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



 
THE AMERICAN ENERGY INITIATIVE, PART 25: EPA'S PROPOSED GREENHOUSE GAS 
  NEW SOURCE PERFORMANCE STANDARDS FOR UTILITIES AND THE IMPACT THIS 
                      REGULATION WILL HAVE ON JOBS 

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

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 16, 2012

                               __________

                           Serial No. 112-165


      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...........................................     4
Hon. H. Morgan Griffith, a Representative in Congress from the 
  Commonwealth of Virginia, opening statement....................     6
Hon. David P. Roe, a Representative in Congress from the State of 
  Tennessee, opening statement...................................     7

                               Witnesses

Thomas F. Farrell II,Chairman, President and Chief Executive 
  Officer, Dominion Resources, Inc...............................     9
    Prepared statement...........................................    12
Paul H. Vining, President, Alpha Natural Resources, Inc..........    21
    Prepared statement...........................................    23
John N. Voyles, Jr., Vice President, Transmission and Generation 
  Services, LG&E and KU Energy, LLC..............................    34
    Prepared statement...........................................    37
Donna Kessinger, Mechanic Electrician, Cliffs Natural Resources, 
  UMWA Local 1713................................................    44
    Prepared statement...........................................    46
Daniel E. Nation, Division President, Parkdale Mills.............    57
    Prepared statement...........................................    60
Joe Gary Street, Vice President, Sales, West River Conveyors & 
  Machinery Co. on Behalf of Buchanan County Chamber of Commerce.    66
    Prepared statement...........................................    68
Scott E. Weyandt, Director, Sustainability & Compliance, 
  Shearer's Food, Inc............................................    71
    Prepared statement...........................................    73


THE AMERICAN ENERGY INITIATIVE, PART 25: EPA'S PROPOSED GREENHOUSE GAS 
  NEW SOURCE PERFORMANCE STANDARDS FOR UTILITIES AND THE IMPACT THIS 
                      REGULATION WILL HAVE ON JOBS

                              ----------                              


                         MONDAY, JULY 16, 2012

                  House of Representatives,
                  Committee on Energy and Commerce,
                          Subcommittee on Energy and Power,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:00 a.m., in 
the Southwest Virginia Higher Education Center, One Partnership 
Circle, Abingdon, Virginia, Hon. Ed Whitfield (chairman of the 
subcommittee) presiding.
    Members present: Representatives Whitfield and Griffith.
    Also present: Representative Roe.
    Staff present: Allison Busbee, Legislative Clerk; Cory 
Hicks, Policy Coordinator; Mary Neumayr, Senior Energy Counsel; 
Jean Woodrow, IT Director; Alison Cassady, Democratic Senior 
Professional Staff Member.

  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. We said we would start at 9:00 and it is 9:00 
right now.
    I want to thank all of you for taking time from your busy 
schedules to join us this morning on what we consider a very 
important topic. We have a distinguished group of witnesses 
today. We actually will have two panels and I will introduce 
them, I will introduce the first panel right after I make my 
opening statement.
    I also want to thank the Southwest Virginia Higher 
Education Center here in Abingdon for providing this forum for 
the hearing this morning, and I am delighted that your 
Congressman, Morgan Griffith, is here with us today and is 
actually responsible for us having the hearing here in 
Abingdon. I want to thank him for his efforts on that. And of 
course, Phil Roe is with us, who is a Congressman from 
Tennessee, and we appreciate very much his interest in this 
important topic and being with us this morning as well.
    I will tell you that in Washington, DC, we have had a 
series of hearings. In fact, today is the 25th hearing that we 
have held on the subject matter of energy and its importance in 
our economy today. And in those hearings, we focused on a lot 
of different aspects. We have looked at the impact of 
government regulations, we have looked at the impact that those 
regulations have on the competitiveness of American businessmen 
and women competing in a global marketplace. We have looked at 
the impact on prices of fuel, which always plays a vital role 
in our ability to compete in today's global marketplace.
    And this morning, we are going to be focused primarily on 
the new greenhouse gas regulation being issued by EPA relating 
to new utility plants. Now I can tell you that when the Clean 
Air Act was adopted--and the last time we revisited the Clean 
Air Act was about 1990, in the Congress. But there have been 
about three separate occasions in the United States Congress 
where the issue came up of whether or not the Environmental 
Protection Agency, through the Clean Air Act, should attempt to 
regulate greenhouse gas emissions. And every time that issue 
came up, the Congress specifically said no, that the Clean Air 
Act was not the appropriate way to regulate greenhouse gases.
    And yet, as you know, many environmentalists use the court 
systems to end up making decisions because a lot of lawsuits 
are filed under the Clean Air Act. And the Clean Air Act, as it 
is written, if a party files a lawsuit, then the government 
ends up paying their legal fees for them through the judgment 
through the Department of Treasury, Secretary of the Treasury's 
Office. So a lawsuit was filed and it went all the way to the 
United States Supreme Court and the Supreme Court ruled that 
greenhouse gases are a pollutant.
    Now, if you read the definition of a pollutant in the Clean 
Air Act, you will see that it is rather broad and rather vague 
and so it would be easy for a court to make a decision that 
that or any other gas would be a pollutant. So they made the 
decision and then they issued something called the tailoring 
rule, because when they made the decision that they were going 
to regulate greenhouse gases, they realized that if they 
regulated across the economy of the United States, that they 
would not have enough manpower to enforce this Act because it 
would apply to small businesses, it would apply to farmers, it 
would apply to all sorts of businesses and even non-profits, 
because of the emission standards that they set. And because of 
that, they realized that we are going to have to narrow this 
down, which really was in violation of the Clean Air Act 
itself, and we are going to apply this only to the biggest 
utility companies.
    Now, we have a distinguished group of witnesses today that 
are going to get into more detail than I can right now. But 
when I read their testimony--these are all distinguished 
businessmen and women and we have some coal miners with us 
today too, and when you read their testimony, it is rather 
sobering, the impact that these regulations are having on 
thousands of men and women who live in coal-producing areas. 
Jobs are being lost. And interestingly enough, when the 
Environmental Protection Agency issues a regulation, they 
always talk about the number of hospitalizations they are going 
to stop, the number of premature deaths that they are going to 
stop, the cost benefits of their new regulations. But you know 
what, they never ever look at the cost to the communities where 
the jobs are being lost.
    [Applause.]
    Mr. Whitfield. And they never look at the cost for the 
families who lose their health care because they lost their 
job. And so it is sort of a double standard.
    And today at this hearing, we are going to get into all of 
this. I might also say, I am really not aware of any other 
administration that when the President of that administration 
was running for office, and this President when he was in San 
Francisco campaigning made the comment that--I am paraphrasing 
a little bit, but he basically said our policies are going to 
bankrupt the coal industry. And that is precisely what they are 
doing.
    [Applause.]
    [The prepared statement of Mr. Whifield follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Now at this time, I would like to introduce 
your Congressman, who is doing a great job in Washington, DC. 
We are very fortunate to have him on the Energy and Commerce 
Committee and the Energy and Power Subcommittee, and that is 
Morgan Griffith.
    [Applause.]

OPENING STATEMENT OF HON. H. MORGAN GRIFFITH, A REPRESENTATIVE 
         IN CONGRESS FROM THE COMMONWEALTH OF VIRGINIA

    Mr. Griffith. Thank you, Mr. Chairman. If I might first 
recognize--if I miss any other State legislators, please let me 
know--but I see Joe Johnson sitting in the front, the dean of 
the southwest Virginia delegation. Joe, thank you for being 
with us.
    [Applause.]
    Mr. Griffith. I do want to begin by thanking the House 
Energy and Commerce Subcommittee on Energy and Power for 
holding this important hearing in southwest Virginia.
    Under your leadership, Chairman Whitfield, our subcommittee 
has led the way in fighting burdensome and unreasonable 
regulations that are hurting the American economy and hurting 
American jobs. Chairman Whitfield, thank you so much for coming 
to southwest Virginia so that we might spotlight what is at 
stake for this region and many other regions throughout the 
country if these misguided regulations go unchallenged.
    This hearing is a great opportunity to put important 
testimony on the official record. People in our region 
understand the importance of coal. Simply put, coal powers 
America. According to the U.S. Energy Administration, coal 
generates 45 percent of the electricity in the United States 
and a much higher percentage in our area. We have the largest 
recoverable reserves of coal in the world. Based on current 
consumption levels, the United States has enough coal to last 
us more than 200 years. The National Mining Association 
estimates that coal accounts for about 94 percent of the 
Nation's fossil energy reserves.
    Make no mistake, the EPA does have a coal on war--a war on 
coal. They have rolled out an alphabet soup of rules and 
regulations designed to put coal out of business in the United 
States. In the last few years alone, the EPA has given us the 
Utility MACT Rule, Boiler MACT Rule, Cross State Air Pollution 
Rule, Best Available Control Technology for Greenhouse Gases, 
New Source Performance Standards for Greenhouse Gases, National 
Ambient Air Quality Standards, Section 316(b) Cooling Water 
Intake Structures, Coal Combustion Residuals and Regional Haze 
Plans, just to name a few. In Washington-speak, these 
intertwined, insurmountable rules are called the EPA train 
wreck, and the American economy is what is being run over. I 
would point you to this chart behind me. Those are a series, if 
you look starting in 2010, going forward, those are a series of 
the new regulations, just a few of which I just mentioned.
    Sadly, we should not be surprised.In January 2008, then-
Senator Barack Obama told the San Francisco Chronicle, ``So if 
somebody wants to build a coal power plant, they can. It is 
just that we will bankrupt them because they're going to charge 
a huge sum for all that greenhouse gas that's being emitted.'' 
He further went on in that interview to say, ``I'm capping 
greenhouse gases, coal power plants, you know, natural gas, you 
name it, whatever the plants were, whatever the industry was, 
they would have to retrofit their operations. That will cost 
money. They will pass that money on to consumers.'' They will 
pass that money on to consumers. You know who that is? That is 
you and me, that is every hard-working middle-class American in 
the United States of America, and the President knows that his 
policies are passing those costs on to the people of America 
and apparently does not care.
    This field hearing is focused on just one of the many 
regulations I just mentioned, the New Source Performance 
Standards, or NSPS, which the EPA proposed on March 27 of this 
year. The NSPS proposal would essentially prevent any new coal-
fired power plant from being constructed. Why? Because the 
carbon dioxide limits dictated by the NSPS cannot be met, even 
by the most technologically advanced coal-fired generation 
facility in the country today. Furthermore, the technology is 
simply unavailable for any new plant to be able to meet the EPA 
standards. The EPA is mandating something that does not exist.
    If these EPA regulations are allowed to proceed, the impact 
on direct coal jobs and indirect coal jobs will be devastating. 
Already this year, three coal companies have announced layoffs 
in our region--Consol, Alpha Natural Resources and Southern 
Coal Corporation. Sadly, these layoffs are unlikely to be the 
last under current regulations.
    Those in other industries will not be immune from the EPA's 
wrath. ACCCE, the American Coalition for Clean Coal 
Electricity, estimates that retail electricity prices will 
increase somewhere between 10 and 19 percent in our region due 
to new EPA rules. Seven percent of the entire U.S. coal fleet, 
or 24,000 megawatts of coal units, will retire by 2015 due 
solely or in part to EPA regulations. Higher electricity prices 
means more expensive products that are less competitive, which 
leads to fewer products being sold, ultimately leading to fewer 
jobs and a lower standard of living. Higher electricity prices 
are another hidden tax--another hidden tax--on the middle-
income earners of the United States of America that takes more 
income away from other necessities. The people hurt the worst 
are the people who can afford the least--the middle-income 
worker in the United States. There is much at stake.
    I want to thank all of our witnesses for taking their time 
to be here today. I look forward to their testimony, and Mr. 
Chairman, I yield back.
    [Applause.]
    Mr. Whitfield. Thank you very much.
    And at this time, I will recognize for 5 minutes the 
gentleman from Tennessee, Mr. Roe, for an opening statement.

  OPENING STATEMENT OF HON. DAVID P. ROE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mr. Roe. I thank the chairman for yielding.
    I do not have a prepared statement. I just want to talk to 
you. I am your next-door neighbor down here from Johnson City, 
Tennessee and I find it a real privilege, and I thank the 
chairman and Morgan for inviting me here today.
    In my previous life, I was a doctor in Johnson City and the 
Mayor of Johnson City. And I can tell you as a mayor and a 
local official, and certainly Representative Johnson, the dean 
here, can tell you, in dealing with the mandates from on high 
inside the 395 beltway, became almost a full time job when you 
looked at ozone, stormwater runoff and just a myriad of things 
that we had to deal with on a local level.
    I want to speak to the miners in here. I grew up in a union 
household. My dad worked with the United Rubber Workers, he 
made shoe heels in a factory. In 1973, when I was in Korea in 
the Army, just a little south of the DMZ, he lost his job to 
Mexico. I know what it is to have your job exported to Mexico 
or offshore. And in this country right now, there is a war on 
jobs, there is a bulls eye on the coal industry and jobs in 
southwest Virginia and West Virginia and Wyoming and Colorado 
and the other mining areas of this country. And to me, it is 
unforgivable. We have one of the greatest resources in the 
world, and right down the road here, 30 minutes from here, 
Eastman Chemical Corporation uses 60 carloads of coal every day 
that you all produce, and a railroad takes to them. There are 
not just jobs in the coal industry, there are jobs in the rail 
industry, in the car dealerships. What I do not think this 
administration understands is it is just not coal mining. The 
coal miners here and the other people buy cars, they coach 
Little League teams, they do all of those things. It is your 
community, and your community is being assaulted right now. We 
are here to see if we can stop this assault.
    It is ridiculous when you bring on a standard that is not 
attainable by any technology in the world. That means that 
Secretary Chu specifically, in the Energy Department, has lined 
you up to take the coal industry out. Six weeks ago, I was in 
China on a trip and viewing things there. They are opening one 
new coal-fired power plant every week. And let me tell you, if 
we do not have inexpensive energy in this country, we cannot 
compete. We have an opportunity now in this country to be 
energy independent in the next 8 years, it is unbelievable, if 
we had a coherent energy policy in this country; and we do not.
    Let me tell you why it is very personal to me. I was a 
young Army Captain just south of the DMZ in Korea in 1973 when 
we had an oil embargo. The oil was cut off from the Middle 
East, and guess what happened, we only got heat 3 hours a day 
because we needed the fuel to keep our tanks running, our Cobra 
helicopters up and serviceable, our Hueys running, and our 
equipment running. It is not only jobs, it is national 
security, that is what we are talking about.
    And we need to use an all-of-the-above approach, everything 
we have. Coal is a very important part of it, along with 
natural gas and along with conservation and all those things. 
But this particular administration has picked winners and 
losers instead of using the resources that we have. And what we 
need in Washington, DC, is some good old southwest Virginia 
common sense, is what we need in Washington, DC.
    [Applause.]
    Mr. Roe. Morgan, when you put this chart up, I thought that 
was the healthcare bill for a minute. It looks exactly the 
same.
    [Laughter.]
    Mr. Roe. I have studied it a little more than I have that, 
but it looks exactly the same to me, all the little boxes and 
things going to it with a bunch of bureaucrats.
    I know Morgan, it is only his first term, it is only my 
second term, and Ed has been here awhile. We look to Ed as a 
leader for us because it is very frustrating to me to be in a 
place that--I have got to tell you, there is something wrong 
with the oxygen blend inside 395, I can tell you, the beltway 
around Washington.
    A young woman came to my office not long ago, Donna 
Kessinger, who is going to speak in just a minute, she is a 
miner, and made a very big impression on me, and I asked that 
she be on this panel. And Morgan, thank you for having her, 
because she tells a story like no one else can about taking 
care of your family. That is what this is about, and about 
jobs.
    Mr. Chairman, and Morgan, thank you very much and I know we 
have a distinguished panel. I am excited to hear what they have 
to say.
    [Applause.]
    Mr. Whitfield. Thank you very much, Dr. Roe.
    Now I would like to introduce our first panel because you 
know all of us are affected one way or the other by these 
regulations, whether it is price increases, whether it is loss 
of a job, or whatever. But the witnesses that are going to be 
testifying this morning, they deal with this every single day 
trying to comply with these regulations and so we are fortunate 
to have these witnesses today and I would like to introduce 
them at this time.
    The first one is Mr. Tom Farrell, who is Chairman, 
President and CEO of Dominion Resources, and we appreciate you 
being here. The second one is Mr. Paul Vining, who is President 
of Alpha Natural Resources. The third is John Voyles, Jr., who 
is Vice President, Transmission/Generation, Louisville Gas & 
Electric and Kentucky Utility Energy Company. And as Phil said, 
the third--I mean the fourth--is Donna Kessinger, who is a 
mechanic electrician at Cliffs Natural Resources and a member 
of United Mine Workers, Local 1713, and she works in the mine.
    So at this time, I would like to start with Mr. Farrell and 
we will recognize Mr. Farrell for 5 minutes for his opening 
statement.

  STATEMENTS OF THOMAS F. FARRELL II, CHAIRMAN, PRESIDENT AND 
  CHIEF EXECUTIVE OFFICER, DOMINION RESOURCES, INC.; PAUL H. 
   VINING, PRESIDENT, ALPHA NATURAL RESOURCES, INC.; JOHN N. 
   VOYLES, JR., VICE PRESIDENT, TRANSMISSION AND GENERATION 
 SERVICES, LG&E AND KU ENERGY, LLC; DONNA KESSINGER, MECHANIC 
    ELECTRICIAN, CLIFFS NATURAL RESOURCES, UMWA LOCAL 1713.

               STATEMENT OF THOMAS F. FARRELL II

    Mr. Farrell. Good morning, Mr. Chairman, Congressman 
Griffith and Congressman Roe; thank you for the opportunity to 
join you today.
    My comments summarize Dominion's views on the Environmental 
Protection Agency's proposed performance standards for 
greenhouse gas emissions for new coal and natural gas power 
stations. It is our view that the rule needs to be revised in 
four fundamental areas.
    First, EPA should set different standards for combined 
cycle gas and advanced coal stations.
    Second, the standard for new coal-fired plants should be at 
least 2,000 pounds of carbon dioxide per megawatt-hour.
    Third, EPA must reaffirm that existing facilities 
installing pollution control equipment will not be regulated as 
``new'' units.
    Fourth, the standard for combined cycle gas facilities 
should be no lower than 1100 pounds of carbon dioxide per 
megawatt-hour.
    It is important that this rule for new generating 
facilities also gives cause for concern about the direction the 
agency may take on expected regulation of greenhouse gas 
emission limits for existing facilities.
    The utility industry is transitioning to newer, lower-
emitting advanced coal and natural gas power stations. 
Renewable energy sources, demand side management programs, 
smart grid technologies are playing a growing role in meeting 
energy demand. The foundation of America's electric generating 
fleet, however, continues to rely on baseload power supplied by 
coal, nuclear, hydro and natural gas.
    Our concern is that for all new fossil fuel generating 
stations, EPA proposes a single emissions limit for greenhouse 
gases of 1,000 pounds per megawatt-hour. This limit can be met 
by one fuel source only--natural gas--using one type of 
generation technology only--combined cycle.
    In the history of implementing the Clean Air Act, the 
Environmental Protection Agency has never set a single standard 
for all power plants. As a result, the proposed standard would 
eliminate new coal-fired generation, restrict the use of a 
major baseload fuel, and result in an undesirable national 
policy of abandoning coal.
    This outcome, however, is not mandated by the Clean Air Act 
and it can be avoided. The law allows EPA to set separate 
standards for each fuel type. The law allows a separate 
standard based on the best emission reduction technology for 
each fuel type. The law allows EPA to set a standard based on 
actual emissions data instead of vendor specifications. 
Dominion, along with many others, has urged the agency to 
exercise this discretion and make these modifications to the 
rule.
    A single standard is not only unwarranted, it threatens 
fuel diversity, which is critical for providing reliable, 
affordable electricity. If we remove coal from our energy 
future, we will undermine our supply base and ultimately 
consumers may be more exposed to unpredictable fuel prices. EPA 
states that the rule does not foreclose the possibility of new 
coal, as long as they are built with carbon capture and storage 
technologies that are installed on the plant by its 11th year 
of operation. There is no demonstrated commercially available 
carbon capture and storage technology available today.
    A report issued last month by the Congressional Budget 
Office confirms our view that there remain legal, regulatory, 
and technical obstacles to deploying CCS on a utility scale. 
CBO found that, ``Integrating CCS technology into the 
production of electricity generation at coal-fired power plants 
appears to be more demanding technically than, for example, the 
use of CCS in the production of natural gas.'' The report 
concludes that without increased funding or other incentives to 
encourage investments, Federal support for CCS will have little 
impact on technology deployment or reducing the cost of 
electricity from CCS-equipped coal plants. Achieving widespread 
deployment depends on a comprehensive Federal strategy that 
includes sustainable funding and a resolution of permitting and 
liability issues.
    Simply put, performance standards from EPA will not succeed 
at forcing the adoption of CCS technologies. EPA should abandon 
that approach and set a specific standard for new advanced 
coal-fired plants of at least 2,000 pounds of C02 per megawatt-
hour.
    It is also important to understand that the impact of the 
proposed rule extends beyond just new plants. It has the 
potential to create significant uncertainty about the future of 
existing plants. Today, the industry, our industry, is planning 
to invest billions of dollars by 2015 or 2016 to retrofit 
hundreds of facilities to comply with the new pollution rules. 
EPA must make clear that upgrading these facilities will not 
change the regulatory status from existing sources to new 
sources. Requiring these plants to meet the new gas combined 
cycle standard would in all likelihood leave only one 
compliance option--closure of the plant.
    Last week our company, Dominion, began full commercial 
operation of our Virginia City Hybrid Energy Station, a new 
nearly 600-megawatt advanced coal station in Wise County, about 
30 miles to our northwest. This $1.8 billion project employed 
nearly 2,000 people at the height of construction. It will 
generate more than $440 million annually in tax and other 
revenues for Wise County and employ more than 100 people. The 
station has been outfitted with all available pollution control 
equipment to achieve major reductions in sulfur dioxide, 
nitrogen oxides, particulate matter, and mercury. Our testing 
of mercury emissions indicates removal rates well in excess of 
the 90 percent required by the Mercury and Air Toxic Standard 
Rule. Any future greenhouse gas standard for existing plants 
must ensure that plants like this will be able to continue to 
operate.
    We know that the next step for EPA is to propose greenhouse 
gas standards for existing facilities. It has said only that it 
will do so ``at the appropriate time.'' I expect this will 
happen either by EPA's own decision or forced through 
litigation. Most importantly, the new source proposal must not 
be the model for existing or modified source standards.
    Mr. Chairman, this concludes my remarks this morning. I 
have submitted a more detailed written statement that I ask to 
be included in the hearing record. And I will be happy to 
answer any questions that you may have.
    Mr. Whitfield. Well, thanks very much, Mr. Farrell, we 
appreciate that.
    [Applause.]
    [The prepared statement of Mr. Farrell follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. And our second witness this morning, as I 
said earlier, is Paul Vining, President of Alpha Resources, and 
you are recognized for 5 minutes, Mr. Vining.

                  STATEMENT OF PAUL H. VINING

    Mr Vining. Thank you. Good morning to everybody. Thank you, 
Chairman Whitfield, and members of the subcommittee for the 
opportunity to testify today on an issue of vital importance to 
the survival of our coal industry. I ask that my full written 
testimony be placed into the committee record.
    As this committee is all too familiar, these are tough 
times in coal country. Alpha employers alone have reduced our 
workforce by over 750 hard-working men and women in recent 
months, and many of our industry peers have made similar 
workforce reductions. Mines are being idled, jobs are being 
lost, and as a result, many Appalachian communities are facing 
a reduced tax base upon which to serve their citizens.
    Unfortunately, the current administration, and particularly 
the United States Environmental Protection Agency, continues to 
significantly and artificially influence our domestic 
electricity market through regulatory actions that hinder both 
the production and the use of America's abundant coal 
resources. I have heard some members of this committee and the 
broader Congress refer to these regulatory actions as the war 
on coal.
    While there is no question that our industry is being 
detrimentally impacted, what we are experiencing is a war on 
affordable electricity, a significant building block of 
American prosperity. And it will be American consumers, small 
businesses, and an already struggling domestic manufacturing 
sector that will pay the price for years ahead.
    On March 27, the EPA released yet another proposal that 
will directly impact what fuel sources are allowable for use by 
our domestic utility sector. Commonly referred to as the New 
Source Performance Standard for Greenhouse Gases, the proposal 
sets output base limits on carbon dioxide from new fossil-fuel 
fired power plants of 1,000 pounds of C02 per megawatt-hour. 
This is a standard the EPA estimates could be met without any 
difficulty by approximately 95 percent of the natural gas 
combined cycle units built since 2005, as well as all new 
natural gas combined cycle units. In contrast, new conventional 
coal-fired generating units would be capable of meeting this 
new standard only by employing the use of highly expensive 
carbon capture and storage technology.
    Interestingly and importantly, simple cycle or peaker 
natural gas units, which typically are used as baseload power 
to support renewable energy facilities and which generally have 
a significantly higher C02 emissions rate than their combined 
cycle counterparts, are exempted from the proposed rule.
    In its Regulatory Impact Analysis, the EPA states that this 
proposed rule demonstrates to other countries that the United 
States is taking action to limit greenhouse gases from its 
largest emission sources. However, the agency also states that 
``the proposed standard will result in negligible C02 emission 
changes, energy impacts, quantified benefits, costs, and 
economic impacts by 2020.'' For the sake of clarity, let me 
state it again, the EPA's own analysis assumes that this 
proposal will neither reduce domestic C02 emission levels, nor 
impact the economy in any way. So what is the purpose of this 
standard?
    EPA asserts that this proposed rule will ``contribute to 
downward pressure on CCS costs by shifting the regulatory 
landscape towards CCS.''
    By statute, a new NSPS is required to reflect application 
of the best system of emission reduction that has been 
adequately demonstrated, taking into account costs, 
environmental impacts, and energy requirements. As a technology 
still in its infancy, CCS has not be adequately demonstrated, 
nor used in any widespread fashion.
    Until full commercial deployment is realized, power 
companies are extremely unlikely to spend $2 billion or more 
for a new coal-fired power plant whose Federal regulatory 
compliance depends entirely on the effectiveness of an unproven 
technology. Put more simply, the proposed standard will not 
contribute to downward pressure on CCS costs, but instead will 
all but stall that investment.
    After justifying the rule as consistent with the 
President's goal of reducing greenhouse gases, but then 
admitting that the proposal will fail to accomplish any such 
reduction, EPA fails to rationally and reasonably explain the 
net effect of the proposal to effectively prohibit the 
construction of new coal-fired electric generation capacity in 
the U.S.
    In setting this proposed NSPS for greenhouse gases, the EPA 
decided to break from all past agency practice by establishing 
new fuel-neutral standards instead of one that recognizes the 
difference between fuel types. EPA attempts to justify this 
departure as warranted in light of both the emissions benefits 
and the changed economic circumstances, notably the lower 
prices of natural gas due to technological development and 
recent discoveries that have boosted recoverable reserves. In 
other words, EPA believes that historic price volatility aside, 
the availability and low current market price of natural gas 
justifies the elimination from America's fuel mix.
    In conclusion, this greenhouse gas NSPS fails to adhere to 
the statutory limitation of adequately demonstrated emissions 
control system, acknowledges its failure to reduce global C02 
emissions, and unabashedly admits its preference toward natural 
gas over coal as a domestic fuel source. I would respectfully 
assert that now is simply not the time to handicap our own 
economic health for no discernible environmental gain, while 
our international competitors continue to strive for 
prosperity.
    Thank you for the opportunity to testify.
    [Applause.]
    [The prepared statement of Mr. Vining follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Thank you very much.
    And at this time, I will recognize for 5 minutes, Mr. 
Voyles with LG&E.

                STATEMENT OF JOHN N. VOYLES, JR.

    Mr. Voyles. Good morning, Mr. Chairman, and members of the 
subcommittee and audience guests. Thank you for the opportunity 
to appear before you today to present comments regarding the 
EPA's proposed rule Standards of Performance for Greenhouse Gas 
Emissions for New Stationary Sources.
    LG&E and KU Energy is a wholly owned subsidiary of PPL 
Corporation and operate Louisville Gas and Electric and 
Kentucky Utilities Company, regulated utilities that serve 1.3 
million customers in 90 counties in Kentucky and five counties 
in Virginia.
    Today, the companies operate electric generating stations 
with approximate capacity of 8100 megawatts that is 74 percent 
coal-fired, 25 percent natural gas peaking-fired and one 
percent hydro. Approximately 96 percent of our coal-fired units 
are equipped with sulfur dioxide controls and 67 percent of 
those units have SCR for nitrogen dioxide control.
    After assessing the impact of the most recent regulations 
promulgated by the EPA, specifically the National Ambient Air 
Quality Standards, the Mercury and Air Toxic Standards, and the 
Cross State Air Pollution Rule, the companies developed 
compliance plans which were presented to and approved by the 
Kentucky Public Service Commission in December of 2011 and 
April of 2012. Those plans include installing additional 
environmental controls at four stations and replacing some 
existing controls at one station. Also, the companies will 
retire 800 megawatts of coal-fired capacity and will be 
constructing a new 640 megawatt gas-fired combined cycle unit. 
These investments are expected to cost an estimated $3 billion 
and to raise electric rates approximately 14 percent and 18 
percent for KU and LG&E customers respectively by 2016.
    With this background, we are concerned that the proposed 
rule would effectively eliminate new coal-fired generation from 
the Nation's energy portfolio by setting a standard which could 
only be achieved by coal units through the use of carbon 
capture and sequestration technology, a currently 
undemonstrated technology that is not cost-effective under 
current market conditions.
    Today, we offer three specific comments:
    1. The proposed C02 standard is a one-size-fits-all 
standard applicable to new generating units, both natural-gas-
fired and coal-fired. Over the 40-year history of the Act, EPA 
has never set a single NSPS for all fossil-fired power plants 
based on an emissions rate achievable only by the fuel type 
with the lowest emissions. In fact, in past rulemakings, EPA 
has routinely established subcategories based on different 
fuels, industrial processes, equipment and other factors.
    The proposed standard assumes that CCS technology 
sufficient to capture and store at least 50 percent of C02 
emissions is available for new coal-fired units. While EPA's 
proposal for a framework to establish compliance under a 
sliding scale over a 30-year period certainly would appear to 
provide additional flexibility for new coal units with CCS, EPA 
also implicitly acknowledges the uncertainties as to when or if 
CCS technology will be developed. Significant technical, 
financial, legal, and regulatory barriers still exist to the 
commercial deployment of CCS.
    The Clean Air Act does not allow EPA to mandate a 
particular fuel and generation technology which is exactly what 
the agency has done in requiring coal-fired generation to 
comply with a standard based on new natural gas combined cycle 
units using a specified technology. Although low natural gas 
prices may currently favor new natural gas plants over coal 
plants, there can be no guarantee that natural gas prices will 
remain at those levels indefinitely. Approximately 42 percent 
of the Nation's power is supplied by coal-fired plants that 
utilize various boiler designs and combinations. As a matter of 
statutory compliance and sound energy policy, it is critical 
for EPA to set a separate standard for new coal-fired units 
that will permit those types of units to remain an option in 
the future. Such an approach is consistent with the relevant 
provisions of the Clean Air Act as implemented by EPA in the 
past and this administration's stated energy policy objective 
of achieving a diverse energy portfolio.
    Secondly, the proposed standard of 1,000 pounds of C02 per 
megawatt-hour does not take into account the full range of 
operation normally experienced by a combined cycle unit. The 
proposal is based on an assumption that the standard is capable 
of being achieved by a unit at all times of operation, 
including startup, shutdown, and malfunction. Based on the 
extensive analysis conducted by the company in the course of 
planning and designing for our current combined cycle project, 
during periods of startup and shutdown, the emission rate will 
exceed the standard. Because combined cycle units will 
generally be operated as intermediate load units, they will 
likely experience regular startups and shutdowns that will pose 
a substantial challenge in meeting the emission standard.
    Finally, while extremely problematic for new facilities, a 
single standard for all existing or modified fossil-fired units 
will have even more extreme impacts. A standard requiring each 
existing coal-fired unit to achieve C02 reductions equivalent 
to a gas-fired unit would likely result in shutdown of 
virtually all coal-fired units in the Nation. Such a result 
would wreak havoc with the Nation's energy supply in terms of 
both cost and reliability. In the State of Kentucky, and other 
midwest States where customers obtain more than 90 percent of 
their electricity supply from coal-fired generation, the 
outcome would be disastrous to the economies of those States.
    Although contrary to EPA's stated policy, a single NSPS 
standard could also create a precedent for combining coal-fired 
and gas-fired units into one category for criteria pollutant 
regulation and subjecting those units to standards that can 
only be achieved by combined cycle units.
    EPA has stated that its proposal does not apply to modified 
units, but the proposed rule does not contain express language 
to that effect. The potential for future standards applicable 
to modified sources results in substantial uncertainties, 
particularly for units facing major projects for the purposes 
of compliance with CSAPR and MATS. To avoid regulatory 
uncertainty and unintended consequences, EPA should clarify 
that the proposed rule does not apply to existing modified 
units by including clear and unambiguous language in the Code 
of Federal Regulations stating that the performance standards 
established by the proposal does not apply to existing units.
    Thank you for your time and interest. We have included a 
full copy of the comments we filed with the EPA and would 
submit those for your consideration.
    [Applause.]
    [The prepared statement or Mr. Voyles follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Now at this time, I would like to recognize 
Donna Kessinger, who is a miner with Cliffs Natural Resources, 
and we appreciate you being here very much this morning, Donna. 
You are recognized for 5 minutes.

                  STATEMENT OF DONNA KESSINGER

    Ms. Kessinger. Thank you, Chairman Whitfield and other 
members of the committee for this opportunity to speak with you 
today. It is an honor and a privilege.
    Mr. Whitfield. Is your microphone on?
    Ms. Kessinger. Yes, it is on.
    I am here not as a representative of my employer--sorry, I 
messed up.
    My name is Donna Kessinger and I live in southwest Virginia 
and work at Cliffs Natural Resources' Pinnacle Mine in Wyoming 
County, West Virginia. I am here not as a representative of my 
employer, but as a private citizen, a coal miner and a mother 
that works hard for my family.
    I work in a metallurgical coal mine as a certified 
electrician and mechanic and I am a member of the United Mine 
Workers Association 1713. My job duties include inspecting 
electrical installations and equipment to ensure they operate 
in accordance with all State and Federal laws and regulations 
that govern coal mining. More importantly, my job is to keep my 
coworkers safe by making sure our equipment functions properly. 
I work underground every day and I am incredibly proud of the 
work I do.
    When my shift is done each day, I go home to take care of 
my daughter, she is 8 years old, her name is Haven. I am a 
single mother. Coal mining has allowed me as a single mother to 
provide a better standard of living for my daughter than I 
would be able to otherwise. The same is true for my coworkers 
and their families.
    Our jobs allow us to put food on the table, buy clothes for 
our children and provide our families with good health care so 
we can lead productive lives. Coal mining makes this possible. 
Coal mining also provides the foundation for entire communities 
because it supports local businesses, which are the heartbeat 
that keeps many small communities alive.
    As many of you are aware, several coal companies have 
announced layoffs because of decreased market demand that has 
been compounded by the decisions of Federal regulators who have 
made their distaste for coal mining known even though they are 
blind to the real world economic consequences of their actions.
    My industry is under attack, and that means my job is under 
attack. America's future economic prosperity depends on the 
availability of affordable, abundant coal resources. 
Furthermore, my livelihood and the well-being of my family is 
at stake.
    As I said before, I am proud to be a coal miner. This is an 
honorable profession that should be respected, not disparaged 
by those who have no solutions, just loud voices.
    Please help me and others like me, proud Americans who want 
to work hard and provide for our families. We are not asking 
for special treatment or handouts, we simply want to be allowed 
to work.
    Thank you.
    [Applause.]
    [The prepared statement of Ms. Kessinger follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Ms. Kessinger, thank you very much for that 
testimony. The insights that you provided are quite helpful for 
all of us and every one is concerned about their job and simply 
providing for the needs of their family, and we appreciate your 
taking time to be here today to talk about it.
    Ms. Kessinger. Thank you.
    Mr. Whitfield. Now at this time, each one of us will be 
asking 5 minutes of questions to the witnesses. And I will 
recognize myself for 5 minutes.
    I was reading an article the other day that said that 
nitrogen and oxygen make up 99 percent of the atmosphere, and 
that of that, .00144 percent is man-made. And that back in 1991 
when Mount Pinatubo in the Philippines erupted, more C02 was 
thrown into the atmosphere than all man-made C02 in history.
    Now I point that out simply because when Lisa Jackson, the 
Administrator of EPA, came to testify before our committee 
about these proposed greenhouse gas regulations, one of the 
members asked her a question, and they said--that person said, 
``How effective will these greenhouse gas regulations be?'' And 
she said, ``They won't be very effective at all unless all the 
other countries in the world do the same thing.'' We had a 
couple of witnesses that made the comment that the benefit of 
these regulations are rather minimal.
    So, these proposed regulations if adopted, in my view, will 
definitely penalize America and make it more difficult for us 
to compete in the global marketplace.
    Now, one of the difficulties about all of these 
regulations, proposed and otherwise, is that there have been so 
many of them coming that it is difficult to comprehend, and all 
of this stuff is really complicated.
    But I want to ask you gentlemen in the utility industry to 
elaborate a little bit, because all of you have mentioned that 
for the first time ever in this proposed regulation, that EPA 
has issued a standard--and normally they do this if there is 
existing pollution control equipment that would meet the 
standard--that they do it for individual fuel sources like we 
will have this standard for coal because it is different from 
natural gas, that it is different from oil. And yet this time, 
for the first time, they did something different.
    So Mr. Farrell, would you elaborate on that?
    Mr. Farrell. Certainly, Mr. Chairman.
    The Clean Air Act mandates that if the EPA makes an 
endangerment finding, they are supposed to regulate the various 
pollutants that cause the endangerment, the tradition over 
almost 50 years has been to--the term of art they use is 
subcategorize the form that is causing the pollution they are 
concerned about. So they not only have always differentiated 
between a fuel source, for example natural gas different from 
coal different from oil, because they have different components 
to them, they actually also subcategorize even traditionally 
among things like coal, so that there are different standards 
for different types of coal because the Act requires them to 
use the best available--us, our industry--use the best 
available control technology for that particular fuel.
    This is the first time in the history of the Clean Air Act 
that the EPA has adopted a single standard and it will allow 
only one type of fuel to be used, which is natural gas, and 
will only allow one type of technology for that fuel, which is 
combined cycle technology.
    Mr. Whitfield. Right.
    Mr. Farrell. And we are not even sure--as one of the 
witnesses pointed out, and I did, they are basing it on design 
specifications from manufacturers, not on any real world 
experience with the technology.
    Mr. Whitfield. So they are not basing it on any actual 
emission information?
    Mr. Farrell. That is my understanding, Mr. Chairman.
    Mr. Whitfield. It is primarily decided from design 
theories.
    Mr. Farrell. That the manufacturers believe that a certain 
level can be achieved, but it has not yet been demonstrated.
    Mr. Whitfield. Now Mr. Vining, would you agree that when 
you go to regulate and you use one standard for every fuel 
source, which is the first time it has ever been done, that in 
reality, would that mean that you could never build another 
coal-powered plant in America and comply with that existing 
standard?
    Mr Vining. Absolutely. And I guess, Mr. Chairman, I would 
point out two things. And my colleagues on either side of me 
could comment further, but I think it would be difficult for 
any utility in this country, whether it is to be held 
accountable to the shareholders or to the public utility 
commissions whose job it is to look after the consumers of the 
electricity, to basically roll the dice and invest several 
billion dollars in a new coal-fired power plant with having no 
discernible way to remove the C02 and meet the standard that 
has been promulgated here.
    Mr. Whitfield. So you know what, I walk away from that with 
the firm belief--and I think one of you said this--that EPA 
wants, at this point in time, the majority of electricity to be 
produced from natural gas, so that is why they developed this 
standard. And so we have a group of bureaucrats in Washington, 
DC, that think because of the availability and low current 
market prices of natural gas, that justifies the elimination of 
coal as a fuel mix. So the free market system is not 
determining this, this is being determined by decisions in the 
Federal Government in Washington, DC. Would you agree with 
that?
    Mr Vining. Absolutely.
    Mr. Whitfield. Well, where does the time go, my time has 
already expired.
    So Mr. Griffith, I will recognize you for 5 minutes of 
questions.
    Mr. Griffith. Thank you, Mr. Chairman.
    Mr. Farrell, do all natural gas combined cycle power plants 
meet EPA's proposed greenhouse gas NSPS requirements?
    Mr. Farrell. That is unproven at this point, Congressman. I 
believe that new designs from manufacturers believe you can 
reach that standard, but I think that remains to be seen.
    Mr. Griffith. And are you aware that certain groups that 
first targeted coal, such as the Sierra Club, are now targeting 
natural gas with their Beyond Natural Gas program, as well as 
Beyond Coal?
    Mr. Farrell. I have read news accounts to that effect.
    Mr. Griffith. Thank you.
    Ms. Kessinger, I know you work in the met coal, which is a 
little more secure than steam coal is. But if you were to lose 
your job, in your community where would you go to find another 
job that pays anywhere near as much as what you're making now?
    Ms. Kessinger. I have no idea. I make pretty good money 
with what I do, and I do not think there is anything in this 
region that would allow me to make the kind of money that I do 
and provide for my family.
    Mr. Griffith. And would it not be fair to say as well that 
if the coal mines suffer a huge layoff across the region, that 
many other businesses will also fail and unemployment will most 
likely skyrocket in the region?
    Ms. Kessinger. Well, yes. In my community where I work, it 
is in Pineville-Welch area, it would be devastating to that 
community because that is all they have there, is coal mining.
    Mr. Griffith. All right. Let me ask each of you a question. 
The EPA maintains that the proposed NSPS rule will impose no 
additional costs on industry and will have no adverse impact on 
jobs. Do you agree with that, Mr. Farrell?
    Mr. Farrell. Well, I cannot speak for other industries. I 
can speak for our industry. This particular rule deals with new 
power plants. We have just completed the plant here in Wise 
County. If this rule had been in effect 5 years ago when we 
made the decision to proceed with that facility and got the air 
permits from EPA, from the DEQ in Virginia, permission from our 
State regulators, we would not have been able to proceed with 
the plant. That would have been--that $1.8 billion investment 
would not have occurred.
    Mr. Griffith. So it would have had an impact on you except 
you got in under the wire before this rule came in.
    Mr. Farrell. Well, several years before, but yes.
    Mr. Griffith. Mr. Vining, do you agree with their 
assessment that it does not impact costs on industry or adverse 
impact on jobs?
    Mr Vining. It is inevitable that it is going to have a huge 
impact on coal mines and the coal miners in this region and 
elsewhere in this country in terms of demand for the product 
that we produce every day.
    Mr. Griffith. And I think in your testimony, you indicated 
that you believe that with the prices of electricity going up, 
that would also affect manufacturers and other jobs as well; is 
that correct?
    Mr Vining. I will be a little more harsh and say that I 
view it as a regressive tax on every American who lives and 
breathes and pays bills in this country today, when they turn 
on a lightbulb.
    [Applause.]
    Mr. Griffith. Mr. Voyles, your opinion on the EPA's 
assessment that it has no real impact on the--the NSPS has no 
real impact on costs on industry or an adverse impact on jobs.
    Mr. Voyles. Well, I would concur with Mr. Farrell's 
comments. As it applies to new units, most of the people in the 
utility industry are not going to build any new coal units, so 
there will be no impact. We too have just put in service a 
brand new coal unit at the beginning of 2011 that in fact 
received a clean coal technology tax credit incentive from the 
IRS through the DOE's program, our Trimble County Station. So 
like Mr. Farrell, had we waited until now, that unit would not 
be in existence.
    The bigger concern I think that goes to the point of your 
question is how the mechanisms in the Clean Air Act will lead 
them down a path to apply this new standard to existing units. 
That would be devastating.
    Mr. Griffith. Are you saying that perhaps if the 
administration gets past November and is still in office, they 
might feel more flexible and apply these regulations to 
existing coal-fired power plants?
    Mr. Voyles. What I am saying is I think that there are some 
languages in the Clean Air Act Amendments of 1990 that say that 
they move toward existing units. The concern we have is do they 
apply this particular standard based on natural gas-fired units 
to existing or modified units.
    We have just invested significant monies and will be 
investing $3 billion to put additional controls on for the 
other rules that are on your chart and those investments could 
become standard if they apply this C02 standard to existing 
coal-fired units.
    Mr. Griffith. I yield back my time, Mr. Chairman.
    Mr. Whitfield. Thank you.
    At this time, I recognize Mr. Roe for 5 minutes.
    Mr. Roe. I thank the chairman for yielding, and just to say 
it does matter, listening to your statement, Mr. Voyles.
    Mr. Vining, it was difficult I know, I look at the size of 
this room and I am not sure how many people are in it, but not 
750, that you have had to lay off. And that had to be a very, 
very difficult decision that you had to make.
    What are the impacts of these rules that you have to deal 
with on a day-to-day basis as a CEO of your company?
    Mr Vining. Well, first and foremost, the number one 
priority for Alpha is safety and the welfare of the employees. 
That is hard to pursue if those employees are not employed long 
term basically in the job of producing low cost electricity, 
low cost energy for this country.
    It is the hardest thing that I do, is get a phone call in 
the middle of the night when somebody is hurt or I see coal 
stacking up, as a lot of the folks here have seen happen, and 
have to make very difficult decisions. And it is because of our 
consumer base, folks that sit at this table and other consumers 
who are unable to use our product in the manner they have used 
it in the past.
    Mr. Roe. Anyone can answer this if you want, and this is 
what bothers me. I just mentioned that China uses more coal 
than Europe, the United States and Japan put together, so it is 
a global commodity, coal is.
    What impact do the EPA regulations have on our 
competitiveness for businesses around the world. And it 
disturbs me that we might end up selling our own natural 
resources to our major competitor. That makes no sense to me 
whatsoever.
    Mr. Voyles. I certainly think that if you are in the coal 
industry and the use of your product declines within the United 
States, the inclination, if you are a businessman, is to find a 
way to utilize your product. So I would agree that coal, the 
coal industry, would make every attempt to sell the product 
they can, and some of that would go overseas to China and it 
certainly would I think migrate toward the thoughts that you 
had.
    Mr. Roe. So the point is that it would have a very 
detrimental effect on U.S. businesses and jobs and then global 
competitiveness.
    Mr. Voyles. I would agree with that.
    Mr. Roe. Let me ask, Mr. Voyles, for you, I know you are 
concerned and I just met with the power distributors last 
Friday in Johnson City and they are looking at this--these are 
the folks on the ground that have to face people when their 
power rates go up. And we have a lot of our senior citizens in 
our area that live on a fixed income. I think one of the worst 
things you can do--they have to pay their power bill, it has 
got to be one of the hardest things in the world you see as a 
distributor, as a producer, when someone, you have to go and 
they are behind in their power bill, how does this affect 
people. You have to pass those increased costs to the 
ratepayer, like us and everybody sitting in this room. When you 
have to turn their power off, is what I am saying.
    Mr. Voyles. Yes, that is correct. As I said in my 
testimony, the impacts of the rules, not this proposed rule but 
the previous promulgated rules, is going to have an impact on 
our customers ranging between 14 and 18 percent increase by 
2016.
    If you are on a fixed income, that forces people into 
decisions of where to put the money that they have that is 
disposable. Do you put the extra 14 percent to your electric 
bill or do you put it to some other bill that you might need, 
whether it be medical, food, housing. We take very seriously, 
and have programs established to do what we can to ease the 
burden and not cut people off unnecessarily. But at the end of 
the day, they are making choices of their life based on the 
money that they have as fixed income.
    Mr. Roe. See, why this bothers me is I guess maybe the way 
I look at things as a physician, I look at things from a single 
patient. When you have these policies that are up here and you 
do not see how it affects the individual down here, whether it 
is a job loss or whether it is an 80-year-old lady, you have 
got to go out, a widow, that you have got to cut their power 
off because they cannot pay their bills. That is very 
disturbing to me.
    And Donna, one final question to you. I know you have a 
child and you are very proud of your child. How does this 
affect kids in your area, the miners' families?
    Ms. Kessinger. I think it would affect them because if you 
are not able to provide certain things for your children, like 
if you are forced at or below poverty level because you are not 
making the money, I mean, you choose between buying a new pair 
of shoes or paying an electric bill. That would be a hard 
decision as a parent, you know. And if you do not have the 
money, it would be hard.
    Mr. Roe. Mr. Chairman, thank you, and I yield back.
    Mr. Whitfield. Thank you.
    Ms. Kessinger, I would also like to ask you a couple of 
questions. Number one, do you work with a strip mine or an 
underground mine?
    Ms. Kessinger. No, underground.
    Mr. Whitfield. Underground. And so when you go to work and 
you all are there preparing to go underground, putting your 
equipment on, checking your equipment and so forth, I was just 
curious, is there very much discussion among the miners 
themselves about these regulations and the potential impact of 
these regulations? Is it something that you all discuss or do 
you not discuss it?
    Ms. Kessinger. There is a handful of us that discuss it. I 
do not think it is really well known in the community or among 
a lot of miners how serious this is to us. I mean, we are 
working every day, we get up, we go underground, we come out, 
we take care of our families. And I think the average working 
day citizen, every day, they do not have the time. A lot of it, 
me personally, I am not very political and a lot of it is not 
written in layman's terms for me, so it is a little hard to 
understand certain things.
    Mr. Whitfield. Right.
    Ms. Kessinger. But our company is making it more well aware 
because of the utility MACT. That it will affect us, it will 
affect our community.
    Mr. Whitfield. Well, you know, talking about utility MACT, 
this is another disturbing thing about what EPA is doing. When 
they first came out with utility MACT or finalized that rule, 
they said that less than 5,000 megawatts of electric generating 
capacity would be retired and so far over 25,000 megawatts has 
been retired. So we think that they under-estimate the cost of 
many of their regulations as well.
    We talked about this one standard, which is the first time 
they have ever utilized that sort of analysis, and normally 
when you come out with a regulation, there is some existing 
technology available that you can meet the requirement. But it 
is my understanding, we talked about carbon capture and 
sequestration, there is no commercially viable carbon capture 
and sequestration that you could use to meet this standard, if 
you are a coal plant; is there, Mr. Farrell?
    Mr. Farrell. No, Mr. Chairman, there is not. The theory--I 
would never try to speak for the EPA--I believe their theory is 
that you could permit a new plant but it would have to have a 
functioning commercially viable CCS, carbon capture technology, 
attached to it, removing the carbon down to this 1,000 pounds 
within 10 years. I guess the theory is that by imposing this 
rule, that will force the adoption of a technology that does 
not yet exist.
    Mr. Whitfield. Right. You agree with that?
    Mr. Voyles. I do agree with that and a further complication 
that I think people really need to get a better understanding 
on, carbon capture is a mechanical process, a chemical 
mechanical process, and theoretically it does perform as it 
says, and it has in some other industries. The bigger question 
I think facing the country is what do you do with it after you 
capture it, where do you store it? And there are significant 
legal and property rights and all kinds of issues that have to 
be put in place to allow, if you can capture it, to put it 
somewhere. So that is the great concern that I think needs to 
be dealt with.
    Mr. Whitfield. And, you know, we actually sent a letter to 
EPA about this and they came back and specifically said that 
future coal power plants simply cannot meet this requirement 
without CCS and there is no CCS available. So I do not know how 
you can walk away with any other conclusion except that EPA 
wants to put the coal business out of business. That is my 
interpretation.
    Mr. Griffith, you are recognized for 5 minutes.
    Mr. Griffith. Let me follow up on that for just a quick 
minute, Mr. Voyles.
    When you talk about the legal rights and the property 
rights--this is the old lawyer in me coming out--am I 
interpreting you correctly that while a mining company might 
have had the right to extract coal, there is nothing in that 
original permit that allows somebody to put carbon back into 
the ground. Is that part of what you are talking about?
    Mr. Voyles. To a degree. One of the technologies that is 
being investigated in research and development activities, and 
we participate in those research and development activities, is 
injecting carbon dioxide deep into saline aquifers, actually 
would be below coal mines, below water tables, upward of, 
depending on where you live, 4,000, 8,000, 10,000 feet 
underground, and allowing it to fill up the pores that are in 
the earth and the rocks at that point. Once you inject it that 
deep in the ground, it propagates, it does not just stay in one 
place, it propagates laterally in that rock formation. And if 
you have seen rock formations as you drive through the 
mountains as I did coming down here, you see all different 
kinds of rock. It is going to propagate laterally, so it is 
going to go under pieces of property and across State 
boundaries and under rivers. You know, where does it go? You 
know, there are lots of technical questions about that, and 
certainly legal barriers, I think.
    Mr. Griffith. And am I correct that on a large scale, that 
has not been done anywhere in the world. So when it starts 
migrating or going places or the pressure builds up, we really 
do not know what the long-term consequences of doing that are, 
do we?
    Mr. Voyles. That is correct.
    Mr. Griffith. OK.
    Mr. Farrell, how do utilities maintain reliable service and 
rates when the EPA ratchets up regulations?
    Mr. Farrell. If I could make one last comment on this 
carbon capture.
    Mr. Griffith. Absolutely.
    Mr. Farrell. There is another issue that has not been 
addressed specifically, which is you have to take the carbon 
from the plant to where you are going to store it. That would 
have to be done largely in a new pipeline system, that does not 
exist today. My company is also in the pipeline business 
delivering natural gas through pipelines. Those pipelines are 
not designed, cannot handle carbon dioxide, so you would have 
to have a new system, or it would have to be removed by truck. 
It is another complicating factor on the legal liability around 
all those kinds of issues.
    To your question, Mr. Griffith, all of us in the industry 
are extremely conscious of our customers' rates, it is our 
primary focus. Whenever we make a decision and we are having to 
make a decision--when we built this Wise County power plant, it 
is almost $2 billion of investment, it is the largest single 
investment in the history of southwest Virginia, in its entire 
history--that decision was based on the fact that we were going 
to be able to use that plant for 60 years. That is our payback 
time, that is the nature of our business, that is what we do 
and we are OK with that. Most normal businesses would not have 
a long payback like that, or they would not make the 
investment. But that is what we do, that is what we have always 
done.
    In order for us to be able to keep rates low--our company 
has among the lowest rates in the United States--we have been 
able to do that for many years because my predecessors, we have 
been in business for over 100 years, my predecessors that had 
my job, made the determination that the most important thing 
was to maintain fuel diversity. So we have very highly 
efficient nuclear power stations, we have coal-fired stations, 
we have hydro-powered stations, we have wind farms, we have 
biomass stations, we have natural gas, we have some oil. We 
have the largest pump storage water facility in North America. 
And it is by being able to use all of those sources of energy 
that has allowed us to maintain among the lowest rates in the 
United States.
    If we are forced into one fuel, which will take place, it 
will take decades, at least a decade, probably two. That is 
going to be--I consider that to be a serious problem for the 
country.
    Mr. Griffith. I will tell you that I am very concerned. One 
of the hearings that Chairman Whitfield held, Lisa Jackson did 
testify and we were talking about greenhouse gases in 
particular and their concern was, you know, that as things get 
warmer, you end up with more heart attacks and strokes and I 
specifically asked the question, what happens when people 
cannot afford to heat their homes and you have got people, you 
know, huddled in one room with a small heater going at about 50 
degrees just to stay warm because they cannot afford it. The 
response was well, we have programs to take care of that. But 
in talking with my constituents, those programs often, 
particularly in cold winters, are not adequate to meet the 
needs. You get to late February, early March and they have run 
out of whatever assistance money that was there.
    So it is a great concern to me that the EPA does not seem 
to take into consideration the negative impacts on families and 
on jobs when they put new regulations in that have minimal 
impact and ratchet up the costs tremendously.
    I yield back.
    Mr. Whitfield. Mr. Roe for 5 minutes.
    Mr. Roe. I thank you, Mr. Chairman. I just have one 
question.
    I have seen this same EPA with ozone, they set a standard 
of attainment and you reach attainment and then they set 
another standard that you cannot reach with current technology. 
So as I understand this, EPA has set a standard that there is--
it is the ultimate catch 22. You set a standard for one 
particular industry that there is no technology to reach and 
then you have the audacity to say that under the proposed rule 
for power plants, there is a path forward for construction of 
new power plants. I may not be the roundest marble in the sack, 
but I understand exactly what that is. That is just an attack 
on coal to remove them, and as you said, to take that one piece 
out of your armament that you have to keep your rates low for 
customers.
    So Mr. Vining, is there a way forward--or anyone who wants 
to answer this--for constructing--maybe Mr. Voyles--that coal-
fired power plant under these rules?
    Mr. Voyles. The standard as it is set today for greenhouse 
gases, there is no technology, as we have said here repeatedly, 
that will allow us to operate a coal-fired power plant in the 
near term. Whether or not that comes, I have significant doubt 
about, because why would financial institutions invest in a 
technology that is not proven and is not going to be here in 
time for that flexibility, that 30-year flexibility, that they 
have proposed, to allow us to do that. So we will migrate, as 
we need to add resources to meet customer demand, toward 
technologies that can achieve a standard. And coal will not be 
one of those in new units.
    Mr. Roe. This is what bothers me about what is going on in 
Washington, DC,. now. We are picking winners and losers. Can 
you say Solyndra, where you picked one particular industry, 
subsidized them heavily, it did not work, it is more expensive, 
and yet you have a known technology that does work that you are 
trying to put out of business. You have created a rule. There 
was a law that was passed and sponsored by Jeff Davis from 
Kentucky, that is probably the most important piece of 
legislation that has been passed out of the House that is 
sitting in the Senate gathering dust, that will affect every 
person in this country. It is called The Reines Act. The Reines 
Act was passed last September and it says this, if the 
rulemaking process, when we write rules--I will give you an 
example, the healthcare bill is 2700 pages long, I have read 
every word of it, but the rulemaking is already at 13,000 
pages. But if a rule affects the U.S. economy by more than $100 
million, it has to come back to the Congress for re-approval. 
We have to do that to rein in these rulemakers that are 
affecting the economy. And that is what it is doing, not the 
legislation, but the rulemaking process. Am I correct on that?
    Mr. Voyles. My opinion, it is the implementing regulations 
that are written against the acts passed by Congress. You 
mentioned ozone in your opening comments, and the way that the 
Clean Air Act statute reads, every 5 to 8 years, the EPA must 
re-assess the standard and decide if it is still adequate. And 
that happens now, it has happened since 1990, and this standard 
would be no different going forward.
    Mr. Roe. Mr. Voyles, here is a question I asked when I was 
the Mayor of Johnson City. I said what was the ozone level 500 
years ago. Nobody knew the answer, so they may be setting a 
standard that has never existed in the world. So that was a bit 
of a question that I thought was fairly important. What are you 
trying to get to, what was the world like 1,000 years ago, 100 
years, nobody knew the answer.
    So what you are saying to me is that there is no way 
forward currently to build a coal-fired power plant in this 
country.
    Mr. Voyles. Under this proposal for greenhouse gases, I do 
not see a way forward at any time in the near future.
    Mr. Roe. Thank you, Mr. Chairman. I yield back.
    Mr. Whitfield. Thank you.
    I would just like to follow up with one question, Mr. 
Farrell. You mentioned you have this new plant in Wise, 
Virginia. Did you say a $2 billion expenditure?
    Mr. Farrell. One-point-eight.
    Mr. Whitfield. One-point-eight. And of course, these 
proposed regulations are for new plants. That would be an 
existing plant, so if EPA came back and applied this same 
standard to your $2 billion plant in Wise, as an existing 
facility, would you be able to meet this requirement?
    Mr. Farrell. Not this new proposed requirement, absent CCS 
technology being developed within the next 10 years. With the 
plant that is there today, we could not do that.
    Mr. Whitfield. And when did you all complete that plant?
    Mr. Farrell. It went commercial last week.
    Mr. Whitfield. Last week. And how many people are employed 
there?
    Mr. Farrell. It is a little over 100. Over 2,000 were 
involved in the construction.
    Mr. Whitfield. And $2 billion. And if they do make this 
apply to existing plants; today, you would not be able to meet 
it.
    Mr. Farrell. Could not run the plant, no.
    Mr. Whitfield. Anybody else have anything?
    [No response.]
    Mr. Whitfield. Well, that would conclude our questions and 
answers with the first panel.
    What we are going to do is we are going to take like a 7-
minute break and then we will be right back. But Mr. Farrell 
and Mr. Vining and Mr. Voyles and Ms. Kessinger, thank you all 
very much for being with us. We appreciate your testimony and 
giving us very clear and concise answers to our questions. 
Thank you very much.
    [Applause.]
    [Recess.]
    Mr. Whitfield. We will come back to order and at this time, 
I want to introduce the members of the second panel.
    We have with us this morning Mr. Dan Nation, who is the 
Division President for Parkdale Mills, and I believe that is in 
North Carolina. Is that correct, Mr. Nation?
    Mr. Nation. That is correct, Mr. Chairman.
    Mr. Whitfield. We have Mr. Joe Street, who is Vice 
President of Sales for West River Conveyors & Machinery Company 
on behalf of the Buchanan County Chamber of Commerce. And then 
we have Mr. Scott Weyandt, who is the Director of 
Sustainability & Compliance with Shearer's Food, Inc.
    So welcome to the hearing this morning. As you know, we are 
discussing the proposed greenhouse gas regulations for new 
plants. And we appreciate all of you being here and we look 
forward to your experiences and your expertise on this subject.
    So Mr. Nation, I will recognize you for 5 minutes for an 
opening statement.

 STATEMENTS OF DANIEL E. NATION, DIVISION PRESIDENT, PARKDALE 
   MILLS; JOE GARY STREET, VICE PRESIDENT, SALES, WEST RIVER 
CONVEYORS & MACHINERY CO. ON BEHALF OF BUCHANAN COUNTY CHAMBER 
 OF COMMERCE; AND SCOTT E. WEYANDT, DIRECTOR, SUSTAINABILITY & 
                COMPLIANCE, SHEARER'S FOOD, INC.

                 STATEMENT OF DANIEL E. NATION

    Mr. Nation. Thank you, Mr. Chairman.
    My name is Dan Nation, I am the Division President of 
Parkdale Mills. I appreciate the opportunity to speak to you 
this morning regarding the impact of rising energy costs on 
Parkdale Mills and the textile industry.
    Parkdale is North Carolina-based textile company that has 
28 plants in operation and over 4,000 employees in eight 
states. In addition to our U.S. facilities, Parkdale has 
operations in six countries outside the U.S. in North, Central, 
and South America. Over 90 percent of our production takes 
place in the U.S. In turn, 78 percent of that production is 
exported to other countries. The major export markets for 
Parkdale Mills are Central America, Mexico, China, and South 
America.
    Parkdale Mills is the number one manufacturer of spun yarns 
in the world. Our business model centers on a constantly 
evolving supply chain in order to yield a faster response, 
better service and continued improvements in speed to market. 
Parkdale also has a business diversification strategy that aims 
to complement our core competencies. Some of these products are 
sold direct to retail and include cotton balls, swabs, and 
pads. Our core finished product is a tube of yarn. These tubes 
of yarn are sold to knitting companies such as Hanes and Fruit 
of the Loom and made into garments that include underwear and 
t-shirts. We also sell to weavers for end uses such as denim 
and military uniforms.
    Yarn spinning is a very volume-driven commodity business. 
Textiles are some of the first manufacturing plants built in 
emerging economies, requiring us to compete in a growing global 
arena. We are constantly under pressure to lower conversion 
costs to stay competitive. Our conversion cost is expressed in 
cents per pound, which is the cost to convert a pound of cotton 
into a pound of yarn. The major components of conversion costs 
include labor, energy, benefits or health care, and 
maintenance. All of these are escalating but of these, energy 
represents the highest percentage increase.
    Many of you might be surprised to learn that the largest 
yarn spinner in the world is located in the United States. Last 
year Parkdale produced 850 million pounds of yard and we were 
the 88th largest exporter out of the United States. In order to 
compete against extremely low wage countries, it has been 
necessary for us to invest capital in automation. The downside 
is that automation consumes more energy. As energy prices 
continue to escalate, we are losing the cost advantage of the 
automation investment. Yarn spinning is a very power intensive 
industry, comprising 25 percent of our conversion costs. As a 
reference point, last month, all Parkdale plants in the United 
States consumed 86 megawatts of power, or enough energy for 
almost 100,000 homes.
    Over the last few years, our power costs have continued to 
rise and we are unable to pass these increases through the 
supply chain. What is more concerning to Parkdale and other 
manufacturers is the Greenhouse Gas New Source Performance 
Standard, which will create even larger cost escalations that 
our supply chain cannot absorb. One of our plants near here is 
a perfect representative example of what is happening to 
Parkdale companywide. In 1995, we built a 750,000 square foot 
spinning mill with an investment of $200 million in Hillsville, 
Virginia. It is still one of the most modern and automated 
spinning mills in the world. This operation employs 381 people 
and supports a substantial amount of other local jobs. We are 
the largest employer and taxpayer in the county. Over the last 
4 years, our power cost has increased 24 percent in this 
facility. Energy cost increases of this magnitude put 
manufacturing companies at serious risk as well as destroying 
any potential for future investment and job growth. Energy 
price rates have become the primary consideration for us when 
we evaluate where to locate a new facility.
    The Greenhouse Gas New Source Performance Standard is in 
fact a penalty designed to incentivize the consumer to lower 
energy consumption by raising their price. It needs to be 
understood that this strategy does not work with power 
intensive manufacturing companies. Parkdale has been in the 
energy saving business for years. We invest a lot of capital in 
energy efficient lighting, motors, and machinery. We cannot 
reduce our energy demand to offset higher prices. It is not 
possible for us to turn off more lights at night or raise the 
temperature on our thermostat by five degrees. There is no way 
for us to cut consumption to compensate for the cost increase 
like, for instance, a residential consumer could. In fact, we 
contribute to overall energy efficiency by running our 
factories at a consistent 24 hours a day, 7 days a week, giving 
utilities a base capacity, which lowers their cost. The only 
way a strategy like this could possibly work is if you punish 
the consumers who can do something about it, if they so desire.
    Furthermore, manufacturing is not creating new demand or 
the need for any added capacity. We have been using the same 
amount of energy for years. It is not in the best interest of 
job preservation or growth to penalize manufacturing for this. 
We are the one creating the jobs so the people who need this 
energy can pay for it.
    If we have to turn off lights to conserve energy, we turn 
all of them off, we close the factories and people start losing 
jobs. These jobs end up overseas and we never get them back. 
Putting higher energy costs on the back of manufacturing is one 
of the fastest ways I know of to kill more U.S. jobs. This 
regulation does not solve a problem, it creates a larger one.
    Thanks for the opportunity to speak to you this morning, I 
look forward to answering your questions.
    [Applause.]
    [The prepared statement of Mr. Nation follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Thank you, Mr. Nation.
    I might also mention that Dr. Roe has a previous 
appointment in his district, and when you see him get up and 
leave, it does not mean he is not interested, but he just has 
to be somewhere else.
    So, Phil, thank you for being with us today.
    Mr. Street, you are recognized for a 5-minute opening 
statement.

                  STATEMENT OF JOE GARY STREET

    Mr. Street. Good morning, Mr. Chairman and committee 
members. My name is Joe Gary Street and I am a small business 
owner in Buchanan County, Virginia. I am also the son of a 
Buchanan County coal miner. My children, grandchildren and 
friends all have ties to coal. We are a coal mining family with 
our county's best interest at heart. Having lived here in 
Buchanan County my entire life, I am passionate about the 
county's current prosperity and prosperity for future 
generations.
    Buchanan County is the largest producer of coal in the 
State of Virginia, producing more than 9.1 million tons in 
2011. With the amount of coal produced here, coal jobs make up 
a significant portion of our workforce. With a population of 
only 23,000 in Buchanan County, coal mining jobs, directly and 
indirectly, total more than 50 percent of the workforce. I am 
here today to ask you to reject the U.S. EPA's proposed 
Greenhouse Gas New Source Performance Standards (NSPS) for 
utilities, and explain to you the impact this regulation will 
have on the jobs in Buchanan County, Virginia and beyond.
    The EPA's latest proposal for controlling greenhouse gas 
emissions will force more coal-fired plants to close when 25 
percent have already announced closure over the next few years, 
reducing the amount of coal that will be produced and used in 
the United States. With the forced closure of power plants 
comes major repercussions for the coal industry. Already this 
year, thousands of coal miners have been laid off across 
Kentucky, southwest Virginia and southern West Virginia. The 
EPA's continued war on coal makes the layoffs the tip of the 
iceberg for the impact these regulations will begin to have on 
our communities. This past Monday, one of the largest U.S. coal 
producers filed for bankruptcy. With this significant 
bankruptcy filing and the volatility of fossil fuels, newspaper 
headlines are rampant and employees are scared. I have been 
asked in my own business about layoffs. Although our business 
has never laid off a single person, emotions are high even for 
the employees of businesses indirectly affected by the coal 
market. Our people are worried about their jobs and how they 
will pay their bills and mortgages.
    It was 4 years ago that President Obama told an interviewer 
in San Francisco if he was elected, he would bankrupt any 
companies attempting to build a coal-fired power plant and he 
would see to it that electricity costs would ``necessarily 
skyrocket.'' The EPA sponsored NSPS will drastically drive up 
the cost of electricity. In addition to people losing their 
jobs, they will be faced with higher electricity bills. NSPS 
will deliberately push Americans to abandon coal, our most 
efficient and reliable source of energy. In Buchanan County, we 
simply cannot afford to abandon coal. Already we have tried to 
diversify our economy with manufacturing jobs. The geographical 
location and lack of flat land makes it nearly impossible. The 
population is so dependent on coal that if we were to abandon 
it, the only word to describe Buchanan County will be 
devastation.
    Buchanan County receives $46 million per year in severance 
tax from coal, natural gas and other related coal taxes, per 
2013 budget Buchanan County. The county only receives a total 
of $60 million from all county sources, excluding Federal and 
State. This $60 million figure includes the severance tax, 
including property tax, local sales tax and use tax, revenue 
from waste removal. The major county expenses total between $55 
million and $60 million, could go as high as $65 million. In 
order to survive, if fossil fuels are abandoned, major cuts 
will have to be made. These cuts will come from a large 
majority of people who do not have jobs.
    President Obama allegedly supports an all-of-the-above 
energy policy, as he stated in his address to the American 
people in January. However, fossil fuels were left out of that 
policy. Currently, there is no energy policy from the executive 
branch that includes fossil fuels. I feel that it is my 
responsibility to speak on behalf of the citizens of Buchanan 
County so that everyone understands what is at stake if the EPA 
continues on the ``convoy of regulatory train wrecks that are 
rolling across America.'' We are only one of thousands of 
communities across our country that will suffer. Counties in 
Kentucky and southern West Virginia will suffer even worse than 
Buchanan County because they have higher populations of coal 
and coal-related jobs.
    If President Obama's energy policy is all-of-the-above, 
should he not be putting taxpayer dollars into things like 
carbon storage research and ways to continue to cut down on C02 
emissions, rather than pumping taxpayer dollars into 
unprofitable solar energy? Coal is the most economical, 
abundant, and reliable source of energy that we have in this 
country. Why are we not focusing on making this affordable 
resource better? NSPS's impact on our country is beyond 
describable. The facts presented in this statement do not begin 
to summarize the devastating effects the NSPS will have. As a 
business owner, how do you explain to your employees why they 
are losing their job? Do you tell them it is because we have a 
government who forgot about the people of Appalachia and their 
livelihood? I am telling you all this because I see and read 
every single day firsthand what EPA regulations are doing to 
the communities throughout Appalachia, and particularly 
Buchanan County. I am here to ask you to say no to the proposed 
NSPS.
    Thank you and I will answer any questions you may have.
    [Applause.]
    [The prepared statement of Mr. Street follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Well, thank you, Mr. Street, we appreciate 
your testimony.
    Mr. Weyandt, you are recognized for a 5-minute opening 
statement.

                 STATEMENT OF SCOTT E. WEYANDT

    Mr. Weyandt. Mr. Chairman, members of the subcommittee, 
good morning and thank you for the opportunity to participate 
in your proceedings.
    Over the course of 35 years, Shearer's has grown from a 
single family owned delivery truck to what is truly an American 
success story. Recognized as the Nation's largest manufacturer 
of kettle chips, Shearer's also proudly produces standard 
potato, tortilla, multigrain and extruded chip products. 
Shearer's currently employs nearly 2,000 individuals with total 
manufacturing space of over one million square feet in five 
states--Ohio, Texas, Oregon and Virginia.
    Today, I would like to share our concerns regarding 
potential changes in the EPA Greenhouse Gas Reporting and 
Tailoring Rules, and the resulting impacts on our industry. If 
the Clean Air Act C02 trigger points are lowered from 100,000 
tons per year to suggested values such as 250 tons, all five of 
Shearer's sites would be subject to expensive and unnecessary 
Title V requirements as well as those associated with PSD 
regulations. In a fiercely competitive market where margins are 
accumulated in pennies and not dollars, the cost and compliance 
burdens associated with these sites would be substantial and 
should not be underestimated.
    Shearer's does recognize a concern for the results of 
growing greenhouse gas concentration levels, but believes that 
our industry's greatest ability to positively impact these 
concerns comes through the proactive and voluntary management 
of sustainability and energy reduction programs, rather than 
through mandated government intervention and increased 
regulation. Substantial participation in previous programs such 
as Climate Leaders has indicated our industry's willingness to 
accept proportionate accountability and to effect positive 
change in a voluntary manner.
    To discuss real change, it has been my pleasure to work 
with our CEO Bob Shearer and our President Scott Smith, as well 
as all of our Shearer's associates in creating a culture of 
sustainability and corporate social responsibility, one that 
embraces the communities and environments in which we reside 
and operate. With energy and greenhouse gas tracking programs 
in place since 2007, Shearer's elevated its commitment to this 
program in 2009 with the design and construction of our new 
facility in Massillon, Ohio under the guidelines of the United 
States Green Building Council's LEED program, Leadership in 
Energy and Environmental Design.
    Shortly following the commissioning of this building in 
June of 2010, this site was recognized with the highest honor, 
the Certification of Platinum. With this, it was the only 
plant, the only manufacturing plant in the United States, and 
the only food manufacturing plant in the world, to receive this 
honor.
    In order to participate in this certification, Shearer's 
was required to establish not only baseline values for energy 
use in our industry, but also demonstrate a total energy 
intensity reduction of at least 14 percent. Like other 
manufacturers, the large portion of our energy consumed is in 
our manufacturing, over 83 percent. That comes in the form of 
natural gas and electricity that we use in the processes of 
cooking, baking, and frying our products.
    Shearer's was only able to achieve the required intensity 
reductions through the redesign and reconstruction of our basic 
processes. The resulting innovations resulted in patent pending 
designs for new ovens, heat recovery systems, and the recycling 
of energy in our plants.
    In summary, the site was measured and verified to use over 
30 percent less total energy than our comparative plants. This 
site was funded without any Federal grants or contracts, or any 
additional investment. Shearer's had to go to the level of 
investing 5.5 percent of the total project cost to reach these 
goals. However, the business case was there and a return on 
investment was made within less than 3 years. As a result, 
these innovations and enhancements are being passed on to our 
other facilities.
    Future market impacts. In simplest terms, Shearer's 
manufacturing relies on three primary ingredients--labor, 
energy in the form of natural gas and electric, and agriculture 
(potatoes, corn and grain). Shearer's has already witnessed 
shifts in our supply chain indicating the outcomes of 
greenhouse gas will continue to impact our supply chain moving 
forward. Shearer's is very sensitive to fluctuations in energy 
markets as well, where even small changes can result in 
devastating impacts. Our largest plants maintain yearly budgets 
of $5 million for natural gas and over $2 million in electric 
costs. Shearer's ability to consider the potential benefits of 
sustainable projects such as cogeneration to offset these 
energy costs have been severely limited by the uncertainty 
surrounding these established thresholds and the potential for 
the EPA to drop these triggers.
    In conclusion, Shearer's continues to proactively push the 
efficiencies of our processes, lowering energy use and 
associated greenhouse gas emissions. It is our belief that any 
attempts to control or reduce the impacts of greenhouse gas 
emissions must both be scientifically sound, as well as 
economically sustainable. This must be executed in a stepped 
and methodical approach, and with the involvement of affected 
industry partners.
    Shearer's would like to thank the subcommittee for its 
consideration of this important issue and we are open to answer 
any questions that you may have.
    [Applause.]
    [The prepared statement of Mr. Weyandt follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Thank you very much, Mr. Weyandt, we 
appreciate that.
    I will recognize myself for 5 minutes of questions.
    Mr. Street, you mentioned about the President being 
committed to an all-of-the-above energy policy and I might say 
that when he developed his campaign Web site about 5 months 
ago, we were looking at the Web site and every source of fuel 
was mentioned in that Web site except for coal. We wrote a 
letter and they actually put coal back in, but I think the 
actions of his administration indicate that while it might be 
on the campaign Web site, they do not have any intention of 
doing anything to facilitate the additional use of coal.
    Now Mr. Nation, you and Mr. Weyandt are both involved in 
manufacturing and the President talks frequently about the need 
to rebuild manufacturing and create new manufacturing jobs in 
America. And your company, Parkdale Mills, Mr. Nation, you said 
is the largest spun yarn company in the world, is that correct?
    Mr. Nation. That is correct.
    Mr. Whitfield. And you have, is it 4,000 employees?
    Mr. Nation. Just over 4,000 employees.
    Mr. Whitfield. And you operate in six countries in addition 
to the U.S., correct?
    Mr. Nation. That is correct.
    Mr. Whitfield. But most of your production comes from the 
U.S., right?
    Mr. Nation. Ninety percent, that is right.
    Mr. Whitfield. And how many employees did you say you all 
had, Mr. Weyandt?
    Mr. Weyandt. Just under 2,000.
    Mr. Whitfield. Two thousand.
    Now if this greenhouse gas rule is finalized, in the 
previous panel, the CEOs of these major utility companies all 
indicated that prices are going to go up for fuel, for 
electricity. And both of you seem to be saying that there is 
very little that you can do to reduce the amount of electricity 
that you need, is that correct?
    Mr. Nation. There is very little we can do at all. Our 
factories run 24 hours a day 7 days a week, we have to control 
our atmospheric conditions and we have to run every motor on 
every machine, just like he said, to try to make pennies when 
you spend millions of dollars, because we are a commodities 
business. We have no way to lower our energy costs any more.
    Mr. Whitfield. So to set aside the question of reliability 
because everyone is quite concerned about the reliability issue 
of whether you can get the electricity you need, but just 
focusing on the price, if these actually go into effect and 
then they also take it down to existing power plants, that is 
going to be devastating to your companies, is it not?
    Mr. Nation. It will, it could easily result in job loss, it 
certainly will stop future investments. We are in business to 
make a profit, we have to go where we can make a profit. If the 
energy costs are prohibitive, we cannot do it.
    Mr. Whitfield. Well, I know that in Kentucky, where I am 
from, we have some big aluminum plants there that have 
indicated that their margins are so low that if these 
electricity prices continue to go up, that they will move their 
facilities to Canada. And if you cannot economically compete 
here in the U.S., then you either have to decide, I suppose, to 
go out of business or go somewhere else. Is that correct?
    Mr. Nation. Those are basically your options, that is 
correct.
    Mr. Whitfield. You agree with that, Mr. Weyandt?
    Mr. Weyandt. That would present significant challenges for 
Shearer's. Currently electricity is the smaller portion of the 
two energies that we use. Again, per our discussion, frying, 
baking, those are the processes we use which are very natural 
gas intensive.
    Mr. Whitfield. Well, now baking, we have had bakers come to 
Washington and testify about the impact that greenhouse gas 
regulations will have on them from their emissions.
    Mr. Weyandt. And that is the bigger concern for Shearer's, 
when I talk about Title V permitting, is that the rules as 
described--the first panel was energy producers in terms of the 
supply chain to us, but the rules also could roll down if the 
limits are lowered significantly, they could impact us directly 
in terms of the air permits that we manage for our equipment 
which does combust natural gas, ultimately asking us to report 
on our greenhouse gas emissions, or could eventually cap or 
limit how much production we could use.
    Mr. Whitfield. I see. And that is a real threat because 
under the Clean Air Act as it exists today, EPA has a 
responsibility and a legal obligation to enforce emissions 
under their new proposed regulation to much smaller companies. 
I mean the New Source Performance Standard is focused on larger 
utility companies, but if they literally abided by the 
statute--and they have indicated that eventually, they are 
going to go down, down, down to smaller facilities--it would 
directly impact you on your emissions.
    So this could get even much worse than it already is and 
that is why we are doing everything that we can do to try to 
prevent EPA from finalizing this rule.
    At this time, I will recognize Mr. Griffith for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman. Let me follow up on 
that because I do think that is important and you referenced if 
the EPA lowers it.
    In reality, the Clean Air Act calls for that 250 ton 
standard and they have unilaterally on their own changed the 
law and they got a DC Circuit Court to agree with them that 
that is because if you apply what the Congress wrote back in 
the 1990s to greenhouse gases, particularly carbon dioxide, it 
is not doable. That being said though, there is a suit that is 
going to be appealed from the DC Circuit on up and that suit 
claims that they do not have the power to, what they call, 
tailor the rule.
    And I would have to agree with you that it would be hard on 
a lot of businesses in this country should the actual law be 
applied. It was not the members of Congress who made that 
decision, 250 tons was the law that they wrote, but they never 
put the words greenhouse gases or carbon dioxide. And in fact, 
Mr. Chairman, correct me if I am wrong, but I believe even the 
man who wrote the bill, Congressman Dingell, has said they 
never anticipated that it would apply to carbon dioxide. Am I 
correct on that?
    I yield.
    Mr. Whitfield. Actually that is true. As a matter of fact, 
when they had a conference between the Senate and the House, 
when the Clean Air Act was last amended in 1990, one of the 
members, I was told, introduced an amendment to allow 
greenhouse gases to be regulated and they would not accept it.
    Mr. Griffith. So that is where that problem comes in. So it 
is not just the EPA that may make a decision to lower it, it 
may actually be the courts that ultimately determine that they 
have no choice but to lower that standard, thus affecting 
business. And that is why there is so much concern over this 
particular regulation, because it is not just the current 
effects we heard about on the last panel or the effects we have 
heard on this panel, it is the future effects if they actually 
implement the law the way it was actually written originally.
    Mr. Street, let me ask you this. I know that you are here 
today representing the Buchanan County Chamber, but also are a 
manufacturer, are you not?
    Mr. Street. That is correct.
    Mr. Griffith. You manufacture conveyor belts, if I remember 
correctly, and other items for the coal industry?
    Mr. Street. We actually build the conveyors, we do not 
build the belts. We build all the terminal groups and I have 
been in business since 1981 with another partner. We service 
the coal industry, probably 75 to 80 percent will be directly 
shipped to the coal industry this year and some of the people 
are here, we ship to all the major companies throughout the 
United States.
    Mr. Griffith. And one of your customers is in fact Patriot 
Coal that went bankrupt last week?
    Mr. Street. That is correct.
    Mr. Griffith. And that is part of the reason why your 
employees are very concerned about whether or not they are 
going to have jobs in the months to come, is that true?
    Mr. Street. Well, what happened, on Tuesday morning, we 
suspended all their orders going to Patriot Coal. And naturally 
you send it out in the work sheets that we have stopped, we put 
those back and put other orders ahead of those and our 
employees became very, very concerned about, you know, what is 
going on. And with the Internet, they found out that Patriot 
had filed bankruptcy, which I know with the regulations and 
compounded with EPA and investors not wanting to invest in the 
coal industry, as per se that the coal-fired plants are being 
shut down, the steam market is in devastation.
    The first thing I heard--as a matter of fact, I was on the 
property in West Virginia on Monday and the first thing I heard 
on Tuesday morning was what is going on, do we still have a 
job? And naturally we sell to other companies throughout the 
industry. I reassured them and then with the announcement that 
they did have financing, DIP financing in Chapter 11, that we 
were reassured that all the orders that we had were going to be 
in place the rest of 2012.
    So my employees are very, very concerned even though we are 
still working 10 hours a day, two shifts.
    Mr. Griffith. And you indicated earlier that you have never 
had to lay anybody off and can I assume that because you are 
part of the community, that you will do everything in your 
power, notwithstanding the devastation that is happening in 
various parts of the coal industry, to keep all those people 
employed if you can?
    Mr. Street. We are going to do everything we possibly can. 
We could probably cut back to 8 hours a day, two shifts. We are 
not going to do anything to lay anybody off. Fortunately we 
have numerous contracts with other large companies throughout 
2012 and we just recently received some orders from the potash 
industry that are quite large. We are trying to get diversified 
to a point, but our employees are very, very concerned.
    Mr. Griffith. All right, I appreciate that.
    Mr. Nation, you told me earlier that either this year or 
late last year, that you one time had to tell a group of 
employees, several hundred, that you were going to have to 
close down that facility, and that you never wanted to do that 
again. Is that still your desire, to never have to close down a 
facility?
    Mr. Nation. I have had the unfortunate experience of 
standing in front of a big crowd of people and telling them 
that they were losing their job, at that point in time it was 
due to poor trade regulations enacted. But it is what I work 
hardest on every day, is never having to say that again to 
anybody. But I need the government's help to do it, and I need 
this thing not to be passed.
    Mr. Griffith. You need this not to be passed in order to 
not to have to do that again.
    I yield back, Mr. Chairman.
    Mr. Whitfield. Thank you very much. We appreciate your 
testimony as well.
    I might just make a couple of comments. One, we appreciate 
the work that you do as manufacturers because you are a very 
large company, some of these companies are small, but two out 
of every three jobs created in America today are still created 
by small business men and women, and at a time when our economy 
is struggling and efforts are being made to decrease 
unemployment, increase employment, we are not making much 
progress. And the reason Morgan Griffith and many others of us 
in Washington are having so many hearings and writing letters 
and meeting with Lisa Jackson and Gina McCarthy and others over 
at EPA is that we feel like with the multitude of regulations 
coming out of EPA at this particular time in our Nation's 
history, our economy is so sluggish we need to do more to 
create jobs rather than create obstacles that make it more 
difficult to create jobs.
    One of our witnesses earlier mentioned Region 1 
Administrator for EPA, a fellow named Curt Spalding. I am not 
sure if he is still the Region 1 administrator or not, but two 
days after EPA released its greenhouse gas proposed regulation, 
he gave a speech at Yale University and he said this, among 
other things, ``If you want to build a coal plant, you have got 
a big problem. You must remember if you go to West Virginia, 
Pennsylvania, Virginia, Kentucky and other states where 
communities depend upon coal, you say to those communities, you 
should go away.''
    And as I said in the very beginning, when EPA goes through 
these thorough analyses looking at benefits from proposed new 
regulations, they inevitably talk about we are going to stop X 
thousands of premature deaths, we are going to stop X thousands 
of hospitalizations, we are going to stop X thousands of heart 
attacks that they have come up with these numbers through some 
modeling that they do. And yet, the thing that is so 
frustrating about it is they never go to the communities where 
the jobs are going to be lost when they implement the new 
regulations, to determine the cost for that community, those 
people and what it means to them and their families when they 
lose their healthcare.
    [Applause.]
    Mr. Whitfield. They talk about the new jobs that are going 
to be created in the green industries and they have said 
recently that they have created four million new jobs in green 
industries. But, you know, Morgan, when Darrell Issa had that 
hearing on the definition of a green job, under this 
administration, we found out that if you are someone working in 
a service station and you fill up a bus, that is a green job; 
if you work in an antique store, you are recycling, that is a 
green job. So the definition of the green jobs has been skewed 
in such a way that yes, you can talk about all the jobs created 
but we know when they gave 538 million taxpayer dollars, to 
Solyndra, to a company controlled by George Kaiser of Oklahoma, 
who bundled millions of dollars for the President. And by the 
way, after they received that money, as you know, they went 
into bankruptcy, but they subordinated the taxpayers of America 
who provided the money so that they would get their money back 
after the venture capitalists and the private people got their 
money back.
    So this administration, in my view, even though they talk 
about middle class America, they are not nearly as interested 
in middle class America as they say.
    So thank you all very much for being with us today and Mr. 
Griffith, do you have any other questions or comments?
    Mr. Griffith. Well, if I could expand on that a little bit.
    Two things; one that I think is extremely important, I know 
that all of you all want to keep your jobs in the United States 
if at all possible. What sometimes is forgotten is that if we 
make our energy costs so high by unreasonable regulations, that 
a company has to send their jobs--either they close down and 
somebody else in another country starts producing that product, 
or they have to send their jobs overseas. What then happens is 
those countries are producing the goods that we used to 
manufacture here. Might not apply to potato chips, but it 
certainly applies to Mr. Nation's yarn products. And what 
happens then is they do not have the reasonable regulations 
that we already have. So when you send those jobs to Colombia 
or to India or to China or Kazakhstan, and they do not have 
those reasonable regulations that we have currently, they put 
more air pollution into the air. And according to a NASA study, 
it takes 10 days to get from the middle of the Gobi Desert in 
China to the eastern shore of Virginia. So what happens is we 
send our jobs over there because we have policies that make the 
cost of energy so high that a company cannot stay here, and 
then we get shipped back the air pollution that was the 
original reason for shipping away our jobs in the first place.
    [Applause.]
    Mr. Griffith. If you look at the total picture, it just 
does not make any sense.
    And, you know, I am reminded by both a bumper sticker and 
by the facts that we have heard in front of our committee that 
you have gone into in so much detail to make sure that we have 
all the facts in front of us, and that is the number one 
indicator for whether or not people have health problems in 
their community is the poverty level. And so I am reminded of 
that bumper sticker that I have seen on a number of vehicles 
around this district, and that is ``If you think coal is ugly, 
wait until you see poverty.''
    Mr. Chairman, I think it is extremely important that we 
have heard from these witnesses today, that we have had it open 
for folks who do not have to travel to DC to see what our 
hearings are like, and to understand what we are trying to do. 
I appreciate that very, very much.
    I thank you so much for doing that, and I yield back my 
time.
    Mr. Whitfield. Well, thank you.
    [Applause.]
    Mr. Whitfield. In conclusion, I would simply say thank you 
for coming. It is important that we all be aware of precisely 
what is going on in Washington and the impact of decisions 
being made there.
    I want to once again thank the Southwest Virginia Higher 
Education Center and all of the people here who helped us put 
this on.
    I will tell you what, I found out Morgan Griffith is a 
determined fellow, because he stayed on us about this hearing, 
and we are delighted that we came because it was something that 
needed to be done.
    I want to thank you three witnesses for being with us as 
well as those on the first panel. We look forward to working 
with all of you to do everything in our power to have more 
common sense regulations and laws adopted in Washington, DC.
    So thank you very much and that adjourns today's hearing.
    [Applause.]
    [Whereupon, at 11:12 a.m., the subcommittee was adjourned.]

                                 
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