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



 
                          EPA'S CARBON PLAN:
                          
                          FAILURE BY DESIGN

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

   
   
                               HEARING

                               BEFORE THE

              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 30, 2014

                               __________

                           Serial No. 113-89

                               __________

 Printed for the use of the Committee on Science, Space, and Technology


       Available via the World Wide Web: http://science.house.gov
       
       
       
                                      ______

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              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                   HON. LAMAR S. SMITH, Texas, Chair
DANA ROHRABACHER, California         EDDIE BERNICE JOHNSON, Texas
RALPH M. HALL, Texas                 ZOE LOFGREN, California
F. JAMES SENSENBRENNER, JR.,         DANIEL LIPINSKI, Illinois
    Wisconsin                        DONNA F. EDWARDS, Maryland
FRANK D. LUCAS, Oklahoma             FREDERICA S. WILSON, Florida
RANDY NEUGEBAUER, Texas              SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL, Texas             ERIC SWALWELL, California
PAUL C. BROUN, Georgia               DAN MAFFEI, New York
STEVEN M. PALAZZO, Mississippi       ALAN GRAYSON, Florida
MO BROOKS, Alabama                   JOSEPH KENNEDY III, Massachusetts
RANDY HULTGREN, Illinois             SCOTT PETERS, California
LARRY BUCSHON, Indiana               DEREK KILMER, Washington
STEVE STOCKMAN, Texas                AMI BERA, California
BILL POSEY, Florida                  ELIZABETH ESTY, Connecticut
CYNTHIA LUMMIS, Wyoming              MARC VEASEY, Texas
DAVID SCHWEIKERT, Arizona            JULIA BROWNLEY, California
THOMAS MASSIE, Kentucky              ROBIN KELLY, Illinois
KEVIN CRAMER, North Dakota           KATHERINE CLARK, Massachusetts
JIM BRIDENSTINE, Oklahoma
RANDY WEBER, Texas
CHRIS COLLINS, New York
BILL JOHNSON, Ohio
                                 ------                                

                Subcommittee on Research and Technology

                   HON. LARRY BUCSHON, Indiana, Chair
STEVEN M. PALAZZO, Mississippi       DANIEL LIPINSKI, Illinois
MO BROOKS, Alabama                   FEDERICA WILSON, Florida
RANDY HULTGREN, Illinois             ZOE LOFGREN, California
STEVE STOCKMAN, Texas                SCOTT PETERS, California
CYNTHIA LUMMIS, Wyoming              AMI BERA, California
DAVID SCHWEIKERT, Arizona            DEREK KILMER, Washington
THOMAS MASSIE, Kentucky              ELIZABETH ESTY, Connecticut
JIM BRIDENSTINE, Oklahoma            ROBIN KELLY, Illinois
CHRIS COLLINS, New York              EDDIE BERNICE JOHNSON, Texas
BILL JOHNSON, Ohio
LAMAR S. SMITH, Texas


                            C O N T E N T S

                             July 30, 2014

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Cynthia Lummis, Chairman, 
  Subcommittee on Energy, Committee on Science, Space, and 
  Technology, U.S. House of Representatives......................     9
    Written Statement............................................    10

Statement by Representative Eddie Bernice Johnson, Ranking 
  Member, Committee on Science, Space, and Technology, U.S. House 
  of Representatives.............................................    11
    Written Statement............................................    12

                               Witnesses:

The Honorable Jeffrey Holmstead, Partner, Bracewell & Giuliani 
  LLP
    Oral Statement...............................................    14
    Submitted Biography..........................................    16

The Honorable Charles McConnell, Executive Director, Energy & 
  Environment Initiative, Rice University
    Oral Statement...............................................    23
    Written Statement............................................    25

Mr. David Cash, Commissioner, Massachusetts Department of 
  Environmental Quality
    Oral Statement...............................................    78
    Written Statement............................................    81

Mr. Gregory Sopkin, Partner, Wilkinson, Barker, Knauer LLP
    Oral Statement...............................................    89
    Written Statement............................................    91

Discussion.......................................................   116

             Appendix I: Answers to Post-Hearing Questions

The Honorable Jeffrey Holmstead, Partner, Bracewell & Giuliani 
  LLP............................................................   146

The Honorable Charles McConnell, Executive Director, Energy & 
  Environment Initiative, Rice University........................   153

Mr. David Cash, Commissioner, Massachusetts Department of 
  Environmental Quality..........................................   156

Mr. Gregory Sopkin, Partner, Wilkinson, Barker, Knauer LLP.......   158

            Appendix II: Additional Material for the Record

Report submitted by Representative Eddie Bernice Johnson, Ranking 
  Member, Committee on Science, Space, and Technology, U.S. House 
  of Representatives.............................................   178

Report submitted by Representative Elizabeth Esty, Committee on 
  Science, Space, and Technology, U.S. House of Representatives..   234

Report submitted by Representative Randy Neugebauer, Committee on 
  Science, Space, and Technology, U.S. House of Representatives..   245

Graphs submitted by Representative Larry Bucshon, Committee on 
  Science, Space, and Technology, U.S. House of Representatives..   297

Article submitted by Representative Randy Neugebauer, Committee 
  on Science, Space, and Technology, U.S. House of 
  Representatives................................................   300


                           EPA'S CARBON PLAN:

                           FAILURE BY DESIGN

                              ----------                              


                        WEDNESDAY, JULY 30, 2014

                  House of Representatives,
               Committee on Science, Space, and Technology,
                                                   Washington, D.C.

    The Committee met, pursuant to call, at 10:07 a.m., in Room 
2318 of the Rayburn House Office Building, Hon. Cynthia Lummis 
[Chairwoman of the Committee] presiding.

[GRAPHIC] [TIFF OMITTED] 

    Chairman Lummis. Good morning. The Committee on Science, 
Space, and Technology will come to order.
    Welcome to today's hearing titled ``EPA's Carbon Plan: 
Failure by Design.'' In front of you are packets containing the 
written testimonies, biographies, and truth-in-testimony 
disclosures for today's witnesses.
    And without further ado, I now recognize myself for five 
minutes for an opening statement.
    Today, we are examining one of the most sweeping regulatory 
proposals in American history. The EPA is attempting to take 
control of our nation's electric system without legal or 
scientific justification. The EPA's Clean Power Plan reaches 
well beyond the regulation of power plants. The EPA wants to 
control the entire system, right down to the amount of 
electricity Americans use in their homes.
    The implications of this overreach really are staggering. 
The rule has the potential to shut down power plants across the 
Nation, raise energy prices, and threaten energy security. And 
I submit for what? The EPA admits that the rule will have 
little or no impact on global warming. In this case it appears 
to be regulation in the name of climate change but it is just 
regulation in the name of regulation, Federal control for 
Federal control's sake.
    EPA's proposal would impose standards on States that turn 
power systems on their heads. Each State's reduction mandate 
varies widely, based on what the EPA claims can be done through 
a combination of costly efficiency technologies, drastic fuel 
switching, and unprecedented reliance on intermittent 
renewables and energy rationing.
    States, companies, and utility commissioners and local 
officials are left figuring out how to comply, which will 
necessarily involve higher prices and potentially threaten grid 
reliability. The EPA claims the rule is flexible and that 
compliance is easy. But the EPA's assurances are of little 
comfort when the standards are beyond what technology can 
deliver and ratepayers can afford.
    The ability of the EPA's so-called building blocks, which 
are really mandates, to produce the required reductions is 
uncertain. The limited analysis in this rule is based on black 
box models and untested assumptions. This hides the hard fact 
that ratepayers will be left holding the bag on an expensive 
overhaul of our electric system to reach theoretical and 
unproven targets.
    The confusion also hides a more fundamental concern. The 
EPA is operating outside the bounds of the law. The Clean Air 
Act does not give the EPA the authority to regulate the 
electric grid or tell Americans where to set their thermostat. 
Instead, EPA is limited to technology-based standards at the 
power plants themselves.
    As our witnesses will explain, had EPA followed the law and 
been straightforward about what technology can accomplish, the 
rule might be manageable. But since the law doesn't match this 
Administration's agenda, the EPA is now bypassing Congress to 
rewrite the statute. The EPA also ignores technology and 
reliability concerns. The Administration hasn't fully 
considered the potential impacts of this proposal on the 
electric system, the economy, and the American people most 
importantly.
    A scientific look at the proposal reveals major problems. 
EPA's claims are backed by flawed technology assumptions. It 
relies on unrealistic scenarios about our nation's energy 
future. And EPA's conclusions are based on a secret model, 
hidden from public view. We see this all too often at EPA. In 
fact, serving on Natural Resources Committee and other natural 
resource matters, we see it all the time in this natural 
resource environment that we are in with this Administration.
    This science that is hidden science undermines the 
scientific review process and moves straight to regulation. The 
law requires a bottom-up review of what can be accomplished at 
a power plant. Instead, the EPA has proposed top-down 
regulation of the entire electric system. This rule needs to be 
withdrawn. It fails to meet even the most basic standards of 
objectivity and transparency; it lacks technical analysis on 
scientific and economic feasibility, and the American people 
deserve to know exactly what the EPA is doing, and that is why 
we are having this hearing today. Other than that, my 
constituents have no strong feelings about this.
    [The prepared statement of Mrs. Lummis follows:]

  Prepared Statement of Subcommittee on Energy Chairman Cynthia Lummis

    Today, we examine one of the most sweeping regulatory proposals in 
America's history. The Environmental Protection Agency (EPA) is 
continuing its regulation rampage, attempting to take control of our 
nation's electric system without any legal or scientific justification.
    The EPA's ``Clean Power Plan'' reaches well beyond just the 
regulation of power plants. The EPA wants to control the entire system, 
right down to the amount of electricity Americans use in their homes.
    The implications of this overreach are staggering. The rule has the 
potential to shut down power plants across the nation, raise energy 
prices and threaten energy security. And for what? Even EPA admits that 
the rule will have little to no impact on global warming.
    EPA's proposal would impose standards on states that turn their 
power systems on their heads. Each state's reduction mandate varies 
widely, based on what EPA claims can be done through a combination of 
costly efficiency technologies, drastic fuel switching, and 
unprecedented reliance on intermittent renewables and energy rationing.
    States, companies, utility commissioners and local officials are 
left figuring out how to comply, which will necessarily involve higher 
prices and potentially threaten grid reliability. The EPA claims the 
rule is flexible, and that compliance is easy. But EPA's assurances are 
of little comfort when the standardsare beyond what technology can 
deliver.
    The ability of the EPA's ``building blocks,'' which might as well 
be called mandates, to produce the required reductions is uncertain at 
best. The limited analysis in this rule is based on black box models 
and untested assumptions. This hides the hard fact that states will be 
left holding the bag on an expensive overhaul of our electric system to 
reach theoretical and unproven targets.
    The confusion also hides a more fundamental concern: the EPA is 
operating outside the bounds of the law. The Clean Air Act does not 
give the EPA the authority to regulate the electric grid or tell 
Americans where to set their thermostat. Instead, EPA is limited to 
technology-based standards at the power plants themselves.
    As our witnesses will explain, had EPA followed the law and been 
honest about what technology can accomplish, the rule might be 
manageable. But since the law doesn't match the President's partisan 
agenda, the EPA is now bypassing Congress to rewrite the statute. This 
comes as no surprise from this Administration. The EPA also ignores 
technology and reliability concerns. The Administration hasn't fully 
considered the potential impacts of this proposal on the electric 
system, the economy and the American people.
    A scientific look at the proposal reveals major problems. EPA's 
claims are backed by flawed technology assumptions. It relies on 
unrealistic scenarios about our nation's energy future. And EPA's 
conclusions are based on a secret model, hidden from public view.
    Instead of providing useful tools for state and local policymakers, 
the analysis appears to be nothing more than window-dressing for a 
predetermined outcome.
    We see this all too often at the EPA. It undermines the scientific 
review process and moves straight to regulation. The law requires a 
bottom-up review of what can be accomplished at a power plant. Instead, 
the EPA has proposed top-down regulation of the entire electric system.
    This rule needs to be withdrawn. It fails to meet even the most 
basic standards of objectivity and transparency; and it lacks technical 
analysis on scientific and economic feasibility. The American people 
deserve to know exactly what the EPA is doing, and that is why we are 
having this hearing today.

    Chairman Lummis. That is my opening statement and now I 
would like to recognize the Ranking Member, the gentlewoman 
from Texas, Mrs. Johnson, for an opening statement.
    Ms. Johnson. Thank you very much, Madam Acting Chair. And 
let me thank our witnesses for being here this morning.
    Last month, the Environmental Protection Agency released 
its Clean Power Plan, a proposal to cut carbon pollution from 
the largest source, power plants. This proposal, like the rest 
of President Obama's Climate Action Plan, is the bold step 
forward our nation needs to address the impacts of climate 
change--impacts that are growing more present in the lives of 
every American.
    Severe drought, record temperatures, and an increase in the 
spread of infectious diseases are just a few examples of what 
Americans will have to confront in the coming years. The 
scientific evidence confirms that we need to act now to lessen 
these impacts. Cutting carbon emissions from the power sector 
is critical to any solution that is--and that is why I support 
the Clean Power Plan. It sets reasonable limits that take into 
account the characteristics of each State. It is based on 
strategies already in use such as improving energy efficiency 
and power plant operations and encouraging the development of 
renewables. And finally, it provides the States with 
flexibility.
    EPA is not prescribing a specific set of measures. States 
will choose what goes into their plans and they can work alone 
or as part of a multistate effort to achieve meaningful 
reductions. Today, we will hear from some Members and witnesses 
that EPA is acting beyond its authority and that EPA 
regulations are killing the economy and jobs.
    This is not a new argument but one that we have heard time 
and time again. Whenever EPA proposes an action that will 
protect the air we breathe and the water we drink, industry 
raises alarms about the purported negative impact on the 
economy. I expect we will hear the same argument trotted out 
once again in today's hearing.
    In addition, some of my colleagues on the other side of the 
aisle are fond of saying that those who want to address climate 
change are alarmists using scare tactics to frighten the 
American people. I would say that the true alarmists are those 
who have a history of exaggerating the cost of compliance. For 
example, in 1990, electric utilities opposed to the Acid Rain 
Program said that the cost of an allowance to emit sulfur 
dioxide would be $1,500 per ton. It in fact turned out to be 
$150 per ton.
    Madam Chair, I could go on but the track record of Clean 
Air Act speaks for itself. Since its adoption in 1970, air 
pollution has declined more than 70 percent and the American 
economy has more than tripled. Now more than ever the American 
people need a strong EPA. I firmly believe that we can have a 
vibrant economy and a safe and healthy environment. The Clean 
Power Plan puts us on the path to achieving both.
    Thank you. And before I yield back, I would like to request 
that Mr. Kennedy be allowed to introduce Dr. Cash.
    Thank you. I yield back.
    [The prepared statement of Ms. Johnson follows:]

 Prepared Statement of Ranking Member Eddie Bernice Johnson, Committee 
                   on Science, Space, and Technology

    Thank you, Mr. Chairman, and thank you to our witnesses for being 
here this morning. Last month, the Environmental Protection Agency 
released its Clean Power Plan, a proposal to cut carbon pollution from 
the largest source--power plants.
    This proposal like the rest of President Obama's Climate Action 
Plan, is the bold step forward our nation needs to address the impacts 
of climate change. Impacts that are growing more present in the lives 
of every American. Severe drought, record temperatures, and an increase 
in the spread of infectious disease are just a few examples of what 
Americans will have to confront in the coming years.
    The scientific evidence confirms that we need to act now to lessen 
these impacts. Cutting carbon emissions from the power sector is 
critical to any solution and that is why I support the Clean Power 
Plan. It sets reasonable limits that take into account the 
characteristics of each state. It is based on strategies already in use 
such as improving energy efficiency and power plant operations, and 
encouraging the development of renewables. And finally, it provides the 
states with flexibility; EPA is not prescribing a specific set of 
measures. States will choose what goes into their plans and they can 
work alone or as part of a multi-state effort to achieve meaningful 
reductions.
    Today we will hear from some Members and witnesses that EPA is 
acting beyond its authority, and that EPA regulations are killing the 
economy and jobs.
    This is not a new argument, but one that we have heard time and 
time again. Whenever, EPA proposes an action that will protect the air 
we breathe or the water we drink, industry raises alarms about the 
purported negative impact on the economy. I expect we will hear the 
same argument trotted out again at today's hearing.
    In addition, some of my colleagues on the other side of the aisle 
are fond of saying that those who want to address climate change are 
alarmists, using ``scare tactics'' to frighten the American people. I 
would say that the true alarmists are those who have a history of 
exaggerating the cost of compliance. For example, in 1990, electric 
utilities opposed to the acid rain program said the cost of an 
allowance to emit sulfur dioxide would be $1,500 per ton. It, in fact, 
turned out to be $150 per ton.
    Mr. Chairman, I could go on, but the track record of the Clean Air 
Act speaks for itself. Since its adoption in 1970, air pollution has 
declined by more than 70 percent and the American economy has more than 
tripled. Now, more than ever, the American people need a strong EPA. I 
firmly believe we can have a vibrant economy and a safe and healthy 
environment. The Clean Power Plan puts us on the path to achieving 
both.
    Thank you and I yield back.

    Chairman Lummis. Mr. Kennedy, we will--when we reach Dr. 
Cash's introduction, I will yield to you at that time. Thank 
you.
    Mr. Kennedy. Thank you, Madam Chair. Thank you, Ranking 
Member.
    Chairman Lummis. If there are Members who wish to submit 
additional opening statements, your statements will be added to 
the record at this point.
    Chairman Lummis. At this time I would like to introduce our 
witnesses. Our first witness today is Mr. Jeff Holmstead. Mr. 
Holmstead is one of the Nation's leading air quality lawyers 
and heads the Environmental Strategies Group at Bracewell and--
how do you pronounce it--Giuliani. Okay. He previously served 
as Assistant Administrator at the EPA for the Office of Air and 
Radiation. He also served on the White House staff as Associate 
Counsel to former President George H.W. Bush. Mr. Holmstead 
received his law degree from Yale.
    Our second witness is Charles McConnell, Executive Director 
at the Energy & Environment Initiative at Rice University. 
Previously, Mr. McConnell served as the Assistant Secretary for 
Fossil Energy at the U.S. Department of Energy. At DOE he was 
responsible for the strategic policy leadership budgets, 
project management, and research and development of the 
Department's Coal, Oil, Gas Advanced Technology Programs and 
the National Energy Technology Labs. He received his bachelor's 
degree in chemical engineering from Carnegie Mellon and an MBA 
from Cleveland State.
    And now to introduce Dr. David Cash, I will yield to the 
gentleman from Massachusetts, Mr. Kennedy.
    Mr. Kennedy. Thank you, Madam Chairman.
    We are here today in part to examine how States can be 
empowered to use an innovative approach to successfully 
navigate the challenges they confront. To that end, I am 
delighted to welcome Dr. Cash, a constituent and Commissioner 
of the Massachusetts Department of Environmental Protection.
    Throughout his career in public service, Dr. Cash has 
played an integral role in our Commonwealth's efforts to 
address climate change, first, as the Under Secretary for 
Policy in the Massachusetts Executive Office of Energy and 
Environmental Affairs, then as Commissioner at the 
Massachusetts Department of Public Utilities. He has been a 
leader in developing a Massachusetts Clean Energy and Climate 
Plan for 2020 and other legislation that will reduce the 
State's greenhouse gas emissions, legislation that has 
contributed to a 16 percent statewide drop in emissions since 
1990. Beyond the success we have experienced in limiting 
emissions, these initiatives have also led to an 11.8 percent 
increase in clean tech job growth in the last year.
    Dr. Cash, as Congresswoman Clark and I often cite the 
success of Massachusetts to others in this room, we are very 
happy to have you here today and look forward--I am looking 
forward to your testimony.
    Thank you, Madam Chairman. I yield back.
    Chairman Lummis. I thank the gentleman from Massachusetts.
    Our final witness today is Mr. Gregory Sopkin, Partner at 
Wilkinson Barkett and Knauer--what is it? Barker?
    Mr. Sopkin. Barker.
    Chairman Lummis. Okay.
    Mr. Sopkin. Thank you.
    Chairman Lummis. Got a typo here. Previously, Mr. Sopkin 
was the Chairman of the Colorado Public Utilities Commission, a 
neighbor here. Thanks. I am from Wyoming.
    He has also worked as Assisting Attorney General for 
Colorado. He has practiced energy and telecommunications law 
for over 15 years and has been a member of the National 
Association of Regulatory Utility Commissioners. Mr. Sopkin 
received his law degree from the University of Colorado.
    As our witnesses should know, spoken testimony is limited 
to five minutes after which the Members of the Committee will 
have five minutes each to ask questions.
    I now recognize our first witness, Mr. Holmstead, for five 
minutes. Welcome.

         TESTIMONY OF THE HONORABLE JEFFREY HOLMSTEAD,

               PARTNER, BRACEWELL & GIULIANI LLP

    Mr. Holmstead. Thank you and good morning. I thank you very 
much for giving me the chance to testify this morning.
    There is a lot to say about EPA's proposal, but this 
morning, I would like to focus on just two major points. First, 
anyone who believes in the rule of law should be troubled by 
EPA's proposal. It goes far beyond the authority that Congress 
has given to the agency.
    And second, EPA officials have and so distracted with the 
notion that they can fundamentally change the electric system 
in 49 States that they have failed to do the basic technical 
work that they are supposed to do to develop legally defensible 
regulations to reduce carbon emissions from existing power 
plants.
    The Supreme Court has made it clear that EPA has authority 
to regulate carbon emissions under the Clean Air Act but the 
Supreme Court has not given EPA a roving mandate to do whatever 
it thinks best when it comes to regulating those emissions. In 
the Clean Air Act Congress created literally dozens of 
different regulatory programs with carefully defined limits. 
Some of these programs can be used to regulate carbon 
emissions, but EPA may only do so in a way that complies with 
the limits established by Congress.
    EPA has proposed to use Section 111(d) to regulate carbon 
emissions from existing power plants. There is a significant 
question about whether they can even use that provision, but I 
want to set that aside and ask the question if EPA can regulate 
carbon emissions from existing power plants under Section 
111(d), what would those regulations look like?
    And it has been interesting to me. There is all this debate 
about this proposal and few people ever actually look at what 
the statute says. So let me quote from the relevant provisions 
of the statute. It says that ``EPA can require a State to 
develop a plan that includes a standard of performance that 
requires a continuous emission reduction for any existing power 
plant in their State based on the best system of emission 
reduction that has been adequately demonstrated for that type 
of plant but that States shall be permitted in applying the 
standard of performance to any particular source to take into 
consideration, among other factors, the remaining useful life 
of the existing plant to which such standard applies.'' That is 
just what the statute says, and what EPA has done for 37 years 
under that regulation is to establish an allowable emission 
rate that each plant would have to meet.
    But somehow, EPA has discovered a broad new power from 
these words, a broad new power in a provision that has been in 
place for almost 40 years. After all this time, it turns out 
that this provision actually gives EPA the authority to require 
States to fundamentally change the way that electricity is 
generated and used throughout their States.
    Here is what EPA expects States to do: first, require all 
existing coal-fired power plants to improve their efficiency by 
an average of six percent regardless of how efficient they are 
today or whether it is technically feasible to improve their 
efficiency by that much. But at least that is close to the 
statute.
    Second, they want to be States to take business away from 
these more efficient coal plants and give this business to the 
gas-fired power plants in the State until the gas-fired plants 
are operating at 70 percent capacity regardless of the cost or 
whether these gas-fired plants were even designed to operate 
that much.
    Third, EPA believes that it can require States to mandate 
more wind and solar power plants be constructed and used.
    And fourth, to come up with programs to require people and 
industries to use less electricity so that the total statewide 
demand for electricity is reduced by 1.5 percent a year every 
year for 10 years.
    All these things, according to EPA, can be required under a 
statutory provision that says the following: ``EPA can require 
States to set a standard of performance for any existing power 
plant in their States but that a State must be permitted in 
applying a standard of performance to any particular plant to 
consider the remaining useful life of that plant.''
    Simply put, EPA's reading is preposterous. And because the 
folks at EPA have been so distracted by the notion that they 
can change the electric power system in our country, they have 
failed to do the basic technical work they are supposed to do 
under the Clean Air Act. What they are supposed to do is 
actually go out and study existing power plants to determine 
the lowest carbon emission rates that have been achieved by 
different types of plants based on size, boiler type, age, and 
other factors and then provide technical guidance to the States 
so that the state environmental officials have the information 
they need to go out and set appropriate emission standards for 
the plants in their States. The sooner EPA does what it is 
actually supposed to do, the sooner we will have a defensible 
program to reduce carbon emissions from existing power plants.
    Thank you and I would be happy to answer any questions you 
may have.
    [The prepared statement of Mr. Holmstead follows:]
    
    [GRAPHIC] [TIFF OMITTED] 
    
    Chairman Lummis. I thank the gentleman.
    I now recognize our second witness, Mr. McConnell, for five 
minutes.

         TESTIMONY OF THE HONORABLE CHARLES MCCONNELL,

      EXECUTIVE DIRECTOR, ENERGY & ENVIRONMENT INITIATIVE,

                        RICE UNIVERSITY

    Mr. McConnell. Thank you. I am here to talk about EPA's 
carbon plan and Clean Power Plan, and unfortunately it is 
neither of the two.
    So what is it and what is it not? Well, it is certainly not 
impactful environmental regulation. In fact, Administrator 
McCarthy testified in 2013 to that very effect in front of the 
House of Representatives and suggested that it was really being 
developed for political leverage in a global climate 
discussion.
    So let's talk about how much of an impact it really is. It 
impacts, if fully developed, .18 percent of the global CO2 
that is admitted in the world, less than 2/10 of a percent. It 
will impact global warming and climate change by .01 degrees 
centigrade. And that, if you do the mathematics and climate 
change, technology, would affect the level of sea rise by about 
1/3 the thickness of this dime that I am holding. It is hard to 
see, I know, but it is 1/3 of that thickness.
    It is also not flexible. Administrator McCarthy has 
mentioned that it is too flexible in fact in some States and 
that we haven't really prescribed it enough. Well, truly, if 
you look at the outputs of a coal-fired power plant or even a 
natural gas-fired power plant, you will see that it is a 
disingenuous comment. In fact, there is no other way for this 
to be achieved than to simply mandate more windmills and more 
solar panels. It is just that simple.
    And at the end of it all, where is the question on 
affordability and what have we heard from the EPA? And what you 
hear right now is the sound of silence. There is nothing that 
has been said. As a matter of fact, the questions have been 
dodged, unanswered, and not addressed at all. But if you look 
at the mathematics of the way it works and the way technology 
is deployed, on average across this country the average 
ratepayer will see its rates go up by about two times. But in 
the five States that are going to bear 40 percent of the burden 
of this CO2 reduction, those ratepayers are going to 
see anywhere from 3X to 4X. So if this gets put forth, you 
won't have to wonder why your power bill is more expensive; it 
is directly related to this.
    And the other problem is the inconvenient truths are that 
we don't have any studies on reliability; we don't have any 
studies on affordability. There is really no evidence of any 
interagency collaboration, FERC and the natural gas 
availability for all the fuel switching that is being 
anticipated. Transmission capacity and capability, the 
Department of Energy and the Office of Electricity have that 
capability but there is no evidence that there is any 
connection there. Operating plant efficiencies by the National 
Energy Technology Laboratory and Fossil Energy have copious 
amounts of information that have not been tapped into. And of 
course the carbon capture and storage and CCS technology 
development roadmap has fundamentally been avoided with this.
    So really this is dangerous and damaging to the American 
consumer, to industry, and to our global competitiveness. And 
unfortunately, what we are doing is we are wrapping this up as 
an environmental victory and there isn't any environmental 
victory. It is a disingenuous ``all pain for no gain'' program 
and it is difficult to understand. I would suggest that what we 
need to do is pivot this conversation to a discussion around 
world-class technology so that we can have real environmental 
responsibility and a real all-of-the-above approach, not just 
CO2 but all the issues associated with environmental 
responsibility not only in our country but globally. We need to 
study the situation around energy reliability. It is too 
important and it needs to tap into the agencies that we had 
here in our system to be able to do that.
    And finally, we have to drive toward affordability for all 
citizens, not just in our country but to think about the global 
implications of the developing nations around the world and 
their need for advanced technology. The rest of the world 
doesn't need our political platitudes and morals. What they 
need is our technology that we are so capable to develop that 
we need to fund and deploy.
    Thank you.
    [The prepared statement of Mr. McConnell follows:]
    
    [GRAPHIC] [TIFF OMITTED] 
    
    Chairman Lummis. I thank the witness and now recognize our 
third witness, Dr. Cash.

           TESTIMONY OF MR. DAVID CASH, COMMISSIONER,

                  MASSACHUSETTS DEPARTMENT OF

                     ENVIRONMENTAL QUALITY

    Mr. Cash. Thank you very much, Chair Lummis and Ranking 
Member Johnson and other Members of the Science, Space, and 
Technology Committee for the opportunity to provide comments on 
EPA's proposed Clean Power Plan.
    My name is David Cash. I am the Commissioner of the 
Massachusetts Department of Environmental Protection, and prior 
to this, I was Commissioner of our State's Public Utilities 
Commission and focused on grid reliability and cost for 
ratepayers. In total, I have worked in State Government for ten 
years, always at the nexus of energy, environment, and economic 
development and always with the goal of creating a thriving 
State for families, communities, and businesses.
    Let me start with a story of dramatic change. Eight years 
ago there were three megawatts of installed solar power 
Massachusetts. Today, there are over 500 megawatts. Eight years 
ago there were three megawatts of installed wind power. Today, 
there are over 100 megawatts. Today, there are over 5,000 
companies and over 80,000 people employed in the clean energy 
economy in our State, and for the last four years, clean energy 
job growth has been between six percent and 12 percent per 
year.
    Today, Fortune 500 companies and mom-and-pop shops, 
residential customers in cities and towns are taking advantage 
of our energy efficiency and renewable energy programs and 
saving billions of dollars. For a company this may mean hiring 
new people or expanding R&D or marketing. For a town, maybe new 
teachers or firefighters can be hired. For families across the 
Commonwealth, they have more money in their pockets that they 
are not spending on energy. Over the last several years we have 
invested over $1 billion in energy efficiency and expect a 
return of $3-$4 billion.
    The arc of this story is simple. Wise environmental 
protection and robust economic development can and should go 
hand-in-hand. In fact, since 1990, our carbon emissions in 
Massachusetts have declined by 40 percent while our economy has 
grown by almost 70 percent.
    [Slide]
    Mr. Cash. If you will take a look at the graph that is 
shown on the screens now, take a look particularly at the 
bottom line, the red line that shows our greenhouse gas 
emissions in the power sector declining by 40 percent, most of 
that in the last 8 to ten years, but over the last 20 years by 
40 percent. At the same time, look at the top line. That shows 
our economic growth of over 70 percent. You can see some other 
indicators in the middle, but the story is a powerful story 
that shows that environmental protection can go hand-in-hand 
with economic development.
    The Administration of Governor Deval Patrick has launched a 
clean energy revolution in our State introducing forward-
looking policies and wide-ranging regulatory reform and 
regional partnerships. One of his first actions in office was 
to bring all of the energy and environment agencies under one 
umbrella and add a mandate to link environmental protection and 
economic development.
    We have approached EPA's 111(d) rule with exactly this 
comprehensive perspective understanding how these regulations 
will impact the power sector, energy prices, the environment, 
and economic development.
    Our conclusion is that implementation of 111(d) will mirror 
what has happened in the last eight years in Massachusetts and 
other States but on a national scale. The private sector will 
respond, sparking innovation, entrepreneurship, energy cost 
savings, job growth, customer choice, and opening up global 
markets for U.S. products and services.
    In preparing the Clean Power Plan, EPA conducted an 
unprecedented amount of outreach to States and other key 
stakeholders recognizing the need for flexibility in the 
diversity of state-led initiatives and programs. One such 
successful program is the multistate Regional Greenhouse Gas 
Initiative, RGGI. RGGI is a regional market-based emissions 
reduction program for the power sector, in other words, setting 
a standard and letting the market work. In the Clean Power Plan 
EPA recognizes regional market-based programs as acceptable 
compliance mechanisms. This is critical because the evidence is 
clear. RGGI and the RGGI experience has demonstrated that we 
can cost effectively realize environmental and economic goals 
while maintaining electricity grid reliability.
    The RGGI States have experienced a 40 percent reduction in 
power sector emissions since 2005 while our regional economy 
has grown by seven percent, adjusted for inflation. Of course, 
these significant pollution reductions are due to a combination 
of factors including market forces, the greater supply of 
natural gas, and other state clean energy policies, but RGGI 
has clearly been a driver as well.
    A recent independent analysis by the Analysis Group 
concluded that investments for the first RGGI control period in 
energy efficiency, renewable energy, and other programs are 
adding $1.6 billion of net economic value to our region. In the 
RGGI region, these emissions reductions and types of strategic 
investments by Massachusetts and other RGGI States occurred 
while customer rates were dropping. Our original prediction, as 
we began developing RGGI, where that electricity rates would 
increase by 1 to two percent. Instead, region-wide they have 
declined by 8 percent.
    I know that we are not Kentucky or West Virginia or other 
States that are facing difficult challenges, but I also know 
that the low-hanging fruit of energy efficiency is available 
everywhere and grabbing that low-hanging fruit means savings 
for customers, local jobs, and greenhouse gas emission 
reductions.
    EPA should be commended for developing the proposed rule 
that recognizes the diversity among States and provides a 
flexible approach to compliance. By providing the States with 
this flexibility, Massachusetts believes the plan will not only 
aid in the effort to reduce carbon pollution but will also help 
our nation develop an advanced infrastructure that delivers 
cleaner air, smarter energy use, and an improved economy and 
local jobs.
    Thank you and I am happy to answer questions.
    [The prepared statement of Mr. Cash follows:]
    
    [GRAPHIC] [TIFF OMITTED] 
    
    Chairman Lummis. I thank the gentleman and now recognize 
our final witness, Mr. Sopkin, for--is it Sopkin?
    Mr. Sopkin. It is Sopkin.
    Chairman Lummis. Okay. For five minutes.

                TESTIMONY OF MR. GREGORY SOPKIN,

             PARTNER, WILKINSON, BARKER, KNAUER LLP

    Mr. Sopkin. Thank you. And it is an honor to be here from 
the great State of Colorado where we don't always win Super 
Bowls but we have a really balanced energy portfolio.
    From 2003 to early 2007 I was the Chairman of the Colorado 
Public Utilities Commission. I am approaching this testimony 
primarily from a State perspective, what States are looking at 
and having to implement this EPA rule.
    We have written a white paper. My partner Ray Gifford, who 
also was a Chairman of the Colorado PUC, and I wrote a white 
paper about the logistical political and practical difficulties 
States are going to have in implementing this EPA rule.
    I also have to give a shout out to our associate Matt 
Larson who had a big hand in offering this and had a baby boy 
yesterday. And we as a compassionate firm gave him the day off 
yesterday.
    We wrote this paper because of our experience as State 
Commissioners in working with state environmental departments 
and state legislatures. Some of the white paper's findings are, 
first, the EPA's proposed carbon reduction rule creates a 
carbon-driven energy resource planning process that is unlike 
any other Clean Air Act regulatory regime. The proposed 
building blocks look strikingly like integrated resource 
planning, which is a function that has traditionally been 
performed by States that have the expertise and manpower to 
delve into those matters deeply. Carbon IRPs or their 
equivalent will almost certainly require state legislation 
regardless of whether a State is vertically integrated or 
deregulated States.
    The time constraints for States in implementing this rule 
are potentially insurmountable. States have little time, 
particularly given the need to pass legislation, to make 
crucial and far-reaching decisions regarding this proposed 
rule. The decision points include whether to act individually 
or on a multistate basis and determining what state agencies 
should take the lead in implementing and overseeing this 
process.
    The scope of the EPA rule creates implementation--excuse 
me--creates a serious risk of EPA takeover of state resource 
planning. If a State implementation plan is a deemed inadequate 
by EPA, then it is up to the EPA to then devise the plan for 
States to follow.
    Next, a carbon adder for environmental dispatch is likely a 
necessary implementation feature regardless of market 
structure. That means that there has to be something similar to 
a carbon tax that is imputed upon the regulatory structure.
    Next, all generators must participate in the carbon IRP 
process from investor-owned utilities to non-jurisdictional 
entities not traditionally subject to regulation. That includes 
rural cooperatives and municipal utilities who have never had 
to submit a resource plan before are now going to be subject to 
regulation of some state agency over their resource planning.
    Central resource planning will return to restructured, 
competitive States. In restructured States, States have opted 
to use competition as the method for lowest-costing electricity 
and to determine their optimal resource mix. That will now give 
way to carbon planning.
    Multistate SIPs are accompanied by legal and practical 
hurdles, including the potential need for a congressionally 
approved interstate compact. The EPA approval criteria 
requiring adequate enforcement mechanisms implicate the United 
States Constitution Compact Clause because enforcement can and 
should be on an interstate basis to address inevitable 
rivalries that will develop in an interstate agreement between 
States.
    In my view of the EPA's Section 111(d) proposal 
fundamentally transforms state commission sovereignty over 
resource planning in determining what is best for electric 
consumers. I have seen firsthand the effects of electric 
reliability problems and high cost generation in my home State, 
Colorado. The EPA has repeatedly invoked the refrain 
``flexibility,'' meaning we don't care how your State reaches 
that prescribed carbon reduction level, but you must get there 
and you have one year to submit a plan to do it. This is 
analogous to saying you have 6 gallons of gas to get from San 
Francisco to New York City in 24 hours but you have the 
flexibility regarding your mode of transportation. One could be 
forgiven for not thinking that that is flexibility. The problem 
here is that EPA has declined to offer flexibility on the all-
important issues of cost, capacity, and feasibility. In fact, 
EPA has implicitly declined to offer the State flexibility 
inherent in its very own Section 111(d) implementing 
regulations.
    The remainder of my written testimony is the contents of 
the white paper. I look forward to your questions.
    [The prepared statement of Mr. Sopkin follows:]
    
    [GRAPHIC] [TIFF OMITTED] 
    
    Chairman Lummis. And I thank all the witnesses for their 
testimony and for being here today.
    We will now begin Member questions. The Chair will at this 
point recognize herself for five minutes.
    First of all, Mr. Sopkin, you mentioned in your testimony 
rural cooperatives, which are a big component of providers of 
electrical power in my very rural State of Wyoming, as well as 
in Colorado, your home State. Are there unique difficulties for 
States with rural electric co-ops in being able to hit a 70 
percent gas utilization rate?
    Mr. Sopkin. Thank you, Chairman. And if I could have Slide 
2 shown, I think that would give you an idea of what rural 
cooperatives are up against.
    [Slide.]
    Mr. Sopkin. This is a--this slide was released by the 
Colorado Air Quality Control Commission and it--what it does is 
it shows where the EPA's 2030 goal is, which is a limit of 
1,108 pounds per megawatt hour and it superimposes that on top 
of every electric generating unit resource in Colorado. This 
shows you that every coal unit is in violation of the EPA rule 
on a pure rate emissions basis. The ones that are under the red 
line are all gas units. One gas unit actually exceeds this 
limit. And what you can see from this is that many of these 
coal plants are operated by rurals and municipals and so they 
are going to be affected pretty dramatically by this rule.
    As far as the 70 percent dispatch, there are many questions 
about that. In particular, the national utilization average for 
combined cycle units, gas units, is 48 percent. The EPA 
standard pushes that up to 70 percent. In most States the 
utilization rate is somewhere around 30 or 40 percent. Now, why 
is that? It is because running that gas combined cycle unit is 
more expensive than the baseload unit that they traditionally 
run on an 80 or 90 percent basis. It also could be because they 
don't have the adequate gas line--gas pipeline infrastructure 
to do it or the electricity transmission rights to do it. So 
EPA just simply did the cookie-cutter approach of every State, 
go to 70 percent, without knowing whether a State can actually 
achieve that because you have to delve deep into whether those 
transmission rights, those--the pipeline infrastructure is 
there. But also it is probably going to result in significant 
rate increases because it is more expensive to run a gas unit 
than a baseload unit.
    Chairman Lummis. Thank you. I would also like to ask Mr. 
McConnell a question about the EPA targets. How reasonable are 
they? Let's look at coal generators. Can they improve their 
heat rate by six percent. As the gentleman from Colorado 
stated, overall utilization to 70 percent for natural gas 
combined cycle; States meeting renewable energy deployment 
targets of 13 percent nationwide; end-user energy efficiency 
improvements, are these targets realistic?
    Mr. McConnell. You know, I am all for regulations and 
environmental responsibility. I am having a hard time figuring 
out why we are talking about deployment and execution of 
something that fundamentally doesn't impact the environment. 
The targets that have been set are all about finding a 
mechanism to eliminate coal and ultimately natural gas from our 
energy mix and require renewables to be deployed.
    Now, it is dressed up to look like there is some sort of 
technical evaluation behind it, but in fact the targets that 
you just cited are not only difficult to achieve but require 
advanced technology, advanced development of that technology, 
and are not something that people will be able to make that 
decision to go to in the time frame that has been proposed. And 
so, again, we are in a situation where we are talking about 
deployment and yet we are getting no value for it.
    Chairman Lummis. I thank the gentleman. My time is expired.
    And I do want to allow Mrs. Johnson, the Member from Texas 
and Ranking Member, to ask questions for five minutes.
    Ms. Johnson. Thank you very much.
    Recently, three thought leaders from different backgrounds 
and political ideologies--Michael Bloomberg, Henry Paulson, and 
Tom Steyer--came together to study the impacts of climate 
change would have on American businesses. This effort 
culminated in the report called ``Risky Business: The Economic 
Risk of Climate Change in the United States.'' And, Madam 
Chairman, I would like to submit this by unanimous consent for 
the record.
    Chairman Lummis. Without objection.
    [The information appears in Appendix II]
    Ms. Johnson. The report didn't parse words stating 
unequivocally ``every year that goes by without a comprehensive 
public and private sector response to climate change is a year 
that locks in future climate events that will have a far more 
devastating effect on our local, regional, and national 
economies.''
    Dr. Cash, as I understand it, many businesses already 
include climate risk as part of their business model. Can you 
comment on the engagement and interest in businesses in 
Massachusetts and the Northeast in achieving carbon reductions?
    And the second question, what are the potential impacts to 
the economy of Massachusetts and its businesses if we do not 
address climate change now?
    Mr. Cash. Thank you very much, Ranking Member Johnson. I 
will actually take those in reverse order because one builds on 
the other.
    We think there--and the science shows and the evidence 
shows that there is already impacts on climate change and all 
you need to do is to be in any part of the country where we see 
high-impact weather events happening that are happening much 
more frequently than had previously been happening. In the 
Northeast we struggled with Super Storm Sandy, Irene, a freak 
October snowstorm. All of those happened while I was a PUC 
Commissioner and the outages that lasted days and days and days 
was certainly something that we struggled with. And there is no 
question that a coastal State like Massachusetts is dealing 
with sea level rise already.
    Businesses are already concerned and are already making 
plans to deal with climate change. There is no question that in 
the insurance industry they are addressing climate change. 
There is no question in the development community they are 
looking at extra expenses in development along coastal areas. 
And in the public sector we are very concerned about 
infrastructure. That is one of the primary reasons that action 
on climate change is so fundamentally important because we want 
to avoid those kinds of large problems that we are going to see 
on a greater scale in the future. And we see huge economic 
opportunities to address this problem in terms of clean energy 
development.
    Ms. Johnson. Thank you.
    Now, in your testimony you indicate that significant 
pollution reductions achieved in the Northeast were due to a 
combination of factors, but the Regional Greenhouse Gas 
Initiative has been a driver. You also conclude that 
implementation of the Clean Power Plan will mirror what has 
happened in Massachusetts over the past five years--last eight 
years but on a national scale. Can you please describe in more 
detail what has happened over the last eight years in 
Massachusetts?
    Mr. Cash. I can. One of the most exciting things that 
happened is this growth of the clean energy sector in jobs that 
go all the way across the value chain that employs people who 
have Ph.D.'s, that employ architects, plumbers, electricians, 
those who come to your house to weatherize it, to put in 
insulation. It is across-the-board value chain job growth that 
happened in Massachusetts that can't be put overseas. And it 
has been done--the Regional Greenhouse Gas Initiative has been 
done using a market-based approach.
    And one of the things that I find kind of interesting about 
the concerns that are raised is there seems to be a lack of 
confidence that our private sector can step up. What we have 
done in Massachusetts and across the Northeast is set a clear 
target, clear market rules, and the private sector has stepped 
up with innovation after innovation after innovation seeking to 
capture that world market where we know there is going to be 
greater demand for electricity in China, and India, et cetera. 
I am not sure why we want to cede that, cede the growth to 
India, China, Germany in terms of innovation, entrepreneurship, 
and economic development. That is what our country is founded 
on and that is what this kind of regulatory package will allow, 
the unleashing of that kind of entrepreneurial spirit.
    The other piece that I think has been fundamentally 
important is our use of energy efficiency, and perhaps at some 
later point I can talk more about that because that is savings 
across the board, residential customers and business customers 
as well.
    Ms. Johnson. Thank you. My time is expired. Thank you very 
much.
    Chairman Lummis. I thank you very much.
    I recognize the gentleman from Arizona, Mr. Schweikert.
    Mr. Schweikert. Thank you, Madam Chairman.
    This is one of those occasions where you have dozens of 
questions and only a few minutes to do it in, so let me grind 
into a couple things that I fret about. For my panel, who has 
actually worked at the EPA? My understanding is in the modeling 
that the modeling is ultimately proprietary to the EPA, is that 
correct?
    Mr. Holmstead. I think it is actually proprietary to an EPA 
contractor.
    Mr. Schweikert. How do you make public policy and not have 
that model available for everyone to vet and make sure that--
because who knows? Is it stringent enough; is it too stringent? 
Is there noise in the model? I am trying to understand from, 
you know, a discussion at the state level to the industry level 
to the activist level, how do you make public policy on a 
proprietary model?
    Mr. Holmstead. Well, that question has been raised many 
times. EPA's answer is, well, you can have your own models and 
model the same thing, and in fact if you pay a lot of money, 
there is a way to have the same contractor run something 
similar. But here is what I would say. For most of these 
models, the big issue is the assumptions that go into them and 
it is pretty easy to be skeptical of EPA's assumptions without 
necessarily--so I agree with your question but just take a look 
at the assumptions that they do acknowledge publicly and you 
will see how unrealistic they are.
    Mr. Schweikert. Yeah. And I want to make it very clear for 
my brothers and sisters on the Committee and everyone else in 
the room, when I say model, I actually mean from the raw data 
sets because we also know if you all remember your basic 
statistics class, that is where you get to really, you know, 
mess with your inputs.
    And this one just sort of eats at me so I might as well 
share it and get it off my chest. An article from a couple 
months ago, EPA Chief promotes--or, excuse me, ``EPA Chief 
Promises to Go after Republicans Who Question Agency Science.'' 
And in the article it makes it very clear. I love this quote. 
``We're coming for you.'' So if you question the data, question 
the science, they are going to come for us? And then the 
arrogance of the comments of, well, we have real scientists and 
if you are not part of the EPA infrastructure, you don't count 
as a real scientist. Is this just noise or is this the actual 
arrogance that comes out of the EPA? I know it--okay----
    Mr. McConnell. We saw it in spades at DOE. We had 
opportunities to do interagency collaboration and in fact many 
times it was just frankly dismissed.
    Mr. Schweikert. Who do I have on the panel that has 
actually worked at the Department of Energy?
    For Department of Energy, this is your area of expertise; 
were you requested to build or participate or do some of the 
modeling? Because my understanding being from out West where, 
you know, we have this great difficulty trying to explain to 
States like Massachusetts and stuff the scale and the distances 
we run through and that it is more than just that facility, it 
is my pipelines, it is my mileage of, you know, power lines, 
the distances we have to cover. So a long way to ask the 
question, DOE, were you asked? Were you contracted for--to 
model the actual energy side of this?
    Mr. McConnell. Well, first of all, I think it is a great 
story that has been told here about Massachusetts. I think we 
all have to recognize that they are less than one percent of 
the total energy generated in the United States so it is a very 
unique story to a very small place. And it is a great story but 
it is a very small part of our world.
    At DOE a simple example we got a 650-page document on 
Friday afternoon at 3:00 and were asked for a response back by 
10:00 a.m. on Monday. Now if my folks at DOE hadn't worked all 
weekend, we wouldn't have had a chance to respond, and after we 
responded, we barely got a thank you and many of the 
corrections that were made were regretfully accepted but it was 
the kind of disingenuous interagency collaboration that often 
was very puzzling.
    Mr. Schweikert. And so you are saying from a technical 
standpoint the relationship DOE and EPA--I mean how did they 
react when you provided them those corrections to the data?
    Mr. McConnell. Reluctant acceptance, but in fact I think it 
was more of a box-checking exercise to show that interagency 
collaboration occurred when it really didn't.
    Mr. Schweikert. Okay. Thank you, Madam Chairman.
    Chairman Lummis. The gentleman yields back.
    The Chair now recognizes the gentlelady from Oregon, Ms. 
Bonamici.
    Ms. Bonamici. Thank you very much, Madam Chairwoman. And 
thank you to the witnesses for appearing here today.
    This is an issue that is a high priority for my 
constituents, and before I go into questions, I just wanted to 
say a few words about the economic arguments we are hearing 
today. I know that a lot of my fellow Committee Members have 
heard me rave about Oregon and I do realize that in some ways 
we face different conditions from the conditions experienced by 
some of my colleagues. In Oregon, for example, we are currently 
phasing out our last coal-fired power plant. We have abundant 
hydroelectric power and that means that the reduction target 
given to our State by the EPA is quite a bit different from 
targets given to States that rely on coal power for 
electricity.
    But I also want to say that Oregon's economy is uniquely 
reliant on natural resources, and hence, our economy is 
threatened by the impacts of climate change. My constituents 
see the cost of inaction as startlingly high. We consider what 
might happen to our wine industry, for example, if the global 
temperatures continue to rise, what is happening to our 
commercial fishing and shellfish industry as the ocean 
chemistry changes because of high levels of carbon dioxide in 
the atmosphere.
    And so while the EPA's proposed rule is being analyzed by 
the State Departments of Environmental Quality, our utility 
sector, and others who will participate in its implementation, 
they are seeing forward progress in carbon reduction as welcome 
news in Oregon.
    And I know, Commissioner Cash, you spoke about RGGI. I just 
want to mention that our Pacific Coast Collaborative has worked 
on a Pacific Coast Action Plan on Climate and Energy, and that 
is a collaboration among not only States, the States of 
California, Oregon, and Washington, but also British Columbia 
to combat climate change. And our region is really becoming a 
center of innovation and investment in the clean fuels and 
technologies.
    And I know, Mr. McConnell, you mentioned the importance of 
developing new technologies, attracting private capital for 
infrastructure. All of this is turning into jobs, as you, Dr. 
Cash, recognized was happening in Massachusetts.
    So even though, yes, Massachusetts is just one, as Mr. 
McConnell recognized, one State, when we look at the regional 
partnerships that are being implemented and moving forward, I 
think we see a lot of potential to have the same kind of 
results that they have seen in Massachusetts on a regional 
scale.
    So I wonder, Dr. Cash, could you talk a little bit--it was 
an interesting discussion about collaboration or the alleged 
lack thereof with the EPA. Can you recommend any improvements 
that could have been made to the outreach process but also talk 
about whether your agency and others in the RGGI group were 
consulted during the development of the proposed rule?
    Mr. Cash. Thank you very much. That is an excellent 
question and I am glad I have an opportunity to respond.
    I think in the development of the rule there was actually a 
lot of outreach, and it wasn't just to States like 
Massachusetts. My understanding from talking to colleagues when 
I was in--a member of NARUC as a Commissioner--Public Utilities 
Commissioner, was that the EPA reached out quite a bit all 
across the country from the highest level--Commissioner level 
down to the staff level, that the inputs into models and to how 
they analyze this was done with a lot of input from States, 
from other agencies as well. The Department of Energy, et 
cetera, was very engaged in this as well.
    So I think that kind of process was a very robust one and 
has continued to be a robust one since the rule was announced 
that EPA has been holding meetings at--through all of their 
regions and our staff has been in contact with the technical 
staff at EPA almost nonstop. So that outreach has definitely 
been there.
    In terms of the regional concern, I knew it might be 
addressed that Massachusetts is a small State. I get that. But 
part of what has happened in RGGI is that it hasn't been just 
our State. It hasn't just been the one percent. It has been all 
of the RGGI States, the New England States down to the mid-
Atlantic States, down to Maryland and Delaware have been part 
of this. And all across that region, which is a significant 
amount of population in the country, a significant amount of 
the energy use, a significant mix of different energy sources, 
we have seen reductions of 40 percent while the regional 
economic advances by seven percent. And we have seen this huge 
growth in the innovation sector of the--in--all across these 
States. And it is actually not just these States. We see this 
throughout the--all of the United States.
    Ms. Bonamici. Thank you, Dr. Cash.
    And in my remaining few seconds, I just want to mention 
that, you know, we have had many discussions about the 
development of technology in the Committee and also in the 
Environment Subcommittee on which I am the Ranking Member. We 
have had hearings about this issue. And I want to point out 
that historically, if you look at the development of 
technology, there is a lot more incentive for the companies to 
develop technology and for investment in the development of 
technology when there is a requirement that the technology is--
there is a demand for it. So when there is a requirement, then 
the technology is developed. If it is not required, there is 
not as much incentive for the development of that technology.
    So I yield back. I am over time. I yield back. Thank you, 
Madam Chairwoman.
    Chairman Lummis. I thank the gentlelady.
    The Chair now recognizes the gentleman from Oklahoma, Mr. 
Bridenstine.
    Mr. Bridenstine. Thank you, Madam Chair.
    First of all, I would like to thank the whole panel for 
being here and thank you for your time and your service. I 
would especially like to thank Mr. McConnell for your great 
service to my alma mater Rice University and it is--while we 
may not win many football games, we have got some amazing 
technical research capabilities and I am glad you are there to 
help us with those things.
    When President Obama was a candidate in 2008, he pledged to 
the San Francisco Chronicle that he would bankrupt the coal 
industry. These rules from the EPA are nothing more than his 
attempt to fulfill this campaign promise. When you look at the 
practical effects that this rule will have, no other conclusion 
can be made than this president is trying to kill coal.
    As several of you mentioned in your testimonies and what I 
have heard from utilities and co-ops back in Oklahoma, the 
assumptions the EPA made regarding efficiency improvements were 
utterly unrealistic. The timeline for implementation was 
egregiously short and electricity prices will go up, 
particularly in States like mine, the State of Oklahoma, who 
rely heavily on coal.
    Last year, coal-fired power plants accounted for nearly 60 
percent of electricity generation in the State of Oklahoma, and 
because of that, we enjoy rates that are well under the 
national average. This is why I find the EPA's claims of 
unprecedented outreach to stakeholders to be rather egregious, 
because if they did, they obviously ignored feedback that they 
got from my part of the country in Oklahoma.
    Further, as we have heard, this plan amounts to the EPA 
remaking the electricity system in each State, something that 
has never been under the purview of this agency. There are 
other Federal agencies with expertise in this area, namely, 
DOE. And I am interested if they were ever approached by the 
EPA regarding this aspect of electricity generation.
    Mr. McConnell, as a former member of this Administration, 
what can you tell me about the nature of interagency 
collaboration under this President?
    Mr. McConnell. Well, I think, as I had mentioned earlier, 
it was an awkward dance because very often the inconvenient 
truths of technical evaluation didn't fit the political agenda 
and that made it very difficult to actually have any 
collaboration, and in fact, as time went on, the communications 
became almost zero.
    I think the other thing that I would like to respond to as 
well earlier about technology is that if we truly have an 
administration that believes in an all-of-the-above energy 
strategy and we really want to do something about the 
environment because we have been talking about that a lot today 
about climate change and everything else, I believe it is an 
important topic as well, but passing this regulation isn't 
going to do anything about the climate change. That is what is 
so strange about all of this conversation.
    And to the point of if we want to do something about it, 
what we have to do is invest in clean technologies to enable 
the fuels that we are using that can be reliable and affordable 
for not only our country but for the rest of the world, we need 
to get on with that task, not defund the fossil energy 
organization at DOE while everything else gets the money for 
the windmills and the solar panels. It is a difficult 
conversation. It is hard to understand.
    Mr. Bridenstine. For the record, how much was the fossil 
part of DOE? How much was that cut during your time there?
    Mr. McConnell. Well, it got to the point where it was on 
and all over the--the period of time during my tenure it was 
about 40 percent per year, and most recently, some of the 
continued work that has come in you see the cuts continuing. So 
it is not an all-of-the-above strategy by any stretch.
    Mr. Bridenstine. So when you say they were cutting research 
opportunities for fossil, were the other opportunities for wind 
and solar, were they being cut at 40 percent per year as well?
    Mr. McConnell. No, not at all. The DOE budget was 
continually increased during that entire time, and so the 
fundamentals around the technology that are so important around 
carbon capture, utilization, and storage, to promote the 
ability to put technology in place that people will want to 
use, not to legislatively make them use, is a huge transition. 
It drives a market, it drives an opportunity, and it also opens 
up global acceptance for technology rather than trying to 
moralize with the rest of the world so they will do what we 
tell them to do.
    Mr. Bridenstine. Thank you, Madam Chair. I yield back.
    Chairman Lummis. I thank the gentleman.
    The Chair now recognizes the gentlelady from Florida, Ms. 
Wilson.
    Ms. Wilson. Thank you so much, Chairman Lummis, for holding 
this hearing, and thank you to our witnesses for being here 
today.
    I am from Florida and Florida is ground zero for climate 
change in America. Because of our location and geography, 
Floridians feel the effect of climate change more than any 
other region of the United States. We see firsthand the results 
of rising sea levels as seawater floods onto the streets of 
Miami. We feel the effects of increasingly powerful, 
increasingly common hurricanes and tropical storms that batter 
our State every year. On top of these devastating effects, 
climate change is quickly eroding Florida's beaches. These 
effects of climate change have caused millions and millions of 
dollars of damage to Florida's infrastructure, as well as 
reducing the number of tourists visiting Florida, further 
hurting our economy.
    These impacts are here and we feel them now, yet we know 
that even more are coming. We have to act now. Pretending this 
is not a serious problem and delaying the hard decisions will 
make it--climate change more expensive and more difficult to 
deal with in the future. Frankly, we owe our children and 
grandchildren better than kicking the problem down the road for 
them to deal with.
    That is why I applaud President Obama and the EPA for 
proposing the Clean Power Plan. This plan will prevent 140,000 
to 150,000 asthma attacks in children. It will also prevent 
thousands of premature deaths. The Clean Power Plan is the 
result of unprecedented proposal outreach by the EPA, which 
engaged a broad range of stakeholders in developing this plan. 
As a result of this outreach, the Clean Power Plan provides 
States with broad flexibility to design plans that reflect the 
individual policy objectives of the State and reflects its own 
unique circumstances.
    By implementing this plan, the United States can lead the 
international community in efforts to address climate change 
while growing our clean energy sector and improving our 
economy. Done correctly, addressing climate change will create 
jobs and we should be about creating jobs. In fact, jobs, jobs, 
jobs should be the mantra of this Congress.
    Climate change is no longer just a theory; it is our 
reality. So I implore my fellow Members of Congress to support 
this plan and help address climate change for future 
generations.
    Madam Chair, I have a question.
    Dr. Cash, can you talk about your experiences in 
Massachusetts, what you have done, and I would like to know how 
your State's successes could be able to be duplicated in 
Florida and around the country. And also talk about the 
regional initiatives, what benefits they present and how to 
best encourage more States to adopt these initiatives.
    Mr. Cash. Thank you very much, Ms. Wilson. A couple of 
comments on that.
    Again, I want to go back to the comment I made about low-
hanging fruit. Almost without this regulatory package it seems 
like there is huge opportunities on energy efficiency. Again, 
this is not something particular to Massachusetts. Yes, we have 
old housing stock but there is old housing stock all throughout 
the country that were not built to high energy efficiency 
codes. And so energy efficiency is essentially something that 
puts money back in the pockets of ratepayers. I still don't 
really understand why that isn't seen as the first fuel. Before 
coal, before natural gas, before wind and solar, we should be 
looking at energy efficiency as the first fuel and that is 
something that I know that in Florida there have already been 
advances made, particularly on the demand response side on 
those hot, hot summer days when people can opt to turn down 
their air-conditioners a little bit and they make money on that 
and that reduces cost for everybody in the system.
    The other point is I have often wondered about the Sunshine 
State and solar energy in the Sunshine State. And you are 
talking about jobs, jobs, jobs. If there were policies that 
advanced solar in Florida the way that it does in 
Massachusetts, in New Jersey, in California, and many, many 
other States now, I think that we would see many more 
installation jobs, electrician jobs, et cetera, and all of that 
would work to decrease the amount of demand that is on the 
whole system and make the system more reliable, not less 
reliable.
    Chairman Lummis. The gentlelady yields back.
    The Chair recognizes the gentleman from New York, Mr. 
Collins.
    Mr. Collins. Thank you, Madam Chair.
    Mr. McConnell, you and I share a couple things, both 
engineers, both MBAs. I have also spent my life in the energy 
industry starting with Westinghouse Electric. My background is 
in nuclear, it is in coal, it is in gas. I even owned a wind 
company for a while in the late '70s. We were producing 
components for the new-found wind energy driven solely by tax 
credits where none of the wind turbines even worked. So I have 
got extensive--almost 30 plus years in that area.
    So let me just start with a sign in my office, ``In God We 
Trust, All Others Bring Data.''
    So as you have pointed out what you saw in the DOE was a 
political agenda. I think that is obvious. So if I could--
before I run through some things, just to address Dr. Cash for 
a minute, I just looked up some data. RGGI. I am from New York, 
setting aside Alaska and Hawaii, setting them aside--they are 
pretty unique--let me tell you the 8 most expensive States in 
this country for electricity. They are Massachusetts, 
Connecticut, New York, Rhode Island, Vermont, New Hampshire, 
New Jersey, and Maine. I think they are all RGGI States. So 
let's call it out for what it is.
    Mr. McConnell, you have got a lot of experience and I think 
some of what I will say is probably rhetorical but I think it 
is good to put it on the record. If the United States didn't 
produce any industrial CO2, none whatsoever, no 
power plants, no nothing, I have heard that that might reduce 
the total CO2 produced in the world by about two 
percent. Is that correct?
    Mr. McConnell. Yeah.
    Mr. Collins. So to answer the gentlewoman from Oregon, if 
the United States didn't have any coal-producing power plants, 
no gas power plants, no automobiles, no nothing, at best it 
might help Oregon, even if you accept that, by two percent 
maybe, sort of. In other words, this is a political agenda. I 
think it is obvious to anyone when you look at the data.
    If I look at the different costs of producing electricity, 
nuclear, coal, gas, hydro, and then throw in wind and solar, 
wind and solar is the most expensive, two times, four times, 
eight times. So is it safe to say the only reason we have a 
wind and solar energy is tax subsidies? Absent those, you 
wouldn't have them?
    Mr. McConnell. Yes, that is right.
    Mr. Collins. Is it also a statement of fact, rhetorical 
question, that every last dollar we spend, whether it is on tax 
subsidies or not is borrowed from China? So isn't it fair to 
say we are borrowing from China, money, so our neighbors can 
put solar panels on their house? Is that a fair statement? You 
are chuckling but it is. I mean rhetorically if every last 
dollar is borrowed and solar and wind only exist, only exist on 
subsidies, if we did not have tax subsidies, there wouldn't be 
a single solar panel or wind turbine going up in the United 
States of America, and it has been that way since the 1970s and 
I was part of that back in the 1970s where the joke was the 
wind turbine manufacturers put up the wind turbine. Back then, 
they were putting wooden blades on the wind turbines pretending 
they would work. They get their tax subsidy and laugh all the 
way to the bank. That is how this industry started. It is still 
there. They do work today. Technology has come a long way, but 
my view is the government exists to help develop technology, 
not to pick winners and losers. This is a political agenda. The 
States that we just talked about are these RGGI States, the 
most expensive in the country, and we talk about jobs, jobs, 
and jobs, the cost of energy is a major part of it.
    So in the remaining minute, carbon sequester, which I know 
quite a bit about, you are going to pump the CO2 
into the ground, quite deeply into the ground, and you are 
going to cap it, is that a proven technology as in 
understanding the potential--we talk about the environment--the 
potential environmental consequences of pumping CO2 
into the ground?
    Mr. McConnell. No, it is not a proven technology inasmuch 
as carbon capture and storage as a waste disposal of 
CO2. But I can offer you some encouraging thoughts. 
CO2 has been used for enhanced oil recovery in this 
country for well over 50 years. When it goes into the 
formation, it brings up additional oil that otherwise wouldn't 
come up, and in the process of doing so, in those geological 
formations it also is safely and permanently stored and has 
been in many areas across this country and in Canada as well.
    It is a market-based opportunity to utilize CO2 
and safely and permanently store it. Our challenge is to 
broadly deploy this in other places across our country and 
frankly the world. The technology behind that is part of what 
the Department of Energy has tried to bring forward, and to 
declare it ready today is disingenuous. It is not.
    Mr. Collins. Well----
    Mr. McConnell. But the technology needs to be developed so 
it can be.
    Mr. Collins. My time is expired but I would make one 
closing statement. And as the county executive in Erie County, 
when the environmentalists--as the environmentalists talk about 
fighting CO2 emissions, and they don't like 
hydrofracking because we are creating hydrofracking down in the 
earth, these same folks, I don't know how they can support 
carbon sequester, pumping gas down in there. And I can tell you 
as the county executive, I did not allow that to proceed in our 
county right on the Great Lakes, one of the greatest freshwater 
bodies in America where they wanted to carbon sequester. I said 
not under my watch. But the same environmentalists that seem to 
care about the environment don't like hydrofracking sit there 
and say let's sequester carbon underground next to the Great 
Lakes. It makes no sense to me. I yield back.
    Chairman Lummis. The gentleman's time is expired.
    The Chair now recognizes the gentlewoman from Connecticut, 
Ms. Esty.
    Ms. Esty. Thank you, Madam Chairman.
    And to Dr. Cash, welcome from a fellow RGGI State in 
Connecticut. Glad to have you here.
    There are two topics I would like to discuss. One is 
electrical reliability, the reliability of the grid for those 
of us in the Northeast and what we went through with Sandy and 
other storms, that is the first topic. And the other is on the 
impact on consumers, again, as has been mentioned by my 
colleagues. Connecticut and Massachusetts and New York are 
high-cost States for virtually everything, I can assure you. 
Electricity is not alone among those.
    So first turning to reliability, I know we have found in 
Connecticut where I know a little bit about the electrical 
situation that by the low-hanging fruit, the economizing 
efforts we have been undertaking, we have been able to take 
pressure off the grid at precisely those times when there has 
been most demand, those August days when thunderstorms roll 
through. Could you talk a little bit about the RGGI experience, 
your own in Massachusetts and with your colleagues throughout 
the RGGI States of how that intersection between what we have 
been able to do and how that impacts an aging infrastructure 
and frankly national security concerns about reliability of the 
grid?
    Mr. Cash. Thank you, Representative Esty. Excellent 
questions.
    On the reliability side what has happened is in part the 
RGGI funds that have come from the RGGI program, so from the 
generators, has gone essentially to customers who can use those 
funds for energy efficiency programs. And that is customers 
across the board, residential customers, businesses, commercial 
entities, those whose bottom line is very important. And I 
forget which Member mentioned that energy costs are a very 
important part of the business bottom line for companies. And 
what they have done is availed themselves of those revenues and 
used them for better lighting, weatherization, getting out old 
motors and getting variable speed motors, all getting huge 
savings.
    And what that has led to is a remarkable thing in the 
Northeast, which is we have load growth of 2 to three percent, 
would have load growth of 2 to three percent because our 
economy is growing, people are buying more laptops, more cell 
phones, all that kind of stuff, and what we have essentially 
done by our energy efficiency programs--so again giving money 
back to the customers to retrofit their homes--is we have come 
to zero load growth, so same economic development, zero load 
growth. And that means we have avoided building 2,000 megawatts 
of new energy, new generation. No more transmission lines for 
those, no new generation, 2,000 megawatts, huge savings. So--
and that has made the system more reliable, right? So on the 
hot summer day you don't need all that.
    And so that is one way, and the other is by the use of 
solar, which, as you mentioned, is working at that peak time of 
day. And we think that as solar becomes more expansive in the 
Northeast, we will see even more and more of that.
    Ms. Esty. Well, let's turn to consumers and the cost. We 
find I can say in Connecticut where I am working very hard to 
bring manufacturing back because I know my colleagues in 
Massachusetts are as well, there tends to be an obsession with 
the kilowatt hour cost as opposed to the actual--and how much 
is your energy costing if you are using less energy than your 
overall cost is lower?
    And just to give you an example, FuelCell Energy based in 
Danbury, Connecticut, is benefiting from some of these targeted 
investments on basic R&D. They are finding it is cheaper for 
them to produce in Danbury, Connecticut, massive fuel cells 
that they are shipping to Korea. They are shipping to Korea 
from Connecticut because it is in fact cheaper because our 
productivity is so high----
    Mr. Cash. Um-hum.
    Ms. Esty. --and they can produce a product that the Koreans 
are very happy to reduce their reliance on other fuel sources. 
So I think it is just an example of again it is the all-in 
cost.
    Can you talk a little bit--first, I would like to introduce 
into the record if I can, Madam Chairman, the Analysis Group 
report that you referenced in your testimony. I would like to 
submit that for the record because I think that provides more 
detailed--could you describe on the consumer's end communities 
in Massachusetts how this has impacted the bottom line of the 
bills they pay, not the kilowatt hour cost but the bills they 
end up paying?
    Mr. Cash. Well, actually, the story is really good on both 
those counts. As I mentioned before, our rates have dropped by 
about eight percent in the RGGI region. Even if they had gone 
up by the 1 to two percent that was predicted, it would have 
meant lower bills. So higher rates, but because less is being 
demanded and the price of energy would be lower and less energy 
being used, the bills across the region would be lower as well.
    And I absolutely concede the point that Mr. Collins was 
raising before about the RGGI States having the most expensive 
electricity in the country, that is absolutely true. And by the 
way, you and I share something. I was--born and grew up in New 
York, more downstate, and that was one of the driving reasons 
that we got engaged in this, for the cost savings. And as I 
mentioned, it has led to cost savings, not cost increases. We 
have seen across the board these cost increases even with 
renewable energy, which at the beginning has been more 
expensive. Onshore wind, though, is not more expensive now. We 
see that throughout the country. We see that in Texas where it 
is competitive. And we see that in New England where it is 
competitive. And solar has been dropping by 30 to 40 percent.
    And while you mentioned the subsidies that are now 
received, of course we have historical subsidies to fossil 
fuels that go back 100 years. So clearly the playing field is 
not level for renewables at this point, and these subsidies at 
both States and the Federal Government are doing, or trying to, 
get that level playing field so we can see the kind of cost 
reductions both on rates and bills that this kind of regulation 
and what state activities are doing throughout the country are 
reaping for their customers.
    Chairman Lummis. The gentlewoman's time is expired.
    Ms. Esty. Thank you.
    Chairman Lummis. And without objection her submission will 
be entered in the record.
    [The information appears in Appendix II]
    Chairman Lummis. The Chair now recognizes the gentleman 
from Texas, Mr. Weber.
    Mr. Weber. Thank you, Madam Chair.
    Earlier, one of you all said in your testimony that these 
rules were applying to 49 States I think. Was that you, Mr. 
Holmstead?
    Mr. Holmstead. Yes, that is right.
    Mr. Weber. And what State is it they don't apply to?
    Mr. Holmstead. You know, I can't--I think it may be 
Vermont----
    Mr. Weber. Is that right?
    Mr. Holmstead. --because Vermont doesn't have any coal-
fired power plants, any even legacy plants. So I think it is 
only 49 States and the District of Columbia that are covered.
    Mr. Weber. I got you. I got you. Well, I was hoping you 
were going to say Texas because, you know, Texas has its own 
grid and we get things right in Texas and we are part of that 
lower--the rate that I think Chris Collins beat me to the punch 
on. I was going to bring that out.
    You were talking about CO2 carbon capture 
sequestration. Do any of you all know where the only really 
huge facility with the carbon capture sequestration is?
    Mr. Sopkin--is it Sopkin--where would that be?
    Mr. Sopkin. I believe you are referring to the Kemper 
facility in Mississippi or not?
    Mr. Weber. No.
    Mr. Sopkin. Okay.
    Mr. Weber. They are in the process of a building that----
    Mr. Sopkin. That is right.
    Mr. Weber. --right now at huge cost overruns incidentally.
    It would happen to be in Port Arthur, Texas. Would you like 
to guess whose district that is in? That is in my district. It 
was at a cost of about $400 million; 60 percent of that was 
supplied by the DOE. You want to talk about a nice subsidy? 
Sixty percent of that 400 and something million so it was like 
200 and--what would that be, 240 or 50 million dollars by the 
Department of Energy through the American Reinvestment and 
Recovery Act.
    How many of you all think that is duplicable in the private 
industry? Anybody? Mr. Cash?
    Mr. Cash. Are you asking does the Federal Government 
subsidize the private industry----
    Mr. Weber. I won't----
    Mr. Cash. Is that what you mean? I am unclear on your 
question. I am sorry.
    Mr. Weber. I thought that was pretty clear.
    Mr. Cash. Okay.
    Mr. Weber. How many of you think it is duplicable in the 
private industry without the subsidies?
    Mr. Cash. No, there are clearly some things that are not 
ready for the market----
    Mr. Weber. Right.
    Mr. Cash. --and there is no question that throughout the 
history of this country the Federal Government has stepped in 
to----
    Mr. Weber. Okay.
    Mr. Cash. --provide subsidies, and fossil fuels----
    Mr. Weber. Right.
    Mr. Cash. --is one of them.
    Mr. Weber. And I want to point that out that in my district 
we have firsthand experience of that. EOR, enhanced oil 
recovery, there is a company down in our area that does a lot 
of that. They do an absolute lot of that enhanced oil recovery, 
so we know how it works, Chuck, in our area.
    I do want to go back to some of the data and the stuff, the 
rules, and I--Mr. McConnell, you said you worked for the DOE? 
When the rules were being formulated by the EPA regarding this, 
did they seek--were you able to give input in that?
    Mr. McConnell. The point that I am trying to make is that a 
true collaborative effort would have been considerably 
different than what I observed.
    Mr. Weber. Okay.
    Mr. McConnell. And I observed what was a box-checking 
exercise to say that it occurred but in fact was de minimis.
    Mr. Weber. But were you personally able to give input in 
there or were you prevented from doing that?
    Mr. McConnell. We were able to make inputs and never able 
to actually observe whether they were received and entered. It 
was simply a communication and then at that point the EPA was 
fundamentally in charge with whatever they wanted to report.
    Mr. Weber. So that is what you are calling you just checked 
the box and you never knew what they did with that?
    Mr. McConnell. Well, I didn't check the box; the EPA did 
because they were required to do ``interagency collaboration.''
    Mr. Weber. And that was their method?
    Mr. McConnell. Yes.
    Mr. Weber. And so they signed off on doing interagency 
collaboration.
    I want to respond to some comments made from the gentlelady 
from Connecticut. And, Mr. Cash, you said you went after the 
low-hanging fruit. You wanted energy efficiency to be the first 
form of energy. And then of course Chris Collins brought out 
that you all have the most expensive electricity in the 
country. Is it true that in producing anything manufacturing 
that the more of it you produce, the greater the economy of 
scale and the greater cost savings you ought to have?
    Mr. Cash. Often, that is the case.
    Mr. Weber. Often or most of the time?
    Mr. Cash. I don't know but I know that often that is the 
case, that economies of scale will mean better use of----
    Mr. Weber. So if we had less burdensome and unnecessary 
regulations in permitting and in production, we could actually 
produce more electricity and it might even be at a lower cost. 
Would you agree with that?
    Mr. Cash. I would agree that there are situations where 
that is true.
    Mr. Weber. So when that impacts the elderly and those on 
fixed incomes or, as one of my colleagues said, well, just 
everything in New England is higher, it makes me realize why 
1,500 people a day are moving to Texas, okay, in our area----
    Mr. Cash. Um-hum.
    Mr. Weber. --which all the while if you looked at our 
government charts, there with the TCEQ, we are actually 
reducing not only our CO2 but our noxious gases.
    Mr. Cash. Um-hum.
    Mr. Weber. And by the EPA's own admission--or should I say 
emission--70 percent of noxious gases come from non-stationary 
point sources or what we would call vehicles.
    Mr. Cash. Yeah.
    Mr. Weber. How do you think those 1,500 people a day are 
getting to Texas? Cars and trucks? I am just thinking, you 
know. So maybe a reduction of those rules would help us 
actually produce power more efficiently and less costly for 
some of our constituents.
    Madam--oh, Mr. Chair now, I yield back.
    Mr. Neugebauer. [Presiding] I thank the gentleman and now 
the gentleman from North Dakota, Mr. Cramer, is recognized for 
five minutes.
    Mr. Cramer. Thank you, Mr. Chair. Thanks to all the 
panelists. And it is hard to know where to begin.
    I might just state for the benefit of my Texas friend that 
while 1,500 people move to Texas, the fastest rate of growth is 
in North Dakota where the price of electricity at the end of 
May is $8.62 a kilowatt hour, the lowest in the country, and 
I--while I appreciate--and by the way, I love any technology 
that would expand the lifespan of our coal mines and coal 
plants while at the same time expanding the lifespan of the 
Bakken crude oil so carbon capture for tertiary oil recovery is 
a very good technology that I hope someday is truly ready for 
prime time.
    But we have talked about interagency or the lack of 
interagency collaboration, which concerns me, the lack of it, 
in a big way. But we have really rarely talked so far about the 
other obvious agency that has been ignored here and that is the 
Federal Energy Regulatory Commission or the FERC, who I am not 
even sure why we would need if we have a rule like this, not to 
mention the NERC and the others.
    I spent, as Commissioner Sopkin may know, nearly ten years 
as the--as a Public Service Commissioner in North Dakota, and 
multistate integrated resource planning was hard enough just 
being multistate, but now to have to throw this into the mix, 
it boggles my mind how we even could do it. I am very proud of 
the fact that--and I am one that has resisted many times to 
call for a comprehensive national energy policy. We have a 
really good energy policy. It is called lowest cost. The 
dispatchers dispatch the lowest-priced electricity. It works in 
a market-based economy quite well. How in the world would we 
expect a utility like Basin Electric, for example, a rural 
electric cooperative, G&T, that has its own multistate 
challenges that doesn't answer to a state regulator, how would 
we--what are we to tell them? What are we to tell the States of 
North Dakota, South Dakota, Minnesota, and all of the others 
about their own integrated resource planning and how is this 
going to impact them, and North Dakota being an export State, 
major export State of electricity?
    And I am going to begin with Commissioner Sopkin because 
your white paper, by the way, and Commissioner Gifford's work 
is very, very good, but maybe if you could just help me 
understand how I would explain a rule like this to those that 
are multistate and multi--by the way, multi-resource planners?
    Mr. Sopkin. Well, I think it is difficult to explain 
frankly. We have looked at the rural and municipal providers 
across the country and they are very reliant on coal.
    Mr. Cramer. Yeah.
    Mr. Sopkin. And they have made the decision to self-
determine their own resource plan. That is part of the reason 
to be a co-op or muni. And now they are going to have to cede 
their authority to the EPA and to some state agency that will 
then tell them how they have to plan their resources. And the 
big problem here is not having a balanced portfolio.
    I would point to a study that just came out this week 
called ``The Value of U.S. Power Supply Diversity'' by IHS 
Energy. This is no right wing think tank here. This is a 
respected international organization that studies electrical 
issues. And this I think gives everybody a good idea of what is 
going to happen with this EPA plan. It looks at a base case, 
2010 to 2012, and it compares to what will happen if we go to a 
lot of reliance on gas and renewable energy. And the cost of 
generating electricity will increase $93 billion per year 
because of that and consumer pockets are going to be lighter by 
$2,100 per year. I won't go through the rest of the report, but 
this details the direction we are headed.
    Mr. Cramer. Well, and I know some of you are anxious, and 
Dr. Cash, but I want to get to the efficiency issue as well 
because we talk about energy efficiency like it is free, and I 
mean we have a lot of legacy sunk investment that is going to 
be--the costs are going to be recovered. If we don't use it, it 
is still going to be recovered. And if we add another resource 
to it, the legacy stuff still has to be recovered. How do we 
deal even with energy efficiency and ignore the requirement to 
recover costs? I mean, you know, I listened to my colleague 
talking about, yes, the price per kilowatt hour is much higher 
but the bills are lower and you have said the same thing. We 
still have to recover costs for things that are being built, 
don't we? Are we ignoring that in this rule?
    Mr. Cash. I don't think that we are ignoring that, and I 
think that there are a lot of lessons to be gained from two 
past historical things. One is the acid rain program, which 
then layered this other thing on top of least cost, and the 
grids, whether they be state only or regional like PJM or state 
only like Texas, et cetera, modified the market so that least 
cost bid stack took into account whatever requirements were 
required for acid rain, and likewise in the RGGI region where 
we have ISO New England, NISO and PJM, we layered that on top, 
and what we have seen is the market respond. The market has 
responded with innovation, with better technologies, with 
energy efficiency that even has happened in the requirement 
for----
    Mr. Cramer. I don't want the rule to get ahead of the 
technology, and that is what I am afraid we are----
    Mr. Neugebauer. I ask unanimous consent that the report 
that Mr. Sopkin was referring to in his testimony be a part of 
the record. Without objection, so ordered.
    [The information appears in Appendix II]
    Mr. Neugebauer. We now go to the gentleman from Indiana. 
Mr. Bucshon is recognized for five minutes.
    Mr. Bucshon. I thank all of you for being here. Eighty-five 
percent of the electrical power in Indiana comes from coal, and 
every coal mine in the state is in my district as well as most 
of the oil and natural gas. My dad was a coal miner, and that 
is why I am here today because of the high-paying job in the 
coal industry. Mom was a nurse.
    I want to first of all say I was also a medical doctor 
prior to coming here, and I know some of the scare tactics I 
heard from the other side about health issues related to 
emission, and that is exactly what it is. It is scare tactics. 
You know why? Because we look at a medical study, and the first 
thing you look at is who paid for it. Well, the studies that 
are showing this type of information all paid for by left-
leaning global warming advocates based on a model created by a 
left-leaning global warming advocate who has a financial stake 
in the model and shamelessly published by a nationally known 
organization, which I actually talked to about this and told 
them I was ashamed of their information. From a health care 
standpoint, there is no clear data. It is scare tactics to 
scare the American people, and every time I hear it, it makes 
me very mad.
    The discussion here today is not about whether the 
temperature of the Earth is changing. Of course it is. It is 
always changing. When you look back at the history of the 
Earth, it has changed for hundreds of years, and you know, the 
other thing is, the EPA admits their current regulations will 
have no effect on this.
    I want to follow up on what Mr. Collins was discussing 
about energy subsidies. First of all, I believe in an all-of-
the-above policy. I think we should pursue absolutely 
everything. But let me tell you and Mr. Chairman, I was 
unanimous consent to introduce a few graphs from the Energy 
Information Administration and the Institute for Energy 
Research into the record.
    Mr. Neugebauer. Without objection, so ordered.
    [The information appears in Appendix II]
    Mr. Bucshon. Here is what the facts are, and you can see 
it--everyone can see it on this chart from where you are 
sitting--that the solar industry per kilowatt-hour is being 
subsidized at 1,100 times more than coal, oil and natural gas, 
and wind is being subsidized at over 80 times more than these 
others. So all of the states in the Northeast, you are welcome 
because the taxpayers in Indiana are paying for what is 
happening in your state.
    In the electrical generation sector, renewable energy, 55 
percent of the subsidies generated ten percent of the 
electricity. Wind, 42 percent of the subsidy, 2.3 percent of 
the electricity generated. Fossil fuel--it is true fossil fuel 
gets subsidies, and it has for a long time. Sixteen percent of 
the subsidies but generated the largest share of electricity, 
70 percent. And in this chart, solar per kilowatt-hour, 
$775.64, coal 64 cents. So I do think economics is part of the 
mix here, and we do need to look at economics. And the fact of 
the matter is, is that as we pursue new technology, the Federal 
Government should support these technologies, but we also need 
to recognize what the facts are about what we are doing and 
whether or not we can sustain this.
    Mr. Cash, how close to you were brownouts in the Northeast 
in the cold winter we just had? And be very short because I 
know what the facts are.
    Mr. Cash. We were not. We were not close to brownouts.
    Mr. Bucshon. Okay, because that is interesting because all 
the energy people in the Midwest tell me that you were within 
hours of brownouts based on the fact that you had plenty of 
natural gas, you just didn't have any pipelines to get it to 
where it needed to go.
    Mr. Cash. We had constraints. I don't know if we were 
hours, but we had constraints and there were concerns.
    Mr. Bucshon. Okay. So you know, when you eliminate 40 
percent of the electrical power generation in the entire United 
States, which is coal, which is the goal of the Administration, 
get used to it, American people. You are going to not have 
power 24 hours a day. You are going to have brownouts because 
the infrastructure is not there.
    Mr. Sopkin, do you want to answer that question?
    Mr. Sopkin. Yeah. What happened with these polar vortices 
in January and February, many of the baseload plants that are 
soon to be retired because of EPA regulations came to the 
rescue. Don't take my word for it. The New York Times headline 
was ``coal to the rescue but maybe not next winter,'' and I 
offer this as well for the record.
    Mr. Neugebauer. Without objection, so ordered.
    [The information appears in Appendix II]
    Mr. Sopkin. And what happened is that 89 percent of AEP's 
coal fleet that is going to be retired next year had to be 
operated to avert brownouts, and on the subject of energy 
efficiency, Murray State College had signed up for 
interruptable program and found out to its dismay that actually 
you do get interrupted, and they were interrupted with five 
minutes' notice. Students had to be displaced and there was 
flooding at the school.
    Mr. Bucshon. Mr. Chairman, I yield back.
    Mr. Neugebauer. I thank the gentleman, and now the 
gentleman from Massachusetts, Mr. Kennedy, is recognized for 
five minutes.
    Mr. Kennedy. Thank you, Mr. Chairman.
    Mr. Cash--Dr. Cash--excuse me--I want to touch base back 
with you about the interstate compact and the need for one from 
your opinion.
    We have heard testimony today about several assumptions 
about the operations of multi-state implementation plans, but 
your testimony seems to indicate that many, if not all of them, 
are unfounded. Specifically, I believe it was Mr. Sopkin that 
indicated that enforcement can and should be on an interstate 
basis and that states should and will insist upon it. I wanted 
to get your thoughts as to that, and if you can tell us a 
little bit about what is going on in Massachusetts and RGGI.
    Mr. Cash. Thank you very much, Congressman Kennedy.
    Certainly, states can take actions by themselves. There is 
no question, and many, many states across the country have on 
energy efficiency and other programs. There are many states 
that avail themselves to solar programs, not just the 
Northeast, in fact, many in the Southwest. But what is 
advantageous to an interstate compact, it allows the program to 
move forward in the most cost-effective way. If it is very 
costly to reduce emission in Massachusetts but there are plants 
in New York that can be dialed back more cheaply, you can have 
a tradable program to do that. That is what the neoconservative 
economists said before the acid rain debates in the 1980s and 
1990s, which incidentally many environmentalists were very 
concerned about letting the market play here. It has worked 
perfectly well in acid rain, and is has worked perfectly well, 
that the market works in the lowest-cost way to get emission is 
what comes to the fore, and so by having more and more states 
in an interstate compact, you can have a broader market, a more 
liquid market that allows that kind of cost-effective economics 
to work.
    Mr. Kennedy. Thank you, Doctor. And building off of those 
comments, can you discuss a little bit--again, from your 
opinion and your experience with Massachusetts--about how EPA's 
proposed rule helps Massachusetts and will allow other RGGI 
states to build off the successes that you have already seen.
    Mr. Cash. Sure. So it is kind of interesting. When we were 
developing RGGI ten years ago when it started, we always 
thought of it as a potential model for something that could 
happen at the national level. Again, acid rain was one of the 
models that had worked on the acid rain side. We thought on 
carbon this would be a very good approach.
    Clearly, as the market gets larger, if there are more and 
more states that are playing this, when more and more states 
playing it, it means that there is going to be more innovation 
and more competition to get that next new energy efficiency or 
solar product or advancement that is going to drive the cost 
down and reduce emission, and we see that already. The states 
that are very engaged in the clean energy sector, there is 
enormous growth and innovation, and so the larger the market 
is, the more advantageous it is and the lower the cost will be 
for emissions reduction. In fact, the cost is negative. In 
other words, we are saying money.
    Mr. Kennedy. Thank you, Doctor.
    Mr. McConnell, thank you for your testimony earlier today. 
My in-laws actually live right down the street from your 
university so I have been to Houston more times than I ever 
thought I would be over the past several years.
    Mr. McConnell. You are always welcome.
    Mr. Kennedy. Thank you very, very much.
    Sir, you talked about a bit earlier the lack of 
coordination between--communication between interstate 
agencies. If I am correct, you finished up your stint at the 
Department of Energy back in January of 2013, so you haven't 
actually been part of those official communications back and 
forth for over a year. Is that right?
    Mr. McConnell. Resigned in February of 2013, yes.
    Mr. Kennedy. So is it fair to say that you wouldn't be as 
involved and your knowledge about the extent of those 
communications over the course of the past year would be less 
than they would have been before?
    Mr. McConnell. That is absolutely true.
    Mr. Kennedy. Okay. Thank you, sir.
    Chairman, I yield back.
    Mr. Neugebauer. I thank the gentleman, and now the 
gentleman from Alabama, Mr. Brooks, is recognized for five 
minutes.
    Mr. Brooks. Thank you, Mr. Chairman.
    Mr. Sopkin, Alabama Attorney General Luther Strange 
recently testified to Congress that `Since 1915, the Alabama 
Public Service Commission has guided intrastate electricity 
development so as to protect ratepayers and ensure reliability. 
Under EPA's proposed 111(d) guidelines, however, the Commission 
could continue these efforts only insomuch as they comport with 
EPA's greenhouse gas agenda.'' What is your opinion on whether 
the EPA or a public utility commission can do a better job of 
protecting ratepayer interests?
    Mr. Sopkin. I certainly think a public utility commission 
is the expert agency that performs the resource planning 
function best. This is something that most state public utility 
commissions do all the time, and their highest calling is for 
reliability and cost. They need to make sure that service is 
adequate and safe and rates are just and reasonable. That is 
found in virtually every statute in the state.
    The problem with the EPA plan is, those issues now become 
secondary to carbon reduction, and as far as EPA flexibility on 
that subject, it appears that EPA is rejecting exceptions to 
the carbon reduction rule if a state says we have a problem 
with feasibility, we have a problem with cost, we have a 
problem with the age of the units, we have a problem with how 
this is going to affect our state. Section 111(d) of the 
statute that EPA is operating under specifically provides that 
states should have a flexibility to come to the EPA and ask for 
a case-by-case exception but page 520 of the EPA's proposed 
guidelines appears to reject that and say that these case-by-
case exceptions should not be considered as a basis for 
adjusting the state emission performance goal or for relieving 
a state of its obligation to develop and submit an approvable 
plan that achieves that goal on time. To me, that means that 
states have no choice but to submit to these carbon caps 
regardless of these issues of cost and reliability.
    Mr. Brooks. Thank you, Mr. Sopkin.
    The next question is going to for Mr. Holmstead, but if 
anyone else has any insight, please feel free to share it after 
him.
    I think we can all agree that overpopulated poor countries 
are some of the world's worst polluters and that prosperous 
economies empower economies and countries like America to pay 
for expensive pollution control equipment. That being the case, 
what weight does the EPA give to jobs creation and jobs 
destruction when the EPA imposes its rules and regulations? And 
I mention that in particular because in our state, Governor 
Bentley has made some rather strong comments recently talking 
about how the EPA and its rules and regulations are basically 
an attack on jobs in the State of Alabama and are costing us 
thousands of jobs that our people in the State of Alabama need. 
So Mr. Holmstead, what insight can you share?
    Mr. Holmstead. EPA is supposed to do studies of job losses 
caused by Clean Air Act regulations. They have not done that so 
far. But here is what they do: They count the jobs that they 
want to create and don't look at the jobs that are destroyed, 
so we have heard about all the people who are employed 
installing wind turbines and solar panels and all of those 
things, and those jobs that are created by government subsidies 
and government mandates. But they don't look at the jobs that 
are lost in other sectors and in particular the jobs that are 
lost because of higher energy costs. So the bottom line is, EPA 
doesn't really consider that.
    Mr. Brooks. Anybody else want to share any insight?
    Mr. Cash. If I may, Congressman Brooks, I think that the 
EPA, again, like many other states that have taken on these 
kinds of issues, not just climate but clean energy, see job 
growth as a very important part of this, and whether it is 
primary like in the growth in our field of--in our area of 
solar jobs, wind jobs, or it is a secondary growth, that is, 
savings through energy efficiency that now stays in the pockets 
of customers, which stays in the pockets of businesses that can 
now use that for additional job growth. We see this as a big 
step forward in that regard.
    Mr. Brooks. Thank you. Any other comments?
    Mr. McConnell. I think there is a big difference between 
jobs in the service industries and real manufacturing and heavy 
industry, whether it is the petrochemical industry, refining, 
and some of the burdens of that. The states of Texas, Florida, 
Illinois, Alabama, your state, this is where 40 percent of the 
burden of this regulation will be borne, in those states where 
there is heavy manufacturing and heavy industrial use, and that 
is the real critical issue here is that many of the other 
states that are involved with this don't feel that pain near as 
much.
    Mr. Brooks. Well, thank you. I would just follow up on that 
just for one or two comments. I would submit that manufacturing 
and industry are the golden eggs, and if you destroy those 
golden eggs, there won't be service jobs because those people 
who are in industry and manufacturing, their incomes are what 
ultimately are consumed by those who are providing services.
    And then finally, inasmuch as the EPA is not--well, I am 
getting hammered down. I thought last I would have an extra 30 
seconds. I don't. Thank you. Have a good day.
    Mr. Neugebauer. I thank the gentleman, and now the 
gentlewoman from Maryland, Ms. Edwards, is recognized for five 
minutes.
    Ms. Edwards. Thank you very much, Mr. Chairman, and thank 
you to our witnesses today.
    You know, it is so interesting when you are in Congress how 
people have different perspectives depending on the state and 
the district that they come from and represent and here you 
heard a number of different perspectives, and I guess the way I 
looked at this EPA rulemaking is that it offers states some 
flexibility to develop a plan that matches the needs and 
opportunities of its state, considering the kind of industry 
and the challenges that that state faces. I know in Maryland, 
we have taken on this challenge put forward by our Governor to 
reduce our energy consumption by 15 percent just in a very 
short time by 2015.
    Now, I don't know whether we are going to meet that goal. 
It is a really big goal. But I think it is important here when 
we are talking about preserving and protecting the environment, 
creating jobs for the 21st century, leaving a planet that our 
children and their grandchildren can enjoy and get the benefit 
of, then we should set a big goal. Maybe at the end of that 
time we don't meet those goals but we should try to do that. 
And so I have looked at this rulemaking as about flexibility.
    Dr. Cash, I want to ask you about that because in his 
testimony, Mr. Sopkin mentions that the proposed rule places 
severe time constraints on states that are potentially 
insurmountable, given the need for state legislation, and I 
think we all recognize that these kind of things don't happen 
overnight, especially legislation, but it does appear to me 
that Massachusetts and other RGGI states have been able to 
accomplish much of what is described in the building blocks in 
a relatively short amount of time.
    So as someone who has been instrumental in developing that 
legislative basis in Massachusetts that mirrors the intent of 
the proposed rule, I am curious about hearing your perspective 
and what lessons we can learn from the successes that have been 
achieved by RGGI states in overcoming some of these hurdles.
    Mr. Cash. Thank you very much, Congresswoman Edwards, and 
it has always been a pleasure to be working with Maryland and 
RGGI on other projects in this area.
    First of all, I believe that there will be flexibility even 
on the legislative versus regulatory side. In RGGI, for 
example, not every state had to pass legislation. There were 
already states as Massachusetts was one of them that had the 
regulatory authority to become part of the market base program 
that is RGGI.
    The other, I think, thing that is interesting is that 
during the RGGI process, it was a bipartisan approach, and it 
changed during the--there were different gubernatorial 
elections during the time but there were both Republican and 
Democratic governors during that time who saw the economic 
advantages and there were legislatures that were interested in 
moving the ball forward.
    So while I think that this may be difficult for some 
states, I think there may be states that have regulatory 
authority already and I think in the face of this EPA 
regulation, I think legislators will see the potential 
opportunities and build in flexibility in their own state 
rules, which is another thing that we have done in RGGI. For 
example, each state can apportion the allowances, the revenue 
that comes from allowances, in different ways. There isn't a 
cookie cutter way to do it. Different states have done 
different regulations and different laws that allow themselves 
to comply with what we have agreed upon to be RGGI but to do it 
in very different kinds of way. And so that has been a big 
advantage and one I think that adds to the kind of flexibility 
that we see here in the EPA rule.
    Ms. Edwards. Let me just ask about that, because, I mean, 
there is also some criticism and we have heard it already today 
about the job creation potential or the negative impact on 
jobs, and again, I have always thought of this as, you know, 
here we are, we are in the early parts of the 21st century. The 
kind of jobs that we have now are not the kind of jobs that we 
had in the early part of the 20th century. So the fact that we 
lose jobs in some areas doesn't close off the opportunity in 
this new sector and a growing sector to create those jobs. Has 
that been part of your experience as well?
    Mr. Cash. That has been part of our experience, and I just 
want to say very, very clearly, when any of these changes 
happen and the economic shifts, whether they are because of 
regulation or just the market, the global market changes, it is 
very, very difficult and in no way do we minimize the changes 
that may happen in states that are more dependent on fossil 
fuels, et cetera. We do not minimize that at all. We have dealt 
with that in our state. We have had coal plant closings in our 
state and throughout the region, and we have actually used part 
of your RGGI funds to assist communities in the transition as 
those plants have closed down, whether they are in retraining 
or loss of revenue to the municipality that had the plant as a 
tax base. So that is something that I think needs to be taken 
into account.
    Ms. Edwards. Thank you.
    Mr. McConnell. I would like to add a comment to----
    Mr. Neugebauer. I am sorry. The time of the gentlewoman is 
expired.
    We will now go to the gentleman from California. Mr. 
Rohrabacher is recognized for five minutes.
    Mr. Rohrabacher. What would you like to add?
    Mr. McConnell. I would like to add that I have been 
somewhat stunned that we have spent so much time today talking 
about the states that generate five percent of the energy for 
the entire United States as a model for the rest of the United 
States, and I think that is the most troubling aspect of this 
is looking at that small subset as the model for the rest of 
the country, which doesn't look anything like the rest of the 
country.
    Mr. Rohrabacher. And I think you mentioned earlier that the 
same states actually have higher costs of energy than the rest 
of the states.
    Let me just note that when jobs are really destroyed in our 
country and whether they are in Maryland or anywhere else, if 
what is being mandated is a use of what we have as wealth in a 
country and now it takes more wealth to do something, that 
means there are fewer jobs because there is not the wealth to 
create the jobs. That is one of those basics that we know 
about. One excuse would be for doing that, if you want to 
eliminate wealth that doesn't need to be eliminated and have 
the jobs there would be if public health was involved in this, 
and what I would like to know basically what we are talking 
about today are regulations that are not really aimed at public 
health. They are aimed at CO2 reduction. Is CO2 
a threat to public health?
    Mr. Cash. It is a threat to public health.
    Mr. Rohrabacher. CO2 actually is harmful to 
humans?
    Mr. Cash. Not breathing it in but the impacts of climate 
change.
    Mr. Rohrabacher. Okay.
    Mr. Cash. It is harmful to public health.
    Mr. Rohrabacher. That is enough of that. Let me----
    Mr. Cash. And it is also----
    Mr. Rohrabacher. That is totally absurd, so CO2 
is not harmful to human beings, right? But all these other 
things that we can just conjure up in CO2 become 
hazardous to the health of human beings. Frankly, that one 
extra step is a big step because some people don't believe that 
CO2 actually is a major factor in climate change for 
our planet.
    Let me just ask, earlier on we had a--so CO2 is 
not harmful to human beings' health itself. Earlier on, Mr. 
Collins, my colleague, asked about all of these regulations 
would even in the reduction of CO2 would only result 
in a two percent reduction in the production of CO2. 
I remember that. I am not sure who----
    Mr. Holmstead. Can I just put this in context?
    Mr. Rohrabacher. Yes.
    Mr. Holmstead. A study came out not that long ago that said 
if you assume this regulation is fully implemented by 2030----
    Mr. Rohrabacher. Yes.
    Mr. Holmstead. --what would this regulation do, this 
massive shift in our economy. That would be equal to about 21 
days of current emission from coal-fired power plants in China, 
and by 2030, it is projected that it would be something like 12 
days.
    Mr. Rohrabacher. And we are talking about CO2 
production.
    Mr. Holmstead. Right, CO2 production.
    Mr. Rohrabacher. Which by the way is not harmful to 
people's health. The byproduct of manufacturing it can be 
conjured up but CO2 itself is not harmful, but this 
reduction of CO2 that we are talking about, this two 
percent, is not two percent of what mankind is producing or is 
it a two percent reduction of what CO2 represents as 
part of our atmosphere the two percent reduction, is it not? We 
are not talking about two percent of the reduction of what 
CO2 in the whole atmosphere. We are only talking 
about a two percent reduction in mankind's addition. Is that 
correct? Right.
    Mr. Holmstead. Yes, it is, and to be clear about it, this 
specific regulation is .2 percent of the overall 
CO2.
    Mr. Rohrabacher. And let me note that CO2 then, 
we are talking about a two percent reduction of what some 
people think will have a draconian effect on our economy. That 
is two percent less than one-half of one-tenth of one percent 
of the atmosphere, not 2 percent--people will think it is two 
percent of what it is in the atmosphere of CO2. That 
is not what we are reducing. We are reducing the one-half of 
one-tenth percent of the atmosphere, okay, is CO2, 
and we are reducing the mankind's percent of that, which is 
only one-tenth of that. Is that correct? So what we are really 
talking about is one-tenth of one-half of one percent of the 
atmosphere that would be affected by this at all.
    In order to--let me just state, CO2 again is not 
harmful to people's health. Reducing it by this teeny weeny 
microscopic amount and hurting people's jobs, et cetera, 
throwing us into turmoil and restructuring our business is 
absurd. Thank you.
    Mr. Neugebauer. I thank the gentleman, and now the 
gentleman from Illinois, Mr. Hultgren, is recognized for five 
minutes.
    Mr. Hultgren. Thank you, Mr. Chairman. Thank you all. I 
want to thank the witnesses for being here. This is certainly 
an important hearing as we try and understand what legal 
authority under Section 111(d) EPA has to promulgate these 
rules.
    With unemployment rates still disproportionately high in my 
State of Illinois, what my constituents are worried about is 
jobs. Manufacturing is a vital part of my district's economy, 
and this sector is one that will always be energy intensive. 
They have every incentive to find efficiency gains, which the 
industry has been actively doing, but many now fear that this 
was all for naught, considering that increased energy costs, 
especially in the short term, will end up making them pay more 
even though they are using less.
    Mr. Holmstead, I wonder if I could address my question not 
you. The Clean Power Plan is comprised of two main parts, to my 
understanding, one, the state-specific goals to lower carbon 
pollution from power plants, and guidelines to help the states 
develop their plans for meeting those goals. According to EPA, 
this framework provides states with the flexibility to choose 
for themselves, the best set of cost-effective reductions. How 
does EPA guidance under this plan compare with previous agency 
guidance for similar performance standards? Is it more or less 
flexible than the guidance EPA has provided for other sources, 
and what boundaries for state interpretation has EPA set for 
its guidance?
    Mr. Holmstead. This is fundamentally different from 
anything EPA has ever tried to do before, so in the past when 
they have done guidance, the guidance says here is the kind of 
plants that you need to regulate, here are the things that you 
can do to improve the emission rate of those plants, and then 
states, you go out and you need to develop the standards for 
these individual plants. I think it is true that this provides 
much more flexibility than EPA has ever done before but it is 
flexibility to achieve a goal that can only be accomplished by 
making these dramatic changes in many ways. So is it flexible? 
Sure. But it is--someone used the analogy before, you know, 
they give you six gallons of gas to make it from here to 
California and say, you know, you are completely flexible, do 
that any way you want.
    Mr. Hultgren. Mr. McConnell, if I could address this to 
you, you spoke about the lack of communication between DOE and 
EPA when putting forward new rules. Earlier this year I asked 
EPA about their consultation with DOE regarding the technology 
readiness assessment for your former agency of science to 
technologies they develop. Their answer was alarming, and 
echoes your complaints. I wondered at what technology readiness 
level would you consider a technology to be adequately 
demonstrated? All of the CCS technologies were at six or below. 
That is my understanding.
    Mr. McConnell. I came here last November and testified 
about the new coal standards, and in fact, what is absurd about 
it is that EPA is taking a stance where plants that are either 
in construction or in engineering development have actually--
are examples of demonstrated commercially available technology 
and declared that that technology would be commercially 
available in 2016 for new coal-fired power plants.
    We have a roadmap and have had a roadmap for a number of 
years that said it was going to be available in 2020, and that 
also--it also required that continued funding of the program 
would be maintained at the then-current rates and then 
subsequent to that, the government and the Administration has 
defunded that effort, and so what we have done is, we have 
taken the money out of the technology development, declared it 
ready ahead of time. It is a somewhat disingenuous process that 
says you can use it, you should use it, but you really can't, 
and then consequently, you are required to make another choice. 
It is flexibility but it really isn't flexibility.
    Mr. Hultgren. I think you kind of touched on this, but 
since climate is a global problem, I wonder if you could into a 
little bit more specifics of what technologies are we not 
developing right now that nations such as China would be 
willing to purchase? I am thinking of some of the combustion 
technologies that provide significant efficiency gains, which 
seem to be, you know, something this President is not 
supporting. So I wonder if you could talk a little bit more 
about that.
    Mr. McConnell. Well, many people would use--would say that 
clean coal and clean fossil technology is an oxymoron, and that 
is absolutely not true. It is demonstrated in our country we 
have made enormous progress, and that is when the government 
has worked with industry to provide that pathway forward, not 
to eliminate something but to actually invest in the technology 
so that it can be deployed.
    The world's energy is going to double in the next 50 years. 
Ninety percent of that doubling will occur in developing 
countries. Those developing countries are going to use fossil 
fuels. EIA has already projected that 85 percent of the world's 
energy will be fossil energy by 2060. So we have an obligation 
to the rest of the world to develop those clean technologies so 
we can really make an impact, not do this that doesn't impact 
anything while we hobble our economy.
    Mr. Hultgren. Good point. Thank you.
    Thank you, Chairman. I yield back.
    Mr. Neugebauer. I thank the gentleman. I guess the Chair 
has a question then.
    Mr. Holmstead, by the year 2030, EPA believes that the 
proposed plan would allow the United States to reduce carbon 
emission from the power sector by 30 percent below the 2005 
levels and roughly 17 percent cut from the 2013 levels. To 
achieve these reductions, EPA calculated a specific emission 
rate for each state, as you are aware of, by totaling the 
CO2 emissions produced by each state's EGUs and 
dividing it from the total amount of electricity generated by 
the EGUs. My home State of Texas is looking at a 39 percent cut 
in emissions by 2030. Is that achievable?
    Mr. Holmstead. It is hard to know. We don't really have 
kind of good data on that. People are trying to figure that 
out. But what we do know is that it will be very expensive, and 
I think that is the--and again, there been some estimate of how 
expensive that may be. I think people are still trying to 
figure it out. This is an enormously complicated proposal. But 
the one thing we can say is, it certainly will put reliability 
at risk in some areas, and it will be very expensive.
    Mr. Neugebauer. This may be a harder question. Do you 
believe EPA has a sound legal and technical basis for these 
emission rates and reduction targets for each individual state?
    Mr. Holmstead. Well, that is actually an easy question. I 
think it is quite clear that this proposal goes far beyond 
anything EPA is authorized to do under the Clean Air Act, and I 
just think that is troubling that a regulatory agency would 
essentially ignore what Congress has given it authority to do.
    Mr. Neugebauer. And this weighting formula that EPA came up 
with for these reduction goals, was that done fairly? If you 
were going to do it that way, that is a pretty big burden on 
some of the states that are actually producing electricity.
    Mr. Holmstead. Again, this question is a hard one because 
EPA went state by state and they said here is how we believe 
you should change your electric system, right, and they said on 
a state-by-state basis, we think you should, you know, shift 
generation this way and you should do energy efficiency 
programs and you should mandate renewable energy. So it is hard 
to know if it is fair. What we do know is, EPA went state by 
state and said here is the way we believe you should change 
your electricity system.
    Mr. McConnell. And I think in our State of Texas, we ought 
to be concerned because we generate 11 percent of the energy in 
this country and we are going to bear better than 20 percent of 
the burden for this, and specifically, the only way Texas can 
do this because of the pounds per megawatt-hour that have been 
mandated are going to require us to double the amount of 
renewable energy we have in our portfolio, approaching 35 
percent in our state. So we are being punished because we are 
the leading renewable state in the country. The formula goes to 
making that a baseline for ability to move forward. So in our 
state, we should be very concerned.
    Mr. Neugebauer. I thank the gentleman. Unfortunately, the 
Chair has to close this hearing. I want to thank the witnesses 
for their valuable testimony and the Members for their 
questions. The Members of the Committee may have additional 
questions for you, and we ask that you respond to those in 
writing. The record will remain open for two weeks for 
additional comments and written questions from the Members.
    The witnesses are excused and this hearing is adjourned. 
Thank you.
    [Whereupon, at 12:14 p.m., the Committee was adjourned.]
                               Appendix I

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                   Answers to Post-Hearing Questions




                   Answers to Post-Hearing Questions
Responses by The Honorable Jeffrey Holmstead

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Responses by The Honorable Charles McConnell

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Responses by Mr. David Cash





Responses by Mr. Gregory Sopkin

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                              Appendix II

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                   Additional Material for the Record




        Report submitted by Ranking Member Eddie Bernice Johnson
        
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           Report submitted by Representative Elizabeth Esty
           
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To view the report in its entirety please visit: http://
www.analysisgroup.com/uploadedFiles/Publishing/Articles/
Analysis_Group_EPA_Clean_Power_Plan_Report.pdf
          Report submitted by Representative Randy Neugebauer
          
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