[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:]
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    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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