    [House Hearing, 113 Congress]
    [From the U.S. Government Publishing Office]

        EPA'S PROPOSED GHG STANDARDS FOR NEW POWER PLANTS AND H.R. ___,
                         WHITFIELD-MANCHIN LEGISLATION

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

                                    HEARING

                                   BEFORE THE

                        SUBCOMMITTEE ON ENERGY AND POWER

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               FEBRUARY 13, 2013

                                   __________

                               Serial No. 113-94

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          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
    RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
    JOE BARTON, Texas                      Ranking Member
      Chairman Emeritus                  JOHN D. DINGELL, Michigan
    ED WHITFIELD, Kentucky                 Chairman Emeritus
    JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
    JOSEPH R. PITTS, Pennsylvania        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
    TIM MURPHY, Pennsylvania             GENE GREEN, Texas
    MICHAEL C. BURGESS, Texas            DIANA DeGETTE, Colorado
    MARSHA BLACKBURN, Tennessee          LOIS CAPPS, California
      Vice Chairman                      MICHAEL F. DOYLE, Pennsylvania
    PHIL GINGREY, Georgia                JANICE D. SCHAKOWSKY, Illinois
    STEVE SCALISE, Louisiana             JIM MATHESON, Utah
    ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
    CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
    GREGG HARPER, Mississippi            DORIS O. MATSUI, California
    LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin
    BILL CASSIDY, Louisiana                  Islands
    BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
    PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
    DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
    CORY GARDNER, Colorado               BRUCE L. BRALEY, Iowa
    MIKE POMPEO, Kansas                  PETER WELCH, Vermont
    ADAM KINZINGER, Illinois             BEN RAY LUJAN, New Mexico
    H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
    GUS M. BILIRAKIS, Florida
    BILL JOHNSON, Missouri
    BILLY LONG, Missouri
    RENEE L. ELLMERS, North Carolina
                        Subcommittee on Energy and Power

                             ED WHITFIELD, Kentucky
                                     Chairman
    STEVE SCALISE, Louisiana             BOBBY L. RUSH, Illinois
      Vice Chairman                        Ranking Member
    RALPH M. HALL, Texas                 JERRY McNERNEY, California
    JOHN SHIMKUS, Illinois               PAUL TONKO, New York
    JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
    LEE TERRY, Nebraska                  GENE GREEN, Texas
    MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
    ROBERT E. LATTA, Ohio                MICHAEL F. DOYLE, Pennsylvania
    BILL CASSIDY, Louisiana              JOHN BARROW, Georgia
    PETE OLSON, Texas                    DORIS O. MATSUI, California
    DAVID B. McKINLEY, West Virginia     DONNA M. CHRISTENSEN, Virgin
    CORY GARDNER, Colorado                   Islands
    MIKE POMPEO, Kansas                  KATHY CASTOR, Florida
    ADAM KINZINGER, Illinois             JOHN D. DINGELL, Michigan
    H. MORGAN GRIFFITH, Virginia         HENRY A. WAXMAN, California (ex
    JOE BARTON, Texas                        officio)
    FRED UPTON, Michigan (ex officio)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Ed Whitfield, a Representative in Congress from the
      Commonwealth of Kentucky, opening statement....................     1
        Prepared statement...........................................     3
    Hon. Jerry McNerney, a Representative in Congress from the State
      of California, opening statement...............................     4
    Hon. Fred Upton, a Representative in Congress from the state of
      Michigan, opening statement....................................     5
        Prepared statement...........................................     6
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................     7

                                   Witnesses

    Joe Manchin, A United States Senator from the State of West
      Virginia.......................................................     8
        Prepared statement...........................................    11
    Janet McCabe, Acting Assistant Administrator for Air and
      Radiation, U.S. Environmental Protection Agency................    15
        Prepared statement...........................................    17
        Answers to submitted questions...............................   225
    E. Scott Pruitt, Attorney General, State of Oklahoma.............    55
        Prepared statement...........................................    58
    Henry Hale, Mayor, Fulton, Arkansas..............................    74
        Prepared statement...........................................    76
    Tony Campbell, President and CEO, East Kentucky Power Cooperative    80
        Prepared statement...........................................    83
    Susan F. Tierney, Managing Principal, Analysis Group.............    90
        Prepared statement...........................................    92
    David Hawkins, Director of Climate Programs, Natural Resources
      Defense Council................................................   122
        Prepared statement...........................................   124
    J. Edward Cichanowicz, Engineering Consultant....................   149
        Prepared statement...........................................   151
    Donald R. Van Der Vaart, Chief, Permitting Section, North
      Carolina Department of Environment and Natural Resources,
      Division of Air Quality........................................   163
        Prepared statement...........................................   165
    Ross E. Eisenberg, Vice President, Energy and Resources Policy,
      National Association of Manufacturers..........................   172
        Prepared statement...........................................   174

                               Submitted Material

    Letter of November 13, 2013, from the American Coalition for
      Clean Coal Electricity to the subcommittee, submitted by Mr.
      Whitfield......................................................   200
    Report by John R. Christy, submitted by Mr. McKinley.............   203
    Statement of Richard A. Bajura, submitted by Mr. McKinley........   218

       EPA'S PROPOSED GHG STANDARDS FOR NEW POWER PLANTS AND H.R. ----,
                         WHITFIELD-MANCHIN LEGISLATION

                                  ----------

                          THURSDAY, NOVEMBER 14, 2013

                      House of Representatives,
                      Subcommittee on Energy and Power,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 9:39 a.m., in
    room 2123 of the Rayburn House Office Building, Hon. Ed
    Whitfield (chairman of the subcommittee) presiding.
        Members present: Representatives Whitfield, Scalise, Hall,
    Shimkus, Terry, Burgess, Latta, Cassidy, Olson, McKinley,
    Gardner, Kinzinger, Griffith, Barton, Upton (ex officio),
    McNerney, Tonko, Yarmuth, Green, Capps, Barrow, Dingell, and
    Waxman (ex officio).
        Staff present: Nick Abraham, Legislative Clerk; Gary
    Andres, Staff Director; Charlotte Baker, Press Secretary; Sean
    Bonyun, Communications Director; Allison Busbee, Policy
    Coordinator, Energy and Power; Patrick Currier, Counsel, Energy
    and Power; Tom Hassenboehler, Chief Counsel, Energy and Power;
    Brandon Mooney, Professional Staff Member; Mary Neumayr, Senior
    Energy Counsel; Chris Sarley, Policy Coordinator, Environment
    and the Economy; Peter Spencer, Professional Staff, Oversight;
    Jean Woodrow, Director, Information Technology; Jeff Baran,
    Democratic Senior Counsel; Greg Dotson, Democratic Staff
    Director, Energy and Environment; Caitlin Haberman, Democratic
    Policy Analyst; and Alexandra Teitz, Senior Counsel, Energy and
    Environment.

      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.
    As you know, this morning we are having a hearing on the EPA's
    proposed greenhouse gas standards for new coal powered plants,
    and also we are going to touch on discussion draft legislation
    that has been introduced by myself, Senator Manchin, Morgan
    Griffith, David McKinley, John Shimkus, and many others in the
    Congress. Because of what many of us view as the extreme
    position in this greenhouse gas regulation that EPA has taken,
    our legislation would allow EPA to regulate greenhouse gases,
    but Congress would set the parameters for that regulation. And
    our legislation would apply to new plants, as well as existing
    plants, although they would be treated in significantly
    different ways.
        Just 1 year ago James Wood, the Deputy Assistant Secretary
    of the Department of Energy's Office of Clean Coal, made this
    statement regarding CCS technologies. ``Unlike the cost
    effective advanced technologies that were developed to reduce
    emissions of nitrogen, sulfur, mercury and particulates,
    technologies to capture and store carbon emissions from
    electric power plants are elusive, expensive and, although
    there are CO2 separation technologies in use in the
    natural gas and chemical processing industries, there has not
    yet been deployment in the electric power industry, and there
    is little history of the integration of these technologies with
    electric generation in reliable or cost-effective modes.'' So
    bottom line is we all know that EPA cannot point to a single
    completed operational facility that meets the emissions
    standard it has set for coal in this proposed regulation, and
    all of the demonstration projects that they refer to have
    received huge government subsidies. All of them are cost
    overruns. None of them are in operation.
        Now, Section 111 of the Clean Air Act defines the term
    ``standard of performance'' as ``a standard for emissions of
    air pollutants which reflects the degree of emission limitation
    achievable through the application of the best system of
    emission reduction which the Administrator determines has been
    adequately demonstrated.'' And that is the key word. And I am
    sure that Ms. McCabe, who will be testifying later this
    morning, would agree, and knows full well, that there is going
    to be legal challenges on this proposed rule in the court
    system, because they have gone a long way down the road that
    they have never traveled before in setting these demonstration
    projects as something that is adequately demonstrated that the
    technology can work.
        So EPA is doing everything it can do, with the backing of
    the President, to move us down a road that we may not be yet
    ready to move down. As a matter of fact, when Congress
    addressed this issue the last time, the Democrats controlled
    the House and the Senate, and the Markey-Waxman bill was
    rejected by the U.S. Senate. They could not get it through. And
    so now they are attempting to do, by regulation, what cannot be
    done through legislation. So this morning we find ourselves
    living in a country where we are the only country in the world
    where you cannot legally build a new coal powered plant because
    the technology is not available to meet the emission standard.
        Now, I recognize that people are not rushing out to build
    new coal powered plants because natural gas prices are so low.
    But why in the world would a country, struggling with economic
    growth, trying to be competitive in the global marketplace, say
    to its citizens, and make a policy decision without a national
    debate, that one of our most abundant resources will not be
    used in America? Now, people say, well, natural gas prices are
    so low, and they are, as I have stated, but what is happening
    in Europe? How many of you know that over the last 20 months
    they are in the process of closing down 30 gigawatts of new
    natural gas plants? Why? Because natural gas coming out of
    Russia is so expensive, so what happened last year in Europe?
        Well, we view Europe as a green arena, and I am for all of
    the above, so they moved quickly down that road. 22 percent of
    their electricity is produced from renewables, but gas prices
    are so high that last year they imported 45 percent of our coal
    export market, which was the largest export market we had had
    in about 15 years, and so they are now building coal plants in
    Europe because of the high cost of natural gas. So why, in
    America, would we make the decision because gas prices are low
    now, we are not going to allow a new coal powered plant to be
    built? So that is what we are going to try to explore this
    morning. I understand there are different views on it, and,
    obviously, that is why we have hearings. But I look forward to
    the testimony of all our witnesses today on an issue that is
    very important.
        [The prepared statement of Mr. Whitfield follows:]

                    Prepared statement of Hon. Ed Whitfield

        This morning, we continue our oversight of EPA's numerous
    regulations targeting the use of coal. The regulation at issue
    today, the proposed greenhouse gas standards for new power
    plants, may well be the most damaging one yet in the agency's
    all-out attack on one of our nations' most affordable, reliable
    energy sources, coal.
        There is a great deal about this proposed rule that is
    concerning for states and ratepayers. The proposed rule has
    serious implications for the affordability, reliability, and
    diversity of the nation's electricity portfolio. Today, we will
    examine this proposed rule and also discuss a more reasonable
    alternative. Senator Joe Manchin and I have released draft
    legislation that allows for greenhouse gas emissions
    reductions, but it does so in a manner that ensures coal
    remains a key part of America's energy mix. It would simply
    provide that in setting greenhouse gas standards for new
    plants, that EPA base the standards on tested and proven
    technologies that are commercially achievable. It would also
    provide that Congress set the effective date for any
    regulations that EPA develops relating to existing power
    plants.
        I would like to thank my good friend Senator Manchin for
    appearing before us today and for working with me on this
    commonsense alternative. Make no mistake--EPA's proposed GHG
    New Source Performance Standards would effectively ban new
    coal-fired generation. It would essentially require carbon
    capture and storage technologies, which are nowhere close to
    being commercially viable. Even Charles McConnell, former
    Assistant Secretary for Fossil Energy in the Obama
    administration, recently testified before Congress that it is
    ``disingenuous'' to say that CCS is ready.
        And while EPA moves to finalize a rule that would spell the
    end of new coal-fired generation, it has also pledged to
    finalize regulations that go after existing sources--a one-two
    punch to eliminate coal as a source of electricity.
        Now, I might add that some still claim that there is no
    direct attack on coal or fossil fuels in general. They argue
    that coal-fired power plant shutdowns are occurring simply
    because natural gas is cheaper, and that coal is a victim of
    nothing more than market forces. But if that was truly the
    case, one wonders why the Obama EPA feels the need to keep
    issuing rules that are nowhere close to being achievable by
    coalfired power plants. In reality, while the increase in
    domestic natural gas production is in itself good news for our
    economy, this nation still needs a diversity of supply that
    also comes from coal and nuclear as well as renewable sources
    of electricity. The generation mix varies greatly across the
    country based on what makes sense locally, including my part of
    the country in Kentucky which relies heavily on coal.
        America has the world's largest coal resources, and EPA's
    pending regulations to phase out or eliminate the use of coal
    for both new and existing power plants poses extreme risks for
    jobs, energy reliability, and energy security. And these
    regulations threaten to drive up electric bills in coal-reliant
    states and restrict access to energy for many Americans. We
    should be pursuing energy policies that will lead to more
    energy that is less expensive for people, rather than less
    energy that is more expensive for people. And this decision
    should be left with the American people, not with EPA to
    decide.
        Further, many of our largest industrial competitors,
    including China, have been rapidly adding coal to their
    generation portfolio, and for good reason given its low cost
    and reliable performance. And none of these nations are
    imposing on themselves anything like EPA's anti-coal agenda.
    The global economy is sending us a clear message--the more we
    handicap American coal, the more we handicap American
    competitiveness.
        Prior to the Obama administration, the EPA and states had a
    decades-long history of regulating coal in ways that reduced
    emissions without abandoning this vital energy source. And I
    believe that Sen. Manchin and I have tapped into that tradition
    of realistic and achievable regulation with our draft
    legislation. Our bipartisan and bicameral proposal is the
    commonsense way to ensure that any greenhouse gas regulations
    for power plants going forward are achievable.
        I would conclude by noting that this hearing is about what
    energy policy makes sense for the American people. We need to
    keep the lights on and the bills low while creating badly
    needed jobs. And it won't happen without coal.

                                    #  #  #

        Mr. Whitfield. At this time I would like to recognize the
    gentleman from California, Mr. McNerney, for his 5 minute
    opening statement.

     OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. McNerney. Thank you, Mr. Chairman. It is a little
    chilly in here this morning, so maybe we should turn on the
    coal-fired power plants and get things warmed up.
        You know, I am glad we are having this hearing, but I want
    to make clear that this hearing is about climate change. The
    legislation focuses on the Whitfield bill. The draft
    legislation would block EPA's ability to issue standards to
    limit carbon pollution from new and existing coal-fired power
    plants. It effectively rolls back EPA's authority under the
    Clean Air Act. The legislation nullifies EPA's proposed carbon
    standards for new power plants and prohibits future standards
    from being implemented unless at least six units at different
    locations have met that standard for 12 continuous months. It
    is not clear why utilities would deploy any carbon pollution
    control technology in the absence of a requirement to do so. As
    a result, the bill's requirements appear to be insurmountable.
    In addition, the bill would require Congress to pass new
    legislation before the EPA could limit carbon pollution from
    existing power plants.
        Greenhouse gases pose a significant threat to our economy,
    to our public health, and to the environment. We have heard
    time and again from the world's leading scientists that
    greenhouse gases have negative consequences, and are causing
    global warming. I share the view of many of my colleagues, that
    we need a comprehensive approach to our nation's energy needs.
    Coal can continue to play an important role, but we must
    address carbon emissions.
        California still relies on coal powered plants for some of
    its energy needs. However, California has been a national
    leader in clean energy generation, and in reducing greenhouse
    gases. A Republican governor established short and long term
    greenhouse gas emission reduction targets for California, to
    reduce carbon emissions to 1990 levels by 2020, and 80 percent
    below 1990 levels by 2050. The State's carbon emissions have
    declined for 3 straight years.
        The development of carbon capture and storage technologies
    is essential to the future of coal. The International Energy
    Agency expects carbon capture and storage to rank third among
    ways to reduce carbon emissions by 2050, behind energy
    efficiency, and the use of renewable sources, and ahead of
    nuclear power. As far back as 2009, industry stakeholders were
    talking about the benefits of carbon capture and sequestration.
    Although work remains to be done on carbon capture and
    sequestration, I believe that the current technological
    capacity exists to effectively deploy CCS technology on power
    plants. Taking away incentives for implementation of carbon
    capture and sequestration will stunt the progress that has been
    made in this industry to this point. We saw a similar scenario
    play out in the wind industry back in the 1990s, that I was
    involved in. The United States was building new technology, and
    was leading the charge, but proper support went away, and so
    did the jobs and the technology. I saw those jobs leave this
    country. That set our industry back for years.
        As I said at the beginning of my opening statement, this
    hearing is about climate change. Either we believe that climate
    change is happening, and is caused by human activities, or we
    don't. If we do believe that climate change is happening, this
    bill is exactly the wrong way to go.
        I want to thank the witnesses for their time, and I look
    forward to their testimony, and I am interested to hear how we
    can support efforts to reduce greenhouse gases, while boosting
    energy independence, and protecting public health.
        Thank you, Mr. Chairman. I yield back.
        Mr. Whitfield. Thank you, Mr. McNerney. At this time
    recognize the gentleman from Michigan, Mr. Upton, for 5
    minutes.

       OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Upton. Well, thank you, Mr. Chairman.
        You know, nearly everyone claims to support an all-of-the-
    above energy strategy, everybody. And, in my view, all-of-the-
    above allows every viable energy resource to compete. It
    doesn't take certain options off the table by setting
    unachievable Federal regs. Unfortunately, it is the latter that
    has been on display by the EPA. EPA's proposed greenhouse gas
    rule for new power plants is the latest effort by this
    administration to eliminate the use of coal. The President's
    energy strategy is the exact opposite of an all of the above
    approach, and would limit our energy choices, jeopardize jobs,
    raise energy costs, and threaten America's global
    competitiveness.
        An open all-of-the-above energy strategy is important
    because diversity of energy is critical to providing affordable
    and reliable electricity to U.S. homes and businesses. The
    nation has, for decades, benefitted from a variety of sources
    of electricity. The idea that electricity from coal is no
    longer needed because we have more natural gas is misguided.
    And, while our Nation has become the envy of the world because
    of recent breakthroughs unlocking vast amounts of oil and
    natural gas, it never makes sense to regulate an entire fuel
    category out of the mix. It makes even less sense when the
    resource makes up 40 percent of the fuel used for electricity
    domestically, while at the same time other nations, from
    Germany to China, are continuing to build new state-of-the-art
    coal facilities.
        Given that the U.S. has the largest coal reserves, and is
    the largest producer of coal, it should remain a critical
    contributor to a diverse electricity portfolio for decades to
    come. Fuel diversity not only gives us the flexibility we need
    to keep electricity costs low, it also helps ensure
    reliability. As we have heard from many witnesses in previous
    hearings, the coal-fired power plant shutdowns already underway
    pose a serious threat to reliability in many regions,
    particularly in the Midwest. That threat will continue to get
    worse if these shutdowns increase in the years ahead while we
    limit our options for new base load power.
        In sum, fuel diversity gives us a more stable, reliable,
    affordable electricity supply, and any threat to coal,
    including the EPA's proposed rule, is a threat to that
    diversity. I want to applaud both Chairman Whitfield and
    Senator Manchin from West Virginia for their efforts in
    authoring a workable bipartisan, and bicameral, alternative to
    EPA's proposed rule. Their proposal is a good faith effort that
    requires a critical check on EPA's misuse of the Clean Air Act
    to try and accomplish through regulation what was rejected in
    Congress through legislation. Their approach does not prohibit
    the EPA for setting the standard for new sources, but instead
    focuses on setting standards that have been adequately
    demonstrated at geographically diverse locations around the
    country, a key ingredient that is missing from EPA's regulatory
    proposal. It deserves serious consideration by this committee
    and Congress.
        And I yield back my time.
        [The prepared statement of Mr. Upton follows:]

                     Prepared statement of Hon. Fred Upton

        Nearly everyone claims to support an all-of-the-above
    energy strategy. In my view, all-of-the-above allows every
    viable energy resource to compete. It does not take certain
    options off the table by setting unachievable federal
    regulations. Unfortunately, it is the latter that has been on
    display by the Environmental Protection Agency.
        EPA's proposed greenhouse gas rule for new power plants is
    the latest effort by the Obama administration to eliminate the
    use of coal. The president's energy strategy is the exact
    opposite of an all-of-the-above approach and would limit our
    energy choices, jeopardize jobs, raise energy costs, and
    threaten America's global competitiveness.
        An open, all-of-the-above energy strategy is important
    because diversity of energy is critical to providing affordable
    and reliable electricity to U.S. homes and businesses. The
    nation has for decades benefitted from a variety of sources of
    electricity.
        The idea that electricity from coal is no longer needed
    because we have more natural gas is misguided. While our nation
    has become the envy of the world because of recent
    breakthroughs unlocking vast amounts of oil and natural gas, it
    never makes sense to regulate an entire fuel category out of
    the mix. It makes even less sense when that resource makes up
    40 percent of the fuel used for electricity domestically while
    at the same time other nations, from Germany to China, are
    continuing to build new state-of-the-art coal facilities.
        Given that the United States has the world's largest coal
    reserves and is the largest producer of coal, it should remain
    a critical contributor to a diverse electricity portfolio for
    decades to come.
        Fuel diversity not only gives us the flexibility to keep
    electricity costs low, but it also helps ensure reliability. As
    we have heard from many witnesses in previous hearings, the
    coal-fired power plant shutdowns already underway pose a
    serious threat to reliability in many regions, particularly the
    Midwest. That threat will continue to get worse if these
    shutdowns increase in the years ahead while we limit our
    options for new base load power.
        In sum, fuel diversity gives us a more stable, reliable,
    and affordable electricity supply. And any threat to coal,
    including EPA's proposed rule, is a threat to that diversity.
        I would like to applaud both Chairman Whitfield and Senator
    Manchin for their efforts in authoring a workable bipartisan
    and bicameral alternative to EPA's proposed rule. Their
    proposal is a good faith effort that requires a critical check
    on EPA's misuse of the Clean Air Act to try to accomplish
    through regulation what was rejected in Congress through
    legislation. Their approach does not prohibit the EPA from
    setting a standard for new sources, but focuses on setting
    standards that have been adequately demonstrated at
    geographically diverse locations around the country, a key
    ingredient missing from EPA's regulatory proposal. It deserves
    serious consideration by this committee and Congress as a
    whole.

                                    #  #  #

        Mr. Whitfield. Thank you, Mr. Upton. At this time I
    recognize the distinguished gentleman from California, Mr.
    Waxman, for 5 minutes.

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

        Mr. Waxman. Thank you very much, Mr. Chairman.
        The warning signs of climate change are happening all
    around us, but House Republicans are averting their eyes,
    denying the science, and jeopardizing the future of our
    children and grandchildren. Not only is this committee refusing
    to act, we are considering legislation to stop the
    administration from acting under existing law. The bill before
    us is a recipe for climate disaster.
        Last week, the World Meteorological Association reported
    that the levels of heat trapping gases in the atmosphere set
    new records. The levels are now higher than at any time in the
    last 800,000 years. Direct measurements and basic physics tell
    us that carbon pollution is warming the planet.
        Now, my Republican colleagues deny this scientific reality.
    I wish they would open their eyes and escape their
    congressional bubble. In my state, firefighters know that
    wildfires are getting bigger and more dangerous as heat and
    drought become more common. Across the West, foresters are
    grappling with dying forests, killed by bark beetles that
    thrive in warmer temperatures. Farmers know the weather better
    than anyone else, and they say it is different now. Coastal
    communities confront ever-rising sea levels, putting them at
    risk from extreme storms and ever higher storm surges. And just
    last week a super typhoon, perhaps the strongest ever recorded,
    demolished entire cities in the Philippines. Extreme weather,
    sea level rises, heat waves, droughts, floods, wildfires,
    pests. This is what climate change looks like.
        So what is this committee doing today? Denying,
    obstructing, and weakening the Clean Air Act. We will hear
    charges today that the administration is waging a war on coal.
    We will hear claims that EPA's rules will block all new coal-
    fired power plants. We will be told that we must pass
    legislation to effectively repeal EPA's existing authority to
    address carbon pollution from power plants under the Clean Air
    Act. And we will be told this is a reasonable middle ground.
        But we will hear no recognition of the dangers from climate
    change, much less any suggestions for dealing with it. EPA's
    approach is actually very reasonable. For existing coal-fired
    power plants, EPA is starting by listening to stakeholders. EPA
    hasn't yet issued a proposal. For new coal-fired plants, EPA
    proposes to require partial use of carbon controls that are
    technically feasible, have been used in other industrial
    applications for years, and have been demonstrated on existing
    power plants. Several full scale commercial applications of
    carbon capture at coal-fired power plants are currently under
    construction.
        Of course, these controls are more expensive than dumping
    carbon pollution into the air. That is why industry will never
    deploy them without government incentives or requirements.
        If this committee is truly concerned about the future of
    coal, it should be doing everything possible to advance the
    carbon capture technologies. That is the path to continued use
    of coal in a carbon constrained world.
        That is exactly what Democrats tried to do. In 2009 the
    Waxman-Markey bill gave utilities certainty about carbon
    regulation. It gave utilities with more coal generation extra
    allowances to help defray their costs. And it provided $60
    billion, $60 billion, to deploy carbon capture technology. That
    bill provided a future for coal. We worked with Representative
    Boucher, the coal miners, the utility industry, to make sure of
    that.
        But House Republicans said no.
        In the Recovery Act, President Obama provided $3.4 billion
    for carbon capture and storage technology. But House
    Republicans said no.
        So I ask my Republican colleagues, if you don't like
    President Obama's approach, if you don't like congressional
    Democrats' approach, what is your plan for dealing with climate
    change? Just saying no, pretending it doesn't exist, is just a
    recipe for climate disaster.
        Yield back my time.
        Mr. Whitfield. Thank you, Mr. Waxman, and that completes
    the opening statements. And we have this morning three panels
    of witnesses, and on the first panel we are delighted to
    welcome Senator Joe Manchin of the great State of West
    Virginia, and he will be our first witness. Senator Manchin is
    on the Energy and Natural Resources Committee, and he is also
    chairman of the Public Lands, Forest, and Mining Subcomittee.
    And I know you are on a lot of other committees as well,
    Senator, but we welcome you, and thank you for taking time to
    join us this morning.
        And I will say that when Senator Manchin finishes his
    statement, he has got to get over to a confirmation hearing, so
    I know that you all will be disappointed you can't ask him any
    questions.
        But, Senator Manchin, you are recognized for 5 minutes.

    STATEMENT OF HON. JOE MANCHIN, A UNITED STATES SENATOR FROM THE
                         STATE OF WEST VIRGINIA

        Senator Manchin. Thank you for inviting me, and having me
    be part of this. My colleague from West Virginia, Congressman
    McKinley, good to be with you. And I want to, first of all, say
    that I do believe that seven billion people on Mother Earth has
    had an impact on the environment. We have a responsibility. We
    also have seven billion people that would like to eat and
    provide for themselves, and their families, so we have got to
    find that balance.
        The EPA regulation of greenhouse gas emissions from both
    new and existing power plants are what we are talking about in
    this legislation that we proposed. Our legislation would
    protect Americans' access to reliable and affordable
    electricity now, and for decades to come, finding that balance
    we talk about. We need a diverse energy portfolio, which, I
    think, Mr. Upton, you have talked about, and we sure do need
    that, a true all of the above mix of natural gas, nuclear,
    renewables, oil, and coal. Unfortunately, the Environmental
    Protection Agency has chosen a regulatory path devoid of common
    sense that will take us way off course from a future of
    abundant, affordable clean energy. Our legislation tries to get
    the EPA back on track, but in a way that does nothing to
    prevent the EPA from acting in a reasonable and rational way.
        Mr. Chairman, EPA's proposed standards for new coal-fired
    power plants would effectively prevent any new plants from
    being constructed. Their standards require coal-fired power
    plants to deploy technologies that are not currently
    commercially viable. And though EPA has yet to formally propose
    new standards for existing power plants, there is every
    indication that these standards will be unachievable as well.
    The EPA is holding the coal industry to impossible standards.
    And, for the first time ever, the Federal Government is trying
    to force an industry to do something that is technologically
    impossible to achieve, at least for now. The industry is making
    steady progress, but is still a ways off from developing the
    carbon capture and storage technologies that the EPA claims are
    commercially viable. We don't have a commercially viable plant
    right now.
        Right now coal provides 37 percent of all electricity
    generated in the United States, and the Department of Energy
    projects coal will provide at least that much through 2040.
    Right now we simply can't make up the difference with
    renewables. That is just wishful thinking. So if we just stand
    by and do nothing, and let the EPA eliminate coal from the
    energy mix, we are going to see stability of our electrical
    grid threatened, and see the price of electricity rise
    dramatically, jeopardizing America's economy and countless
    jobs, with no real environmental benefit, but we are just
    standing by.
        Our bipartisan, bicameral legislation is part of a national
    discussion about our energy future and the proper role of
    regulatory bodies like the EPA. Our legislation ensures that
    EPA will no longer be able to impose unachievable standards on
    coal-fired power plants. It is just common sense that
    regulations are based on what is technologically possible at
    the time they are proposed. With regulations, if they aren't
    feasible, they aren't reasonable.
        For new plants, our legislation will require that any EPA
    regulation must be categorized by fuel type, coal, or gas. The
    EPA can only impose a standard if that standard has been
    achieved for 12 consecutive months at six different U.S.
    electricity generating plants, operating on a full commercial
    basis. For existing plants, any EPA proposed rule will not take
    effect until Federal law is enacted specifying the rule's
    effective date, and EPA must report to Congress on the economic
    impact of the rule.
        Mr. Chairman, it is time we strike a balance between
    healthy environment and a healthy economy. That is all we have
    asked for, is a balance, and that is what our legislation does.
    Abundant, reliable, affordable energy made this country the
    economic leader of the world. We all wouldn't enjoy the life we
    have today if it had not been for the coal, when produced by
    the hardworking people of this country. And that is the same
    formula that will keep us up at the front. It is time the EPA
    started working as our partner, not as our adversary, to
    achieve that balance. And the EPA can start by recognizing it
    is just common sense that regulations should be based on what
    is technologically possible at the time they are proposed. That
    is all we have asked for.
        Again I want to thank you, Mr. Chairman, and all the
    members of the committee here for allowing me to come before
    you, and thank you for the opportunity to work with you on this
    very important piece of legislation.
        [The prepared statement of Senator Manchin follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Well, Senator Manchin, thank you so much for
    your testimony. I know all of us look forward to working with
    you as we move forward, and we appreciate very much your taking
    time to come over and visit us on the House side.
        Senator Manchin. Well, it is good to be with you.
        Mr. Whitfield. Thank you so much.
        Senator Manchin. Thank you.
        Mr. Dingell. Mr. Chairman, I would just like to say welcome
    to Senator Manchin. Welcome.
        Senator Manchin. Thank you, my friend.
        Mr. Dingell. I am delighted to see you in the committee
    this morning.
        Senator Manchin. Thank you, Mr.----
        Mr. Dingell. Thank you, sir.
        Senator Manchin. Thank you, Mr. Dingell. You are my friend,
    I appreciate it. Thank you.
        Mr. Whitfield. Thank you, Mr. Dingell.
        At this time I would like to call our second panel, and our
    second panel consists of one person, and that is the Honorable
    Janet McCabe, who is the Acting Assistant Administrator for Air
    and Radiation at the Environmental Protection Agency. And I
    just discovered, in talking to her before the hearing, that she
    has a travel schedule like many of us do. She lives in Indiana
    and travels back and forth to Washington. So, Ms. McCabe, thank
    you very much for joining us today to talk about the proposed
    greenhouse gas regulation, and maybe the discussion draft, and
    you are recognized for 5 minutes for an opening statement.

    STATEMENT OF HON. JANET MCCABE, ACTING ASSISTANT ADMINISTRATOR
      FOR AIR AND RADIATION, U.S. ENVIRONMENTAL PROTECTION AGENCY

        Ms. McCabe. Well, thank you, Mr. Chairman, and members of
    the subcommittee. Thank you for the opportunity to testify
    today on EPA's recently issued proposed carbon pollution
    standards for new power plants and the related discussion draft
    under consideration in the committee.
        Responding to climate change is an imperative----
        Mr. Whitfield. Is your microphone on, Ms. McCabe?
        Ms. McCabe. The green light is on.
        Responding to climate change is an imperative that presents
    both an economic challenge and an economic opportunity. As
    President Obama and Administrator McCarthy have underscored,
    both the economy and the environment must provide for current
    and future generations. We can and must embrace cutting carbon
    pollution as a spark for business innovation, job creation,
    clean energy, and broad economic growth.
        In June President Obama issued a national climate action
    plan, which directs EPA and other Federal agencies to take
    steps to mitigate the current and future damage caused by
    greenhouse gas emissions, and to prepare for the climate
    changes that have already been set in motion. A key element of
    the plan is addressing carbon pollution from new and existing
    power plants. Power plants are the single largest source of
    carbon pollution in the U.S., accounting for about \1/3\ of
    U.S. emissions. In March 2012, EPA first proposed carbon
    pollution standards for future power plants, and after
    receiving 2.7 million comments, we determined to issue a new
    proposed rule based on this input and updated information.
        In September EPA announced its new proposal. The proposed
    standards would establish the first uniform national limits on
    carbon pollution from future power plants. They will not apply
    to existing power plants. The proposal sets separate national
    limits for new natural gas fired turbines, and new coal-fired
    units. The standards reflect the demonstrated performance of
    efficient lower carbon technologies that are currently being
    constructed today. They set the stage for continued public and
    private investment in technologies, like efficient natural gas,
    and carbon capture and storage. The proposal is currently
    available to the public, and the formal comment period will
    begin when the rule is published in the Federal Register. We
    look forward to robust engagement on the proposal, and will
    carefully consider the comments and input we receive as a final
    rule is developed.
        For existing plants, we are engaged in outreach now to a
    broad group of stakeholders who can inform the development of
    proposed guidelines, which we expect to issue in June of 2014.
    These guidelines will provide guidance to states, which have
    the primary role in developing and implementing plans to
    address carbon pollution from the existing plants in their
    states.
        In addition to the proposed carbon pollution standards, I
    have been asked to provide testimony on the discussion draft
    that has been put forward by Chairman Whitfield and Senator
    Manchin. Although the administration does not currently have a
    position on the draft, I will offer a few points that I hope
    will assist the committee in its deliberations. The draft bill
    would delay action and regulatory certainty for future power
    plants by repealing the pending proposed carbon pollution
    standards. Further, it would indefinitely delay progress in
    reducing carbon pollution by discouraging the adoption of
    innovative technology that is available and effective today,
    and would limit future development of cutting edge
    technologies. The draft bill could also prevent timely action
    on the largest source of carbon pollution in the country, the
    power sector, by prohibiting EPA rules from taking effect until
    Congress passes legislation setting the effective date of the
    rules.
        For over 40 years State and Federal regulators have worked
    with stakeholders under the Clean Air Act to substantially
    reduce pollution through the development of cutting edge
    technologies. Addressing carbon pollution under the Clean Air
    Act will not be any different.
        Thank you again for the opportunity to testify on this
    important subject, and I look forward to answering your
    questions.
        [The prepared statement of Ms. McCabe follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Well, Ms. McCabe, thanks very much for being
    here, as I said, and thanks for your testimony. We will now
    have questions for you, and I will recognize myself for 5
    minutes for the first questions.
        First of all, this legal term, adequately demonstrated,
    what is your definition of adequately demonstrated?
        Ms. McCabe. Well, thank you for the question, Mr. Chairman.
    The EPA, in developing new source performance standards, which
    we have done, many, many times under the Clean Air Act, does a
    broad review of what technologies are available, feasible, in
    use, and being developed. Indeed, that is one of the elements
    of Section 111 of the Clean Air Act, is that the new source
    performance standards, which apply to plants that are to be
    built in the future, are to encourage new cutting edge and
    innovative technology. So we look at the broad range of
    technologies that are out there. And, in this case, we looked
    at the types of technologies that were being used for the
    newest generation of clean power plants that are being built,
    clean natural gas, and----
        Mr. Whitfield. But you----
        Ms. McCabe [continuing]. Coal technology.
        Mr. Whitfield. But you think the projects that you all have
    identified would adequately demonstrate that the technology is
    available?
        Ms. McCabe. That is what our proposal lays out.
        Mr. Whitfield. Now, even though my recollection is the
    Federal Government provided about $1.4 billion for those three
    projects, that are all in enhanced oil recovery areas, and
    there are all cost overruns on them, and none of them are
    completed. So how can you issue a regulation that would
    dramatically change the possibility of even building a plant on
    such speculative processes?
        Ms. McCabe. Well, with respect, I wouldn't refer to these
    as speculative technologies. Carbon capture and sequestration
    has been used in industrial applications for many years.
        Mr. Whitfield. But is it commercially available?
        Ms. McCabe. It is commercially available----
        Mr. Whitfield. Where.
        Ms. McCabe [continuing]. And there are?
        Mr. Whitfield. Where is the project, then?
        Ms. McCabe. There are four projects underway. Two of them
    are significantly----
        Mr. Whitfield. Have they been completed?
        Ms. McCabe. They are very close to completion, \3/4\ of the
    way----
        Mr. Whitfield. Do you know when they will be completed?
        Ms. McCabe. My understanding is that the two that are under
    construction now are expected to begin operation in 2014.
        Mr. Whitfield. And where are they located?
        Ms. McCabe. There is the Kemper plant----
        Mr. Whitfield. And all of them have government money
    involved in them. Well, we just have some fundamental
    disagreements on this, and that is why we have hearings. And
    let me ask you this question. I read repeatedly that the carbon
    dioxide emissions in America are the lowest that they have been
    in 20 years, which I think speaks well of the Clean Air Act,
    speaks well of the efforts that you all are making.
        But, America, we don't have to take a back seat to any
    country in the world on the great progress that we have made in
    cleaning up the environment. So if you were at a Rotary Club,
    and someone, like, asked me the question the other day, why is
    it that in America, with the great success that we have had,
    and the lowest emissions in 20 years, why are we unilaterally
    saying to ourself that you can't build a new coal plant in
    America?
        Ms. McCabe. Well, we are not saying you can't build a new
    coal plant in America. We are, in fact, providing a path----
        Mr. Whitfield. Well, look, let me just say, natural gas
    prices are very low, so no one is interested in building a
    plant right now. But if they wanted to, people tell us they
    would not do it because they cannot meet these requirements.
    And that is one of the fundamental differences that we have.
    Just like I mentioned, in Europe, they are closing down 30
    gigawatts of natural gas, and they are going to coal. Why
    should we remove that option here in America? We have a 250
    year reserve of coal. It doesn't mean that they are going to be
    built immediately, but if the circumstances change, why
    shouldn't we be able to do that? Right now we would not be able
    to do it.
        Ms. McCabe. We agree absolutely that there needs to be a
    clear path for coal. Coal is the largest source of energy in
    the country now. We expect it to continue to be. There are four
    projects underway that are going forward that would use this
    technology. So coal plants are moving forward.
        Mr. Whitfield. Have you ever had meetings with the
    President? I mean, have you ever heard him discuss when he made
    that comment how I'll bankrupt the coal industry--have you ever
    had a discussion with him about that?
        Ms. McCabe. I was not in discussions----
        Mr. Whitfield. OK.
        Ms. McCabe [continuing]. With the President about that.
        Mr. Whitfield. You know, I will make one other comment. In
    1965 coal, worldwide, provided 93 percent of the electricity.
    2013, coal provides 87 percent of the worldwide electricity. So
    it is quite obvious that, while renewables are important, the
    base load is going to have to be fossil fuels. Well, thank you
    very much, Ms. McCabe. I look forward to continuing our
    discussion and working with you on these issues.
        At this time I recognize the gentleman from California, Mr.
    McNerney.
        Mr. McNerney. Thank you, Mr. Chairman.
        Ms. McCabe, are there any coal-fired power plants in the
    U.S. that don't receive any sort of government money?
        Ms. McCabe. Any coal plants in the country that don't
    receive any federal----
        Mr. McNerney. Any----
        Ms. McCabe [continuing]. Money?
        Mr. McNerney [continuing]. Kind of government money at all.
    Are there any in the country?
        Ms. McCabe. I don't know that I know the answer to that
    question. There are some coal plants that are receiving
    government money, but I can't speak for every coal plant in the
    country.
        Mr. McNerney. Well, I would say that it is virtually
    impossible, given what the legislation proposes, for coal-fired
    power plants to use CCS equipment that aren't receiving some
    sort of government subsidy, so I think the bill makes it
    impossible for EPA to require that in the future.
        Ms. McCabe. What I will say is that the history has been
    that, as new technologies are developed, they often receive
    government subsidies, and that is an important role the
    government can play in encouraging research and development of
    new technologies that then become part of the mainstream.
        Mr. McNerney. Well, thank you. The coal industry, and
    critics of the EPA's efforts to control carbon pollution from
    power plants are saying that carbon capture and storage
    technology is not feasible. We keep hearing that it isn't
    ready, and won't be for years, but that is contrary to the
    evidence. The coal industry was saying something very different
    just four years ago, back in 2009. When the House passed an
    energy bill that would have set limits on carbon pollution and
    requiring CCS, the coal industry was running ads about how CCS
    was the future of coal. Let me show you an example. Here is a
    2010 television ad from the Consol Energy, one of the biggest
    coal companies in the country.
        [Video shown.]
        Mr. McNerney. In light of that ad, what do you think the
    outlet for carbon capture and sequestration storage technology
    is?
        Ms. McCabe. Based on the information that we reviewed and
    have laid out in our proposal, it is clear that carbon capture
    sequestration technology is available, is feasible. It has been
    used in applications for many years. It is going forward with
    commercial scale coal plants, so we see carbon capture and
    sequestration as being a future technology that will be very
    much in use.
        Mr. McNerney. So was that ad correct in saying that the
    industry was using CCS technology four years ago?
        Ms. McCabe. There have been industry applications of CCS
    for many years.
        Mr. McNerney. Well, is carbon capture and storage
    technology going to be widely deployed in the United States in
    the absence of a requirement to use it, or other strong policy
    driver?
        Ms. McCabe. The history of development of technologies in
    the power sector, and in many other industrial sectors, with
    the new source performance standards, which put in place
    requirements based on the clean and forward looking
    technologies that this country is so good at inventing, that
    those then allow those technologies to become widespread, the
    cost to come down, and they become routine examples and
    standard equipment in the future.
        Mr. McNerney. What is your response to the argument that we
    should just wait for years, or even decades, before limiting
    the amount of carbon pollution that power plants can emit?
        Ms. McCabe. Well, as has already been stated by members of
    the committee, including yourself, climate change is a serious
    health threat to the citizens of this country, and, in fact,
    the world. And to delay the steps that we can take reasonably
    now would increase the likelihood of significant health
    impacts, and would be failing to do what we can do now to
    reduce carbon emissions.
        Mr. McNerney. Well, thank you. If coal is going to have a
    long term future, carbon pollution from those plants must be
    reduced significantly, and carbon sequestration and storage is
    the only technology we have that can do that, is that right?
        Ms. McCabe. Well, that is the key technology for coal-fired
    power plants at this time, is carbon capture and sequestration.
        Mr. McNerney. OK. Thank you, Mr. Chairman. I yield.
        Mr. Whitfield. Thank you. At this time recognize the
    gentleman from Louisiana, Mr. Scalise, for 5 minutes.
        Mr. Scalise. Thank you, Mr. Chairman. I appreciate you
    having this hearing, and I appreciate Senator Manchin being
    here earlier, as well as you, Ms. McCabe, coming here to
    testify. I think it is very clear that the Obama administration
    has a war on coal, and I think their objectives have been
    stated over the years, in terms of what they are trying to
    achieve, and I think that is unachievable goals that are
    designed to ultimately bankrupt the coal industry. We are
    seeing it across so many states with job losses, but also with
    increased energy costs. And, you know, when you talk about the
    impact on low income families, these high energy costs hit low
    income families the hardest.
        And so, when the administration puts these policies in
    place, they are having real consequences negatively not only on
    our economy, but on families. So when we bring legislation like
    this in a bipartisan way, and, again, I commend the Chairman
    for bringing this bill, but also the Senator as well, because
    it shows that there is bipartisan interest in ending this war
    on coal and getting back to an economy that can function using
    all of the available tools that we have, including coal, that
    is very low cost and very effective.
        So when Senator Manchin says that, under our bill, EPA will
    no longer be able to impose unachievable standards, is there
    something about that that you disagree with? I mean, do you
    think you all should be able to impose the unachievable
    standards you have been imposing so far?
        Ms. McCabe. The standards that we have proposed, and that
    are out for public comment now, are achievable. They are based
    on technologies that are available and feasible, based on
    experience in the real world, and----
        Mr. Scalise. I don't necessarily think they are in the real
    world. You mentioned four examples you said that you all point
    to----
        Ms. McCabe. Yes.
        Mr. Scalise [continuing]. In terms of coal-fired power
    plants that are adequately demonstrated. What are those four
    examples?
        Ms. McCabe. The first is the Kemper plant, which is in
    Mississippi. It is about 75 percent complete. It is an IGCC
    plant.
        Mr. Scalise. I am familiar with that. We have had them
    testify. What are the other three, if you can run through those
    real quickly.
        Ms. McCabe. There is the Boundary Dam project in
    Saskatchewan. That is a 110 megawatt plant, pulverized coal
    plant. It is 75 percent complete. It is designed to capture 90
    percent.
        Mr. Scalise. All right. Next one?
        Ms. McCabe. The next one is the HECA plant in California,
    which is also designed to capture 90 percent. That is an IGCC
    plant as well. And the Texas Clean Energy Project, a 400
    megawatt plant, also designed to capture 90 percent of the
    carbon.
        Mr. Scalise. Well, first let me start with the Kemper
    plant. You use the Kemper plant as one of your poster children
    for how CCS works so well. It is adequately demonstrated. We
    had the Kemper folks come and testify. Let me read you some of
    the statements. Because when you all introduced and announced
    your new coal-fired power plant rules, the Southern Company,
    making that plant, said, ``Because the unique characteristics
    that make the project the right choice for Mississippi cannot
    be consistently replicated on a national level, the Kemper
    County energy facility should not serve as a primary basis for
    new emissions standards impacting all new coal-fired plants.''
    The people building the plant are saying it is creating a lot
    of problems for them to build it this way, but it is saying it
    surely should not be used as some kind of national model. And
    yet you are sitting here saying you are using at as a national
    model, but the people building it are saying it shouldn't be
    used as a national model. First of all, are you aware that they
    have said that?
        Ms. McCabe. Yes, I am.
        Mr. Scalise. Well, then why are you still using it as a
    national model?
        Ms. McCabe. Well, with respect, Congressman, there are
    three other plants that are----
        Mr. Scalise. Well, this was the first one you listed, so I
    am going to start with this one. Kemper said, the other three I
    don't think have testified. Kemper has testified, and their
    testimony was they shouldn't be used as a national standard,
    and yet you are sitting here, using it as a national standard,
    and you know that they said they shouldn't be used as a
    standard. So why are you still using it?
        Ms. McCabe. Well----
        Mr. Scalise. Scratch them off your list.
        Ms. McCabe [continuing]. We don't base our rules on the
    thoughts and comments of one company. We----
        Mr. Scalise. Well, that was the first one you mentioned----
        Ms. McCabe. Yes.
        Mr. Scalise [continuing]. And you said you are using real
    world examples. And the first real world example that you used,
    they have testified, saying that they shouldn't even be used as
    a standard. So you are not living in the real world. You are
    using an example where the people that you are citing have said
    they shouldn't be used as a national example because that
    doesn't replicate itself nationally. You should be talking
    about things that can actually be replicated in the real world
    for these standards to exist.
        Let me ask you this, because I know the Chairman brought
    this up. You know, we have all heard the statement. I don't
    know if you have or not. The President, President Obama said,
    ``So if somebody wants to build a coal powered plant, they can.
    It is just that it will bankrupt them.'' Do you agree with the
    President's statement that he made, that they can build a
    plant, but it will bankrupt them if they build it? Do you agree
    with that?
        Ms. McCabe. The----
        Mr. Scalise. And is that what you all are trying to achieve
    with these rules?
        Ms. McCabe. No. The Clean Air----
        Mr. Scalise. No?
        Ms. McCabe [continuing]. Act, over its history, has
    regulated the power sector, including coal-fired power plants,
    and claims that it would shut the lights off and skyrocket
    power prices have been made before, and have been demonstrated
    time and again not to be true.
        Mr. Scalise. So the President's claim is not true? Because
    the President made that claim. Yield back----
        Mr. Whitfield. Gentleman's time has expired. At this time I
    recognize the gentleman from Michigan, Mr. Dingell, for 5
    minutes.
        Mr. Dingell. Mr. Chairman, I thank you for that, and I
    commend you for this hearing. I want to make it clear that I
    agree with my colleague, Mr. Whitfield, that we should do
    something to provide clarity on how to regulate greenhouse gas
    emissions. However, the bill before us creates a peculiar and
    entirely new process for regulations under the Clean Air Act. I
    am afraid that this bill will take a long established and
    reasonable effective regulatory process, turn it upside down,
    to the great detriment to all of those in the industry, and who
    are seeking certainty.
        Some questions for you, Ms. McCabe. First, I would like to
    have you answer a question I asked Administrator McCarthy and
    Secretary Moniz at a recent hearing on climate change. Do you
    see a future for coal as a viable energy source in light of the
    impending greenhouse regulations? Please answer yes or no.
        Ms. McCabe. Yes.
        Mr. Dingell. Now, this bill requires that no EPA rule
    applicable to existing coal-fired power plants may become
    effective unless and until the Congress acts to adopt a new
    law. Are you aware of any precedent for such provision in the
    Clean Air Act? Answer yes or no, if you would please?
        Ms. McCabe. No.
        Mr. Dingell. Now, the traditional approach is that Congress
    passes a law that directs a Federal agency to issue a
    regulation, meeting specific criteria. Congress retains its
    control over the result by exercising good old fashioned
    oversight. If we do not approve of the results, and the agency
    is unresponsive to Congress's vigorous exercise of its proper
    oversight authority, Congress may then pass a new law to
    provide further direction to the agency. This bill would, as a
    practical matter, eliminate the delegation of rulemaking
    authority to EPA, and set Congress up as a regulatory agency.
        Now, Ms. McCabe, by the way, do you agree with that
    statement, that the bill would, as a practical matter,
    eliminate delegation, rulemaking authority to the EPA?
        Ms. McCabe. Yes.
        Mr. Dingell. Now, Ms. McCabe, in your view, would the
    approach in this bill be effective and workable for regulating
    carbon pollution from power plants, yes or no?
        Ms. McCabe. No.
        Mr. Dingell. Now, I tend to agree with you, since this bill
    proposes to change how EPA regulates greenhouse gas emissions,
    without amending the Clean Air Act itself. It seems that the
    only ideas in this subcommittee of-- brought up before us is to
    block and indefinitely delay rules, and propose rules without
    providing any alternative solutions on how to address the
    problem at hand. Do you agree with that statement?
        Ms. McCabe. Yes.
        Mr. Dingell. Now, since becoming Acting Administrator, have
    you reached out to the stakeholders, including industry, and
    all different parts of the industry about components of the
    greenhouse gas rule, new and existing sources? Please----
        Ms. McCabe. Yes, we----
        Mr. Dingell [continuing]. Answer yes or no.
        Ms. McCabe. Yes, we have.
        Mr. Dingell. Would you submit for the record, not at this
    time, but just submit for the record what you have done? Now, I
    have always believed that we should build a consensus to create
    support for moving legislation forward. I once again offer to
    work with my colleagues on both sides to develop legislation
    dealing with greenhouse gas emissions that provides both
    clarity and certainty to industry and to regulators.
        Sometimes things are done in a certain way for a reason.
    Sometimes history and experience have something to teach us. I
    would urge my friends here to attend to these lessons, and what
    we have learned from them, before leaping to the conclusion
    that a simplistic change will make things better. All too often
    I find that the radical approach proposed in the Congress of
    late will do nothing, except create confusion and problems, and
    it is my fear that this bill is one of such proposals that is
    going to cause us a lot of future difficulties.
        I thank you for recognizing me, Mr. Chairman. I yield you
    back 48 seconds.
        Mr. Whitfield. Thank you so much. I wish you would yield me
    that time to respond to you. At this time I recognize the
    gentleman from Texas, Mr. Barton, for 5 minutes.
        Mr. Barton. Mr. Chairman, I would be happy to let----
        Mr. Whitfield. OK.
        Mr. Barton [continuing]. Mr. Shimkus go----
        Mr. Whitfield. Mr. Shimkus of Illinois for 5 minutes.
        Mr. Shimkus. I thank my friend, and it is very emotional,
    you know, and this is really the livelihood in a lot of our
    districts, so we have great concerns.
        First of all, I hate to correct Mr. Dingell, or at least
    continue to set the record straight, but the Clean Air Act that
    he was involved with in the legislation, there were amendments
    offered to make sure that carbon dioxide was not considered a
    criteria pollutant. And it was only through a court case, and
    litigation, and then, I would argue, a failed endangerment
    finding by the EPA that we are even in this mess. So the
    process how we got here is not as clear as the Chairman
    Emeritus tends to portray in how legislation and regulation
    occurs.
        The second point, to my friend in California, we do have
    power plants that receive no government subsidies, coal-fired
    power plants. In fact, they pay local, State, Federal taxes.
    They have high wages, they have great benefits, they have
    economic development for rural America. So, if there is any
    thought that we have got coal-fired power plants that are
    getting government subsidies, it is only to try to implement a
    CCS standard, which brings me to the question.
        The four CCS power plant projects that we have been talking
    about, and also in your EPA September 20 proposal, to support
    its claim that CCS for coal plants is adequately demonstrated,
    each are being built with hundreds of millions of dollars of
    government funding. Are any commercial scale CCS power plant
    projects going forward right now in the U.S. that aren't
    receiving government funding?
        Ms. McCabe. The four that we have referred to are the four
    that are going forward.
        Mr. Shimkus. The question is, are there any commercial
    size--and that deals with the ad too, because that is not
    commercial size. Are there any commercial scale CCS power plant
    projects going forward right now in the U.S. that aren't
    receiving government funding?
        Ms. McCabe. Not that I am aware of, but the ones that are--
    --
        Mr. Shimkus. No. You are correct. Does EPA believe it is
    appropriate to rely on government subsidized demonstration
    projects to show that a technology is adequately demonstrated?
        Ms. McCabe. With respect, Congressman, I would not call
    these demonstration projects. These are commercial projects
    that are going forward, as has often----
        Mr. Shimkus. OK. So the question is, do you think that if
    it is a government funded project, and then we are trying to
    see if it is commercially viable, do you think government
    subsidizing a project equates to commercially viable?
        Ms. McCabe. I do think that these plants are commercially
    viable. They intend to produce power and sell it.
        Mr. Shimkus. But commercially viable also talks about the
    cost and benefit, and the capital investment, and the risk
    assumed in the cost for selling the commodity product. So, if
    the Federal Government is subsidizing that, how in the world
    can the Federal Government, an agency that is not in a market
    system, make believe that they have the capitalistic model that
    says, with $100 million plus of government subsidies, this is
    going to be a commercially viable project? How do you do that?
    It would be more like the Department of Commerce should
    probably have an evaluation than you all on the commercial
    viability.
        Ms. McCabe. As technology is developed, government
    subsidies often help. This is not the only circumstance----
        Mr. Shimkus. Do you think that every coal-fired power plant
    will need millions of dollars of government subsidies on carbon
    capture and sequestration?
        Ms. McCabe. I do not think so.
        Mr. Shimkus. And what is the basis of that analysis?
        Ms. McCabe. Experience, and information, and analysis from
    the Department of Energy, and other agencies----
        Mr. Shimkus. The Kemper----
        Ms. McCabe [continuing]. Over time.
        Mr. Shimkus. The Kemper facility is how much millions of
    dollars over budget?
        Ms. McCabe. I don't know.
        Mr. Shimkus. It is about $2 billion over budget. And how
    long has it been delayed because of this? You see our problem?
    Two things. You are saying the technology is available. We are
    saying it is not. We are running ads on demonstration projects
    that are small scale, and we are talking about large scale
    power plants. I have got a new power plant, 1,600 megawatts. To
    be able to capture carbon and put it in long term geological
    storage on small scale, yes, we can do that in advanced oil
    recovery. We can't do it in large scale.
        And the administration is gaming the system to say that,
    because we have government subsidized power plants at millions
    of dollars, that it is commercially viable, is fraudulent, and
    it is very disappointing.
        I yield back my time.
        Mr. Whitfield. At this time recognize the gentleman from
    California, Mr. Waxman, for 5 minutes.
        Mr. Waxman. Thank you, Mr. Chairman.
        Since 1970, when President Nixon signed the Clean Air Act,
    we have had a law that had several key features that have
    helped make it one of the most successful environmental laws in
    the world.
        Science-based, health protective standards keep our eyes on
    the prize, healthy air for everyone. Cooperative federalism
    allows EPA to set the clean air goals, and then the states
    decide how best to achieve them.
        And the Clean Air Act uses regulatory standards to drive
    technological innovation in pollution controls, often called
    technology forcing standards. The Act recognizes that it
    usually costs less to dump pollution for free than to clean it
    up, so businesses generally don't control pollution absent
    regulatory requirements.
        Ms. McCabe, could you give us some examples of how Clean
    Air Act standards have driven air pollution control
    technologies?
        Ms. McCabe. Certainly, Mr. Waxman. There are a couple of
    very appropriate examples that affect the power sector
    particularly. The first is the use of scrubbers. So when the
    new source performance standards, which is the same rule we are
    talking about here, were developed to require the use of
    scrubbers, they were not in widespread use. There were only a
    couple, in fact, out there, and since that time they have now
    become mainstream standard equipment on any new power plants.
        Mr. Waxman. And those scrubbers have gotten better, haven't
    they?
        Ms. McCabe. They have gotten better. They have gotten----
        Mr. Waxman. And cheaper?
        Ms. McCabe. And they have gotten cheaper, and they have
    brought improved public health to millions of American by
    reducing SO2 substantially.
        Mr. Waxman. So we know, from decades of experience, that
    the Clean Air Act drives innovations in pollution control. As
    you mentioned, scrubbers, but I know that there are others we
    could talk about----
        Ms. McCabe. Yes.
        Mr. Waxman [continuing]. As well. It drives innovation in
    pollution controls, that then become the industry standard.
        There is something else we have learned over the past 40
    years. Almost every time EPA proposes a significant new
    requirement, industry tells us it can't be done. And I have
    been around all of these decades, and I have heard it over and
    over again. It will cost too much, it will destroy our economy,
    it will turn off the lights.
        I am not going to show you, but I am going to tell you
    about an ad that the American Electric Power System ran in
    1974, the year I was elected, opposing requirements for
    scrubbers to clean up sulfur dioxide. And it describes
    scrubbers as monstrous contraptions that clog the works and
    cause prolonged shutdowns, and would produce ``a disposal
    nightmare.'' Is that what happened?
        Ms. McCabe. Not at all.
        Mr. Waxman. The EPA proposed a requirement that we have
    these scrubbers, and you just mentioned it. They are now
    ubiquitous. They are the standard. They are cheaper, they are
    more effective. What did industry say when EPA proposed to
    require selective catalytic reduction to clean up nitrogen
    oxides, or activated carbon injection to control mercury, and
    how did those statements compare with what actually happened?
        Ms. McCabe. Those are similar examples, where there were
    widespread concerns that it was going to be very detrimental to
    the coal industry, and that has turned out not to be the case.
    In fact, industry has found cheaper and very reliable ways to
    control those pollutants.
        Mr. Waxman. So once an air pollution standard is in place,
    American industry gets to work and meets it. And along the way
    we develop more effective and less expensive pollution control
    technologies. Not only is our air cleaner, but we export tens
    of billions of dollars of pollution control equipment all over
    the world. We have seen that happen over and over again.
        But the Whitfield bill would eliminate EPA's ability to
    drive pollution control technology, rejecting an approach that
    has been successful for over 4 decades.
        If this bill had been in effect in 1971, EPA could not have
    issued standards based on scrubber technology. Only two power
    plants, as you mentioned, had operating scrubbers at the time
    the 1971 rule was finalized. And if this bill were adopted now,
    EPA likely could never set a standard based on carbon capture
    and sequestration.
        This bill is a radical rewrite of the Clean Air Act that
    would block any real reductions in carbon pollution from coal
    plants, and it ignores 40 years of experience.
        I want to point out a couple things. There aren't criteria
    pollutants spelled out in the Clean Air Act, but the Clean Air
    Act requires EPA to deal with other pollutants as well, and
    that is not just this one, carbon, but others that are already
    being regulated. And to say that there is no subsidy for a
    power plant that spews pollution, and hurts the public health,
    and causes a great deal of damage, like we are seeing with
    climate change, that is a subsidy, because they don't have to
    pay for controlling their pollution, we all have to pay, in
    more harm to the climate, more harm to the planet, and more
    harm to our environment.
        Thank you, Mr. Chairman.
        Mr. Whitfield. Thank you. At this time recognize the
    gentleman from Texas, Mr. Barton, for 5----
        Mr. Barton. Thank you, Mr. Chairman, and I don't think it
    is news to the committee, but I am a co-sponsor of your
    legislation, and I hope we will move to----
        Mr. Whitfield. Thank you very much.
        Mr. Barton [continuing]. Move towards a hearing, and
    hopefully a markup.
        We are glad to have you. We are always glad to have our
    friends from EPA. Could you tell the subcommittee, to the best
    of your knowledge, are CO2 emissions in the United
    States up or down?
        Ms. McCabe. Well, that is a relative question, Congressman.
    CO2 emissions are significant from----
        Mr. Barton. I didn't ask the significance of them. I said
    are they going up or are they going down.
        Ms. McCabe. It depends on where you start. So they have
    been----
        Mr. Barton. Well, let us start from----
        Ms. McCabe [continuing]. Going----
        Mr. Barton [continuing]. Five years ago.
        Ms. McCabe. They have been going up significantly over
    time. In the most recent years there has been a reduction in--
    --
        Mr. Barton. So they are going down?
        Ms. McCabe. There has been a recent reduction, but over
    time carbon emissions----
        Mr. Barton. They are going down?
        Ms. McCabe [continuing]. Are significant.
        Mr. Barton. You know that, and I know that. Which country
    is number one right now in CO2 emissions, the United
    States, or China?
        Ms. McCabe. I believe it is China.
        Mr. Barton. You believe correctly. Could you tell me what
    the cost is per megawatt to build a new coal-fired plant under
    existing regulations, as compared to a combined cycle natural
    gas plant? Which is most cost effective right now, under
    current regulations?
        Ms. McCabe. I am sorry, I want to make sure I understand
    your question. I am comparing a----
        Mr. Barton. A state of the art----
        Ms. McCabe. Yes.
        Mr. Barton [continuing]. Natural gas fired power plant that
    is being built today, compared to a coal-fired power plant that
    could be built today under existing regulations. Which is the
    most cost effective per megawatt of output?
        Ms. McCabe. I believe, Congressman, and if I need to
    supplement, I certainly will, but, given the fuel prices today,
    the industry is building natural gas fired plants because they
    are----
        Mr. Barton. They are more cost effective?
        Ms. McCabe [continuing]. More cost effective.
        Mr. Barton. Yes. You get more output, less input, and the
    CO2 emissions are approximately half that of a coal-
    fired plant. Could you tell today what the cost of construction
    of a coal-fired power plant is today? Do you know that number?
        Ms. McCabe. I don't know that number, Congressman.
        Mr. Barton. Do you know what percent of the cost of a coal-
    fired power plant is directed towards emission control?
        Ms. McCabe. I don't have that number with me.
        Mr. Barton. It is approximately \2/3\. Two-thirds of the
    cost of a new coal-fired power plant is for emission control,
    i.e. it is not for efficiency, it is not for power generation.
    It is simply to control emissions as a consequence of burning
    coal.
        If we were to implement the proposed regulations, that
    would require carbon capture and sequestration, do you know
    what percentage of the total cost those emissions control would
    be?
        Ms. McCabe. I don't have that number. There----
        Mr. Barton. Would you agree with me that you are basically
    going to spend approximately three times the cost of the power
    plant itself to control the emissions, and capture and
    sequester the carbon?
        Ms. McCabe. I don't know that to be the case, Congressman.
        Mr. Barton. OK. Could you get us the numbers and provide--
    --
        Ms. McCabe. Absolutely.
        Mr. Barton. I may be off, but I am not off orders of
    magnitude. I mean, I may be off a little bit, but if the
    country adopts these proposed regulations, if you want to
    build, you know, anybody that would be crazy enough to try to
    build a coal-fired power plant, you would basically be paying
    three to four times, for the emission control, what you are
    paying to generate the power.
        Ms. McCabe. What I can say, Congressman, is, based on the
    economic analysis that is laid out in our proposed rule, the
    cost of building a coal-fired power plant under the proposed
    standards is in line with other non-natural gas power
    generation. Biomass, nuclear, and such.
        Mr. Barton. Well, since they are non-competitive, that
    might be a true statement, yes. Finally, my time is expired,
    could you give the committee a summary of all CO2
    poisoning incidents in the last 5 years here in the United
    States? It is going to be a short piece of paper.
        Ms. McCabe. Yes. We are concerned about carbon because of
    its effects in the atmosphere and on the climate, which are
    well demonstrated.
        Mr. Barton. So you accept that nobody has been poisoned as
    a result of inhalation or exposure to CO2 in the
    United States ever?
        Ms. McCabe. CO2 does not work in that way, but
    it creates damage to public health without doubt.
        Mr. Barton. That is a debatable proposition.
        Mr. Whitfield. Gentleman's time has expired. At this time I
    will recognize the gentleman from Kentucky, Mr. Yarmuth. Now, I
    think, at our last subcommittee hearing, we recognized that he
    was a new member of the Energy and Commerce Committee, and Mr.
    McNerney and I were talking, and he said, I don't think we
    introduced him, and I thought we did. But, Mr. McNerney, would
    you like to make some comments?
        Mr. McNerney. Well, no, I appreciate that opportunity. Mr.
    Yarmuth is a close friend of mine from Kentucky, so he is well
    connected to these issues. But, coming from a journalistic
    background, he has a lot of insight into how to proceed, and
    question witnesses, so I really think he is going to be a
    tremendous addition to our committee and our subcommittee.
    Thank you.
        Mr. Whitfield. Yes. And since Mr. Tonko actually was here
    before Mr. Yarmuth, you all now know Mr. Yarmuth, but we are
    going to recognize Mr. Tonko of New York for 5 minutes.
        Mr. Tonko. Thank you, Mr. Chair. Sorry, Mr. Yarmuth. OK.
        Administrator McCabe, welcome. The motivation for this
    legislation and the direction of the questions today suggest
    there is considerable skepticism about carbon capture and
    sequestration technologies. I strongly support moving forward
    to address carbon pollution, and I do not believe we can leave
    the utilities sector out of that effort. While I believe carbon
    capture technologies are technically feasible, I am not as
    confident about our ability to sequester the carbon dioxide,
    that is, capture. We may need to build new plants in areas that
    are not close to a storage reservoir. In light of that, I have
    a few questions.
        Other than using the captured carbon dioxide for enhanced
    oil recovery, are there other options for sequestering carbon
    that are being considered?
        Ms. McCabe. Well, we know that it is possible to sequester
    carbon, even not for enhanced oil recovery. The EPA has
    regulations in effect now that provide guidance for people on
    how to do that, so it is doable.
        Mr. Tonko. OK, thank you. And are there any opportunities
    being explored to use biomass as the final sequestration
    reservoir for carbon?
        Ms. McCabe. I don't know, Congressman, but we would happily
    follow up on that question.
        Mr. Tonko. Thank you. Is there any opportunity for gaining
    further efficiencies in operation of a new coal-fired utility,
    or integrating renewable generation, or CHP, for that matter,
    with coal-fired generation that would enable a facility to meet
    the standard without having to capture and sequester all the
    carbon dioxide that is generated?
        Ms. McCabe. Well, I should clarify that the proposed rule
    does not require that all the carbon be captured. It is based
    on a partial carbon capture, about 30 to 50 percent, and this
    is all laid out in our proposal, is the point at which
    meaningful reductions of carbon can occur at a reasonable cost.
    There are other technologies and approaches that the power
    sector can use to reduce carbon, and you have named some of
    them.
        Mr. Tonko. And that integration, you think, is feasible
    with other generation, or CHP?
        Ms. McCabe. I believe so.
        Mr. Tonko. It seems to me we are focusing too much on what
    cannot be done, and not investing sufficient research dollars
    in solving the problems. Are we investing enough in research?
        Ms. McCabe. Hard for me to answer that, Congressman. I
    think that there is a lot of work being done to explore a
    variety of ways to produce power in a clean way. In addition,
    there are many companies that are on the forward edge of their
    industry, trying to find ways to reduce harmful pollution,
    including carbon. And there is government interest, and
    academic interest, in helping to further those technologies.
        Mr. Tonko. Well, it is a trillion dollar industry, and a
    couple billions of research just may not cut it. I would also
    observe that we rarely have a technology ready to go to solve a
    problem if there is no certain market for that technology. Is
    it the administration's view that regulatory certainty will
    move technology development forward more rapidly?
        Ms. McCabe. That has been the history of the Clean Air Act,
    in developing standards for new plants of any sort, all sorts
    of industries, that putting those regulations in place provides
    a path for the industry, and those technologies then become
    standard.
        Mr. Tonko. Well, I assume EPA is working closely with DOE
    on this effort. And, while DOE is not here today, I hope we
    will have an opportunity to hear from that agency on this topic
    also.
        And, finally, I would ask, in terms of the instant
    legislation that we are reviewing here today, does that move us
    closer toward research at a time when we need that research? It
    seems to me it is pulling us away from research. It is not
    focusing on the element of that research.
        Ms. McCabe. Well, the bill, as I understand it, we are
    taking a different approach to determining how to set a
    standard for future power plants that would not provide the
    path for innovation, and moving new technologies into the
    market.
        Mr. Tonko. Well, it seems we are in a phase of activity
    here where R&D is absolutely a compelling factor in order for
    us to transition, transform, an arena that is essential to the
    growth of this country, and its economy, so I thank you for
    your responses today, and it is great to have the agency
    represented here.
        Ms. McCabe. Thank you.
        Mr. Tonko. I yield back, Mr. Chair.
        Mr. Whitfield. Gentleman yields back. At this time
    recognize the gentleman from Nebraska, Mr. Terry for 5 minutes.
        Mr. Terry. Thank you, Mr. Chairman, and appreciate you
    being here.
        I want to follow up on a white paper that was signed by 17
    Attorney Generals, including ours from Nebraska. The white
    paper was sent to the EPA, as I said, by 17 Attorney Generals,
    and it states that, ``The elimination of coal as a fuel for new
    electric generation would have highly concerning implications
    for electricity prices, and for the economy, and job creation
    in general, as well as the competitiveness of American
    manufacturing.'' I happen to agree with the Attorney Generals'
    statement on this, particularly in Nebraska, where we are a
    coal heavy reliant state, and very close to the Powder River
    Basin. So it allows us to have very affordable and reliable
    electricity generation in our state.
        So I want to know, does the EPA maintain that it has legal
    authority to eliminate coal as a fuel for new electric
    generation?
        Ms. McCabe. The proposed rule would not eliminate coal for
    new electric generation. In fact, just the opposite. The
    proposal would provide a clear regulatory path that coal plants
    could follow.
        Mr. Terry. Now, I understand that answer, and some would
    say that the regulatory issues would, in essence, prevent, the
    way that they will be expected to be written and implemented
    would make it very difficult and expensive to use coal.
        Now, the Attorney Generals also raise concerns that the EPA
    will not properly defer to the states in establishing or
    implementing standards for existing power plants, and that,
    under the guise of ``flexibility'', the EPA will require
    existing plants to operate less, or shut down. Can you provide
    assurances to the Attorney Generals that in its GHG regulation
    of existing plants, EPA will note force the retirement or
    reduction of operation of still viable coal-fired plants?
        Ms. McCabe. So, Congressman, now you are shifting to the
    existing----
        Mr. Terry. The new one----
        Ms. McCabe [continuing]. Power plant----
        Mr. Terry. Yes, exactly.
        Ms. McCabe [continuing]. Proposal, which, of course, is not
    at a proposal stage yet. It is at the very early stages of
    discussion. And the Clean Air Act provision for existing
    facilities operates in a very different way from the provision
    for setting new source performance standards. It does require
    the EPA to set guidelines, and then relies on the states to
    develop plans to achieve those guidelines in their states. This
    is the very successful and fundamental provision that underlies
    the Clean Air Act of the federal/state partnership when it
    comes to, especially, existing sources, that states are in the
    best position to figure out how best to comply with
    environmental targets.
        So those are the discussions we are having now, and will be
    having. And the ultimate outcome, and what is expected of the
    existing fleet, will be very different from what is expected in
    a new source performance standard. And, as Administrator
    McCarthy has said, there is no expectation that carbon capture
    and sequestration would be a technology that would be
    appropriate for existing plants.
        Mr. Terry. OK. But, in discussions from some of our more
    rural coal-fired plant operations, they fear that the standards
    for reduction of CO2, that will be extremely costly
    to meet, and, therefore, their only options, that is the
    quotations around flexibility, is to reduce their operations.
    Now, are you receiving feedback from states like Nebraska,
    where we do have older coal-fired plants that are going to be
    significantly impacted by this rule?
        Ms. McCabe. We are having lots of discussions with states
    all around the country, including Nebraska and others, and we
    are discussing the differences between the new sources standard
    and the existing standards. And it is not our expectation that
    the existing standards, which, of course, will go through
    robust public comment period as well, will require the----
        Mr. Terry. So, for example, who would you be communicating
    with, or receiving input, at this early stage, from Nebraska?
    Is it from the power plants? Is it operators, the companies?
        Ms. McCabe. Through our Region XVII office, there have been
    discussions both with state officials, and I believe also the
    power sector representatives, as well as other stakeholders.
        Mr. Terry. OK. Thank you.
        Mr. Whitfield. Gentleman's time has expired. At this time
    recognize the gentlelady from California, Ms. Capps, for 5
    minutes.
        Mrs. Capps. Thank you, Mr. Chairman. And welcome, and thank
    you for your testimony, Administrator McCabe.
        We have heard from my friends across the aisle, and from
    Senator Manchin, about the cost of implementing carbon emission
    standards, but we have not heard anything yet from them about
    the much higher costs that we are already paying for due to
    climate change. We are seeing more extreme storms, coastal
    erosion, and droughts across this country, not to mention the
    broader impacts of things like ocean acidification, and the
    increased public health risks. Ms. McCabe, will you elaborate a
    bit on this, please? What are some of the costs we are already
    paying for because of these unchecked emissions, and what are
    some that we will be paying for down the road if we don't take
    action now?
        Ms. McCabe. Thank you for your question. As you noted,
    there are significant impacts already being felt across the
    country, and indeed across the globe, as a result of the
    changing climate. You mentioned some of them. In this country
    we have seen increased wildfires, in both frequency and
    severity, that cost, in terms of property damage, in danger to
    human health, and indeed sometimes to human life. In addition,
    storms like Hurricane Sandy are tremendously costly,
    devastating to those communities----
        Mrs. Capps. Yes.
        Ms. McCabe [continuing]. In terms of the property damage,
    the health impacts, which last far beyond the actual events----
        Mrs. Capps. Absolutely.
        Ms. McCabe [continuing]. Of the storm.
        Mrs. Capps. Thank you. I will move on, because----
        Ms. McCabe. Sure.
        Mrs. Capps [continuing]. I know you could go on and on on
    that topic. Given that power plants are the number one source
    of carbon pollution, do you see any way to reduce these costs,
    the kind that you were talking about, without first reducing
    carbon emissions?
        Ms. McCabe. Carbon emissions need to be reduced.
        Mrs. Capps. Yes. Now, we all know the cost and viability of
    carbon capture sequestration technology has been at the core of
    this debate. But, again, my friends across the aisle have been
    focusing on the cost, but at the same time ignoring the
    benefits of using this technology. Whether it is jobs
    developing better CCS systems, jobs installing the systems, or
    jobs in related industries that purchase the captured
    CO2, which is a whole other industry, there are some
    benefits to CCS that should not be ignored, right? Now, Ms.
    McCabe, did EPA compare the costs and benefits of implementing
    CCS in its analysis? If so, can you briefly discuss those
    findings?
        Ms. McCabe. In our proposal we have an economic analysis
    that lays out all these issues, and looks at the expected costs
    of the technologies for gas and coal plants, so all that
    information is laid out.
        Mrs. Capps. Thank you. And that is something that is
    available to the public----
        Ms. McCabe. Absolutely.
        Mrs. Capps [continuing]. So that we can see that there is a
    payoff in economic development for doing this.
        And a final question. We hear frequently that power
    companies would be eagerly building new coal plants, if only it
    weren't for the uncertainty created by EPA and these carbon
    emission regulations. Setting aside the fact that cheap natural
    gas has really been the primary reason behind the recent
    decline in coal, which I did hear mentioned in this hearing, I
    do want to focus on this uncertainty issue. To me, if there is
    one thing for certain in this debate, it is that carbon
    emissions must, and will be, regulated, it is just a matter of
    how and when. I mean, we regulate everything in energy
    generation, don't we?
        EPA's authority to regulate carbon emissions from power
    plants has been upheld twice by the United States Supreme
    Court, and President Obama has made it very clear that these
    power plant rules are a top priority for his administration. I
    see this discussion draft, and other efforts to derail the
    emission standards, as simply delaying the inevitable. So I
    want to ask if you think this proposed legislation would
    decrease or increase uncertainty regarding the regulation of
    carbon emissions. Industry tells me all the time that what they
    want is certainty. So I would like to have your comments on
    this.
        Ms. McCabe. I hear that also, Congresswoman. I have heard
    that over the years from industry, that they want regulatory
    certainty so that they can plan their investments, and know
    what they should be building. And this proposal that we are
    going forward with would provide that, as opposed to a delay
    and further----
        Mrs. Capps. Right.
        Ms. McCabe [continuing]. Uncertainty.
        Mrs. Capps. And don't you feel that the industries do
    recognize that they will be facing, if not sooner, later, some
    more regulation as they develop newer and newer technologies?
        Ms. McCabe. That is what we have heard from many
    industries.
        Mrs. Capps. Thank you very much for your testimony.
        Mr. Whitfield. Gentlelady's time has expired. At this time
    recognize the gentleman from Ohio, Mr. Latta, for 5 minutes.
        Mr. Latta. Thank you, Mr. Chairman, and thank you,
    Administrator, for being with us today. Really appreciate your
    testimony today. And, just to give you a little background
    about my neck of the woods, Ohio gets 78 percent of its overall
    electricity comes from coal-fired plants. And up in my area of
    Northwest Ohio it is even greater than that. According to the
    national manufacturers, I have 60,000 manufacturing jobs in my
    district, which is the third largest number of manufacturing
    jobs on this committee. I also represent the largest number of
    farmers, so what it really comes down to that you are hearing
    is that we need energy, and we need very competitive energy to
    be able to compete. And we are able to compete out there as
    long as we can have those things happening. But if all of a
    sudden our energy costs start going up we are in trouble.
        And also I am blessed because, not only do I have your
    traditional large energy companies that are in my state, and
    across my district, but I also have electric co-ops, which I
    also have the largest number in the State of Ohio in a
    congressional district, and I also represent a large number of
    municipal utilities. And I also go through a lot of businesses,
    and I have gone through over 400-plus businesses over about a
    14-month period. And the number one thing I have always heard
    from everybody out there, it is on regulatory issues is the
    number one concern, but it is also about the EPA. And when we
    are talking about the EPA, I have never heard any business out
    there ever tell me that they are not for clean air, or for
    clean water. But they are very concerned, because one of the
    issues, again, that concerns them is that they have got to be
    able to be competitive.
        And when I look at the proposed bill, especially in section
    three, one of the issues that it comes down to, what you would
    be looking at, they have to study the economic impacts of such
    rural guidelines that affect the potential economic growth,
    competitiveness, and jobs on the electric ratepayers out there.
    So, again, that is what concerns the people in my district,
    and, really on the manufacturing side. And if I could just ask
    a few questions, real quickly?
        The first is when you are talking about the EPA conducting
    listening sessions, willing to plan regulations for existing
    power plants, the EPA has really avoided states like Ohio that,
    again, rely heavily on coal-fired generation. Can the EPA
    provide any assurance that it will defer to states to set the
    standards of performance for existing electric generating units
    in their states?
        Ms. McCabe. What I can tell you, Congressman, is that the
    way that this section of the Clean Air Act works is that EPA
    establishes guidelines, and then the states develop plans to
    implement them. And that is a familiar approach in the Clean
    Air Act. Very much our intent is to work with states so that
    they have the flexibility to do that. And that is what a lot of
    these initial interactions we are having with the states are
    all about, is to make sure that we know what is going on
    currently in the states, what they are looking forward to in
    their own energy policy, so that we can make sure that we
    design a guideline that can accommodate that kind of
    flexibility.
        Mr. Latta. Well, it is very, very important that that
    happens, because, again, if you don't hear what is happening in
    these businesses out there, we are not going to have those
    folks out there that are going to be able to provide these
    jobs. And also, can the EPA provide the assurance for the
    ratepayers in these states that the electricity rates will not
    go up as a result of the EPA regulations?
        Ms. McCabe. We have seen over time that pollution control
    technology has been able to advance in this country in the
    power sector while keeping energy costs low, and that is a very
    important consideration for the administration as we move----
        Mr. Latta. Well, and again, because I am out talking to
    these businesses every week, and again, their number one issue
    is we have got to stay competitive. We don't want to see these
    jobs going someplace else, because they want to make sure that
    they have jobs for their community.
        And also, again, because when you look how unique, like
    Ohio is, in the Midwest, and Indiana right next door, and I
    represent a district that runs right down the Indiana line.
    When you look how much energy they get from coal in Indiana,
    will the EPA thoroughly look at the regional and local
    electricity rate impacts on these regulations?
        Ms. McCabe. We will look at those sorts of things, and we
    recognize that different states are in different positions.
    They have different energy mixes, different fuels, different
    energy needs. And all of that can be looked at in the
    development of a state specific plan.
        Mr. Latta. And finally, some of the discussion was
    occurring, especially with Mr. Barton earlier. Could you
    provide the committee with a list of the facilities that were
    using scrubbers when the standard was implemented and made
    final in the late 1970s on the----
        Ms. McCabe. Sure.
        Mr. Latta [continuing]. Clean Air--we get a list of those
    companies, we would appreciate that.
        Ms. McCabe. We will follow up with that.
        Mr. Latta. OK. Thank you very much. Mr. Chairman, see my
    time has expired, and I yield back.
        Mr. Whitfield. Gentleman yields back. At this time I will
    recognize the gentleman from Kentucky, Mr. Yarmuth, for 5
    minutes.
        Mr. Yarmuth. I thank you, Mr. Chairman. I appreciate the
    welcome, again, and thank you, Mr. McNerney, for your kind
    comments. Ms. McCabe, welcome.
        There was discussion earlier about whether Congress
    intended originally in the Clean Air Act to regulate carbon
    emissions, and the comment made that a court basically ruled
    that it did. Regardless of how we came to this point, the state
    of the law is that not only does EPA have the authority to
    regulate carbon emissions, it has the requirement to regulate
    carbon emissions, isn't that correct?
        Ms. McCabe. That is correct.
        Mr. Yarmuth. And this bill, if I am correct, does not
    change that requirement in any way. I mean, even if this bill
    were to pass, you still have to regulate carbon emissions?
        Ms. McCabe. As I understand it.
        Mr. Yarmuth. So what this bill basically does is just
    eliminate one of the tools that you might have to regulate
    carbon emissions to meet the requirement that you have under
    the law?
        Ms. McCabe. It would significantly change the traditional
    approach that we have taken----
        Mr. Yarmuth. Right.
        Ms. McCabe [continuing]. Under the Act.
        Mr. Yarmuth. And we know there was another approach to
    doing this, and Mr. Waxman mentioned it in his testimony. And I
    want to go back to 2009 for a minute, because, when we were
    debating Waxman-Markey at that time, this was a very hard issue
    for me and the other members for the delegation from Kentucky.
    So we, at least we Democrats, then Ben Chandler and I, and
    Baron Hill from Indiana, and others, worked with Representative
    Boucher of Virginia to kind of construct a methodology that
    would have minimal impact, or the least negative impact on
    Kentucky, which generates about 92 percent of its power through
    coal, and same in my district in Louisville.
        And after we had done that work, and came up with a final
    product, before I cast my vote, I talked to all of the big
    users of energy in my district. I talked to General Electric,
    which has a big manufacturing plant, Ford Motor, which has two
    plants. I talked to UPS, where we have the air hub. I talked to
    the metro government. I talked to University of Louisville, the
    public school system. Every one of those large users of energy
    said they were either for or neutral on the bill. They didn't
    think any of them, none of them, that it would impact them
    negatively. And then I talked to the utility company, which
    powers virtually everybody in my district, and they said they
    thought the impact on residential customers after 10 years
    would be $15 a month additional cost if they did absolutely
    nothing. Didn't insulate, didn't change light bulbs, didn't
    make any changes on the thermostat.
        So, at that point, we were faced with the option of saying,
    all right, this looks like it can work. It can actually deal
    with carbon emissions in a way that doesn't impact states that
    are heavily dependent on coal generated power. The option is to
    turn it back to EPA to issue guidelines which may or may not be
    particularly sensitive to a state like Kentucky, or a state
    like Indiana, or a state like Ohio. And I thought that was a
    good vote. And even though House Republicans opposed it, we did
    pass it in the House. It died in the Senate.
        So my question is, would that kind of methodology still be
    an effective way to deal with carbon emissions, and if we had
    enacted Waxman-Markey in 2009, would we be here today?
        Ms. McCabe. Well, the President has indicated, over a
    number of years, that legislation would be an appropriate way
    to deal with the situation. But that is not where we are today,
    and so we are using the tried and true mechanisms of the Clean
    Air Act to achieve the carbon reductions that are necessary.
        Mr. Yarmuth. All right. And, to your knowledge, has there
    been any proposal made by anybody in the majority party to deal
    with carbon emissions in any way?
        Ms. McCabe. I don't want to speak for everybody, but I am
    not aware of any.
        Mr. Yarmuth. Right. Well, thank you very much for your
    testimony and your work. I yield back, Mr. Chairman.
        Mr. Whitfield. Gentleman yields back. At this time
    recognize the gentleman from Texas, Mr. Olson, for 5----
        Mr. Olson. I thank the Chair. Again, welcome, Administrator
    McCabe.
        This is not news, but America is on course to resume its
    role as the world's energy powerhouse in the 21st century.
    There is no better example of that than the port of Corpus
    Christi in my home state. A few months ago, for the first time
    ever, they exported more oil than they imported. Making this
    opportunity a reality requires common sense rules and no
    overregulation. Your new power plant rule will require carbon
    capture and sequestration. The CCS pilot projects are all near
    oil country. Captured carbon is sold, captured, pumped down,
    and used to jump start old wells. EOR is critical to viable
    CCS, and you recognize that. A quote from your new plant rules
    impact analysis, ``The opportunity to sell the captured
    CO2 for EOR, rather than paying directly for its
    long term storage, strongly improves the overall economics.''
    So let us discuss EOR.
        Coal is critical for power supply in the Eastern part of
    our country. Do you know how many states east of the
    Mississippi have a single CO2 pipeline? Any idea
    what number?
        Ms. McCabe. No, I don't know.
        Mr. Olson. The answer is two. There is one in Mississippi,
    and a small one on the Michigan/Canadian border. The one in
    Mississippi is linked to the Hastings field in my district. It
    is run by a company called Denbury. I visited their operations
    a few months ago. They spent $2 billion on developments for the
    Hastings field. But they also own the Jackson Dome area in
    Mississippi, which naturally produces CO2. There is
    a power plant in my district as well that captures
    CO2 emissions from coal-fired power plants, and uses
    them for EOR operations right there, over an existing oil
    field.
        Ms. McCabe. Yes.
        Mr. Olson. My point is that CCS EOR will only work because
    of geography and luck. My question is, if a utility decides to
    build a coal plant, they want, to use a quote from your impact
    analysis, ``to strongly improve the overall economics of CCS.
    That means they will need a new pipeline.'' Is it reasonable to
    expect utilities to successfully site, permit, finance, and
    build an entire new network of CO2 pipelines? Is
    that even possible for more than a few test plants?
        Ms. McCabe. Well, as you have noted, EOR is a very
    important use of captured CO2, does help with the
    economics of a plant, but that is not to say that carbon
    storage is not feasible in other places, and we expect those
    types of projects to develop and be viable as coal plants of
    the future are built.
        Mr. Olson. But right now they are not viable without EOR,
    and that is my point. We have to have some mechanism to get
    this carbon dioxide to these power plants. Except for special
    circumstances, geography, with the guise of the Denbury people
    owning a naturally producing CO2 structure.
        My final question is about reliability. And EPA says that
    the new plant rule won't impact electric liability. However,
    the EPA says one benefit is that, and this is a quote, ``the
    proposed rule will also serve as a necessary predicate for the
    regulation of existing sources.'' We don't know exactly what
    the new existing plant rule will look like, but if past actions
    of the Obama administration reflect the future, there will be
    new burdens put upon coal. My home state is in desperate need
    of more power, and reliability is one of my top concerns. Can
    you guarantee that a carbon dioxide rule on existing coal
    plants will put grid reliability first?
        Ms. McCabe. You are asking about the existing rule?
        Mr. Olson. The existing rule, any rule.
        Ms. McCabe. For existing power plants?
        Mr. Olson. Yes, ma'am.
        Ms. McCabe. Yes. I can assure you, Congressman, that in
    looking at what the guidelines would be for existing power
    plants, we would have grid reliability, cost, and those
    considerations very much in our minds as we go forward. And as
    I have noted, the implementation of those guidelines is
    something that the states will be involved with, and it will be
    very much on their minds as well.
        Mr. Olson. But first, number one, everything else below? I
    mean, because it is important, ma'am. We have to have power to
    keep going.
        Ms. McCabe. It is absolutely important, and we don't
    disagree.
        Mr. Olson. OK. Yield back the balance of my time.
        Mr. Whitfield. Gentleman's time has expired. At this time I
    recognize the gentleman from Virginia, Mr. Griffith, for 5
    minutes.
        Mr. Griffith. Thank you, Mr. Chairman. I would have to say
    that many of the things my colleagues have said I agree with,
    and I do have many concerns, particularly in light of the fact
    that did hear earlier from the folks who run the Mississippi
    plant that that is not a practical plan anywhere else, and it
    cost them a billion dollars more than they thought it was, and
    only works because they are right next to the fuel source,
    which is not your typical coal in the United States.
        Switching gears, as established in statute and practice,
    the term stationary source has a specific meaning under Section
    111 of the Clean Air Act. Is the EPA considering or planning to
    redefine what stationary source means for the purposes of its
    pending rulemaking activity on existing electric generating
    units? And here is my concern. There are some who would
    believe, or have us think, that it ought to be the whole state.
    So if I have got a plant, which we do, that was just opened
    last year in my end of Virginia, and it is doing fine, but the
    rest of the state isn't, instead of looking at each individual
    plant, that the EPA may be looking at changing its rule, and
    going with every state, and then all of a sudden new regs get
    put on my clean plant in order to try to help the plants that
    aren't as clean in other parts of the state. Is the EPA looking
    at changing any of those rules in regard to the stationary
    source?
        Ms. McCabe. We are not looking at changing the definition
    of stationary source, but what we will be doing, through the
    111(d), which is the existing source----
        Mr. Griffith. Yes.
        Ms. McCabe [continuing]. Program, is allowing the states
    the flexibility to look at how to meet a target, looking across
    all of the plants, and other activities in the state, which
    means that new clean plants are a benefit to the states,
    because they are already making progress towards reducing
    carbon emissions.
        Mr. Griffith. But if you have some plants that are cleaner
    than others, and the worry that I have is that oftentimes in
    the past the EPA has said, well, we are going to let the state
    do this, and then the EPA, behind the scenes, and this happened
    on storm water management in Virginia, says, you are going to
    adopt these regs, you are going to do this, or else we are
    going to come in and take it away from you, and we are going to
    do it ourselves. That was actual testimony in front of a
    committee I used to sit on when I was in the state legislature.
        So I am a little concerned that if you are going to let the
    states go and look at a statewide project, maybe it is not my
    new clean plant, but it is one that is a little bit newer than
    some of the others. Is there going to be pressure put on the
    states to then say, OK, we don't care if you have one bad
    actor, or two bad actors, you have got to ratchet it up on
    everybody in order to meet certain standards.
        Ms. McCabe. Yes. Well, in the Clean Air Act, which is what
    I am familiar with, we have a long history of working with
    states, developing plans to implement the federal standards,
    and there is certainly room in the process for states to be
    looking at what makes the most sense for their states.
        Mr. Griffith. Well, and I would like to think that we could
    figure out what makes the most sense, but that has not been my
    experience in the past with some of the regulations. In context
    of 111(d), and regulations for existing power plants, the EPA
    frequently refers to the term flexibility. I have not often
    found that to be the case. And not with you, ma'am, but with
    others. Does this mean flexibility in setting the standards, or
    in implementing the standards?
        Ms. McCabe. In implementing the standards. It is EPA's role
    to set the guideline, the target.
        Mr. Griffith. But if flexibility is good, shouldn't it be
    good not only for implementing, but also for setting the
    standards, to make sure that we are not putting people out of
    business, or, as you testified a few minutes ago, making sure
    that we have grid reliability? Shouldn't that flexibility be
    there on both ends of that equation?
        Ms. McCabe. Well, the Clean Air Act's approach over the
    last 40 years has been for the Federal Government to set the
    expected environmental result, and then for the states to find
    flexible and appropriate ways to meet those, and that is the
    way that Congress set out those provisions.
        Mr. Griffith. And Congress did give, I would think, way too
    much flexibility to the EPA, but that is an opinion of mine.
        In regard to the Whitfield-Manchin bill, it seems to me
    that it is reasonable to set standards based on actual
    demonstrable technology. You would agree with that, would you
    not?
        Ms. McCabe. The Clean Air Act already asks us to set
    standards based on----
        Mr. Griffith. I am running out of time. I need a yes or no.
    But you would agree that actual technology, as opposed to
    theorized technology, would be preferable, would you not? Yes
    or no?
        Ms. McCabe. Actual technology is what we base our rules on.
        Mr. Griffith. All right. And would you also agree with me
    that there are high efficiency designs for new coal power
    plants, such as the super-critical and ultra-critical steam
    units, yes or no?
        Ms. McCabe. Yes, and those are appropriate technologies,
    certainly.
        Mr. Griffith. And the Whitfield-Manchin draft legislation
    simply requires that, for new electric generating units, the
    EPA standards would be based on technologies that have been
    demonstrated at operating commercial power plants, and that is
    certainly reasonable, isn't it?
        Ms. McCabe. That would not----
        Mr. Griffith. I am out of time.
        Ms. McCabe [continuing]. Be the approach of the Clean Air
    Act, that has been proven over the years to work effectively in
    developing----
        Mr. Griffith. So is that a yes or a no?
        Ms. McCabe [continuing]. New technology. I would not agree.
        Mr. Griffith. All right.
        Mr. Whitfield. Gentleman's time has expired. At this time I
    recognize the gentleman from West Virginia, Mr. McKinley, for
    5----
        Mr. McKinley. Thank you, Mr. Chairman. I have got five
    questions at least, if not more, but we will try to see if we
    get through some quickly with it. The first is, I am just
    curious, some of the earlier statements had been about that
    this is commercially viable now.
        Ms. McCabe. Yes.
        Mr. McKinley. Because I am curious, Lisa Jackson said, back
    in November of 2011, that it wouldn't be available for, and her
    quote was ``maybe a decade or more.'' So I am curious how that
    has moved up on the chain. And DOE put out their own report
    that said it is not going to be commercially viable until 2020
    as well. But you are saying it is available now. So could you
    get back to me explaining why you disagree with Lisa Jackson,
    and why you disagree with the Department of Energy, their
    projection that it could be available? Could you get back in
    writing to me, rather than answer now?
        Ms. McCabe. Certainly.
        Mr. McKinley. Thank you. Second is, I want to probe a
    little further about you saying how coal-fired powerhouse will
    be viable. You have answered that, but, as an engineer, I want
    to probe a little deeper with that. When you say viable, do you
    mean that will maintain that 38 to 40 percent of the portfolio
    of this country of energy production?
        Ms. McCabe. We expect coal to remain a substantial portion
    of the energy portfolio----
        Mr. McKinley. No, I asked----
        Ms. McCabe [continuing]. Even under these----
        Mr. McKinley. No, the question I asked was----
        Ms. McCabe [continuing]. Even under the proposed----
        Mr. McKinley [continuing]. Thirty-eight to 40 percent?
        Ms. McCabe. That is a pretty precise number.
        Mr. McKinley. OK, call it 35 to 40 percent, then, where it
    is now. Is coal going to lose more under these regulations? OK,
    you are the one that used the term viable. I am trying to
    define viability. I would say viability is 7 \1/2\ cents per
    kilowatt hour in West Virginia. Are you saying that the price
    of electricity is going to go up?
        Ms. McCabe. Congressman, there are a number of factors that
    are affecting the power sector now----
        Mr. McKinley. Will the price of electricity go up under
    your definition of viability?
        Ms. McCabe. I can't give you a----
        Mr. McKinley. And you can't define whether or not it is
    going to be the 35 to 40 percent?
        Ms. McCabe. Well, there are a number of factors that go
    into how much of the power in this country----
        Mr. McKinley. So we could----
        Ms. McCabe [continuing]. Is produced by----
        Mr. McKinley [continuing]. Your term of viable, we could
    have less and less use of coal. I am just concerned about all
    the coal miners, and the people that work in these mines, or
    the people in the industry, how they are going to find jobs, if
    it is less and less, and you are saying it is viable. I am not
    so sure I am into that.
        Let me go to a third element very quickly with it. The
    United Nations panel came out with a report. They have been
    doing it periodically. They talk about that 96 percent of all
    CO2 emissions are naturally occurring, and what this
    whole fight is all about is just four percent. Do you agree
    that it is just four percent?
        Ms. McCabe. I don't agree----
        Mr. McKinley. Four percent I am saying is anthropogenic.
        Ms. McCabe. I don't agree that anthropogenic emissions are
    not a significant factor in----
        Mr. McKinley. That is not the question. State the question,
    please. Do you agree with the United Nations, that said four
    percent of all CO2 emissions come from man?
        Ms. McCabe. I am not familiar with that statement,
    Congressman.
        Mr. McKinley. OK. But you will accept that under the, well,
    maybe you don't, if you are not familiar with it, but I think
    it was the Sierra Club, maybe Earth Justice. I know that Al
    Gore has said that 30 percent of all man-made CO2
    emissions come from the deforestation of our tropical rain
    forests, so that would represent 1.2 percent. If it is four
    percent, 1.2 percent would be 30 percent of four. But yet coal-
    fired powerhouses only generate, what, do you know the number?
        Ms. McCabe. They----
        Mr. McKinley. Two tenths of one percent of the
    CO2 emissions in the world come from American coal-
    fired powerhouses, six times less than the deforestation of our
    tropical rainforests. But yet, with all these regulations you
    are putting at risk all the American workers in these
    powerhouses, and coal mines, and all across this country. Two
    tenths of one percent, you are willing to put our economy at
    risk for \2/10\ of one percent. I am not comfortable with that.
        Mr. McCabe. Coal fired power plants are the largest sources
    of carbon in the country.
        Mr. McKinley. It is \2/10\ of one percent of the global
    emission, six times worse in the deforestation of our tropical
    rainforests. So my question is, if we decarbonize America, that
    is what you are trying to do, who are you going to blame the
    next time there is a snowstorm, or there is another tornado?
    Because we won't be producing CO2 in America any
    longer, so who is the EPA going to blame next?
        Ms. McCabe. There are many steps that need to be taken to
    reduce carbon, and if----
        Mr. McKinley. Who will you blame next? If we don't produce
    CO2, what will be your excuse for the next tornado,
    the next Hurricane Sandy? I am sorry, my time has run out.
        Mr. Whitfield. Gentleman's time has expired. At this time,
    recognize the gentleman from Texas, Mr. Green, for 5 minutes.
        Mr. Green. Thank you, Mr. Chairman, and I would like to
    thank our witness for being here. And the topics we are
    addressing today at this hearing are complicated, and there are
    a wide range of views. I believe it when scientists tell us
    that man-made global warming is real, personally, I believe to
    successfully regulate GHG emissions, Congress should develop a
    regulatory program that would promote economic growth, and
    provide the responsible path forward. But until Congress moves
    to pass meaningful legislation, efforts such as this
    legislation are not the correct way to address that issue.
        Ms. McCabe, coming from Texas, in the Houston area, I have
    been interested, and I know we had Secretary Moniz here a while
    back. I know that Secretary Moniz visited the plant in
    Mississippi this week and endorsed the technology. At this
    point, where are we with that CCS technology?
        Ms. McCabe. Yes, the Secretary was there and visited the
    plant. The technology at that plant, and several others, is
    moving forward, so we are looking forward to those projects
    beginning operation, and others considering it.
        Mr. Green. OK. My next question would be is CCS
    technologically and economically feasible for everyone? Because
    I know there have been some problems at the Mississippi plant.
        Ms. McCabe. Well, the Mississippi plant has a variety of
    other activities going on beyond the CCS. But the technology is
    available to plants widely.
        Mr. Green. And we know from other EPA studies and proposals
    there is always concern about accurate data. Is the EPA 2012
    proposal data still accurate enough to be effective?
        Ms. McCabe. Well, we always try to base our rules on the
    most accurate data, and the transparent and open rulemaking
    process make sure that people have an opportunity to give us
    the most up to date data. So, before we would finalize any
    rule, we would make sure we had the most up to date data.
        Mr. Green. Well, and again, coming from Texas, I know our
    state agencies are unique, and have important information to
    assist them in balancing these economic demands. Keeping that
    in mind, how would you characterize the states' regulatory
    efforts up to this point, and their importance moving forward?
        Ms. McCabe. Well, the states are key regulatory partners in
    reducing pollution in this country, and always have been, but
    the system that we have relies on national standards being set
    for major industries across the country, so that the pathway is
    clear so that power plants built all across the country that
    are of similar types would meet the same standards, and then
    the states very effectively implement those rules.
        Mr. Green. I guess I am still skeptical about the economic
    feasibility of that. And again, I am looking forward to what
    happens in Mississippi, because I represent a refining
    community, and we do have storage places in Texas that you can
    store the carbon.
        But the President recently announced an end to the
    financing of overseas coal plants in emerging markets. This,
    combined with the EPA actions, are significant measures. And
    again, we know what China is doing on coal, and I am sure we
    are not providing any overseas financing for that, but in other
    areas. Is the administration action enough to really address
    climate change without strong mandatory reductions by other
    major emitters, including, like, China and India?
        Ms. McCabe. Well, this is a global challenge, as you have
    indicated, and actions will need to be taken by many people.
    Part of the President's climate plan is strong United States
    leadership internationally. And one important aspect of being a
    credible and strong leader internationally is to be doing the
    things we need to do here at home. So the plan includes very
    much both of those elements.
        Mr. Green. I know the United States has reduced our carbon
    emissions over the last few years for lots of reasons. You
    know, downturn in the economy, more fuel efficient vehicles.
    But we have actually reduced our country, but in Western
    Europe, and, of course, in the emerging nations, in the
    developing nations, there has been hardly any. In fact, it just
    continues to grow. And I hear my colleagues from West Virginia
    are concerned. We can do everything we want to in this country
    on carbon, but unless our international partners and
    competitors are on the same wavelength, it doesn't do us any
    good, except maybe price our economy out of the world market,
    and that is, I think, a lot of our concern. But I appreciate
    you being here.
        Thank you, Mr. Chairman. I yield back.
        Mr. Whitfield. Gentleman yields back. At this time
    recognize the gentleman from Louisiana, Dr. Cassidy, for 5
    minutes.
        Mr. Cassidy. Thank you, Mr. Chairman.
        Ms. McCabe, I am over here. Let me build a little bit on
    the questions that Mr. Green just asked. Earlier this year I
    introduced the Energy Consumers Relief Act to provide greater
    relief and transparency about the costs and jobs impact of EPA
    regulations that cost at least a billion dollars. Now, first,
    let us just, if you will, kind of establish common ground. Do
    you agree that EPA rules can affect the economy by raising
    electricity rates for consumers, and business, and et cetera?
        Ms. McCabe. I agree that it is an important issue to look
    at, and a lot of information needs to be evaluated by experts.
        Mr. Cassidy. Now, one of the wonderful things we are
    hearing about right now is re-shoring, where companies are
    bringing jobs back from places like China and India because our
    cost of electricity is so much less than theirs. We can't beat
    them on the price of labor, we are whacking them on the price
    of electricity. So again, building on what Mr. Green said, is
    it a concern at EPA that these regulations will effectively
    increase the cost of that electricity to the point that we will
    not have the same amount of re-shoring, the same number of jobs
    being created in these energy intensive enterprises?
        Ms. McCabe. We do enjoy very low energy prices in this
    country, and that has been the case throughout the history of
    the Clean Air Act, and improved efficiency, and lowered
    emissions from power plants. So we have been able to maintain
    those low prices.
        Mr. Cassidy. Now, that is certainly retrospectively, but if
    we speak going forward, and a lot of rules are put in which
    effectively prejudice against coal, which is now, what, 40
    something percent of our energy supply, do we have the risk of
    undoing that? That, as we raise the cost of electricity, what
    was true in the past will not be true in the future, because of
    these regulations, serving as a form of attacks, raising the
    cost of electricity, adversely affect the movement of jobs back
    from overseas?
        Ms. McCabe. The analysis that we do for this rule will be
    the kind of analysis that we have done for previous rules. And
    I expect that this rule will work in a similar fashion. That
    is----
        Mr. Cassidy. Now, I have some concern, which is why I put
    forward that law, if you will, about encouraging transparency.
    Again, do you accept that there should be transparency about
    the potential cost of EPA regulations to ratepayers?
        Ms. McCabe. EPA follows robust transparency and public
    input processes for all of our rulemakings.
        Mr. Cassidy. Now, you say that, but during an EPA budget
    hearing this past spring, the EPA's Acting Administrator
    admitted that EPA had not done sufficient economy-wide modeling
    to account for the full economic impacts of its major rules,
    including higher rates paid by electricity consumers as a
    result of regulations.
        So let me ask, will you commit that, for any regulations
    relating to existing power plants, including the pending
    greenhouse rules, that EPA will conduct economy-wide modeling
    to measure the cost of the higher electricity rates on
    households, businesses, and its effect upon the re-shoring that
    we need to happen in order to recreate good jobs with good
    benefits for the working class of America?
        Ms. McCabe. In all of our economic analysis that we do for
    our rules, EPA follows OMB procedures, and uses appropriate
    peer reviewed and transparent analysis and approaches.
        Mr. Cassidy. But I am trying to reconcile that with the
    Acting Administrator admitting they had not done sufficient
    economy-wide modeling to account for the economic impacts of
    major rules. So there seems to be a little bit of discordance.
    You are saying that you have, and yet he is saying that they
    had not.
        Ms. McCabe. No, there is no disagreement there. Economy-
    wide modeling is an approach that has not been used in our
    rules because there are not appropriate analytical methods to
    do it.
        Mr. Cassidy. Now, on the other hand, I am almost out of
    time, but if you don't do that, then that gets back to where I
    was going with this. If you don't do the economy-wide, we don't
    understand the ripple effect, smushing, if you will, the hope
    for re-shoring of jobs.
        Ms. McCabe. The agency has engaged with our Science
    Advisory Board to undertake right now an inquiry into the types
    of appropriate models that would be used.
        Mr. Cassidy. So my fear is that if you don't come to a
    conclusion before these regulations are put out, the hope for
    re-shoring of those jobs will not happen. Your regulations are
    creating uncertainty. Business hates uncertainty. They are not
    going to come back if, my gosh, all of a sudden our electricity
    rates are going up, will they?
        Ms. McCabe. The regulations are creating certainty, so that
    plants will know----
        Mr. Cassidy. But it may be certainty of higher cost. You
    have not done your economy-wide modeling, and so, therefore,
    you don't know whether or not the energy intensive enterprise
    will suddenly find themselves priced out both on labor and on
    the cost of energy, correct?
        Ms. McCabe. There has been an economic analysis done on the
    proposed rule. It is open for comment, and----
        Mr. Cassidy. But not economy-wide, you point out.
        Ms. McCabe. Because the methodologies for that approach
    are----
        Mr. Cassidy. So, therefore, we don't know, and so,
    therefore, we may be keeping jobs from re-shoring because you
    don't know, because we don't have the model. That is my fear.
        I am out of time. I yield back.
        Mr. Whitfield. Gentleman's time. At this time I recognize
    the gentleman from Colorado, Mr. Gardner, for 5----
        Mr. Gardner. Thank you, Mr. Chairman, and thank you, Ms.
    McCabe, for your time here today and your testimony.
        You just mentioned that, and I wanted to follow up with Mr.
    Cassidy, that your regulations create certainty. You just said
    that. Does your regulation make electricity more or less
    affordable?
        Ms. McCabe. Our regulation, as required by 111(b) of the
    Clean Air Act, is intended to require for future power plants
    state of the art technologies----
        Mr. Gardner. Well----
        Ms. McCabe [continuing]. That will----
        Mr. Gardner. If you don't mind, I have a series of these
    questions. Does it make electricity more or less affordable?
        Ms. McCabe. The rules that we will be requiring will allow
    coal plants to proceed in a way that is----
        Mr. Gardner. Right, but I am trying to get to the certainty
    that you said your regulation creates.
        Ms. McCabe. Yes.
        Mr. Gardner. If this regulation creates certainty----
        Ms. McCabe. Yes.
        Mr. Gardner [continuing]. Does your regulation make
    electricity more or less affordable?
        Ms. McCabe. We do not expect that these rules will make
    electricity less affordable in this country----
        Mr. Gardner. OK.
        Ms. McCabe [continuing]. As plants are able to plan ahead
    and build plants that will meet the requirements----
        Mr. Gardner. So will it make electricity more or less
    expensive, then? Maybe that is a better way to put it.
        Ms. McCabe. These are the kinds of things that we look at
    in our economic analysis, and----
        Mr. Gardner. Right. So----
        Ms. McCabe [continuing]. Everybody can----
        Mr. Gardner [continuing]. To keep that certainty, and to
    keep the certainty that you said these rules provide, does it
    make electricity more or less expensive?
        Ms. McCabe. The analysis may show that the addition of
    additional equipment will increase costs to----
        Mr. Gardner. OK, so there is the certainty right there. So
    it will increase electricity costs, thank you. You said that
    you did economic viability projections analysis. Were you at
    the coal hearing in Denver that the EPA held, the listening
    session in Denver?
        Ms. McCabe. No, I wasn't.
        Mr. Gardner. OK. So do you do economic viable studies of
    communities where they produce coal?
        Ms. McCabe. We do economic analysis of the proposed rules
    that we are looking at.
        Mr. Gardner. But, do you look at the communities, where
    there is a coal mine, and there are employees there? I mean, do
    you look at the economic viability of those communities, and
    what happens in this rule that you are certain will make
    electricity more expensive?
        Ms. McCabe. I should amend what I said a minute ago, or
    clarify what I said a minute ago. The analysis that we have put
    forward on this rule does show that this particular rule will
    not increase electricity prices.
        Mr. Gardner. OK. Do you believe that overall regulations at
    EPA increase the cost of electricity?
        Ms. McCabe. I----
        Mr. Gardner. Looking at this regulation in combination with
    other regulations that have come through on greenhouse gases,
    or electricity production from coal?
        Ms. McCabe. There are many factors that affect electricity
    prices over time, and environmental regulations have been shown
    to be a very, very small aspect of what increases prices.
        Mr. Gardner. Do you think those price increases have a
    larger impact on people who may be on a fixed income?
        Ms. McCabe. The price of electricity overall is something
    that affects people. But, as I said, the contribution of
    environmental regulation to those cost changes is minimal.
        Mr. Gardner. All right. Just a couple of other questions.
    For existing plants, do you agree that states will have a
    primary role in setting performance standards for electric
    generating units?
        Ms. McCabe. For existing plants, the role that states have
    is to design the plan at the state level that will meet the
    guidelines that the EPA will establish.
        Mr. Gardner. So the states will have a primary role under
    the Regional Haze Program, this is what I am getting at, which
    is also a program intended to be implemented primarily by the
    states, EPA has been routinely disapproving SIP plans, and
    seeking to impose federal implementation plans that require
    plant owners to spend millions of dollars, or shut down their
    units. Where states object, or challenge the EPA, EPA then
    proceeds to enforce these federal implementation plans through
    litigation. We have got examples of these in Arizona, New
    Mexico, Montana, North Dakota, Utah, and Wyoming. Will you
    provide me with an assurance the EPA will give states more
    deference under its pending greenhouse gas regulations than the
    agency has done under the Regional Haze Program?
        Ms. McCabe. EPA, in fact, has approved the majority of the
    Regional Haze plans.
        Mr. Gardner. So, again, the question is will you give
    states more deference under its pending greenhouse gas
    regulations than the agency has under its Regional Haze
    Program?
        Ms. McCabe. EPA will work with the states, as we always do,
    when they have the authority to design state plans, to make
    sure that those state plans meet the federal target.
        Mr. Gardner. And I have some additional questions. When we
    had Administrator McCarthy before the committee last year, we
    talked about new source performance standards for power plants,
    and, in our exchange, she testified that she could not rule out
    regulation of any of the 70 source categories under EPA's new
    source performance standards program, which covered all types
    of industrial activities. Is that still your position, that you
    cannot rule any source out?
        Ms. McCabe. We are focused on the actions laid out in the
    President's Climate Action Plan, which has power plants as the
    rulemaking that we are----
        Mr. Gardner. Yes. Are there any source categories the EPA
    can affirmatively rule out of greenhouse gas regulations?
        Ms. McCabe. There are many source categories that EPA
    regulates that we have----
        Mr. Gardner. So you can't rule----
        Ms. McCabe [continuing]. No----
        Mr. Gardner [continuing]. Any of them out?
        Ms. McCabe [continuing]. Present intention of----
        Mr. Gardner. If the EPA doesn't pursue regulation of all
    these emission sources, can the EPA guarantee that there will
    not be lawsuits to compel the regulation?
        Ms. McCabe. I can't guarantee that there won't be lawsuits.
    The EPA gets sued all the time. But we make our decisions about
    what to do based on the science, and priority setting, and
    power plants are clearly the largest source of carbon in the
    country.
        Mr. Gardner. The Chairman has been incredibly indulgent of
    my time. And just, finally, one last question. Can the EPA
    provide an assurance that there won't be an ever expanding
    suite of EPA greenhouse gas regulations?
        Ms. McCabe. As I said, we are focused on the source
    category that contributes the most carbon pollution in this
    country.
        Mr. Gardner. So there could continue to be an ever
    expanding suite?
        Ms. McCabe. There are a number of source categories that I
    would not expect us to be looking at, in terms of greenhouse
    gas emissions, and we are focused----
        Mr. Gardner. Be interested in finding out what those are.
    Thank you.
        Mr. Whitfield. Gentleman's time has expired. At this time I
    recognize the gentleman from Texas, Mr. Hall, for 5 minutes.
        Mr. Hall. Thank you, Mr. Chairman.
        Ms. McCabe, the Bureau of Labor Statistics reported, back
    earlier in November 2013, that there were 11.3 million
    Americans unemployed, including 4.1 million long term
    unemployed, and they also reported 8.1 million underemployed
    individuals, those working part time, or had been cut back on
    the work, or couldn't find a full time job. Would you agree
    that raising energy prices when we are facing such chronic
    levels of unemployment is not in the best interest of the
    economy?
        Ms. McCabe. Congressman, we are very concerned, as you are,
    about jobs in this country, and about----
        Mr. Hall. I know you are----
        Ms. McCabe [continuing]. The economy of this country----
        Mr. Hall [continuing]. That, but just answer my question.
        Ms. McCabe. We don't believe that moving forward with these
    regulations will be detrimental to the economy of this country.
        Mr. Hall. Well, for the last 3 years EPA has been telling
    us that they don't intend to implement a cap and trade program
    to regulate greenhouse gas emissions. And as recently as May
    15, I think, of this year Assistant Administrator McCarthy, who
    is testifying just below us here today, stated, in a response
    to our committee that, ``Both Former Administrator Jackson and
    I have said in the past that EPA has no intention of pursuing a
    cap and trade program for greenhouse gases, and I continue to
    stand by these statements.''
        Yet EPA appears to be contemplating a ``system based
    approach'' for regulating existing power plants. In a document
    entitled ``Questions for State Partners'', which has to do with
    EPA's planned greenhouse gas regulations for existing power
    plants, EPA asked questions relating to measures like this:
    resource planning requirements, end use energy, efficiency
    resource standards, renewable energy portfolio standards, and
    appliance and building code energy standards. These measures
    seem to me, and maybe I am wrong about it, but they seem to me
    that they are the types of programs that were included in the
    cap and trade legislation that was rejected by this Congress, I
    think, some 2 or 3 years ago, and I think you are aware of
    that.
        Ms. McCabe. Yes.
        Mr. Hall. Looking at EPA's documents, that sounds like a
    back door cap and trade. And I will just ask you these
    questions, just get right to the point. Talking about the
    planned greenhouse regulations for existing plants, is the EPA
    considering requiring states to adopt these types of programs?
        Ms. McCabe. No, Congressman, this is not a cap and trade
    program at all. This is a program that allows states to develop
    flexible state plans.
        Mr. Hall. Well, you aren't whatever you are acting, in
    whatever positions you take. And when EPA says the agency,
    ``has no intention of pursuing a cap and trade program for
    greenhouse gases'', does that just mean at the national level?
        Ms. McCabe. Well, it is not up to us to develop the state
    plans. We are not developing a cap and trade program, nor will
    we require any state to put one in place.
        Mr. Hall. Well, that is my next question. I thank you for
    answering it. Might EPA effectively require it at the state
    level?
        Ms. McCabe. It would be entirely up to the state how they
    would want to approach----
        Mr. Hall. OK.
        Ms. McCabe [continuing]. Meeting the target.
        Mr. Hall. I think that----
        Ms. McCabe. A cap and trade program is not required.
        Mr. Hall. I think that is fair enough, and I thank you for
    your time.
        Mr. Whitfield. Well, thank you, Mr. Hall, and I think that
    concludes our questioners, and I am sure the people on the
    third panel are delighted with that.
        Ms. McCabe, before you go, I want to ask one question, or
    just follow up on Mr. Gardner. Is it your opinion, your belief,
    that the states have the actual authority to set the
    performance standards for existing plants? Or are you saying
    EPA will set the standard of performance for existing plants in
    the states?
        Ms. McCabe. EPA will set the target, but then the states
    will have flexibility to meet that in whatever way makes sense
    to them. So it does not need to be a unit by unit regulation,
    or expectation.
        Mr. Whitfield. And you all are working on this already,
    even though you are not expected to have it until the summer of
    2015, is that correct?
        Ms. McCabe. Well, our proposal will be out in June of 2014.
    We are gathering information right now in order to inform the
    proposal that we will----
        Mr. Whitfield. OK.
        Ms. McCabe [continuing]. Put together.
        Mr. Whitfield. OK. Well, thank you very much, and we look
    forward to your coming back and spending more time with us.
        Ms. McCabe. All right. Thank you.
        Mr. Whitfield. Yes.
        At this time I would like to call up the third panel of
    witnesses, and I want to thank them for their patience, and for
    the long distance that they have come. We appreciate that.
        First of all, we have the Honorable Scott Pruitt, who is
    the Attorney General from the great State of Oklahoma. We have
    the Honorable Henry Hale, who is the mayor of Fulton, Arkansas,
    which I believe is the location of the Turk plant, near
    Texarkana. We have Mr. Tony Campbell, who is CEO and President
    of the East Kentucky Power Cooperative. We have Ms. Susan
    Tierney, who is Managing Principal of the Analysis Group. We
    have Mr. David Hawkins, who is the Director of Climate Programs
    at the Natural Resources Defense Council. We have Mr. Ed
    Chichanowicz, who is an engineering consultant. We have Dr.
    Donald R. van der Vaart, Chief, Permitting Section, North
    Carolina Department of Environment and Natural Resources,
    Division of Air Quality. And we have Mr. Ross Eisenberg, who is
    Vice-President of Energy and Resources Policy at the National
    Association of Manufacturers.
        Thank you for being here, and I will recognize each one of
    you for 5 minutes for your opening statement, and then we will
    have some questions for you.
        So, Attorney General Pruitt, we will recognize you first.
    Thanks for being with us today, and you are recognized for 5
    minutes.

    STATEMENTS OF HON. E. SCOTT PRUITT, ATTORNEY GENERAL, STATE OF
       OKLAHOMA; HON. HENRY HALE, MAYOR, FULTON, ARKANSAS; TONY
     CAMPBELL, PRESIDENT AND CEO, EAST KENTUCKY POWER COOPERATIVE;
      SUSAN F. TIERNEY, MANAGING PRINCIPAL, ANALYSIS GROUP; DAVID
       HAWKINS, DIRECTOR OF CLIMATE PROGRAMS, NATURAL RESOURCES
    DEFENSE COUNCIL; J. EDWARD CICHANOWICZ, ENGINEERING CONSULTANT;
       DONALD R. VAN DER VAART, CHIEF, PERMITTING SECTION, NORTH
       CAROLINA DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES,
    DIVISION OF AIR QUALITY; AND ROSS E. EISENBERG, VICE PRESIDENT,
         ENERGY AND RESOURCES POLICY, NATIONAL ASSOCIATION OF
                             MANUFACTURERS

                   STATEMENT OF HON. E. SCOTT PRUITT

        Mr. Pruitt. Chairman Whitfield, Congressman McNerney, and
    members of the subcommittee, good morning, and thank you for
    the invitation to join you today to discuss concerns, from a
    state perspective, of the EPA's proposed standards of
    greenhouse gas emissions on new power plants. This is an issue
    of great concern for Oklahoma and other states who were given
    authority by Congress to develop and implement emissions
    standards from existing power plants.
        In recent years the EPA has expressed an unwillingness to
    appropriately defer to state authority under the Clean Air Act.
    The prospect of aggressive performance standards for coal based
    power plants is a cause for serious concern among the various
    states. The EPA has indicated a similarly aggressive approach
    to existing coal based power plants, for which the President
    has directed the EPA to propose standards by June 1 of 2014,
    and to finalize those rules by June 1 of 2015.
        While the Clean Air Act gives the EPA the authority to
    develop the framework for the states to establish emission
    standards for existing power plants, the EPA may not dictate to
    the states what those standards should be. The states are
    allowed to engage in a cost benefit analysis, and consider a
    wide range of factors in setting those standards. This is
    important to note because the EPA's new emission standard,
    under the guise of ``flexible approaches'', mandates new coal
    based power plants use costly carbon capture storage
    technology. This is technology that likely remains commercially
    unviable for at least a decade.
        The U.S. Energy Information Administration projects coal-
    based electric generation will provide 40 percent of base load
    energy in this country in 2014. The elimination of coal based
    electric generation would result in higher electricity prices
    for our ratepayers. It would be detrimental to the national and
    state economies, as well as job creation, and other things.
    Increased electricity prices also will hurt the competitiveness
    of American manufacturing. I, and the Attorney Generals of 16
    other states, recently submitted to the EPA a white paper
    outlining those concerns, and our position on both the EPA and
    the states' role under Section 111(d) of the Clean Air Act. I
    have submitted that white paper to you this morning.
        Unfortunately, this is not the only issue at which the
    states and the EPA are at odds over the scope of their
    respective responsibilities. The Congressman from Colorado
    referenced the Regional Haze program. Many states, including
    Oklahoma, are actively engaged in legal challenges to thwart
    the EPA's attempt to expand its authority under the Regional
    Haze program. Under the Clean Air Act's Regional Haze rules, a
    target date of 2064 was set to achieve natural visibility in
    federally designated areas across the country. Regional Haze
    deals with issues of aesthetics, not health, and visibility,
    and safety of the public health. As such, the Clean Air Act
    gives states the primary role in establishing regulations.
        In Oklahoma, stakeholders joined together, worked with
    utilities, to construct a plan for Regional Haze, and submitted
    that in 2010, that allowed for fuel diversity, and balanced
    environmental protection and the need for affordable energy.
    Our state plan accomplished those objectives for the Regional
    Haze rule, and exceeded the target date of 2064 by nearly 4
    decades. The EPA rejected Oklahoma's state implementation plan
    in favor of a federal implementation plan, which would cost the
    state utilities almost $2 billion within 3 years. What is more,
    the federal plan would provide less environmental benefits than
    the state plan, and is estimated to increase costs for Oklahoma
    ratepayers by as much as 20 percent.
        Our state made the decision to sue the EPA over its
    decision. This is a case of first impression under the Regional
    Haze rule adopted in 2005, and will likely potentially end up
    before the U.S. Supreme Court. Many states are monitoring that
    case, as the decision will impact their ability to set policy
    within their jurisdiction.
        There is a great deal of frustration among the states with
    the EPA's attitude, that it ignores the proper role of the
    states as the agency attempts to expand its authority. The EPA
    seems to have a view that the states are merely a vessel to
    implement whatever policies and regulations the administration
    sees fit, regardless of the wisdom, cost, or efficiency of such
    measures. Fortunately, for the states, that is not what the law
    allows. Congress clearly intended for the states to have
    primacy in the areas of environmental regulation, and for the
    EPA to work with the states closely to regulate those issues.
    However, the EPA is attempting to usurp the role of the states,
    all in the name of imposing the administration's anti-fossil
    fuel mentality.
        The extent and form of greenhouse gas regulation is
    important to the states. The states have the experience,
    expertise, and ability to regulate those issues, and must be
    allowed to play their proper roles established by Congress. We
    hope that by making our concerns known here today and beyond
    that the EPA will respect the principles of cooperative
    federalism, something that has been talked about here today,
    that are all set forth in the Clean Air Act, and take a more
    common sense approach to any new regulations, and include the
    states in that process. If not, we will attempt to obtain
    relief from the courts, and we will certainly welcome
    Congressional oversight being brought to bear on these federal
    agencies.
        I look forward, Mr. Chairman, to answering any questions
    you may have today and others, and thank you for the time this
    morning.
        [The prepared statement of Mr. Pruitt follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Thank you, Mr. Pruitt.
        Mayor Hale, you are recognized for 5 minutes, and just be
    sure to put your microphone on so we can hear you.

                      STATEMENT OF HON. HENRY HALE

        Mr. Hale. Chairman Whitfield, and members of this
    committee, it is a great honor to sit here today and testify
    before the committee about the Southwestern Electric Power
    Company, a unit of American Electric Power, which began serving
    customers back in 1912, made the announcement in 2006 to build
    a power plant in Southwest Arkansas, the John W. Turk Plant,
    which later became the single largest project ever constructed
    in the county where I live, with a capital investment of $1.8
    billion. Hempstead County, which had been around for 195 years,
    founded in 1818, is eternally grateful to SWEPCO and AEP for
    their decision to build just a mile or two up the road from my
    hometown. The plant went into commercial operation on December
    the 20th, 2012.
        SWEPCO went to great length to overcome major environmental
    and legal challenges in building Turk, one of the cleanest,
    most efficient coal fueled electric generating plants in North
    America. It was the culmination of 6 years of successful
    engineering, construction, legal, and regulatory effort. Turk
    is an example of how well planned teamwork and coordination can
    make a project of this magnitude come together. It is the first
    power plant in the U.S. to use ultra-supercritical steam
    technology, which requires a plant to use less coal, thereby
    lower the level of emissions, including carbon dioxide, sulfur
    dioxide, nitrogen oxide, and mercury.
        The Turk plant is a 600 megawatt facility that provides
    operation 24 hours a day to meet the growing electrical needs
    of SWEPCO and co-op customers in Arkansas, Louisiana, and
    Texas. SWEPCO realizes how important it is to plan for the
    future energy supply for our states, community, and customers.
        The Turk plant is good for the local economy. While America
    was enduring difficult economic times, the Turk plant provided
    construction jobs for a peak of over 2,000 workers, and bring
    tax revenue to local government. Construction alone generates
    $38 million in sale and property revenue. The plan has 109
    permanent jobs, with an annual payroll of $9 million. The plant
    pays about $6 million in annual school, and county, and
    property tax. I certainly appreciate the tax support generated
    to the local school district, which I am an employee.
        But it is not about the plant. SWEPCO gave the local
    college, the University of Arkansas Community College at Hope,
    a $1 million grant to start up a power plant technology degree
    program early on in the process. Hundreds have graduated, and
    many are able to get jobs at Turk Plant, enhancing education in
    a part of the State of Arkansas that desperately needed it in
    recent years. The Turk team impacts the local community in a
    positive way with toy drives, park improvement for nearby Hope,
    Fulton, and McNab. Construction workers and SWEPCO employees
    also, on site, gave their time, money, and materials to improve
    the lives of others in the area.
        The Turk Plant has won several awards this year, including
    the Edison Award, from Edison Electric Institution, the 2013
    Plant of the Year Award from Power Magazine, and 2012 Project
    of the Year in the Best Coal Fuel Project category from Power
    Plant.
        I thank you for allowing me to speak to you this day. Thank
    you.
        [The prepared statement of Mr. Hale follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Mayor, thanks so much.
        And, Mr. Campbell, you are recognized for 5 minutes.

                       STATEMENT OF TONY CAMPBELL

        Mr. Campbell. Chairman Whitfield, Ranking Member McNerney,
    and members of the subcommittee, thank you for the opportunity
    to appear before you today. My name is Tony Campbell. I am
    President and CEO of East Kentucky Power Cooperative, and I
    have served in that position since 2009.
        East Kentucky Power Cooperative is a generation and
    transmission cooperative based in Winchester, Kentucky. East
    Kentucky Power Cooperative, and its 16 owner-member
    cooperatives, exist to serve the end consumer. East Kentucky
    Power Cooperative generates electricity at three base load
    power plants fueled by coal, and one peaking plant fueled by
    natural gas. More than 90 percent of the power that is
    generated is fueled by coal. East Kentucky Power Cooperative's
    total generating capacity is about 3,000 megawatts, and we
    employ about 700 employees. More than one million Kentucky
    residents and businesses in 87 counties depend on the power we
    generate. We also serve some of the neediest Kentuckians. The
    household income of Kentucky Cooperative members is 7.4 percent
    below the state average, and 22 percent below the national
    average.
        East Kentucky Power Cooperative supports the bipartisan
    Whitfield-Manchin discussion draft bill as common sense
    legislation that provides important guidelines and parameters
    for EPA to follow in developing greenhouse gas regulations for
    new and existing power plants without causing irreparable harm
    to the U.S. economy. This bipartisan bill is badly needed to
    ensure EPA does not promulgate a rule that jeopardizes the
    country's energy future, puts electricity reliability at risk,
    and severely harms the economy.
        While East Kentucky Power Cooperative sympathizes with the
    need to address climate change issues on a global scale, we
    should not impose immediate changes to this country's electric
    infrastructure, forcing utilities to rely on undeveloped
    technologies as the answer. That risk may prove greater than
    the issue it was intended to solve.
        Congress never intended for the Clean Air Act to regulate
    greenhouse gas emissions from power plants. This fact is
    illustrated by EPA's attempts to promulgate greenhouse gas new
    source performance standards under Section 111. The
    administration's proposed greenhouse gas performance standards,
    first issued in April 2012, demonstrated unequivocally that the
    administration seeked to end new coal generation through
    regulation. In that proposal, EPA chose not to establish a
    separate standard for coal-fired units. Instead, it lumped coal
    units together with natural gas fired units into a new new
    source performance standard subcategory, and established a
    greenhouse gas emission limit that only some natural gas
    combined cycle units can achieve.
        These proposed Section 111 regulations have already had a
    chilling impact on electricity generation in the U.S. While the
    current low price of natural gas has contributed to the decline
    in coal-fired electricity generation, and the resurgence of
    natural gas fired units, EPA's new regulations are an equally
    important factor in this trend. In recent years, electric
    utilities have faced a daunting array of environmental
    regulations on all fronts, air, water, and waste, that have
    contributed to the widespread coal-fired unit retirements. Coal
    fired generation is essential to ensure energy diversity, and
    to keep the electricity prices low.
        There is also a significant national security issue that I
    would like to highlight for you. In addition to the realities
    and risks of rising natural gas prices, it is simply not
    feasible or prudent for the nation's entire existing coal-fired
    generation capacity to be transitioned to natural gas. Natural
    gas generation requires transportation from natural gas wells
    to power plants by an intricate network of interstate pipelines
    and compressor stations that allow the gas to be constantly
    pressurized. These requirements raise not only infrastructure
    concerns, but also national security concerns. If a compressor
    station were to fail, or become the victim of a terrorist
    attack, the nation's electric grid could be placed in jeopardy.
        When these natural gas supply requirements are contrasted
    with coal, which is plentiful in supply, can be stockpiled at a
    30 to 45 day supply, and can be transported by several
    different methods without the use of interstate pipelines, it
    makes no sense to require wholesale conversions from coal-fired
    generation to natural gas, particularly in areas of the country
    that are rich in coal resources, and are not located in close
    proximity to natural gas wells.
        Coal fired power plants in the U.S. only contribute
    approximately four percent of the global greenhouse gas
    emissions. The U.S. power fleet has already reduced
    CO2 emissions by 16 percent below 2005 levels, with
    CO2 from coal-fired power plants reduced by almost
    25 percent. The EPA should allow coal-fired power plants to
    continue to make these reductions in a reasonable manner, and
    in response to market pressures, instead of by regulatory fiat.
        Furthermore, the regulation at issue will not have a
    meaningful impact on global climate change. The minimal impact
    that these regulations will have on the environment further
    underscores the need for all greenhouse gas regulations to be
    economically achievable. While East Kentucky Power Cooperative
    has significant concerns with the proposed regulations of the
    new sources, particularly the assumptions on carbon capture and
    sequestration technology, our greatest concern relates to
    regulations for existing sources.
        Pursuant to the consent decree with the EPA, East Kentucky
    Power Cooperative has invested almost $1 billion in
    retrofitting our existing coal-fired power plants over the last
    decade with modern air pollution control equipment. In
    addition, we have invested more than one billion, and installed
    two new cleanest coal-fired units in the country. An existing
    source rule that requires carbon capture and sequestration
    would leave East Kentucky Power Cooperative with no choice but
    to convert these units to natural gas, essentially wasting the
    extensive capital investment that we have been forced to make
    to lower pollutants from the coal-fired units. This would
    result because there is currently no demonstrated technology
    that would be able to control greenhouse gas emissions.
        Mr. Whitfield. Mr. Campbell, your time really has expired.
    If you would just summarize real quick?
        Mr. Campbell. I will summarize. Thank you, Mr. Chairman. To
    summarize, East Kentucky Power Cooperative appreciates the work
    of this committee, and the opportunity to present our views of
    the EPA's regulations on greenhouse gas from power plants. I
    would like to reaffirm East Kentucky Power Cooperative's
    support for the Whitfield-Manchin discussion draft bill.
        [The prepared statement of Mr. Campbell follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Thank you very much.
        And, Ms. Tierney, you are recognized for 5 minutes.

                     STATEMENT OF SUSAN F. TIERNEY

        Ms. Tierney. Thank you, Mr. Chairman. Representative
    McNerney, and members of the subcommittee, I appreciate the
    chance to be here. I understand the premise for the bill you
    are considering today is a concern that the EPA's actions will
    have the effect of barring the ability of coal in new power
    plants and existing power plants, and will have a negative
    impact on electricity consumers and the economy.
        In light of the market realities that we are experiencing
    in the United States today and ahead, I think this concern is
    misplaced for several reasons. First, various abundant domestic
    energy resources are competing to supply affordable, reliable,
    and clean electricity supply. That is happening now, and it is
    good for Americans.
        Second, EPA's taking action under Section 111 will help to
    clarify the rules of the road under which coal and natural gas
    will compete with each other, and with other power supplies and
    technologies in the future. Having clear rules and regulatory
    stability will help a positive investment environment at a time
    when the nation stands to spend up to a trillion dollars on new
    generating capacity in parts of the country.
        Third, putting the rules in place will help EPA address
    pollutants that have been found to threaten public health, and
    the welfare of current and future generations, and they will
    allow a pathway for coal and natural gas to be part of our
    vibrant energy supply. EPA's action under Section 111 is
    important for public health, and is consistent with domestic
    energy resource development and use as part of a reliable,
    affordable, competitive clean energy supply, and there are
    several reasons why I reached that opinion.
        First, coal has been the dominant fuel, and remains the
    dominant fuel, used to generate electricity in the United
    States in no small part because of its affordability in its
    price. Second, the level of coal used has varied dramatically
    over the years as new developments in technologies and fuel
    developments in prices have brought about changes in the supply
    mix, including nuclear power, renewable energy, and much more
    natural gas.
        Until recently, these economic conditions greatly favored
    the use of coal, but the shale gas revolution has fundamentally
    changed that situation. This other abundant domestic supply is
    now economically accessible, can supply 100 years at today's
    levels of consumption, and it can play an important role in
    helping the U.S. reduce greenhouse gas emissions from power
    supply. Abundant domestic supply of renewable energy also can
    supply these outcomes.
        Currently, low gas prices are putting economic pressure on
    coal facilities. We see the forward natural gas prices
    continuing to make it attractive to invest in natural gas, as
    compared to coal-fired generator facilities. This economic
    pressure is lowering, not raising, electricity prices, and has
    been the case around the country, and there is more market
    pressure on coal as a result of that. This has contributed to
    the announcements of retirements of some of the oldest and
    least efficient coal-fired generating units, and the economics
    of over 100 power plants that had been proposed to be built on
    coal have been gradually cancelled because of those poor
    economic alternatives. Today the fuel of choice is natural gas
    for power generation, as well as renewable power projects. And,
    as we have heard today, it is away from coal.
        The bottom line for electricity market fundamentals is that
    coal and natural gas are in strong competition, will remain so.
    They were at head to head to competition, in terms of market
    shares, a year ago, in 2012, and coal has regained a small
    portion of the competitive share that gas had taken away. These
    market dynamics have been important for helping the United
    States and the electric industry provide power reliably and
    affordably to consumers at low prices, and that will continue.
    They are affording the U.S. the opportunity to diversify, not
    otherwise, its overall mix of supplies.
        The industry's responses to the EPA regulations will
    stimulate much needed economic activity and modernization of
    the electric system. Again, the investors in this industry need
    certainty, and the EPA greenhouse gas rules are providing that,
    in light of the fact that they have been expected for many
    years, and are on their way. The recent changes in coal use
    have taken place at a time when production has remained
    relatively strong, in large part because of the export growth
    that we have seen.
        And, finally, let me just summarize by saying that the
    EPA's 111 regulations for new and existing power plants will
    allow flexibility, and pathways for coal and gas to play an
    important role going forward in our electricity supply.
        Thank you.
        [The prepared statement of Ms. Tierney follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Thank you.
        And, Mr. Hawkins, you are recognized for 5 minutes.

                       STATEMENT OF DAVID HAWKINS

        Mr. Hawkins. Thank you, Mr. Chairman. I would like to offer
    a few facts for the subcommittee's consideration.
        First, if we continue to use our atmosphere as a dump for
    carbon pollution, we will wreck the climate. Now, coal-fired
    power plants are the largest carbon pollution source in the
    United States, and more than 40 years ago Congress authorized,
    in the Clean Air Act, EPA to protect the public against harmful
    air pollution, and Supreme Court has confirmed that that
    authority includes the authority to regulate harmful carbon
    pollution.
        EPA is moving ahead to set sensible standards for carbon
    pollution from power plants, and it is following an approach
    that has been used for 43 years by seven Presidents prior to
    President Obama. President Nixon, Ford, Carter, Reagan, George
    H.W. Bush, Clinton, and George W. Bush, all of those Presidents
    presided over EPA standard setting that looked at available
    technologies to control a pollution stream, looked at whether
    those technologies were transferable, or already applied in the
    category being considered for regulation, and looked at what
    the costs would be, and whether those costs would be
    reasonable.
        That is exactly what EPA has done for the proposed standard
    for new coal-fired power plants, and it has based that
    technology on gas CO2 capture systems, which have
    been demonstrated for decades in other major industry
    categories. The power sector has not used that technology yet,
    but that is not an argument against EPA's proposed standards,
    for the power sector did not use SO2 scrubbers, NOx
    controls, or mercury controls until government required them to
    use those controls.
        Now, a few words about costs. Partial carbon capture, which
    is the basis for EPA's standard for new coal plants, can easily
    achieve that standard with reasonable added costs. What was
    EPA's basis for that? Well, it looked at a number of Department
    of Energy studies, and projected that a new coal plant with
    partial carbon capture would have electricity production costs
    about 20 percent higher than a coal plant with no carbon
    capture controls. Now, the cost difference would be much less
    if revenues from enhanced oil recovery sales were included.
        EPA has also announced a schedule for guidelines to control
    carbon pollution from existing power plants, working in
    cooperation with state clean air officials. NRDC's own
    analyses, using an accepted government and industry model,
    demonstrates that we can achieve significant reductions in
    carbon pollution from existing power plants with benefits of
    about 25 to $60 billion annually, compared to compliance costs
    of about $4 billion. Our approach would not require the use of
    carbon capture on existing plants, though that, or any other
    measure that would reduce carbon pollution, could qualify as a
    compliance measure.
        Now, the draft legislation by Representative Whitfield and
    Senator Manchin would repeal EPA's carbon pollution authority
    for existing power plants, and essentially would allow the
    power sector to dictate what standards could be adopted for new
    coal plants. That is not the way the Clean Air Act was written.
    It is not the way any of the seven Presidents before have
    implemented it. This legislation would harm Americans by
    allowing excess carbon pollution from power plants that would
    stay in the air for centuries, disrupting the climate that
    sustains our civilization.
        Ironically, the legislation would not improve the lot of
    coal producers or communities in coal country. Rather, it would
    destroy power sector interest in deploying carbon capture and
    storage systems, the one technology that could provide a
    pathway for a more sustainable use of coal.
        Bills to cut Clean Air Act protections against carbon
    pollution will not solve the coal sector's problems. Power
    companies have choices other than coal, and as long as carbon
    policy remains temporarily locked in a closet, the industry
    will look elsewhere for their power investments. It makes no
    sense to invest billions of dollars in a new coal plant when
    there is no resolution of the rules that will apply to its
    carbon pollution. Congress cannot make this problem disappear
    by forcing EPA to close its eyes.
        Thank you very much.
        [The prepared statement of Mr. Hawkins follows:]

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        Mr. Whitfield. Thank you, Mr. Hawkins.
        And, Mr. Cichanowicz, you are recognized for 5 minutes.

                   STATEMENT OF J. EDWARD CICHANOWICZ

        Mr. Cichanowicz. Chairman Whitfield, and members of the
    subcommittee, thank you for the opportunity to speak this
    morning. For more than 4 decades I have designed and tested
    environmental controls for fossil power stations. This morning
    I will summarize my opinion on the status of carbon capture and
    sequestration, and present a few graphics to show what the
    design challenges are.
        CCS differs from all controls previously adopted to power
    stations to date. The amount of CO2 removed from the
    gas stream is at least 15 times the amount of sulfur dioxide
    that is removed by flue gas desulfurization when using a high
    sulfur coal. The CO2, once captured, in most cases
    must be transported at least dozens of miles, and the ultimate
    sink is well below the Earth's surface. All three of these
    steps have yet to be conducted at full scale on a coal-fired
    power station.
        Let us look at a commercial design for one of the three
    options to control CO2. Exhibit 1 shows the
    preliminary design of a 750 megawatt power station equipped
    with post-combustion control. This station was proposed, but
    not actually built. The equipment in red shows the boiler and
    steam turbine that produce the power. Encircled in green are
    the conventional controls for the emissions of sulfur dioxide,
    nitrogen oxides, particulate matter, and trace species, such as
    mercury. Encircled in blue is the CO2 capture
    equipment. The array of towers on the right absorbs
    CO2, and those on the left regenerate
    CO2. What is noticeable is the size of the
    equipment. It is much larger than the conventional
    environmental controls. You can appreciate why it is important
    to get this design right, and get it right the first time.
        The problem is that we have limited data from which to base
    a design, so we must do three things with our data. The first
    is to scale results from small pilots and early demonstrations
    to enable designing a large commercial unit. The second is to
    generalize results, or extend what we learned with one coal at
    one site to the variety of coals and sites that we will
    encounter around the U.S. And the third, most important, is to
    make sure that all the individual components work together.
        Exhibit 2 helps explain a critical step in scaling. Exhibit
    2 shows the largest pilot plant operating in the U.S. right now
    that is testing this particular process. It is at Alabama
    Power's Plant Barry. This pilot plant treats the gas flow equal
    to about 25 megawatts of capacity. The test towers for
    CO2 absorption and regeneration are designed to look
    like the core, like an apple core, from a commercial reactor.
    So if we were designing a system for Exhibit 1 right now, we
    would scale this Barry pilot plant results by a factor of 37.
    For some steps, this is straightforward, and can be done with
    confidence, but for many steps, it cannot be done. There are
    two other methods to capture CO2, the pre-combustion
    method that is used with gasified coal, and oxycombustion. I
    believe all three options, given time, have an equal chance to
    be commercially proven.
        There are additional pilot plants and demonstrations coming
    on line in the next few years, but their numbers are few, and
    the results will take a while to acquire. Exhibit 3 shows a
    timeline of pilot plants, small commercial, and demonstration
    units that I think will influence CCS feasibility in the U.S.
    Most of these are in North America, but several are in Europe.
    The timeline shows the date when operations begin, and, on the
    vertical axis, it shows the size of the test or demonstration
    unit, in terms of the equivalent capacity.
        I have included both pre-combustion and oxycombustion
    options on the chart, and these are distinguished by different
    symbols. I have also distinguished between projects that are
    operating or under construction. Those are the ones with the
    symbols filled in, which I understand you can't see real well,
    but they tend to be more in the lower left. The projects that
    are not yet financed are represented by the open symbols.
    Although the Great Plains Synfuels Unit has operated with pre-
    combustion control for years, we need to generalize results
    beyond the lignite fuel that it uses and the co-production of
    chemicals and power.
        The final graphic highlights the utility demonstrations in
    the circle on the right. Exhibit 3 shows that only a few
    demonstration projects will be operating in the next several
    years. And, please, recognize the importance is not the start
    date, but the date when we acquire experience that we can use
    in coming up with a design, and that will be several years from
    startup.
        There are equally challenging issues concerning
    CO2 sequestration or re-use. These include, for
    example, the distribution of CO2 sinks throughout
    the U.S., the predicted 5 to 10 year period to confidently map
    the details of the site, and the potentially confounding role
    of property rights. My written testimony further addresses
    these topics.
        In summary, CCS, at some time in the future, may prove a
    feasible technology to control CO2 emissions. In my
    opinion, we need until about 2020 to make this assessment with
    a reasonable degree of confidence. CCS is not commercially
    proven now. For it to be so, we need to populate that circle on
    the right with many more symbols, and the need to be closed,
    showing financed operating units not open.
        Thank you for your time.
        [The prepared statement of Mr. Cichanowicz follows:]

      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Thank you very much.
        And, Dr. van der Vaart, you are recognized for 5 minutes.

                  STATEMENT OF DONALD R. VAN DER VAART

        Mr. van der Vaart. Good morning, Chairman, and members of
    the committee. I am with the State of North Carolina. Thank you
    for the----
        Mr. Whitfield. Your microphone----
        Mr. van der Vaart. Sorry. I am with the State of North
    Carolina, and I appreciate the opportunity to testify today.
    Before I comment on the specifics of EPA's use of Section 111
    of the Act, I wanted to note issues that my comments will not
    address.
        First, my comments are not about the scientific uncertainty
    of the impact anthropogenic greenhouse gas emissions have on
    climate. My comments do not address the accuracy or inaccuracy
    of the IPCC models relied upon by the EPA, or the divergence
    between the models' predictions and the actual temperatures
    over the past 15 years. These issues are critical to any
    decision on whether, in the absence of Congressional
    authorization, the EPA should regulate greenhouse gas emissions
    from stationary sources.
        Against this background, I offer three specific concerns
    about EPA's current actions to regulate greenhouse gas
    emissions from fossil fuel fired electric generating units.
    First, EPA is required by Congress to base any new source
    performance standard on the best system of emission reductions
    that the Administrator determines has been adequately
    demonstrated. The EPA has recently proposed NSPS for utility
    units, assumed carbon capture and storage, or CCS, has been
    adequately demonstrated. One need only look at the yet to
    operate Kemper County Energy Facility in Mississippi, with its
    substantial governmental funding, as prima facie evidence that
    the EPA's conclusions are unsupported.
        Even if a state is blessed with the requisite geologic
    formations, facilities would be required to build miles of
    pipeline simply to reach the formation. EPA's proposed approach
    will pit the reliability of this nation's electricity supply
    against the considerable uncertainty of environmental
    permitting of these pipelines, superimposed on an unproven
    technology of CCS. Sound science, rather than speculation,
    should drive environmental regulation.
        Second, the traditional function of Section 111 was to
    protect, or grandfather, existing facilities to prevent their
    migration to less polluted areas of the country. The 1990
    amendments to 111(d) were true to this tradition by prohibiting
    the overlap of 111(d), for existing sources, with two other
    programs in the Act. Section 111(d) prohibits EPA from
    regulating pollutants from source categories regulated under
    Section 112. In 2011, EPA issued regulations under Section 112
    applicable to fossil fuel fired electric generating units,
    thereby foreclosing regulation under Section 111(d).
        In the past, EPA has suggested that there is a conflict in
    the statutory language of Section 111(d) with regard to whether
    the 112 prohibition was pollutant specific or source category
    specific. This is a false choice, as there is no internal
    conflict in Section 111(d). Prior to 1990, Section 112 was
    pollutant specific. In 1990, the structure of Section 112 was
    changed from one that regulated pollutants to one that
    regulated source categories. To prevent overlap with the newly
    structured 112 program, 111(d) was augmented to exclude not
    only Section 112 pollutants, but also Section 112 regulated
    source categories. The two exclusions are entirely self-
    consistent, and should not be used to invoke Chevron deference.
        Section 111(d) also prohibits regulating pollutants listed
    under Section 108. A pollutant must be listed under Section 108
    when three criteria are satisfied. Those criteria were
    satisfied when EPA published its endangerment finding under
    Section 202. While North Carolina takes no position on whether
    EPA should establish NAAQS for greenhouse gases, all of the
    conditions necessary to list greenhouse gases under Section 108
    have already been met. The listing in itself prohibits EPA from
    regulating greenhouse gas emissions under Section 111(d).
    Indeed, EPA may already be under a pre-existing non-
    discretionary duty to issue criteria and simultaneously propose
    a natural ambient air quality standard for greenhouse gases.
        Finally, in the case where EPA does have authority to
    establish emission guidelines under Section 111(d), that
    authority is limited. EPA is not authorized to impose emission
    standards on existing sources. Rather, EPA can only establish a
    unit specific guideline that describes what control
    technologies have been demonstrated. Once EPA provides that
    guideline, Section 111(d) allows states to develop unit
    specific emission standard after considering many factors,
    including the cost, physical constraints on installing
    controls, and the remaining useful lifetime of the emission
    units.
        The plain language of the Act, as well as the legal
    precedent, precludes EPA and states from designing a standard
    that relies on reductions made outside of the emission unit.
    Any flexibility in compliance with a standard based on a
    specific emission standard resides with the states, who have
    the primary responsibility for implementation of this program.
        Thank you.
        [The prepared statement of Mr. van der Vaart follows:]

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        Mr. Whitfield. Thank you very much.
        And, Mr. Eisenberg, you are recognized 5 minutes.

                     STATEMENT OF ROSS E. EISENBERG

        Mr. Eisenberg. Thank you. Good afternoon, Mr. Chairman.
    Members of the subcommittee, thank you for having me today, on
    behalf of the NAM.
        We are at a crossroads on energy and climate. Our nation is
    truly awash of every single type of energy, be it oil, gas,
    coal, nuclear, renewables, energy efficiency. This robust all
    of the above portfolio and policy, and our commitment to it, is
    helping fuel a manufacturing resurgence in this country. It is
    a good thing.
        However, the very same government that is presiding over
    this, and is benefitting from this, is perilously close to
    enacting policies that would stop us from using most of this
    energy, and many of these decisions would be irreversible, and
    could limit manufacturers' long term competitiveness.
        Now, manufacturers are committed to protecting the
    environment through greater environmental sustainability,
    increased energy efficiency and conservation, and by reducing
    greenhouse gas emissions. We believe that policies to reduce
    greenhouse gases, whether legislative or regulatory, must be
    done in a thoughtful, deliberative manner, and transparent
    process that ensures a competitive, level playing field for
    U.S. companies in the global marketplace. And it should focus
    on cost effective reductions, be implemented in concert with
    all major emitting nations, and take into account all relevant
    greenhouse gas sources and sinks.
        Unfortunately, our government has settled on a climate
    policy that really meets none of these objectives, regulation
    under the Clean Air Act. But as inflexible and unforgiving as
    the Act tends to be with respect to greenhouse gases, many of
    the choices that EPA is making to implement the Act for
    greenhouse gases are equally problematic.
        We know, from the President's Climate Action Plan, that he
    believes the only way to reduce greenhouse gases in the U.S. is
    to stop using fossil fuels. We disagree. We believe that we can
    use fossil fuels, while also innovating and manufacturing the
    technologies needed to limit the resulting emissions. However,
    EPA's greenhouse gas NSPS regulation set us on a clear path
    toward elimination, and nothing else. And so what really should
    be a policy on climate winds up looking suspiciously like a
    means to an end.
        The standard for new power plants bans conventional coal-
    fired power, based on EPA's assertion that partial CCS has been
    adequately demonstrated, taking into account costs and energy
    requirements. We know this isn't true. We have talked about it
    a lot today. While we believe CCS holds great promise as a
    technology, and should happen, it is simply not ready to be
    deployed the way the EPA insists it will be in the near term.
    And because it is not commercially available, this, and all
    future NSPS for greenhouse gases are essentially a line drawing
    exercise in what energy we can and we can't use. Right now EPA
    is drawing that line to eliminate coal, and to allow everything
    else. But these standards are reviewable every 8 years, which
    means 8 years from now EPA will be redrawing that line, and the
    same arguments being used to crowd out coal today could very
    well be used to do the exact same thing to natural gas.
        Regulations that result in the limitation of coal or gas
    could pose serious problems for manufacturers. Coal was
    responsible for 37 percent of our nation's electricity in 2012,
    followed by gas, at 30 percent. These fuels will remain the
    dominant sources of energy in the U.S. for many years, and the
    nexus is even more profound at the state level. States where
    manufacturing is heaviest, places like Indiana, Michigan,
    Louisiana, Kentucky, Kansas, Pennsylvania, Ohio, they use a lot
    of coal, and they use a lot of natural gas.
        And so now EPA is going to have to draw that line not only
    on the new fleet, but on the existing fleet of power plants in
    a little more than 6 months. Then it will have to do it for
    other industrial sectors, like refineries and chemical
    manufacturing, natural gas drilling, iron and steel, aluminum,
    cement, pulp and paper, glass, food processing, and many
    others. That is why we frequently say that manufacturers will
    be hit twice by these regulations, both as users of the energy
    being regulated, and as industries considered next in line to
    receive similar regulations from EPA on their own plants.
        And that is why the choices EPA is making in this rule
    matter. The legal issues, like when a technology is adequately
    demonstrated, and what constitutes significant endangerment,
    matter beyond just this rule, because every sector has a
    stretch technology that doesn't make a lot of financial sense
    right now, but would theoretically reduce emissions. So is this
    now what NSPS is going to require for each of them?
        Now, I suspect that the members of this subcommittee, both
    Republican and Democrat, would prefer that EPA take a different
    approach to greenhouse gases than it has done so far. I still
    believe you can do something about it. We at NAM support the
    Whitfield-Manchin bill, which allows the EPA to regulate
    greenhouse gases, but ensures that the regulations are done
    smarter and better.
        Now, opponents are calling this a repeal bill. That is not
    true. This bill doesn't repeal anything. For new power plants,
    it requires separate standards for coal and gas, with sub-
    categorization. It provides a reasonable path forward for CCS,
    which allows the EPA to require it, but only when it is truly
    ready. And, finally, it allows the EPA to craft rules or
    guidelines for existing power plants. It doesn't stop them from
    doing it. It just gives Congress a say over when they are OK,
    and when they can say go.
        The Whitfield-Manchin bill, at the end of the day, would
    give manufacturers regulatory certainty by preserving an all of
    the above policy. Had the proposed rule that we are discussing
    today looked like that portion of the Whitfield-Manchin bill, I
    think we are having a different conversation. By enacting this
    bill, Congress can steer the EPA toward an end result that
    accomplishes long term meaningful reductions in greenhouse gas
    emissions, while preserving a health and robust manufacturing
    sector.
        Thanks. I look forward to your questions.
        [The prepared statement of Mr. Eisenberg follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Well, thank you, and thank all of you for
    taking time to be with us, and for your testimony.
        Attorney General Pruitt, Ms. McCabe talked about the
    cooperative spirit with the states, and I know that many states
    that I have heard from are quite concerned about EPA setting
    standards and not working in a cooperative way, becoming more
    and more aggressive with states. What has your experience been?
    Would you classify your experience with the EPA on recent rules
    and regulations in a cooperative way, or has it been an
    adversarial way? How would you describe it?
        Mr. Pruitt. Well, Mr. Chairman, two responses. I think,
    under 111(d), it is very clear that Congress intended that
    cooperative federalism be alive and well, as it relates to that
    particular section. Our experience with the Regional Haze rule
    that I mentioned in my comments demonstrates that the EPA has
    taken a different approach respecting the role of the states in
    cooperative federalism.
        Under that rule, as you know, the states are authorized to
    determine the methodology, the process, the plan, to meet the
    guidelines that you, in Congress, and the agency has set, which
    is natural visibility by the year 2064. Oklahoma did just that
    in the year 2010, and beat the deadline by decades. But the EPA
    rejected the plan, and simultaneously endeavored to force upon
    the State of Oklahoma a federal plan that would cost $2
    billion, primarily because, Mr. Chairman, in my estimation,
    fuel diversity was maintained. Coal plants, along with natural
    gas, were maintained. Fossil fuels were being utilized in the
    plan, and the EPA didn't like that, and rejected the plan.
        So, though we have talked a lot about that today, and Ms.
    McCabe made reference to cooperative federalism, I guess I will
    draw upon President Reagan's comment in the '80s about trust,
    but verify, with respect to foreign policy. The states have
    routinely endeavored to trust and work with the EPA, but, in
    response, particularly around the Clean Air Act, and the
    Regional Haze Program, it has not been demonstrated that they
    are, in fact, respecting the states' role.
        Mr. Whitfield. Yes. Well, thank you, Mr. Pruitt.
        Mr. Hawkins, and Mr. Eisenberg, I want to thank you for
    your comment, but you used the word repeal, that we were
    repealing their authority, the EPA's authority, under our
    legislation, and we actually don't repeal it. We set some
    parameters, and, on the existing plants, the only power that
    Congress would have would be to set the effective date.
        But in the larger context, all of us understand that coal
    is not being used as much today, certainly for new plants,
    because natural gas prices are so low. We definitely understand
    that. And I think Mr. McKinley made a great point. 805 billion
    tons of CO2 emissions each year, about 3.5 percent
    of that is man-made, and fossil fuel, U.S. coal plant
    emissions, amounts to, like, \2/10\ of a percent.
        So then it raises the question of moving forward, we live
    in a very unpredictable world. We don't know what is going to
    happen. Why should the U.S. be the only country in the world
    that has standards so stringent on emissions that practically
    you cannot build a new coal powered plant? As I said in my
    opening statement, Europe is closing down 30 gigawatts of
    natural gas plants, mothballing them, because of high natural
    gas prices, and they are building more coal powered plants.
        And so why are we taking these extreme efforts that would
    basically eliminate coal from new opportunities only in
    America? And I would like to hear all of you, if you want to
    make it brief. Yes, Mr. Hawkins, you go right ahead.
        Mr. Hawkins. Well, to begin, the United States is not the
    only country that is requiring carbon capture performance on
    coal plants. The United Kingdom does, and our neighbor to the
    north, Canada, does. Both of those countries have in place
    rules and----
        Mr. Whitfield. But are the emission standards as stringent
    as here?
        Mr. Hawkins. The Canadian standards----
        Mr. Whitfield. Could you build a Turk plant in Canada, or--
    --
        Mr. Hawkins. The Canadian standards apply to new plants and
    to existing plants, after they reach 40 years of life.
        Mr. Whitfield. Well, let me just say, and we can talk about
    this some more, I have had some discussions with people about
    that, and it is my understanding that they are significantly
    different. But I would just tell you, when \2/10\ of the
    emission comes from coal plants in all the emissions worldwide,
    this is, in my view, a pretty extreme position. All we are
    saying is, with our legislation, we want it to be an option
    that people would have the opportunity to utilize it.
        Mr. Hawkins. Mr. Chairman, may I say one word about natural
    versus man-made? The statistics that you are citing are
    confusing what are natural fluxes of hundreds of millions of
    tons that go out of the ocean every year, hundreds of billions
    of tons that go back into the land every year. There are no net
    emissions from those huge transfers. The only net emissions are
    caused by human activities, and man is responsible for 100
    percent of the increased emissions. These natural fluxes have
    nothing to do with----
        Mr. Whitfield. Well, all I am saying is that the
    Intergovernmental Panel on Climate Change, the Energy
    Information Administration, and EPA have said 803 billion tons
    total emissions, and man-made, 3.5 percent.
        Mr. Hawkins. Yes, but they include equal amounts out and
    equal amounts in from the natural system. So those natural
    systems that are included in those 800 billion add nothing to
    the atmosphere.
        Mr. Whitfield. So do you think we might be able to anything
    with our legislation that you will support us?
        Mr. Hawkins. To do what, sir?
        Mr. Whitfield. Do you think we could do anything with our
    legislation in which you would support us?
        Mr. Hawkins. With your legislation? Yes. You could change
    it around so that you would return to some of the provisions
    that were in the Waxman-Markey bill, which this committee did
    report out, and this House did approve, with seven or eight
    Republican votes at the time. You could turn it into a program
    that would actually deploy carbon capture and storage. And if
    you did, we would support it.
        Mr. Whitfield. Thank you.
        Mr. McNerney, you are recognized for 5 minutes.
        Mr. McNerney. I thank the Chairman, and I thank all the
    witnesses. I know it is a long trip, it is a long day, and it
    is an issue with a lot of different perspectives.
        In 2011, I am going to direct a question to you first, Ms.
    Tierney, the American Electric Power proposed to develop a
    large CCS plant in West Virginia, but they had to cancel
    because, as the CEO explained, without federal carbon pollution
    standards, it couldn't get recovery for that investment. You do
    work with executives. Is that a typical experience?
        Ms. Tierney. Yes. It is common, if a regulated utility does
    not see that they are required to do something, they have a
    difficult time making the case before regulators about a cost
    associated with that. So that was what was behind the AEP
    decision to cancel that project.
        Mr. McNerney. OK. One more question. In your testimony you
    mentioned that the EPA rules will address public health and
    help ensure that coal and natural gas remain viable. Would you
    expand on that a little bit?
        Ms. Tierney. Yes. Right now it is clearly the case that, as
    I mentioned, the investment choices that are being made by the
    electric industry are for renewables and natural gas projects.
    Coal is just simply too expensive, too large a capital
    investment to make, and too risky, with regard to what will
    happen with controls on carbon in the future.
        So having certainty, such as that which EPA will be
    introducing with their guidance on existing rules, excuse me,
    guidance on existing plants, and their regulations on new
    plants, will provide a framework under which people can make
    investments, push technology forward, so that eventually we can
    find a time when coal and natural gas, with carbon capture and
    sequestration, can go forward. And I am speaking of coal when I
    say that.
        Mr. McNerney. OK. Mr. Hawkins, you mentioned that the
    benefits basically outweigh the costs. I think you mentioned a
    $20 billion benefit for a specific case, compared to a $4
    billion cost. Could you describe that a little bit?
        Mr. Hawkins. Yes. This was an analysis that NRDC did of an
    approach to regulating existing power plants, and those 25 to
    $60 billion benefits were a combination of health benefits
    associated with reduced soot and smog pollution from the power
    plants whose emissions would be cut, as well as climate
    protection benefits based on the administration's earlier
    social cost of carbon calculations, on what is the benefit of
    reducing a ton of carbon. Those were the earlier benefits
    costs, not the current higher costs. So that was the basis of
    the conclusion.
        It does cost something. It is not a free program. But $4
    billion in a several hundred billion dollar a year industry is
    definitely a digestible cost. And when you compare that to the
    25 to $60 billion in public health and climate protection
    benefits, this is a bargain.
        Mr. McNerney. Thank you. Well, this next one is going to be
    addressed to you as well. In 2008 coal supporters trumpeted new
    technologies to reduce carbon emissions from coal, while
    providing affordable electricity. Now, there was a lot of
    optimism at that point. I would like to show another TV
    advertisement that was produced in 2008 from the coal industry.
        [Video shown.]
        Mr. McNerney. So what that shows is the coal industry was
    willing to spend money to put out advertising on TV to promote
    this. There was a lot of optimism in 2008. Was the coal
    industry right? Did they have the technology ready to go, or
    was that a fantasy at that time?
        Mr. Hawkins. As far as carbon capture and storage is
    concerned, I still believe it.
        Mr. McNerney. Where did all that spirit and optimism go?
        Mr. Hawkins. Well, unfortunately, when faced with a
    requirement to actually perform to these promises, the industry
    has taken a very short-sighted view, and basically said, no,
    what we want to do is block EPA. And the legislation would
    prevent power sector customers of coal to actually be able to
    finance plants, because those plants would not be in
    anticipation of any future EPA regulation, because EPA couldn't
    consider the results if there was any government money in them,
    and the financing wouldn't happen unless there were some
    government money, because there were no requirements. It is a
    perfect catch-22.
        Mr. McNerney. Thank you. I yield back.
        Mr. Whitfield. Gentleman's time has expired. At this time
    recognize the gentleman from Texas, Mr. Olson, for 5----
        Mr. Olson. I thank the Chair, and welcome to our witnesses.
    I know it has been a long morning, so I would like to pick you
    up with a greeting we say in Texas. Howdy, you all.
        My first question is to you, Mr. Eisenberg. As you know,
    sir, we have the world's strongest economy, and highest quality
    of life, because we have cheap, reliable sources of power.
    Reliable power is a matter of life and death in many cases for
    average Americans. But below that, cheap, reliable power is
    critical to the manufacturing revival we are seeing all along
    America, and along the Texas Gulf Coast, the whole Gulf Coast.
    No company would invest in a multi-billion dollar project if
    they have to constantly rely on backup generators, or worry
    about the power going out. Can you describe how electric
    reliability and rates impact investment decisions?
        Mr. Eisenberg. Absolutely. Thank you for the question. For
    many manufacturers, and certainly a substantial portion of my
    membership, for many of them, energy is their single greatest
    expense. So they are going to go, and they are going to build,
    and they are going to expand where energy is reliable, where it
    is affordable, and, yes, I mean, where they can get it, and
    where they can get it cheaply.
        I listed, I don't know, five or six states in my testimony
    where there is this unbelievably evident nexus between coal,
    natural gas, manufacturing. I mean, I could have listed 25
    states. I could have listed 35 states. If you look at a map,
    that is where the manufacturing is. It is where energy is
    inexpensive. And I am not saying that it only has to be those
    two. There are plenty of places in the Northeast, and in the
    West, in the Pacific Northwest, where we are using hydropower,
    renewables, and other things like that, and nuclear.
        But energy matters. It matters a lot to manufacturers. It
    may not be the only thing that matters, but for a lot of them,
    it is a very, very, very large part of why they make a decision
    to locate in a certain place, or to expand in a certain place.
        Mr. Olson. Thank you for that answer, sir.
        Question for you, Mr. Campbell. You mentioned in your
    testimony that your utility serves some of the neediest people
    in Kentucky. And I know that during the recession, the number
    of people behind on their electric bills skyrocketed, exploded.
    It is a real cost to consumers, and your consumers in
    particular. Can you tell me how price sensitive the residents
    you serve are? I mean, how much does it hurt them if prices go
    up?
        Mr. Campbell. Well, the people we serve are some of the
    poorest people in Kentucky, and cooperatives, by their nature,
    serve a lot of the poorer part of the country. But let me give
    a relation to East Kentucky Power Cooperative. Over the last
    decade, we have doubled the price of our power, and a large
    portion of that is because of the consent decree that forced us
    to put on some of the scrubbers for nitrous oxide and sulfur
    dioxide early. We did it early. And they are very sensitive
    being able to afford our power.
        And if we look at CO2 right now, and I will just
    use the President's suggestion of a cap and trade program, and
    $38 a ton for CO2, our revenue this year is about
    $900 million. And if we had $38 a ton tax on top of that for
    every CO2 ton that we released, that would increase
    us about $470 million, so that is going to be another 50
    percent rate increase on some of the poorest people in the
    country. So they are going to have to start to choose, can they
    afford medicine, can they afford food, or are they going to
    afford electricity?
        Mr. Olson. So basically their whole life is impacted
    dramatically by these increases in costs? I mean, they might
    not buy health care, which means they will be more prone to all
    the bad problems we have in our health care industry right now.
    They won't have the jobs. I mean, this is not just something
    that is in Kentucky. This is all across the country.
        Mr. Campbell. That is correct.
        Mr. Olson. And my final question, I have got 25 seconds
    here, is for you, Dr. van der Vaart. The EPA has very concrete
    benefits to claim, few of them, in the proposed new plant rule.
    It will, however, help them check an important box. The EPA
    crows in the proposal that one benefit is that, and this is a
    quote, ``The proposed rule will also serve as a necessary
    predicate for the regulation of existing resources.'' This rule
    has always been about cutting new plants off at the knees so
    they can focus on existing ones. As we look at the costs and
    benefits of the new plant rule, should we also be considering
    the costs of a sweeping rule on existing plants?
        Mr. van der Vaart. Yes. Obviously, under Section 111(d),
    the states, when implementing the standard, have the duty to
    consider costs. I think that what you raise is an interesting
    facet of the new source. It is a required predicate for the EPA
    to pursue a 111(d) program for existing sources. I think it is
    also a predicate to their true desire, which is a cap and
    trade, and they are trying to use a very stringent new source
    standard, perhaps, as a bogey for that. And they are trying to
    use the word flexibility to hide their desire of including off
    the fence, or off the property, reductions that go into a cap
    and trade so-called target.
        Mr. Olson. Thank you, sir. I am way above my time. I am
    much obliged for your answers. Thank you, Mr. Chairman.
        Mr. Whitfield. Gentleman's time has expired.
        At this time recognize the gentleman from Texas, Mr. Green,
    for 5 minutes.
        Mr. Green. Thank you, Mr. Chairman. Again thank our panel.
        Mr. Eisenberg, there is concern about regulations having
    economic impact on manufacturers, and, of course, the cost of
    their electricity, like you just said. Are any of your members
    manufacturers of CCS technology?
        Mr. Eisenberg. They are.
        Mr. Green. Are they optimistic about the economic output
    related to the manufacture of this technology moving forward?
        Mr. Eisenberg. You know, they are. They, like NAM, believe
    that we can have this technology, and that it can work. The
    issue is when? You know, and one thing that has come up
    throughout the course here is, this bill actually is relatively
    consistent with what everybody else has been saying as to when
    CCS has been available, and a lot of my members are telling me
    that as well. EPA, in last year's rule, said that CCS would be
    available 8 years from whenever the rule was enacted, 2022.
    Waxman-Markey would have required, I think four gigawatts of
    demonstrated and achievable CCS, and then wouldn't require it
    for 4 years after that. So this is entirely consistent.
        So it is a long winded way of getting to our members do
    think that we can get there. I think we can get there. I just
    don't think we are there right now.
        Mr. Green. OK.
        Dr. Tierney, the current EPA proposal created separate
    categories for natural gas and coal. In this legislation, there
    is a further subdivision of coal. Now, if you can't tell from
    my accent, I am from Texas, and we burn dirt and call it coal,
    but natural gas has been our fuel of choice, and it has grown
    substantially. Does the additional category have any economic
    cost or benefit to it?
        Ms. Tierney. To whom was that addressed?
        Mr. Green. Ms. Tierney.
        Ms. Tierney. I am sorry. Because I wasn't expecting this to
    come to me, did you say at the very end that this raises costs?
        Mr. Green. Well, no, I wanted to know, the current EPA
    proposal separates categories of natural gas and coal. In this
    legislation, the further subdivision of coal, does this
    additional category have any economic cost or benefit to it, if
    there is a separate----
        Ms. Tierney. Yes, I think it does have a benefit to it,
    because it allows for a different treatment of coal relative to
    natural gas by size and category of technology. So, yes, it
    does provide more flexibility inherently with those two
    categories.
        Mr. Green. Well, that concerns me somewhat.
        Mr. Pruitt, in Texas we have lots of natural gas, and we
    are discovering more and more each day. And I know Oklahoma is
    our neighbor, and, if you all would leave our football players
    at home, we would be really happy.
        Mr. Pruitt. We don't want to do that, Mr. Green.
        Mr. Green. Natural gas continues to expand its footprint
    for fuel, for power generation. Can you comment on the role of
    natural gas in your state's power generation/fuel mix?
        Mr. Pruitt. I mean, as Attorney General, many of us across
    the country represent ratepayers----
        Mr. Green. Yes.
        Mr. Pruitt [continuing]. Before our respective corporation
    commissions as these types of discussions ensue. And I think
    the most important thing is fuel diversity. I think the
    utilities need the ability to choose between natural gas and
    coal, other forms of energy, to provide electricity to their
    consumers. I think when policy is being used, regulation is
    being used, to pick winners and losers, elevating certain
    energy over others, it is detrimental, ultimately, to the
    consumers in our respective states.
        Mr. Green. And I can see that. The other issue is that we
    have had environmental laws for many years, and this would
    overlay it with carbon. And I know you don't do some of the
    things in producing electricity, I mean, like NOx.
    That was built into the cost of our utility providers. But
    carbon sequestration, or control, would be just added
    additional cost.
        But if you are comparing coal with natural gas, or wind,
    and I don't know Western Oklahoma very well, but I know West
    Texas, and parts of South Texas, and the wind power growth has
    just been amazing. We know there are no carbon problems with
    wind, or even solar, if someday we get to it in our part of the
    country. But natural gas is half the carbon footprint of, for
    example, coal. So natural gas would probably be the fuel of
    choice, if we ended up going more for carbon sequestration.
        Mr. Pruitt. And I think that is, in fact, happening, as far
    as utility companies, because of the low cost of natural gas
    presently.
        Mr. Green. Yes. It is based on cost now, not because of the
    environmental impact, I guess, of natural gas.
        Mr. Pruitt. Perhaps, but I think that base load energy
    between coal and natural gas, fossil fuels generally, it is
    ultimately very important to utility companies to have the
    ability to choose what is the best source of their energy as
    they provide the electricity to the consumers.
        And Congressman, I think the issue for the states is that
    ultimately there is a role for us to play. It has been
    recognized here today by Ms. McCabe and others, and we see,
    under the Regional Haze Program, and we are concerned about,
    under this particular proposed rule, that the state's role will
    be diminished, and that the cost benefit analysis will be not
    properly addressed by the EPA. And that is the reason we are
    concerned about that, prospectively.
        Mr. Green. OK. Thank you, Mr. Chairman. I know I am over
    time.
        Mr. Whitfield. Gentleman's time has expired.
        At this time recognize the gentleman from Virginia, Mr.
    Griffith, for 5----
        Mr. Griffith. Thank you, Mr. Chairman. I would point out
    several times folks have said that, obviously, power companies
    want to build gas power plants, which is certainly true,
    because of the cost of natural gas, but I also think, and, Mr.
    Campbell, I am going to direct this question towards you. I
    also think that power companies would be looking more at coal
    if they thought they could build something that would be
    effective, because the price, most recent that I have is
    September, is 3.62 per 1,000 cubic feet for natural gas. And
    experts have previously testified in front of this committee at
    $4 you are at a position where you are breaking even on the
    production of the energy between coal and natural gas. And a
    couple times this year we have actually gotten up to that $4
    level, and people project over the next few years that we
    probably will break that $4 level on natural gas.
        And isn't it true that most electric power companies like
    to have a diversity so that if natural gas prices spike, they
    can rely on coal, and if coal prices spike, they can rely on
    natural gas, and also look to other resources? Is that not
    true? Is my understanding correct?
        Mr. Campbell. That is absolutely correct. In fact, our
    strategy in Kentucky, at East Kentucky, is to diversify our
    portfolio naturally. We will probably go to a little bit more
    natural gas, because we realize there are regulatory risks out
    there too. But we think a healthy diversity of fuel is good for
    all of us.
        Mr. Griffith. Now, your headquarters is a little bit
    outside of my district, but I do touch Eastern Kentucky, down
    on the southwestern end of my district, and I also represent a
    lot of folks who are struggling to make ends meet. And you
    believe that these new regulations, if we don't pass the
    Whitfield-Manchin bill, will cause the electric prices to go up
    for those people, don't you?
        Mr. Campbell. I do believe that they will naturally make
    costs for those people to go up. I believe the new source
    performance standards, with low natural gas, if you assume that
    will go to gas, that will probably keep the rates steady. But
    if you look into the future, and we all have a mad dash to gas
    because we are not going to clean our coal plants up with CCS,
    carbon capture and sequestration, that is going to drive costs
    up.
        Mr. Griffith. And the programs, in my area, at least, if we
    get a cold winter, the programs that help people heat their
    homes who can't afford it, they don't last all winter. Is that
    true in your area as well?
        Mr. Campbell. We do. They run out of funding, and churches
    help, and some people just have to live with less electricity.
        Mr. Griffith. And what they do is they end up crowding into
    one room, several people, or, if it is an elderly person living
    alone, they just heat one room. Isn't that what they do you in
    your area as well?
        Mr. Campbell. That is correct. Yes, sir.
        Mr. Griffith. And that is a shame, isn't it?
        Mr. Campbell. Yes, sir.
        Mr. Griffith. And policies from the Federal Government
    really ought not do that to people, where they make these
    choices, isn't that correct?
        Mr. Campbell. Yes, sir.
        Mr. Griffith. And you have seen studies that also would
    show that that affects their health, doesn't it?
        Mr. Campbell. It does.
        Mr. Griffith. In a negative way, not a positive?
        Mr. Campbell. Yes. Electricity has really increased the
    life expectancy of the people of the United States. No one can
    not say that electricity hasn't improved our lives.
        Mr. Griffith. And affordable electricity makes that even
    better?
        Mr. Campbell. That is correct.
        Mr. Griffith. Dr. van der Vaart, if I might ask you, as a
    regulator, and as a lawyer, as a legal matter, under Section
    111(d), the issue, in terms of setting carbon dioxide standards
    of performance, is what is achievable at an existing electric
    generating unit. Isn't that correct?
        Mr. van der Vaart. That is correct.
        Mr. Griffith. And I would ask both you and Attorney General
    Pruitt, as regulators, can you discuss your concerns about the
    EPA seeking to regulate beyond the scope of its authority in
    planned regulations of existing electric generating units?
        Mr. van der Vaart. I would just like to say, if it does, in
    fact, pass the legal thresholds I referred to, the issue is
    that the Clean Air Act only provides authority for a reduction
    feasible by the institute of technology on the emission unit.
    What I heard earlier today is that a target, which is a
    euphemistic way of saying a limit, will be set by the Federal
    Government. That is my experience as well. If, however, in
    setting that limit the EPA includes the entire system, demand
    side management, you are going to have a number that is
    absolutely unachievable at a single unit.
        Mr. Griffith. And I understand that. Attorney General?
        Mr. Pruitt. Congressman, I would say that the EPA may
    require the states to adopt standards, the EPA may guide the
    states on how to do that procedurally, but ultimately the
    states are vested with the legal authority to decide the
    ultimate standards. And I think that is what is important, is
    we talk about these 111(d) discussions we are having.
        Mr. Griffith. Well, I appreciate that very much. In regard
    to CCS, I would agree with you, Mr. Eisenberg. We may get there
    someday. We are not there yet, and what we are going to do is
    we are going to make people in my district, and in Mr.
    Campbell's service area, and people all over the United States
    pay more for electricity, and that is going to negatively
    impact not only the amount of money in their household, but
    also, as we have heard today, it is going to affect negatively
    their health, and their viability in the world. And so it is a
    real shame that some people are opposed to this really good
    bill that Chairman Whitfield has introduced.
        With that, Mr. Chairman, I yield back.
        Mr. Whitfield. At this time recognize the gentleman from
    West Virginia, Mr. McKinley, for 5----
        Mr. McKinley. Thank you again, Mr. Chairman. Mr. Chairman,
    I have got two reports here, two white papers, one by Dr.
    Christie and Dr. Bajerob on this subject, and I would ask
    unanimous consent they be entered into the record. Mr.
    Chairman, ask these reports be entered into the record.
        Mr. Whitfield. Without objection, yes.
        Mr. McKinley. Thank you. Also, I have come here as an
    engineer, and I want to make sure we avoid Washington-speak,
    and it happens a lot. It happened in the earlier panel, where
    were just trying to get a direct answer about whether or not,
    under the new source performance standard, was going to
    increase the cost of the production of coal, coal-fired
    generated electricity. She wouldn't give us the answer.
        So my question, the two of you that are engineers on the
    panel, would you say that, if the new source performance
    standard goes into effect, will it cost more for those power
    plants that use coal?
        Mr. van der Vaart. Yes, it definitely will.
        Mr. McKinley. Will the cost of electricity increase?
        Mr. van der Vaart. Yes.
        Mr. McKinley. Thank you. And you?
        Mr. Cichanowicz. Absolutely.
        Mr. McKinley. Why can't people just say that straight out?
    Why is Washington-speak so confusing? Thank you for that.
        Mr. van der Vaart, studying your body language in some of
    the testimony from Mr. Hawkins, it seemed like you might
    disagree with some of his comments. Would you like to expound a
    little bit, clarifying some of his statements?
        Mr. van der Vaart. I think my comments covered my position
    pretty well. Again, I am very concerned whether there is any
    legal authority for the EPA to do what they are doing, both in
    the existing source category, but also even in the way that
    they are promoting the new source requirements.
        Mr. McKinley. Let me close in the timeframe I have, maybe
    open to the panel. If all of these regulations are imposed, and
    we de-carbonize America, who wins? Because the carbon is still
    going to be generated around the world. We know that Russia and
    China are going to continue. So who wins? Our workers are going
    to lose their jobs. Our manufacturing is going to lose its
    edge, because the cost of electricity is going to go up. So who
    wins?
        Mr. Hawkins, can you tell me? Who wins?
        Mr. Hawkins. The American people will win.
        Mr. McKinley. If they don't have a job they win?
        Mr. Hawkins. I will explain why I believe that.
        Mr. McKinley. Make sure----
        Ms. Hawkins. I will do it quickly. The United States has an
    incredibly successful model with the Clean Air Act, and this is
    not just theory. We have proven that when the United States
    steps out and demonstrates to the rest of the world that it is
    possible to use American ingenuity to deploy technology to
    clean up our big pollution sources, protect public health, and
    improve the economy at the same time, other countries get it,
    and they follow, and it helps everyone.
        Ms. Tierney. And when you think about the fact that the
    United States has put more carbon pollution into the air
    cumulatively, compared to any other country, it is our turn to
    lead, and we will be able to innovate and move the rest of the
    world with us.
        Mr. McKinley. OK. I am just curious.
        Mr. Campbell, how about you? Who wins?
        Mr. Campbell. Well, let me say, long term, I think everyone
    could win, but let us just look at the Clean Air Act. And I
    understand a lot of people say, boy, if you just do this, the
    technology will come. Build it, and they will come. Look, the
    Clean Air Act came, Congressman Waxman said this morning, in
    1974. That is correct, and it was 40 years, and we had somewhat
    of a proven technology. Now we don't have that, and they are
    trying to shrink that down on everybody, and we are just going
    to do it. And I don't think that can happen, and I think we
    will be a loser.
        I think we have to keep the economy of the United States
    strong so we can find these technologies, so we can help the
    world. If you look at nitrous oxide, and sulfur dioxide, and
    particulate matter cleanup that we did, China is not building a
    lot of those plants with that back-end equipment. I mean, I
    have been trying to sell a coal plant that I have right now
    overseas. None of them want the back-end equipment.
        Mr. McKinley. Thank you, Mr. Campbell.
        Mr. Cichanowicz?
        Mr. Cichanowicz. Yes. I----
        Mr. McKinley. Am I close on that? My question----
        Mr. Cichanowicz. Pretty close.
        Mr. McKinley [continuing]. In part is not only who wins,
    but also, again, your body language, you seem to be concerned
    whether or not we have actually demonstrated enough process
    that we are ready to implement. You know that Ernie Moniz came
    out last week and said, it is ready, we are ready to implement
    carbon capture. And I got the sense that you don't agree with
    that.
        Mr. Cichanowicz. Certainly I don't, and we have had some
    comments all morning about how if the power industry would just
    get to work on things, the problems would go away. Certainly
    you can deploy many advanced technologies. It just takes time.
    All these have risk, and you can go back to selective catalytic
    reduction in scrubbers. Yes, they are successful now, but
    everybody keeps forgetting, that took a while. It took decades
    to sort out the problems.
        And I think in my testimony I was clear, maybe we will have
    an answer in 2020. We don't know yet. But it just takes time to
    do the work, and understand the risks, and come up with
    possible solutions.
        Mr. McKinley. Thank you very much. My time has expired.
        Mr. Whitfield. Gentleman's time has expired. Well, that
    concludes today's hearing. I want to thank all of you for being
    focused on the issue, and for your time and effort. I know many
    of you traveled long distances, but we do appreciate it.
        And, Mr. McNerney, you have some documents you want to
    enter into the record?
        Mr. McNerney. Yes. Mr. Chairman, I ask unanimous consent to
    enter into the record two letters from organizations expressing
    concerns with, and opposition to, the proposed bill, due to its
    anticipated negative effects on climate and public health. The
    first is a letter from the American Lung Association, American
    Public Health Association, and other health and medical
    associations. The other is a letter from 79 environmental
    groups, and other organizations, on behalf of their members and
    supporters.
        Mr. Whitfield. Without objections, so ordered. Thank you.
        [The information was unavailable at the time of printing.]
        Mr. Whitfield. And then I also would like to enter into the
    record, I know the NRDC, in their testimony, had included a
    proposal relating to these issues, and we had the National
    Economic Research Associates do an analysis, and a letter from
    the American Coalition for Clean Coal Electricity relating to
    that. And then I would also like to enter into the record
    letters from the U.S. Chamber, the National Association of
    Manufacturers, and the Fertilizer Institute about the
    discussion draft.
        [The information appears at the conclusion of the hearing.]
        Mr. Whitfield. And then did you all get copies of the
    documents that Mr. McKinley wanted to introduce? OK.
        Mr. McNerney. Yes. Mr. Chairman, we got those late, so we
    would like to have a chance to review those.
        Mr. Whitfield. OK. So you all can review them, and we will
    keep the record open for 10 days. Remind members they have 10
    days to submit questions for the record. And I ask the
    witnesses all agree to respond to any questions we may have for
    you all, if you would.
        So, thank you again, and I know that we will be seeing you
    again as we go along, working on these issues. The hearing is
    adjourned.[Whereupon, at 1:14 p.m., the subcommittee was
    adjourned.]
        [Material submitted for inclusion in the record follows:]

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