key is getting hydropower right. Even small hydropower
can have a huge impact on river health and the future
generations that depend on those rivers. Poorly done hydropower
has cost species to go extinct and put others, including some
with extremely high commercial value, at great risk. However,
there is tremendous potential and growing interest in
developing incidental hydropower projects that add new
generation to existing dams and conduits. These projects cause
less environmental harm than new dam construction, and are the
focus of this bill.
After we opened our Colorado office last year, we started
working with the Colorado governor's energy office on a
streamlined permitting hydropower pilot program, the result of
a Memorandum of Understanding with the Federal Energy
Regulatory Commission. Our experience with this innovative
program offers some important lessons that are relevant to the
Hydropower Regulatory Efficiency Act.
First, giving the public an opportunity to review new
hydropower projects does more than protect natural resources.
It also offers developers certainty, giving them a clear idea
of controversy and viability before they make a big investment.
Second, existing regulations are flexible enough to
expediate permitting of good hydropower projects. A typical
FERC license can take up to 5 years to secure, but after 16
months of the Colorado program, FERC has issued two exemptions,
has four additional projects poised to receive final approval,
and one additional project pending submission. Only two
applicants had completed their project design upon enrollment,
and both of those applicants have already received exemptions.
The value of the program is even clear when viewed in
historical context. In 16 months, seven projects have been
approved or are near approval. Only 15 new projects had been
approved in Colorado over the past 20 years.
Third, the MOU pilot program demonstrated that applicants
are not always in the best position to judge whether or not
their project will be controversial. Out of 28 applications
submitted to the State, only 10 met the criteria for expediated
permitting, often because they were too--they were considered
too controversial. Those projects can still be permitted, but
they will require an additional level of scrutiny to ensure
that they are not causing harm. Public review and comment
works. The 45-day public review period outlined in Section 4(b)
and Section 4(c) of the Act is critically important, because it
provides a safeguard to protect against projects that are
disguised as conduits, such as an example in Aspen, Colorado,
that I cite in my written testimony. However, Section 4 also
provides developers with the certainty that truly non-
controversial projects can receive expediated review and move
forward quickly.
I am proud that the Hydropower Regulatory Efficiency Act is
the result of a spirit of collaboration, both among members
from both sides of the aisle, as well as the industry and
conservation groups.
Here is why I think the Hydropower Regulatory Efficiency
Act gets the balance right. First, the Act encourages
appropriate hydropower development, like adding turbines to
non-power dams, canals, pipes, or adding updated, more
efficient equipment to existing dams.
Second, the Act protects the public interest, providing the
45-day public review period I referenced earlier.
Finally, the Act will help improve the regulatory process
while avoiding the stale concept that regulations are the only
barriers that need to be removed. At American Rivers, we are
not fans of process for its own sake. Time is money for
environmental NGOs too. But make no mistake, it is because, not
in spite of, our regulatory system that hydropower has fewer
environmental impacts today than it did years ago. Getting to
these solutions takes careful study that can, in some cases,
still take longer than 2 years. These laws and regulations are
there for good reason and work well, but that doesn't mean they
can't be improved. Our experience with the Colorado program has
shown us that there are good projects that can get permitted in
2 years or less. We want good projects to get built faster, but
it is not good for rivers or the industry, frankly, if a bad
project gets fast tracked and causes real damage. We are
committed to continuing to work with the committee, the
industry, and others to achieve the twin goals of more capacity
and better environmental outcomes.
Thank you for the opportunity to testify before this
committee, and I look forward to your questions.
[The prepared statement of Mr. Rice follows:]
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Mr. Olson. Thank you, Mr. Rice, and now we will go to
member questions for 5 minutes. The first questions will be
asked by my colleague from Washington, Ms. McMorris Rodgers.
Mrs. McMorris Rodgers. Thank you, Mr. Chairman, and I
wanted to direct my questions to Mr. Munro, and thanks again
for making the trip from Washington State to be here. Great
testimony. I appreciate you highlighting the important role
that hydropower is playing in the Pacific Northwest.
I wanted to ask if you would just elaborate a little bit
more. You talked about BMW, but we have seen where hydropower
really has transformed the economy in Washington State. There
are other companies, high tech companies that are locating in
the Basin area because of low cost hydropower, reliable. And I
just wanted you to at least elaborate a little bit more on what
other job creation we have seen in recent years.
Mr. Munro. I would be happy to, and thank you. This BMW
plant is a great example highlighting how hydropower in itself,
because it is reliable, it is a base load, it is available. BMW
SGL when they were looking worldwide for their new automotive
carbon fiber, which is a lightweight strong plastic material
that is going to their new, all electric vehicle, they wanted a
life cycle emissions free resource. It was important for their
customers that they have that, and as they looked around the
world, the wind was not reliable enough. Hydropower was the
renewable that was reliable for them. So they have reiterated
to us that that was the very key reason that they ended up
locating in Grant County. It was, I think, between us and
Quebec, and they decided to go with Grant County in the United
States. It is an important local economic development
opportunity for a primarily agricultural-based rural populated
area. And then we also have Davis Centers, we have Microsoft,
Yahoo, that are locating in our service territory because of
that renewable and reliable electricity.
Mrs. McMorris Rodgers. Great. We often tell the positive
story of hydropower and how it transformed Washington State,
the whole Columbia Basin project in many ways, and you can even
point to Boeing locating Kaiser Aluminum. But it is exciting to
see these more recent companies that are expanding because of
what hydropower has to offer.
Now a little earlier we where hearing a little about the
administration's energy independence goals moving forward.
Would you just elaborate on the steps that we have taken in
recent years and how we got DOE, Department of Energy, to
actually commit to a goal of doubling hydropower by 2030? I was
disappointed that it wasn't listed or included in President
Obama's chart there, but would you just elaborate a little bit
more on what we have seen from Department of Energy recently?
Mr. Munro. Well we are disappointed as well. We have really
been talking to the administration about having hydropower as
part of the overall solution, and we have done our--as an
industry, we have taken the time to do our analytics to really
study what are the opportunities. It has been, I think, a
mindset that we are not going to build a new Hoover Dam. Well
that is true, but now what we have found is we have already
invested in a lot of infrastructure in the country. We have
dams that exist already we can modernize or existing
hydropower. There is small low-impact conduit power. So through
our jobs studies we have shown that we can expand, support job
creation in every State in the country, that also expands
renewable energy supplies. We are still trying to get that
through to the top levels of the administration. We are getting
support, though, at the lower levels at Department of Energy.
We are happy to see that, but we really need everybody to
understand and change their thinking about hydro, that we can
have both hydropower and fish.
Mrs. McMorris Rodgers. Yes. And to Mr. Munro and Mr.
Johnson, if you would just talk a little bit about how hydro
can--hydropower can contribute overall to grid security and
reliability, which is also on the forefront of Congress's mind.
Mr. Munro. And it is an important base load resource. I
think in terms of our energy security, it is absolutely
essential that if we can expand sustainable hydropower and
closed loop pump storage opportunities, we absolutely ought to
do that. Grant PD is an example. We are 100 percent renewable.
Most of that is hydro generation. We do have wind. We are also
integrating wind in Montana to keep a reliable system. But if
after conservation--if we were to develop a resource, it is a
combined cycle gas plant, which is fine. That is a base load
resource. If there are opportunities, though, where we can
develop hydropower, again, that is really the only renewable
that is base load that can also provide the same amount of
reliability that, say, a gas plant could.
Mr. Johnson. It is probably also worth pointing out that it
can be distributed in small, and so if you can have distributed
base load clean energy, that enhances grid reliability so that,
you know, if you have one giant plant that goes down, you got a
problem. If you have a number of smaller also base load plants,
only one of them goes down, you have less of a problem.
Mrs. McMorris Rodgers. Thank you very much, Mr. Chairman. I
want to thank Mr. Rice with American Rivers for your testimony
and your support of the legislation too, and I yield back.
Mr. Olson. Thank you. The Chair recognizes my colleague,
Mr. Doyle, from Pennsylvania for 5 minutes of questions.
Mr. Doyle. Thank you, Mr. Chairman. Ms. Raggio, the
testimony on our first panel seemed to indicate that there are
conflicting stories about the 2005 202(c) order. Could you
clarify what violation--what the violation was that led to a
fine from Virginia DEQ, and how many hours GenOn was actually
in violation of environmental regulations, or Mirant?
Ms. Raggio. Yes, absolutely. There is some confusion, and I
can actually say that I am probably the only one on either
panel who lived through it. We ran in accordance with the DOE
order. The order took approximately 4 months to be issued. At
that time, it was very clear about environmental limits and
what we could do. After that, an administrative consent order
almost a year after we shut down was imposed, and the DOE order
adopted the administrative consent order. We ran under that.
Both of those orders had very clear procedural requirements we
had and protections we had to follow, and we followed them all.
Throughout the process, DEQ committed, as they did in their
comments to DOE, that they did not believe that DOE had the
authority and they would enforce against us. We had one, one 3-
hour NAAQS violation in 2007, and when we did, DEQ was true to
their word. They came in, they said you violated, and they
issued an NOV. They also said we did not follow certain
pollution control requirements in their allegations, but we
could not follow those requirements and still be in compliance
with the DOE order. But we were in compliance with the ACO, as
evidence that EPA did not enforce against us, nor did DOE. So
it was an after the fact view back as to what we had done. But
to say that we were not fined because we ran under the DOE
order is wrong. We would not have had the exceedance but for
the order.
Mr. Doyle. Thank you for the clarification.
Ms. Raggio. Certainly.
Mr. Doyle. Mr. Brick, first of all, I want to say that
there are many things in your testimony that I agree with, like
the fact that legitimate concerns about reliability impacts of
projected power plant retirements should be addressed by RTOs.
I agree with that.
I am just not sure I understand some of your concerns. You
tell us in your testimony ``that the problem this legislation
purports to fix is not unfolding in an emergency fashion.'' I
just want to be clear, I don't believe compliance time for EPA
regulations are creating an emergency, and certainly not one
that warrants a 202(c) order, but I do think it is foolish to
ignore the fact that we are asking for great changes from our
electric generating fleet, changes and upgrades that we need,
and that I support. The need for those changes, along with
lower fuel costs, has already spurred the retirement of over
100 coal-fired plants, and most of those retirements are in my
neck of the woods. We just have one tool of last resort for
power supply emergencies, and that is the Section 202 order. Do
you think that tool has ambiguities about which Federal law to
follow?
Mr. Brick. First of all, let me say I am not a lawyer so--
--
Mr. Doyle. Neither am I, sir.
Mr. Brick. You are asking me for a legal opinion when I am
not really qualified to give one, but I think it is clear from
the testimony that we have heard that there is some potential
conflict in the law.
Mr. Doyle. And so do you think--if that is the case, do you
think it is wise that we try to address and try to fix any
ambiguities in our law so the power suppliers know what to
expect when a 202 order is issued?
Mr. Brick. It isn't--and once again, I am offering you a
legal opinion when I don't really have the basis for doing
that. It isn't obvious to me that that can't be done perfectly
reasonably without making any statutory changes. The agencies
know how to talk to each other, and you know, if anything, it
seems to me that the single example that we have heard about
this morning--and again, I don't have all the facts on that so
I can't really talk authoritatively about it. That seems to me
to be kind of a bad example, and I would like to think that we
have learned from that bad example and we are not going to make
that mistake again going forward.
Mr. Doyle. Well, we have only had two instances in 34 years
and we are 0-2 when it comes from addressing the ambiguities,
and I think that is what has us concerned, that in the two
instances where we have asked generators to come online, there
was a citizen lawsuit in one case and a fine by Virginia DEQ in
the other. That is all we are trying to address, these
ambiguities in the law. I think, you know, between now and
markup time, if we hear any good suggestions how to make it
better, we will certainly incorporate them in the bill.
But I want to thank you for your testimony today, and Mr.
Chairman, I see that my time is expired.
Mr. Olson. I thank my colleague. The Chair yields himself 5
minutes for questions.
My questions are going to be for you, Ms. Raggio. First of
all, my colleagues should know that Ms. Raggio's employer,
GenOn, was formerly Mirant, which is the poster child of why we
are here today. I mean, because they are the ones who were
exposed to conflicting regulations putting reliability
compliance in direct conflict with environmental regulations,
forcing them to choose how to proceed and expose themselves to
legal liability.
I realize that these cases are rare. There have only been
two as my colleague from Pennsylvania mentioned. But with EPA's
regulations, this explosion of regulations, shutting down our
coal plants all across the country. We have got--we have pretty
good power--excessive power grids, but we have got a very slim
margin right now. Just one example from the real world, the
Cross State Air Pollution Rule, CSAPR. When EPA announced that
they were enacting that rule--in the rulemaking and they
included text in that almost immediately Luminant, the largest
coal producer in Texas, announced that they would shut down two
coal plants. Our State is the fastest growing State in the
country. We cannot lose power generators in Texas if we are
going to keep our people healthy.
And so Ms. Raggio, I would like to give you an opportunity
to respond to all the comments and concerns you have heard,
particularly from the prior panel. I mean, you were said to be
a repeat offender. I heard that from the EPA witness. Talk
about--they mention you might have some perverse incentives if
H.R. 4273 becomes law to exceed your permits and not upgrade
your facilities in hopes of having some sort of grid crisis
where you can, you know, have this done through 202(c). Do you
want to set the record straight?
Ms. Raggio. Well to the extent we have offended any law, we
did it on our own, except for these two situations we weren't
ordered to do so. And that is the problem. When a company makes
a mistake or acts improperly, it pays the fine and it is
enforced against. It is a completely different situation when
you are complying with a Federal order and then facing those
penalties and fines.
I find it confusing how a company could plan its long-term
compliance in hopes that DOE would come in and issue a 202(c)
order. I almost think that would require some kind of collusion
between Department of Energy and the company to circumvent a
requirement that gives you a pretty long lead time to comply.
It is also an extremely transparent process, compliance right
now. My company is deciding right now for 2015 and '16 whether
we are going to put on controls to comply, whether it is
economic and affordable to do so, or whether we are going to
shut down. It is difficult to see how someone could hide
beneath FERC and the ISOs, and the PSCs watching them, and then
pop up at the last minute and say we are here, we didn't put on
controls. DOE, save us.
I don't see that as really credible, although I assume
anything is possible.
Mr. Olson. Thank you for those answers. If you know that
crystal ball, please let me know because we have got the second
leg of the Triple Crown coming up, and I am not a horse guy,
but--I got a couple questions for you, Chairwoman Kane, and
thank you for coming here today. I want to go back to 2005 when
the DOE ordered Mirant, the Potomac River Generating Station,
to go on the status of must run plant, to operate to protect
the electricity supply to Washington, D.C. The generator, at
the time being Mirant, complied with the order and was later
fined by the Virginia Department of Environmental Quality for a
3-hour NAAQS violation. You mentioned in your testimony that
everyone was praying for mild weather. Walk me through what
could have happened if a blackout occurred in Washington, D.C.
Government buildings being shut down, you mentioned the White
House, hospitals losing their power, with all these tourists
here staying in hotels, maybe needing some sort of medical
care. Tell me what happened if Mirant hadn't complied and done
what they were supposed to do and keep the power up and
running.
Ms. Kane. It would have created a very, very difficult
situation. We depended on that plant for peaking in the hot
summer months, and the DOE itself had said in its order that
there would have been a blackout, had one of the other lines
been down and the plant not been able to operate. And so that
is why--DOE also obviously looked at it as a temporary
situation. I want to address that, too. It was an emergency we
did not take lightly, going to a Federal agency and asking them
to order a company to run, asking them to essentially oppose
the actions of a State. And the Virginia Department of
Environmental Quality continued to oppose the petitions and the
actions all the way through. But we knew how serious the
situation would have been, particularly in the summer, and we
then also in response to that acted very quickly ourselves to
order the building of additional lines, 269 KB lines and then
239 KB lines so that the plant in the future if there was a
problem could be bypassed. But that took--even by waiving--we
waived the 6-month filing period, the notice period, we did
expedited proceeding. It still took almost 18 months to get all
of those--almost 2 years, rather to get the new big lines in
place, which was because there were conduits under the river.
They could happen more quickly, but it was a very scary
situation, and we know how people react in Washington where
there is a power outage just from a thunderstorm, and you can
imagine if the whole downtown area, the whole central D.C.
area, there was no power available.
Mr. Olson. Thank you, ma'am. I am out of time, but I think
you would say that violating a 3-hour air quality standard may
have averted a greater crisis here in our Nation's capital. I
am out of time. I yield to the Ranking Member of the full
committee, Mr. Waxman from California.
Mr. Waxman. Thank you very much for yielding to me.
Ms. Raggio, I want to be sure that I understand the
concerns that supporters of the Olson bill are trying to
address. Your concern is the rare instance where compliance
with a 202(c) order will require a company to violate an
environmental requirement, is that correct?
Ms. Raggio. That is correct.
Mr. Waxman. So when operating under a 202(c) order, should
a plant be allowed to run without limit, or should it only be
allowed to run when needed to address the reliability problem?
Ms. Raggio. No, as set forth in the draft legislation, it
should only be allowed to run during times necessary to meet
the emergency, and be consistent with any environmental law or
regulations and endeavor to minimize adverse environmental
impacts.
Mr. Waxman. Well, the bill seems to encourage limiting the
time of operation to the time of the emergency need, but it is
not mandatory. Do you think it ought to be mandatory?
Ms. Raggio. It should be whatever you want the agency to be
doing.
Mr. Waxman. OK.
Ms. Raggio. I think the mandatoriness should be upon the
agency in its order, and then the company should have to comply
with the order.
Mr. Waxman. Should a plant continue to run its existing
pollution control equipment during the emergency operation?
Ms. Raggio. Absolutely, if you can do both.
Mr. Waxman. But the bill doesn't require this either. I am
concerned that the language in this bill is far broader than
the issue you say you want to address.
Let me take an example. A plant is operating under a 202(c)
order generates coal ash that it places in an impoundment. The
impoundment bursts, as it did in Kingston, Tennessee. The spill
blankets nearby communities, pollutes miles of streams and
rivers, and costs over $1 billion to clean up. Under the
language of this bill, the actions of operating the plant and
disposing of the waste as required by the order ``result in''
noncompliance with multiple environmental laws. Thus, a company
should be shielded from any liability for the damage.
Ms. Raggio, that is not your intent here, is it?
Ms. Raggio. Absolutely not, and I actually think that
omission would not be considered necessary to comply with the
DOE order, so it would not be protected, but that is just my
opinion.
Mr. Waxman. I fear the sweeping language of the bill
provides that any action necessary to comply with the order
that results in an environmental violation shall not be
subject--not subject to party's liability, so I am concerned
about that language.
Mr. Brick, what are your views on this bill? Is it narrowly
tailored? Does it preserve any formal role for the
environmental regulators? Is it necessary and sensible?
Mr. Brick. As I said at the beginning, I don't think the
bill is necessary. I think that existing processes can and are
being used right now to harmonize environmental concerns with
reliability concerns. I think that as drafted, it is too broad
and I do think, although I completely agree with what I have
heard from most people that it is nobody's intent, really, to
use it as a hall pass, plain language of the bill really does
seem to be a hall pass. And in that case, you can conjure any
kind of interruption or--of in-plant environmental equipment
that might be deemed necessary somehow during the emergency,
and I think it would be easy to change the language to restrict
it to more reasonable set. Particularly because--and I mean,
this is something that hasn't been said in this hearing. We
design these plants and their pollution control equipment to
operate under all circumstances, and so I really do, again,
without going into all the details on the Potomac case, I
really think that represents an exception, and a rare exception
as opposed to something that is commonplace in the industry.
Mr. Waxman. Would it be safe to say that you don't think
the legislation is necessary, but if we are going to have
legislation, it needs to be more carefully tailored?
Mr. Brick. Yes.
Mr. Waxman. And is it also your view that we need to
preserve a formal role for environmental regulators?
Mr. Brick. Yes.
Mr. Waxman. And in that way, the bill would balance out the
concerns you think are already--could be met under existing
law, but would it do any harm if we narrowed it down in that
way?
Mr. Brick. If it were narrowed in the way that you
described, I don't think it would do any harm necessarily.
Mr. Waxman. I understand the concern that is motivating the
supporters of this bill, but the bill languages goes way beyond
what I think is necessary to address that narrow concern, so I
agree with your views.
I yield back, Mr. Chairman. Thank you.
Mr. Olson. And I thank the Ranking Member of the full
committee. The Chair now recognizes the gentleman from West
Virginia, Mr. McKinley.
Mr. McKinley. Thank you, Mr. Chairman.
I was curious, Mr. Brick, when I saw you on the panel. You
were with the Environmental Integrity Project, and back in
August of 2010, you all issued a document called ``In Harm's
Way: Lack of Federal Coal Ash Regulation Endangers Americans
and Their Environment''. Were you involved in that study and
developing that report?
Mr. Brick. No, sir, I am a consultant to EIP and I work for
them on electric reliability issues.
Mr. McKinley. OK. I was curious to learn a little bit more
of the perspective, because it is--the integrity--when you talk
about the Environmental Integrity Project, when you read the
report and see how it has been rebuked by other entities, it
lessens the credibility of EIP. I was hoping that you may
have--be able to illuminate us, educate us a little bit about
how they could be so wrong in their findings. But you are
saying you have no awareness of it whatsoever?
Mr. Brick. I haven't even read the report.
Mr. McKinley. But if you--I mean, wouldn't you question if
in the report there were things that--in a report of a group
that you represent lacked technical data, unfounded and
misleading comments not technically possible, statement is
unsubstantiated, referenced contaminate levels are incorrect,
errors, statement is inappropriate and misleading,
unsubstantiated. Wouldn't that tend to make you uncomfortable
with EIP's ability to testify on any matter, especially on the
one on which they wrote a report?
Mr. Brick. Sir, all I can say is that I haven't had
anything to do with that particular report, and all I can tell
you is that on transmission reliability issues, which I take
very seriously, I think I bring the highest level of technical
expertise and credibility to EIP. I can't really make any
comment on projects that I haven't been involved in.
Mr. McKinley. But again, I guess my point was that if you
had responses like that, wouldn't you question the integrity of
a report that had that kind of rebuff by other environmental
groups, specifically the Pennsylvania Department--if you heard
an environmental group making those kind of claims, wouldn't
you question whether or not EIP has legitimate issue, if you
read that as--are you an engineer?
Mr. Brick. No, sir, I am an environmental scientist.
Mr. McKinley. OK. No sense harming you any further. I think
you are representing a group that has lost some integrity in
what they have represented, so----
Mr. Brick. I am sorry you think so----
Mr. McKinley. I look forward----
Mr. Brick [continuing]. And I am sorry I can't be more
responsive.
Mr. McKinley. Maybe you will have someone else from the
group come that can answer this, because we are not getting
good answers. I was looking forward to chatting with you a
little bit about your attack on industry and what it is doing
to fly ash around this country. It is unsubstantiated based on
incorrect, incorrect tracks. So I apologize if it is just you
because you are not the one to do, but we are waiting for the
right person to walk through those doors.
Mr. Brick. I will send the message along.
Mr. McKinley. Thank you very much, and I will yield back my
time.
Mr. Olson. Thank the gentleman from West Virginia. Chair
now recognizes for 5 minutes the gentleman from Maryland, Mr.
Sarbanes.
Mr. Sarbanes. Thank you, Mr. Chairman.
Ms. Raggio, in the first panel that we had here, Ms. Capps
had asked Ms. Hoffman and Ms. McCarthy if they could describe
or tell us the list of laws that would be covered by the
liability under the bill, this broad waiver that is in the
bill, and they were not able to do that. I wonder if you have a
sense or if you could describe some of the Federal, State,
local environmental laws and regs that would be--would have
liability waiver with respect to that.
Ms. Raggio. I can't really speak to all the panoply of laws
that are out there facing our power plants. I know there are
many. Water, air, solid waste. The issue is really to be broad
so that an emergency might impact any of those laws, and a
company might be ordered by DOE to take an action that would
violate any of those laws. And if you have no choice but to
comply, you shouldn't be fined or hit down or sued. That is the
intent. So the broadness was--I believe the intent was to go to
covering all of the potential things that could happen in an
emergency that none of us can imagine, because it is an
emergency and it shouldn't happen.
But the key is that you can only be protected if taking
that action was absolutely necessary to comply with the order,
so if you are out there dumping things in the river and it
wasn't required by the order, there is no protection.
Mr. Sarbanes. Of course, the flip side of it being that
broad and applying to all laws is that there are many out there
that you wouldn't think would need to be waived under the
circumstances that one can imagine, and so you get into this
situation where if the bill were interpreted where some of us
might have concerns, it might be that, in fact, the Federal
Government is getting into the business of saying to a State or
locality, you know, we don't know what the particular
regulation or law that you may have on the books is, but
whatever it is, it is going to be waived, which is a fairly
heavy-handed way to proceed here. And I think that is one of
the dangers that we have some concerns about.
Do you know how many different environmental requirements
have ever actually posed a conflict with a 202(c) order?
Ms. Raggio. I only know it being invoked twice for
generation. Our company was impacted both times. It was imposed
during 2001 for the California energy crisis. We complied,
thinking the DOE order was still in place. It had expired by
the summer of 2001, which to me is curious because we were all
still in the height of the emergency.
Mr. Sarbanes. And was the sort of category of regulation
that was in conflict there?
Ms. Raggio. Air.
Mr. Sarbanes. Air, OK.
Ms. Raggio. It was air both times.
Mr. Sarbanes. So we have not seen it with respect to, you
know, endangered species, drinking water, waste disposal, so we
don't have evidence of that kind of conflict having been
presented----
Ms. Raggio. Not yet.
Mr. Sarbanes [continuing]. To this stage.
Ms. Raggio. Not yet, no.
Mr. Sarbanes. Well, I guess I share Chairman Waxman's, I
guess, anxiety that this might be overbroad, and I also have a
sense that if the EPA, for example, is in a position to issue
an administrative order in these emergency circumstances that
is very tailored to the situation at hand, that they are in a
position to kind of limit what the liability protection would
apply to.
And so I think we can perhaps refine this going forward. I
would like to get your views on that.
Ms. Raggio. I just note that the administrative order would
not protect us from citizen lawsuit liability, so even if we
worked it out with EPA, we could have an environmental group
out there that doesn't care and will sue us.
Mr. Sarbanes. Mr. Brick, do you have an opinion on that?
Mr. Brick. If you are asking me do I have an opinion on
whether or not an administrative order would still leave them
open to some fines----
Mr. Sarbanes. Well, it is more do you have an opinion on
whether balance can be struck? And your view is that frankly,
the status quo allows for that now, but whether this balance
can be struck between, you know, our expectations on the
environmental side and providing some kind of protection here.
Mr. Brick. Yes. I think in answer to that, yes, I think a
balance can be struck and I think the way you strike the
balance is--because again, I think these things unfold--even in
the emergency situation, it takes 100 days to develop an order.
You know the likely environmental organizations to involve in a
conversation, get them involved in a conversation and then I
think you diminish the chances that you are going to have
subsequent legal action.
Mr. Sarbanes. Thank you.
Mr. Olson. The gentleman yields back. The Chair now
recognizes the gentleman from the Commonwealth of Virginia, Mr.
Griffith, for 5 minutes of questioning.
Mr. Griffith. So Mr. Brick, what do you do when the
organizations are involved and one of them, not the Federal
Government, but the State government says yes, we don't agree?
Mr. Brick. I think that any case where there is delegated
authority to the State, it is going to be the State air quality
agency that should be involved in the conversation about what
is going to happen during this reliability conversation.
Mr. Griffith. OK, and here is where it gets really
interesting for Ms. Raggio's company. As I understand it,
Virginia didn't get that power. We just had the plant. So why
would Virginia, which has its power delegated from the Feds,
want to help out the District of Columbia and maybe Maryland, I
don't know, but help out the District of Columbia when they
feel like they may get in trouble? Because here is what I see
might have happened, all right? Now I don't know, I didn't
study this issue at the time, and maybe I should have because I
was vice chairman of the Joint Commission of Administrative
Rules and Regulations of the Commonwealth of Virginia at that
time, as well as being the Majority Leader of the Virginia
House of Delegates.
But here is what I suspect, because we ran across this in
some other situations where DEQ felt like if they didn't
strictly enforce the rules, EPA would come in and take either
their power away or their money away. Now, if you are sitting
there and you are not sure what is going to happen either now
or in the future, and you are DEQ and you are like you have
been trained repeatedly by the EPA, you do what we tell you to
do, you follow these rules or we are going to either take the
power away or we are going to take your money away from your
State, and you don't want to have to answer to people like me
as to why suddenly we lost money and why didn't you follow the
rules? What do you do when you are this lady trying to do what
she is supposed to do to help out, under the order, the
District of Columbia? That is the reason why this bill is
important, because that lady didn't have any choice in her
mind--or her company, I know it wasn't your decision--but her
company didn't feel like it had any choice, notwithstanding the
fact that they were told in advance DEQ is not going to go in
that direction. And how do you make all that work? I mean,
people--we have heard the testimony today that people think it
is not necessary because everybody worked together, but they
didn't work together. In at least 50 percent of the cases that
have happened in the last 30 years, they didn't work together,
and in enforcing EPA regulations, the DEQ was authorized and
supposed to enforce, the company who provided power to make
sure that D.C. didn't go down the tubes for a period of time
gets fined.
Now let me tell you something. Here is my problem, and I
think Ms. Raggio would agree with me. That is a sense where
every common person in this country--they might say we don't
want the pollution, we don't want this, we don't want that, but
everybody is going to look at that situation and say that is
not just, and part of our jobs as members of Congress--and we
fail at this a lot. I have only been here 2 years. I am trying
to straighten it out. But we are supposed to set up rules that
if you are a citizen of this United States, whether you are a
human being or a corporation, if you follow the rules that are
coming down, you don't get punished. You may not agree with the
rules, you may come here and lobby to change those rules, but
if you are following the rules, you don't get punished. And we
have a situation where without the language like this bill has,
somebody was following one set of rules and got punished.
And so my concern is, how do we solve that, Ms. Raggio--and
I apologize Mr. Brick, but you opened it up there right t the
end. Ms. Raggio, do you see it any different? Is there anything
I haven't covered as to what happened in this situation, and--
we have got about a minute. Did you all sense that DEQ was
doing this on their own, or because they had it drilled into
their minds that they had to enforce these rules or else the
EPA might take their authority away from them somewhere down
the road?
Ms. Raggio. I sat through the working together process.
When this first started, we had EPA, DOE, Virginia DEQ, and
Mirant in the room. EPA said before the ACO that they would
enforce against us if we violated a NAAQS. I turned to DOE and
said well then I can't run under your order because they are
going to enforce against me, and then DOE said well then we
will put you in jail.
Mr. Griffith. OK, so it is better to face a fine than jail
time.
Ms. Raggio. I guess. I thought well----
Mr. Griffith. I used to represent criminal defendants. It
is better.
Ms. Raggio. We are all from the same government here. So
the Federal Government worked it out and DEQ continued
throughout the process saying they did not believe that DOE had
the authority to order us to run in violation of their limit.
It was a legal issue for them. They filed very clearly in
response to the DOE order. I don't know what their intent was.
I don't know if they felt threatened by EPA. I can't testify to
that, but I can say they were true to their word throughout the
whole process.
Mr. Griffith. And of course, Virginia citizens didn't want
the pollution, and of course, they weren't the ones that were
going to have the blackout. So that created another dilemma
that should have been at the Federal level resolved, and this
bill would help take care of that problem, wouldn't it? Yes or
no?
Ms. Raggio. Yes.
Mr. Griffith. I yield back my time. Thank you, Mr.
Chairman.
Mr. Olson. The gentleman yields back, and seeing no members
seeking recognition, we are at the end here. So the Chair wants
to thank the witnesses so heartily for coming here and giving
us your time, your expertise. We greatly appreciate it, you
giving us this opportunity to ask questions of you. For all the
members, the record will stay open for 10 days for statements,
and without objection, this hearing is adjourned.
[Whereupon, at 12:29 p.m., the subcommittee was adjourned.]
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